Budget 2009 - Pensioners & Pension Age

By Sandy Naidu | May 14, 2009

On May 12th, Wayne Swan, our federal treasurer, delivered 2009 Federal Budget. In a series of posts I am going to write about how this budget will affect us all.

Aged Pensioners

Single aged pensioners will receive $32.49 more a week; couples will get an extra $10.14. 2009 Budget replaces the current pension incomes and assets means tests with a broader income test.

The changes will mean that the income threshold to receive a pension will decrease. Under the new rules, the aged pension will be paid to new pensioners with private income of up to $38,693 for singles, and $59,228 for couples combined - down from $47,444 for singles and $72,423 for couples combined under current income test rules.

Pension Age

The pension age has been increased by two years. The Government has announced a staggered increase to pension age from 2017 with an aim to reach 67 in 2023. Pension age is when you become eligible for government pension benefits (depending on your income and assets).

Currently the pension age is 65 years for men and 63 years and 6 months for women. Anyone whose current age is around 45 or less will be affected by this change. Increase in pension age means people now have to work longer. This change has been brought about to cope with the increasing aging population. This change is inevitable.

Access To Superannuation

Currently you can access your superannuation before you reach your retirement age / pension age. The age at which you can access your superannuation is called preservation age. The current preservation age is between 55 and 60 (depends on your date of birth). It makes sense to have a lower preservation age than the pension age / retirement age. You might retire before you reach your retirement - So why should you wait an extra few years to get access to your superannuation.

There are some reports in the media that based on recommendations by the Treasury, Government will announce some radical changes to preservation age - the preservation age will be increased and brought in line with the pension age. This change is not good news. Lot of people retire before their retirement age. They might want to travel or simply enjoy life.

By lifting the reservation age to 67, you are basically giving the retirees access to their superannuation at a very late stage in their life - they will be reaching 70 soon after they receive superannuation. Because of health conditions, it can be too late for some to travel. This change has not been announced yet but there are rumours in the media that it is just a matter of time before it is announced. Let us hope the rumours are wrong.

If you have an opinion about any of the matters mentioned in this post, please share your thoughts in the comments area.

Other Budget 2009 Posts:

Changes For Carers’ Income

Superannuation Changes

Paid Parental Leave

First Home Buyers Grant Boost

Tax Cuts
Budget 2009 Winners and Losers