4.2.3 Pensions & benefits assets tests
This section describes the assets test as it applies to pensions and benefits. For the purposes of this topic, assets value limits are referred to as assets free areas. This section covers the following matters:
- the pensions assets test
- how assets reduce pension payments
- the benefits assets test
- payments affected by the benefits assets test
- assets free areas, and
- asset disposal by a care receiver.
Pensions assets test
The pensions assets test applies to all pensions. The assets test is only applied where a person's assets exceed the assets free areas for full pension. If assets exceed the assets free areas, pension entitlement is assessed by:
- calculating the rate payable under the assets test, and
- comparing that with the rate payable under the income test.
The assets test only applies if it produces a lower rate of payment than the income test. The following table shows the 4 steps involved in applying the assets test for pensions.
|1||Determine the value of the person's assets (1.1.A.290).|
|2||Determine the person's assets free area.|
Does the value of the person's assets exceed their assets free area?
Determine the reduction for assets:
RESULT: REDUCTION FOR ASSETS
Act reference: SSAct section 1064-G1 Effect of assets on maximum payment rate, section 1064-G3 Assets value limit, section 1064-G4 Pension reduction for assets in excess of assets value limit
How assets reduce pension payments
From 1 January 2017, every $1,000 in assets over the assets free area reduces a pensioner's asset tested pension rate by $3 per fortnight (single or couple combined).
Benefits assets test
The benefits assets test is not the same as the pension assets test. Payments affected by the benefits assets test are NOT payable if a person's assets exceed the assets free area.
Payments affected by the benefits assets test
The following payments are affected by the benefits assets test:
- newstart allowance
- youth allowance
- partner allowance
- austudy payment
- widow allowance
- sickness allowance
- special benefit
- parenting payment (partnered), and
- parenting payment (single).
Legislation covering the operation of the assets test and the assets value limits is contained in the relevant qualifications and payability, or rate calculator sections of the SSAct.
Assets free areas
Assets free areas are indexed from 1 July each year to increases in the CPI.
Carer payment - disposal of assets by care receiver
If a care receiver disposes of assets, the value of the disposed assets can be maintained as an asset if the care receiver:
- does not receive adequate payment for the assets, or
- disposed of the assets for the primary purpose of enabling a carer to qualify for CP.
These situations are NOT likely to occur in most care receiver cases. These provisions DO NOT apply to any disposition before 9 May 1995, the date the change to CP eligibility on this basis was announced.