The Abbott government is hoping to save $3 billion by clamping down on wealthier recipients of the age pension.
Social services minister Scott Morrison is tightening the assets test, which will see an estimated 91,000 people with more than $823,000 in assets losing their part pensions and another 235,000 having part pensions cut.
Morrison predicts around 172,000 pensioners will receive $30 more in their fortnightly payment and 50,000 will go onto a full pension.
“We want the welfare system to be focused on those in greatest need and in the pension system, that’s with those with low or modest assets,” the minister said on ABC Radio’s AM.
“The whole point of providing taxpayer funded incentives through the tax system for superannuation is that people draw down on that in their retirement. It is not intended to be a taxpayer-underwritten bequest program.”
He ruled out the family home being included in the assets test.
The government hopes to save around $2.5 billion over four years from the changes.
While the assets threshold for a full pension will increase from $202,000 to $250,000 for single home owners and $286,500 to $375,000 for couples, the taper rate will double from $1.50 to $3 per fortnight, reversing a 2007 Howard government policy. The maximum asset value will be cut to $823,000 for couples and $547,000 for singles.
The threshold for pensioners without a home increases to $200,000. The government will also close a loophole that sees 48,000 recipients of defined benefit Commonwealth super schemes, receiving up to $120,000 a year, claiming a part pension, saving another $470 million.
Around 3.7 million pensioners will be better off or see no change.
The government is also abandoning its plan to link pensions to inflation instead of average wages.
The changes will be part of next Tuesday’s federal budget and come into effect in January 2017 if backed by the Senate cross-bench.
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