CSHC changes unlock older pensions

CSHC thresholds pensions

Higher income thresholds for the Commonwealth Seniors Health Card have opened the ability to make changes to older pensions without losing the card.

Changes to the income thresholds for the Commonwealth Seniors Health Card (CSHC) may allow people with pre-2015 pensions to change how those income streams operate without any concerns they may lose access to the card, according to an SMSF specialist.

Heffron Consulting managing director Meg Heffron said the increase in income thresholds from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples freed up pensioners with account-based pensions that pre-date 1 January 2015.

“Remember these pensioners have their account-based pensions entirely excluded from the CSHC income test,” Heffron said in a recent blog post.

“Ever since the rules changed in 2015, anyone eligible for this special deal has focused on not losing it [the CSHC].

“That meant it was very important to leave a pre-2015 pension alone. That restricted what they could do with their pre-2015 pension.

“Perhaps even worse, if they lost the card for some other reason, say their taxable income was particularly high one year and so they exceeded the threshold, they also lost their special treatment forever.”

She noted the loss of the CSHC was detrimental for some retirees who relied on it for access to cheaper prescription medications, bulk billing for medical appointments, refunds of medical costs and, dependent on their location, reductions in electricity, gas, property and water rates and public transport costs.

She added that for many people the new thresholds were so much higher there was less need to take a hands-off approach to their pre-2015 pension.

“It might mean people who would love to do so are free to undertake strategies like ‘recontributions’, wind up their SMSF and transfer their pre-2015 pension accounts to their new retail or industry fund, or set up an SMSF and transfer their pre-2015 pension accounts that are currently in a retail or industry fund,” she said.

“Some may even wish to combine different pension accounts together or run down their pre-2015 pension with additional payments, and leave their post-2015 pensions in place, but have previously chosen not to because of the impact on their CSHC.”

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