In a much-anticipated move, The Federal Government recently announced an increase of $33 per week in the single aged pension. The full pension for couples was also increased by $10 per week. Both changes become effective September 20th, 2009.
Although these budget initiatives are welcome and long overdue, the news is not all good for retirees.
Part pensioners who earn extra income will lose some of their payments to help fund the package. Pensioners with private incomes above $3588 for singles and $6240 for couples currently have their pension payments reduced by 40 cents for every extra dollar earned. This will be lifted to 50 cents in the dollar, saving $1.6 billion over five years.
The Government will also slash the amount of income a pensioner can earn before their payment cuts out completely. From September 20, the rate will fall from $47,444 to $38,693 for singles and $72,423 to $59,228 for couples, a saving of $1.2 billion over four years.
The pension bonus scheme, that rewards people who defer claiming the age or service pension, has also been scrapped. Under that scheme, a single pensioner could receive close to $35,000 bonus if they continued to work for five years beyond the retirement age of 65 years.
The Federal Government will replace this with a new work bonus system which it says will treat the amount of money earned by aged and service pensioners more generously. The changes will enable up to $250 of a person’s earnings a fortnight to be excluded from means testing.
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