1. 20 September 2009 Social Security Changes
Diane Hayes St Clair
FirstTech

2. Disclaimer
This presentation is given by a representative of Colonial First State Investments Limited AFS Licence , ABN (Colonial First State). Colonial First State Investments Limited ABN , AFS Licence (Colonial First State) is the issuer of interests in FirstChoice Personal Super, FirstChoice Wholesale Personal Super, FirstChoice Pension, FirstChoice Wholesale Pension and FirstChoice Employer Super from the Colonial First State FirstChoice Superannuation Trust ABN and interests in the Rollover & Superannuation Fund and the Personal Pension Plan from the Colonial First State Rollover & Superannuation Fund ABN and interests in the Colonial First State Pooled Superannuation Trust ABN
The presenter does not receive specific payments or commissions for any advice given in this presentation. The presenter, other employees and directors of Colonial First State receive salaries, bonuses and other benefits from it. Colonial First State receives fees for investments in its products. For further detail please read our Financial Services Guide (FSG) available at colonialfirststate.com.au or by contacting our Investor Service Centre on
The information is taken from sources which are believed to be accurate but Colonial First State accepts no liability of any kind to any person who relies on the information contained in the presentation.  
This presentation is for adviser training purposes only and must not be made available to any client.
This presentation cannot be used or copied in whole or part without our express written consent.
© Colonial First State Investments Limited 2009.

3. Agenda Increase in pension rate New indexation arrangement
New pension supplement
The new Work Bonus & Closure of Pension Bonus Scheme
New taper rate changes & transitional arrangements
Case study – Mary and Walter
Other minor changes

4. Increase in government pension
From 20 September 2009
Increase in maximum pension rate:
*GST supplement only
New Indexation arrangement on basic pension rate:
New pensioner cost-of-living measure to be used
Single pension rate will be set at 66.33% of the combined couple rate
From 20 March 2010 the combined couple rate of pension will be benchmarked to 41.76% of the MTAWE (Male Total Average Weekly Earning)
Pension Basic Rate
Single
Partnered (each)
Pre Amt
20 Sep 09
Base
$550.30
$615.80
$459.60
$464.20
Supplement
$19.50*
$56.10
$16.30*
$42.30
Total
$569.80
$671.90
$475.90
$506.50

5. New Pension Supplement
The Pension Supplement - Fortnightly Payment (Singles)
Minimum component $30.20 p.f.
Source: Department of Families, Housing, Community Services & Indigenous Affair
Couple (combined) pension supplement increase from $63.87 to $84.60

6. New Work Bonus From 20 September 2009 New Work Bonus:
Half of the first $500 of fortnightly employment income will be disregarded from the income test for pensioners over age pension age.
Equals to maximum increase in age pension entitlement of $3,250 p.a. per individual.
May apply to both member of a couple if both eligible
Pensioners who had previously received the pension bonus scheme is also eligible for the new Work Bonus
Self employed people not eligible for Work Bonus

7. Closure of Pension Bonus Scheme
Pension bonus replaced by ‘work bonus’
Pension bonus scheme closed to new entrants
Continues for existing clients
People qualifies for Age Pension before 20 Sep 2009 can still register
Things to watch out for:
Members who are not working and rely on their non-member partner’s employment to remain in the scheme will need to claim their bonus within 13 weeks of 20 Sep 2009

8. Closure of Pension Bonus Scheme
PBS or work bonus?
Depends on expected time in workforce, amount already spent in PBS, percentage of pension bonus expected
Longer in PBS – pension bonus may be more favourable
Reduced rate of pension bonus – work bonus may give more

9. Income Test Taper Change
Income test taper rate to increase:
from 40c to 50c in the dollar for a single pensioner
From 20c to 25c in the dollar for each member of a couple
Transitional Arrangement:
Existing part pensioners affected by the change will:
not have their pension reduced by the change
the maximum base rate of pension will be different under the new rates to the transitional rate
two separate sets of means test applies simultaneously until pension entitlement under the new rules gives a higher amount
once the client is assessed under the new rates they will never be assessed under the transitional rate
transitional rates does not take into account the new Work Bonus

10. Post rate vs Transtional rate - single

11. Case Study – Mary and Walter
Facts:
Couple, homeowner
Walter was receiving the Age Pension on 19 Sep 2009.
His wife Mary was not receiving any Centrelink payment at that the time because she hasn’t reached her Age Pension age.
Walter has an account based pension valued at $300,000 where he is drawing down the minimum.

12. Case Study – Mary and Walter
Facts:
None of Walter’s pension income is assessed due to the Centrelink deductible amount.
Mary earns $1,800 p.f.($50,400 p.a.) from employment which is their main source of income.
Mary reaches Age Pension age in December 2009.

13. Case Study – Mary and Walter Cont.
Walter’s Age Pension entitlement will be assessed under the income test
Walter Age Pension entitlement
Pre 20 Sep
New rate
Transitional rate
Maximum base pension p.f
$478.90
$506.50
$504.70
Reduction due to income test
($1,800 - $248) ÷ 2
x 0.4 = $310.40
($1,800 - $250- $248) ÷
2 x 0.5 = $325.50
($1,800 - $248) ÷ 2 x 0.4 = $310.40
Age Pension entitlement per fortnight
$168.50
$181
$194.30
When Mary attains age pension age, assuming everything remains the same, Mary’s entitlement will be $181 per fortnight

14. Case Study – Mary and Walter Cont
What if Mary decides to retire and stop working?
Total assessable income – nil
Total assessable asset - $300,000
Age Pension entitlement couple each
Mary – new rates
Walter – transition
Walter – new rates
Maximum Age Pension
$506.50
$504.70
Reduction under asset test
($300,000 – $252,500) ÷ 1000 x 1.5 ÷
2 = $35.63
Entitlement
$470.88
$469.07

15. Other minor changes
Seniors Concession Allowance and Telephone Allowance will be combined into a new Seniors Supplement for CSHC and Veteran’s Affairs Gold Card holders.
Removes additional income free amount for dependant child
Introduced new Carer Supplement which is an annual, non-indexed, lump sum payment paid every July to people who are recipient of Carer Allowance, Carer Payment, DVA Carer Service Pension, DVA Partner Service Pension with CA

16. Increased age pension age
From
New age pension age
Affects those born
Current age
1 July 2017
65.5
1 July 1952 –
31 December 1953
55.5 – 57
1 July 2019 66
1 January 1954 –
30 June 1955
54 – 55.5
1 July 2021
66.5
1 July 1955 –
31 December 1956
52.5 – 54
1 July 2023 67
1 January 1957
and later
52.5 or younger
Henry Tax Review report also recommends aligning the super preservation age with this higher age pension age

17. Additional resources
The latest Centrelink thresholds can be found in the A Guide to Australian Government Payments which can be accessed through the FirstTech website (access through FirstNet Adviser)
Fact sheets on the changes available from
Further questions:
Phone: – Adviser Service Team