Week 9 - Social Security Flashcards
What is the main purpose of social security?
Provide minimum standard of living and allow for fairness & opportunity for citizens
what are the aims of current policy trends?
- encourages self reliance
- Support old people with insufficient retirement funds
- Help old people stay at home rather than hospital
How is the Age Pension indexed?
indexed twice a year against:
- CPI
- Pensioners and beneficiary living cost index (PDLCI)
- Male total average weekly earning (MTAWE)
What are the eligibility requirements of the Age Pension?
- Must reach age pension age of 67
- Must be an Australian resident for 10 years
- “means test” of income and assets
What is the pension supplement
Extra income aimed to aid with bills and day-to-day expenses
What is the energy supplement?
Ongoing payment to aid with impact of carbon prices
*Only available to people on age pension before Sep 2016
What assets are excluded from the assets means test?
- Principle home
- NDIS payments
What are the three main ways to increase entitlements under the asset means test?
- Gifting
- Super-splitting
- Renovating the house
Explain the rules of gifting
Assets given away within 5 years of age pension age counted in test
30,000 worth of assets over the 5 years before age pension age are not counted
Explain “super-splitting”
Transferring superannuation balances to younger spouse to reduce assessed amount
*maximum of 300k under “bring it forward” provisions
Explain how house renovation lowers asset test
By renovating the house, cash (assessable asset) is transferred into principle home (non-assessable).
What is the rate of reduction under the assets means test?
$3 reduction per $1000 over applicable threshold
What is included in the income means test?
- Deemed income (financial investments)
- Gross employment income
What items are excluded from deemed income?
- Principle home & contents
- Vehicles
- Antiques & collections
What are the incentives for age pensioners to work after receiving the pension?
$300 a fortnight disregarded from the income test
unused amount accrue until 7800 max
What is the pension reduction rate of the income test?
50 cents for every dollar over threshold
thresholds
singles - 190
couple - 336
ill couples = treated as singles
How is the final age pension decided after both tests are finished?
Lowest of the two tests = age pension amount
