Change to the Age Pension rules – how could you be affected?

05 August 2016


On 1 January 2017, the asset free thresholds and taper rate that apply to the Age Pension asset test will change. This will result in the most significant alteration to retirement income this decade.

Changes to the asset test thresholds and associated taper rate will affect an estimated 416,000 age pensioners.

The changes

There are two primary changes:

  • The asset free threshold is the value of assets that an individual or couple can own, on top of their family home, before their Age Pension payment is affected is being increased.
  • The taper rate (the rate at which the Age pension payment is reduced for assets above the asset free threshold) is being increased from $1.50 per $1,000 to $3 per $1,000 until no payment is due.


Implementation of these changes will result in fewer people qualifying for a part Age Pension.

This table illustrates the current and proposed threshold and taper rates for homeowners.

Current From 1 January 2017
Asset free threshold Pension cut-off threshold Asset free threshold Pension cut-off threshold
Single $209,000 $791,750 $250,000 $547,000
Couple (combined) $296,500 $1,175,000 $375,000 $823,000


How many will people be affected?

It is estimated that 170,000 pensioners will be better off due to the increased thresholds however Government projections are that, after these changes, 235,000 people will see their part Age Pensions reduce and about 91,000 will lose their Age Pension entitlement entirely.

How will people react to these changes?

Seniors concerned about longevity are likely to become more so after the changes to the Asset Test.  They may be looking to replace the income previously received via the Aged Pension without running down their investments or superannuation too quickly.

Home ownership is often considered the ‘fourth pillar’ of retirement income and people affected by the changes to the asset test may start to consider strategies that access equity in the home as a way of generating income while preserving other retirement income assets or more simply converting part of an illiquid asset into cash or an income stream without selling that asset.

Heartland can help.

Heartlands Reverse Mortgage loan could provide you with:

  • The ability to have funds advanced by lump sum, regularly over five or ten years, or set aside to drawdown when required (or a combination).
  • The ability to access equity in your residential property, turning illiquid assets into cash or income.
  • A highly competitive variable interest rate and low set up fees.


Heartland Reverse Mortgage is available to home owners aged 60 and over, with no maximum loan amount and competitive criteria. For a 75 year old Heartland will advance up to 30% of the property value.

Find out more

If you have any questions please feel free to request an information pack or contact our friendly team on 1300 889 338 or [email protected]. We are here to help you.


Information provided is accurate as at 05 August 2016 and may change from time to time