Pensioners to hold onto houses

pensioners house age pension

7 July 2015
| By Nicholas |
image
image
expand image

Pensioners will be better off holding onto their family homes or buying more expensive houses, as an unexpected consequence of the changes to the pension assets test.

Middletons Securities adviser, David Middleton, said savvy investors could end up getting more through the Age Pension than they currently are "and have a nicer house to live in", by taking advantage of the new rules announced in the Budget.

With pensioners facing a 7.8 per cent per annum cut to their Age Pension on assessed capital above the lower threshold, their homes could become "a bricks and mortar bank account".

"This might just ring the death bell on the days where an empty-nester couple chooses to downsize from the family home to something more manageable — and instead we may see them look to buy something that is actually more expensive," he said.

"The bottom line, is that a home-owning couple with $800,000 in assets will soon see their Aged Pension fall by around $14,000, and that's quite a bit," he said.

"By increasing the value of their home by trading up or doing renovations they will get a lot of extra pension. For example, a pensionable couple with $800,000 in investment capital would currently get interest income of around $24,000, along with an Aged Pension of $14,000 - making for a total of $38,000 income."

"Under the new rules their aged pension would all but disappear, but if they added $300,000 to the value of their home their interest income would fall to $15,000 and under the new rules they would have pension income of $23,000 — more than they're getting now."

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

6 hours ago

Interesting. Would be good to know the details of the StrategyOne deal....

4 days 11 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 2 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 4 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

3 days 9 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

2 days 12 hours ago