The Budget has made three very significant changes to the income test for the age pension. The effect of these changes will be to make the income test more stringent and the age pension will now increase at a lower rate.
From 1 September 2017, the income test for qualification for the age pension will be made more stringent by reducing the deeming thresholds from the current $46,600 to $30,000 (single threshold) and from the current $77,400 to $50,000 (couple threshold).
The deeming thresholds apply to financial assets and attribute a notional income return from those assets for the purposes of the income test of the age pension. The current deemed income rates are 2% which applies to the total value of assets (which are subject to deeming) below the threshold and 3.5% on the excess above the threshold.