Social Security and Superannuation updates for 2020
CHANGES to social security legislation are going to affect the Age and Disability Support Pensions, the Carer Payment and the Newstart Allowance:
-The Payment Integrity Bill is proposed to cut GST supplements for pensioners that spend more than six months overseas. This would reduce the single full rate Age Pension by $68.90 a fortnight.
-The same bill also proposes to double the waiting period a recently unemployed person must wait to receive Newstart payments, increasing the wait from 13 to 26 weeks, which means six months with no income.
-The Drug Testing Bill currently before the Senate proposes that Newstart recipients be tested for illicit substances in order to receive allowance payments. This Bill is currently looking unlikely to gain enough support from Senators to become legislation.
-The Cashless Welfare Card is set to extend trial sites in the Northern Territory and transition Northern Territorians on income management programs onto the cashless card.
CPSA wrote to the Federal Social Services Minister in October 2019 requesting that the Minister make it categorically clear that Age and Disability Support Pensioners and Carer Payment recipients will not be forced to use a cashless card to access their pension. At the time of writing CPSA is yet to receive a response.
To reduce the costs of administration and the maintenance of several different types of pensions the Widow B Pension and the Wife Pension will stop on 20 March 2020:
-If you receive a Widow B Pension you will transfer to the Age Pension. The only difference is the name of your pension, you will continue to receive the same amount.
-If you are 66 or older and receive the Wife Pension, you will transfer to the Age Pension and your payment will not change.
-If you are a recipient of the Wife Pension, are 65 and under and live in Australia, you will receive the Jobseeker Payment and your payment will remain the same. The Jobseeker Payment will replace the Newstart Allowance. The only difference is the new name, the payment rate will remain the same.
-If you are 65 or younger and you live overseas your Wife Pension payment will stop.
-The Pension Loans Scheme (PLS) interest rate has dropped from 5.25% per annum to 4.5% per annum as of 1 January 2020. If you already have a PLS loan, you don’t need to do anything as the rate will apply to your loan from 1 January.
It wouldn’t be a new year without new superannuation rules, here are the latest changes:
-If you did not use the entire $25,000 pre-tax concessional super contribution cap in the 2018-19 financial year, the unused amount can be contributed this financial year. Say for example, you only contributed $15,000 in 2018-19, this financial year you can contribute $35,000. The only catch is you must have had a total super balance of less than $500,000 as of June 30, 2019.
There are is also a new work test exemption. Previously under the work test someone aged 65 to 74 had to have been employed for 40 hours in any 30-day period to make additional super contributions. Under a new rule, if you met the work test in 2018-19 but are not working in 2019-20 you will still be able to make super contributions.