Week 9 - Social Security

Question 1

What is the main purpose of social security?

Answer 1

Provide minimum standard of living and allow for fairness & opportunity for citizens

Question 2

what are the aims of current policy trends?

Answer 2

1. encourages self reliance
2. Support old people with insufficient retirement funds
3. Help old people stay at home rather than hospital

Question 3

How is the Age Pension indexed?

Answer 3

indexed twice a year against:

1. CPI
2. Pensioners and beneficiary living cost index (PDLCI)
3. Male total average weekly earning (MTAWE)

Question 4

What are the eligibility requirements of the Age Pension?

Answer 4

1. Must reach age pension age of 67
2. Must be an Australian resident for 10 years
3. “means test” of income and assets

Question 5

What is the pension supplement

Answer 5

Extra income aimed to aid with bills and day-to-day expenses

Question 6

What is the energy supplement?

Answer 6

Ongoing payment to aid with impact of carbon prices

*Only available to people on age pension before Sep 2016

Question 7

What assets are excluded from the assets means test?

Answer 7

1. Principle home
2. NDIS payments

Question 8

What are the three main ways to increase entitlements under the asset means test?

Answer 8

1. Gifting
2. Super-splitting
3. Renovating the house

Question 9

Explain the rules of gifting

Answer 9

Assets given away within 5 years of age pension age counted in test

30,000 worth of assets over the 5 years before age pension age are not counted

Question 10

Explain “super-splitting”

Answer 10

Transferring superannuation balances to younger spouse to reduce assessed amount

*maximum of 300k under “bring it forward” provisions

Question 11

Explain how house renovation lowers asset test

Answer 11

By renovating the house, cash (assessable asset) is transferred into principle home (non-assessable).

Question 12

What is the rate of reduction under the assets means test?

Answer 12

$3 reduction per $1000 over applicable threshold

Question 13

What is included in the income means test?

Answer 13

1. Deemed income (financial investments)
2. Gross employment income

Question 14

What items are excluded from deemed income?

Answer 14

1. Principle home & contents
2. Vehicles
3. Antiques & collections

Question 15

What are the incentives for age pensioners to work after receiving the pension?

Answer 15

$300 a fortnight disregarded from the income test

unused amount accrue until 7800 max

Question 16

What is the pension reduction rate of the income test?

Answer 16

50 cents for every dollar over threshold

thresholds
singles - 190
couple - 336
ill couples = treated as singles

Question 17

How is the final age pension decided after both tests are finished?

Answer 17

Lowest of the two tests = age pension amount