Social security reforms Changes to the age pension previously announced in the 2009 Budget have now come into effect as follows; Increased pension rates on 20 September 2009 This measure increases the single maximum basic rates of certain social security pensions by $30 per week. Pension supplements This measure provides for the consolidation of certain smaller payments and allowances into one pension supplement payment. The amendments will also provide for an increase to pension payments via the new pension supplement of $10.14 per week for couples (combined) and $2.49 per week for singles. Income test This measure provides for; The increase in the income test taper rate from 40 cents to 50 cents per dollar of income over the allowable free amount. The removal of the additional income test free amount for dependant children from calculations of the amount of a person’s ordinary income free amount; and Transitional provisions to ensure that current entitlements of existing pensioners whose pension payments would be reduced due to the income test changes, will be maintained. Existing pensioners will transition to the new arrangements at the point the new arrangements provide a higher rate of pension. Pension bonus scheme The pension bonus scheme provides a tax-free lump sum payment to individuals who have reached age pension age, continue to work and defer claiming the age pension. From 20 September 2009, the scheme closed to new entrants. However, the scheme will continue to be available to existing members. Work bonus This measure introduces a new Work Bonus, which allows for a certain amount of employment income that is earned or received by a pensioner to be disregarded for the purposes of the income test. The amount that is disregarded is as follows; $250 per fortnight where the person earns more than $500 in the fortnight, and 50% of the person’s total employment income for the fortnight where the person earns less than $500. Confused by the new changes, or want to know more about how the changes affect you? Please contact one of the Morse Financial Services team for an obligation free chat. Written by Ron McCumstie Ron McCumstie is a representative of Morse Financial Services Pty Ltd, AFSL No. 240689, ABN 61 003 485 742. The information contained herein is general in nature and not personal advice. It is based on our understanding of the current taxation and superannuation laws and is current as at 1 July 2009.