Plans for a further reduction in the eligibility age for downsizer contributions from 60 to 55 have been estimated to cost the federal government $20 million over four years, according to the budget papers, which state the change will deliver on its election commitments.
While the reduction in the eligibility age has been flagged since the May election, the budget papers stated: “The measure will have effect from the start of the first quarter after royal assent of the enabling legislation.”
Colonial First State head of technical services Craig Day said the regulations for this change have already been passed by parliament, but the enabling legislation, Treasury Laws Amendment (2022 Measures No 2) Bill 2022, had yet to pass.
“The effectiveness of those regulations are dependent upon the passing of a particular act that has to go through parliament and we’re expecting that will become effective probably on 1 January 2023, so the government has just put something in there where there’s legislation before parliament they still need to enact,” Day told selfmanagedsuper.
The bill is currently before the Senate awaiting a second reading, which if agreed to will require the bill to receive royal assent to take effect.
Along with the age reduction, the government also highlighted it would extend the exemption of home sale proceeds from pension asset testing from 12 months to 24 months.
“This will give pensioners more time to purchase, build or renovate a new home before their pension is affected,” the budget papers stated.
The Social Services and Other Legislation Amendment (Incentivising Pensioners to Downsize) Bill 2022 creating this extension was introduced into parliament on 7 September and is also currently before the Senate awaiting a second reading.
