How the 2021 Budget affects those in their 60s, 70s and over
Older Australians will benefit from several measures in the Federal Budget aimed at increasing workforce participation and fixing retirement incomes.
Ian Yates, Chief Executive of COTA Australia, welcomed the expansion of superannuation payments to workers earning less than $450 a month, saying the reforms will make the system more equitable and boost women’s retirement savings. Mr Yates also applauded the abolition of the work test, which applied only to Australians aged 67 to 74 and made it needlessly difficult for self-funded retirees to top up their super savings.
One likely popular 2021 budget measure, is lowering the age of the downsizer scheme to 60 that will help older Australians boost their savings by downsizing their home while freeing up housing stock for bigger households. This allows people aged 65 and over to contribute some of the funds from the sale of a home to their superannuation fund – $300,000 for a single person and $300,000 each for a couple.
Also, the repeal of the work test. Currently people aged 67-74 must work at least 40 hours over a 30 day period to contribute voluntary non concessional earnings or savings into their superannuation fund. From July 1, 2022 the work cap will cease. It will, however, continue to apply to personal concessional deductions. The concessional cap currently $25,000 will increase to $27,500 from July 2021.
The addition to the Pension Loan Scheme should also be warmly welcomed, allowing for people to access small lump sum payments of up to $12,000 for singles and $18,000 for couples, which could be of significant assistance to age pensioners facing unexpected costs. The government is allocating $21.2 million to improve uptake of the scheme and will introduce a No Negative Equity Guarantee which will ensure borrowers will not have to repay more than the market value of their property. Eligible people will be able to receive a maximum lump-sum advance payment equal to 50 per cent of the maximum age pension – around $12,385 for singles and $18,670 for couples.
Council on the Ageing (COTA) Australia also welcomed the very substantial package of measures in the Federal Budget that will fire the starting gun on a substantial overhaul of the aged care system over the next five years, supported by additional expenditure of $17.7 Billion over four years. COTA Australia Chief Executive, Ian Yates, welcomed the package as a serious and meaningful response to the Royal Commission and in particular noted the significant investment in accelerating an improved home care system. Included in the announcement are various mechanisms that will improve the transparency and oversight of aged care as well as increase funding to ensure safe and quality aged care services.
Below are some of the measures from the 2021 Budget that may be most relevant to those in their 60s, 70s and older.
Saving for the future: Pre-retirement, 60s
- Those aged over 60 (previously 65) can contribute up to $300,000 into their superannuation if they downsize by selling their family home.
- Extension of small business loan scheme provides access to low-cost finance.
- The Government will remove the current $450 per month minimum income threshold for the superannuation guarantee. This will improve economic security in retirement for around 200,000 women.
- Older Australians will not have to meet a work test before they can make voluntary contributions to superannuation. From 1 July 2022, individuals aged 67 to 74 will no longer be required to meet the work test when making, or receiving, non-concessional superannuation contributions or salary sacrificed contributions.
The Golden Years: Retirees, 70+
- Medicare levy low-income threshold for seniors and pensioners increased from $36,056 to $36,705 for singles and for families from $50,191 to $51,094.
- Participants in the Pension Loans Scheme can access up to two lump sum advances in any 12 month period, up to a total value of 50 per cent of the maximum annual rate of the Age Pension.
- An additional 40,000 home care packages released for senior Australians, with improvements to the quality of care in dementia, diversity, food and nutrition services.
- A new star rating system to provide senior Australians, their families and carers with information to make comparisons on quality and safety performance of aged care providers.
- By 2023, senior Australians who want to remain in their own homes will be able to access a new “support at home” program.
The elderly/those in aged care
- $17.7 billion in funding for measures including an additional 80,000 Home Care Packages over two years;
- Extra funding to ensure compliance;
- Funding for informal carers;
- A $10 daily supplement for aged care residents for care and nutrition.
Other federal budget categories that may be relevant to Over 60s
- National Disability Insurance Scheme: An extra $13.2 billion over four years for the scheme. The Morrison government has said there will need to be reform as NDIS spending may soon dwarf federal spending on Medicare.
- Low and middle income earners: Up to 10 million people will receive another tax offset of up to $1080, or $2160 for couples, in their refunds after the scheme was extended to 2023. For those earning between $48,000 and $90,000.
- Low-income workers: The superannuation guarantee will be expanded to include people earning less than $450 per month.
- People with mental health issues: The government will spend $2.3 billion over four years to boost mental health services, including in-person services and a network of mental health centres, preventative infrastructure and legal support.
- Employee share owners: Workers won’t be taxed on the shares they own in a company when they leave it. Employers will also be allowed to issue up to $30,000 worth of shares a year, up from $5000.
- Domestic violence support services: Support and legal services for women fleeing domestic violence will get a $300 million boost.
- Suicide prevention: Every Australian discharged from hospital after a suicide attempt will be offered at least three months of follow up care. Also a National Suicide Prevention Office will also be established; easier access to psychiatrists, psychologists and GPs through Medicare.
– COTA. Older Australians to benefit from Budget’s employment and super reforms; consultation needed on support payments, retirement income. 11 May 2021. Read more
– COTA. Council on the Ageing welcomes biggest investment in aged care in a generation. 11 May 2021. Read more
– The Australian, What the budget means for you. Read more
– Roger Wilkins, Melbourne Institute professorial fellow, based on data from the Household, Income and Labour Dynamics in Australia survey, 2019.
– Australian Financial Review. Winners and losers from the 2021 budget. 11 May 2021 by Finbar O’Mallon. Read more
– The Australian, The budget winners and losers. 12 May 2021. By Tom Crystal. Read more
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