Home / Individuals / Articles / Budget 2018 - Social Security

The following announcements were made by Treasurer Scott Morrison.

Increase to Pension Work Bonus

Effective date: 1 July 2019

Currently, the Pension Work Bonus allows pensioners to earn $250 per fortnight of employment income without an impact on the pension income test. Under the proposed changes, the amount of employment income that will be disregarded will increase to $300 per fortnight.

Unused amounts of the fortnightly Pension Work Bonus accrue to exempt future earnings from the pension income test. The maximum unused amount that can be accrued will increase from $6,500 to $7,800.

The Pension Work Bonus will now apply to earnings from self-employment. However, a “personal exertion” test will be introduced to ensure the bonus is only available to those in gainful employment.

As the Pension Work Bonus is in addition to the income free area, a single pensioner without any other income can earn up to $468 per fortnight in employment income and receive the maximum age pension, under the pension income test.

Note: If the pension asset test produces a lower pension entitlement then that lower payment will be made.

Eligibility to the Pension Loan Scheme extended

Effective date: 1 July 2019

The scheme is a voluntary reverse mortgage provided by Centrelink and hasn’t been widely used.

Currently, Centrelink part-pensioners can “top-up” their age pension up to a maximum of 100% of the full pension, where they receive a part pension due to the income or asset test, or do not receive an age pension under either the income or assets test (but not both). The amount of “top-up” payments are a secured loan against Australian real estate. The loan must be repaid when the property is sold or the client passes away.

The proposed changes expand the scheme by:
bulletextending eligibility to everyone over age pension age including maximum rate age pensioners (and self-funded retirees) and
bulletincreasing the maximum amount of “top-up” payments from 100% to 150% of the maximum rate of age pension.

Maximum rate age pensioners will be able to increase their income by up to $11,799 (singles) or $17,787 (couples) per year.

There are a number of variables, for example the clients age, which will impact the maximum limit they are entitled to. The restrictions are to ensure that recipients do not have to pay back more than the value of their home. The fortnightly compounding interest rate is 5.25%.

Means testing of pooled lifetime products

Effective date: 1 July 2019

The Government announced that new means test rules will apply to pooled lifetime income streams. Existing pooled lifetime income streams purchased before 1 July 2019 will be grandfathered.

Under the new rules:
bullet60% of all income payments will be assessed as income and
bullet60% of the purchase price will be assessed as an asset until age 84, or a minimum of 5 years. Thereafter, 30% of the purchase price will be assessed as an asset for the rest of the person's life.

The new means-testing rules aim to provide confidence and stability for the development of new income retirement products that can help retirees manage the risk of outliving their income.

Cancellation of DSP for those in prison

 Effective date: 1 January 2019

Recipients of DSP who are in prison will have their payments terminated after 13 weeks of suspension.

Increase to the Newly Arrived Resident’s Waiting Period for new migrants

Effective date: 1 July 2018

The current waiting period before new migrants can apply for allowances and family payments is 104 weeks and was proposed to be increased to 156 weeks. It is now proposed that the waiting period will increase to 208 weeks (i.e. to 4 years).

Comprehensive Income Products for Retirement (CIPR)

Effective date not specified

A retirement income covenant is to be introduced into superannuation legislation that will require trustees of superannuation funds to develop a strategy that would help members achieve their retirement income objectives by including the provision of lifetime income streams.

The Government intends to release a position paper for consultation.

Expansion of Home Care

 Effective date: 1 July 2018

The number of high level home care packages that will be available over the next four years by 14,000. This number is in addition to the 6,000 high level home care packages previously announced. Whilst any increase is an improvement, it may not make much of an impact on the current number of people waiting for a home-care package.

As at 31 December 2017, over 100,000 people were waiting for either a first home care package or an interim package. Of that number, 54,4% (i.e. at least 54,000) people were waiting for a high level home care package (level 4).

Residential aged care funding

 Effective date: 1 July 2018

Increased funding in 2018-19 will provide an additional 13,500 new residential aged care places and 775 short-term restorative care places in 2018-19.

Additional funding of $82.5 million will be provided to support mental health services for aged care residents.

National register of enduring Powers of Attorney

Effective date not specified

The Government will work with the States and Territories to establish a National Register of Enduring Powers of Attorney to assist in protecting older Australians from elder abuse.



Follow the links to read about the sections that are relevant to you and if you have any queries about the impact of these announcements then please don’t hesitate to contact us.

bulletAnalysis for the individual
bulletAnalysis for business
bulletSuperannuation analysis
bulletNot-for-profit sector









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