Market conditions driving adviser-client conversations

Social security measures relating to the age pension are among the most popular regulatory topics for Australia’s financial advisers, based on the questions they are asking BT’s technical team.

Top of mind for advisers is the $4,000 increase to the 'work bonus’ for pensioners, which incentivises Australia’s seniors to earn more income from work; as well as the eligibility rules for making downsizer contributions into super and the impacts on the age pension.

Tim Howard, Technical Consultant, BT, said,“The eligibility rules and concessions for the age pension have evolved over time. Overall, social security measures for senior Australians can be complex, so any updates to the regulations can result in the need for advice.”

The high inflation rate is also resulting in queries from advisers about the expected increases to the transfer balance cap and total superannuation balance threshold.

Financial advisers regularly contact BT’s Technical Services team on technical topics regarding superannuation, tax and social security. The team fields over 2,000 queries from advisers every quarter. The most popular topics raised by advisers in October to December 2022 are below.

1. Work bonus increased to ease of cost of living pressures and labour shortage

Older Australians who are eligible for the age pension can now earn up to $11,800 from working, without reducing their pension. The ‘work bonus’ income bank was previously $7,800 and has been temporarily increased to ease cost of living pressures on seniors, as well as encourage them to rejoin the workforce, to help relieve labour shortages.

Pensioners have up to December 2023 (extended from the original June 2023 deadline) to utilise the additional $4,000 in their income bank.

Mr Howard said: “While the increase to the work bonus income bank is a welcome one for many clients, how it actually works across this current financial year, and the next one, is resulting in queries from advisers. They are seeking clarity on how their clients are impacted individually.”

2. Inflation impacts on indexation

Regular indexation of certain legislated thresholds is designed to ensure the amounts stay in line with inflation. For example, recently, age pension payments were increased.

Indexation also applies to some superannuation thresholds. In January, it is expected to become clearer whether the general transfer balance cap (cap) will increase. Based on current inflation, it will be raised to as high as $1.9m from 1 July 2023, unless legislative changes are introduced.

The cap is the amount of superannuation that can be transferred to tax-free retirement income streams, and is currently at $1.7m.

Indexation of the cap is determined by reference to movements in the consumer price index (CPI). Increases to the cap occur in increments of $100,000. Because of the rapid increase in the level of CPI during 2022, it seems almost certain that there will be a ‘double indexation’ of the general cap (ie, 2 x $100,000).

Mr Howard said: “If you have clients who are planning to start a retirement income stream before 30 June 2023, it is worth considering if this would lead to the best outcome for them. Would they be better off delaying the commencement of the income stream until after 1 July 2023, so they can gain the maximum indexation benefit?”

Related to the cap is the total superannuation balance threshold (TSB). The TSB is used, amongst other things, to determine the level of non-concessional contributions that can be made by a client into super in a particular income year. The TSB threshold is an amount equal to the general transfer balance cap, so it is currently $1.7m but will increase to either $1.8m or, more likely, $1.9m from 1 July 2023.

3. Downsizers and age pension

The bill to reduce the eligibility age for downsizer contributions has now become law, effective from1 January 2023.

Treasury Laws Amendment (2022 Measures No. 2) Act 2022 lowers the age (from 60 to 55 years) from which individuals can make downsizer contributions to their super fund from the proceeds of selling their home.

To be eligible, clients also need to have owned their home for 10 years or more. Downsizer contributions to a maximum of $300,000 do not count towards any of the contribution caps, and can still be made even if a person has a total super balance greater than $1.7m.

The consequences of selling the principal home on eligibility for Centrelink payments should be weighed up carefully, cautions Mr Howard.

“Downsizing can ease cost of living pressures for many Australians: not only does it free up money, the maintenance costs for a smaller home are also usually lower. In addition, the ability to make up to $300,000 in downsizer contributions to super tax-free can boost retirement savings significantly. However, as part of retirement planning, clients who are receiving an age pension, or expecting to down the track, should be made aware of how age pension means testing may be impacted.”

4. Increase to income thresholds for Seniors Health card now law

For the first time in over 20 years, the income thresholds for the Commonwealth Seniors Health Card have been raised (outside of indexation), with the passing of Social Services and Other Legislation Amendment (Lifting the Income Limit for the Commonwealth Seniors Health Card) Bill 2022, which became law on 28 October 2022.

Effective from 4 November2022, the income thresholds for singles increased to $90,000 from $61,284; and for couples, the increase was $144,000, from $98,054.

Eligibility for the Commonwealth Seniors Health Card gives seniors access to valuable concessions, such as cheaper medicine under the Pharmaceutical Benefits Scheme. Additionally, card holders may also receive economic support payments.

5. Federal Budget announcement on increasing childcare assistance

Advisers with clients who have young families are taking into account the substantial increase to the Child Care Subsidy (CCS) rates, applicable from July 2023. CCS rates will increase from 85% to 90% for families with a combined income of less than $80,000. The CCS will reduce by 1% for each additional $5,000 of annual income.

A couple with a combined income of $120,000 would receive a CCS percentage of 82%, and couples with a combined income of $300,000 would receive 46%. Those with a combined income of $530,000 or greater will not be eligible for the CCS.

Mr Howard said: “Although the CCS increase is not effective for another six months, it’s not too early for busy parents to start planning for any adjustments to their household budgets and work commitments in the new year. Any extra support relating to childcare costs would be a welcome reprieve for many.”

Mr Howard added: “Another topic that advisers are raising questions about is the ability to exit retirement income legacy products. This was not addressed in the Federal Budget, and so we are waiting to see if it appears on the Government’s radar. Of course, advisers are also eagerly anticipating the final report from the Quality of Advice review, which was handed to the Government in December and may be made public soon.


This information was prepared by BT, a part of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian Credit Licence 233714 (Westpac) and is current as at 16January2023. The information provided is general information only and it does not constitute any recommendation or advice. It is intended to provide an overview or summary and should not be considered a comprehensive statement on any matter or relied upon as such. Any recommendation or opinion provided does not take into account your personal objectives, financial situation or needs, and you should consider its appropriateness having regard to these factors. Any taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and our interpretation.


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Lisa Parrett
Media Relations, BT
M: 0432 933 796