Australia’s older citizens will be able to put more money into their superannuation when they downsize, while pensioners will be able to access greater lump sum advances as part of the 2021 Federal Budget.
In the wake of a Royal Commission into Aged Care and a recession that depressed pensioners’ incomes, the Federal Government described the 2021 Budget measures as providing increased flexibility, security and dignity for older Australians.
The Federal Government described its 2021 Budget measures as providing increased flexibility for older Australians.
More from Federal Budget 2021:
Here’s what was in it:
Aged care reform
The big feature of the Budget is aged care reform.
“The Prime Minister called the Royal Commission into Aged Care Quality and Safety,” Frydenberg said in his Budget speech on Tuesday.
“It revealed shocking cases of neglect and abuse.”
The sector has been at the centre of some of Australia’s worst COVID-19 outbreaks, and even before the pandemic, the sector had been marred by claims of widespread neglect and patient abuse.
The Budget contains $17.7 billion over five years in “practical and targeted” funding to improve the system, Frydenberg said.
From 1 July 2022, providers will be required to report care staffing minutes, and from 1 October 2023, residential care facilities will be required to provide an average of 200 care minutes a day. Centres will be required to have a registered nurse on site for at least 16 hours of the day.
Additionally, $6.5 billion will be invested in providing care at home with a goal of providing 80,000 additional Home Care Packages.
The Government will make an additional payment of $10 per aged care resident per day, with Frydenberg describing this as enhancing the “viability and sustainability” of the sector.
The JobTrainer scheme will also receive a funding boost to provide an additional 33,800 training places for aged care workers.
Another $630.2 million will be put towards improving access to high-quality aged care services for Indigenous Australians, Australians with special needs and those in rural and remote regions.
The Government said these reforms will support Australian women in particular, as they make up around two thirds of aged care recipients.
Repealing the work test
The Government will repeal the work test for non-concessional and salary sacrificed superannuation contributions.
As it stands, Australians aged 67 to 74 can only make or receive voluntary contributions if they are working at least 40 hours a month in the relevant financial year.
Removing the test is expected to cost the Government $30 million over the coming four years.
However, those wishing to make personal deductible contributions will still need to meet the work test.
Downsizers score support
Australian retirees looking to downsize will be able to access superannuation benefits sooner.
Currently, Australians can contribute up to $300,000 per person from the proceeds of selling their home into their superannuation, provided they are at least 65 years old.
However, the Government plans to reduce the age requirement to 60.
“This measure will allow more older Australians to consider downsizing to a home that better suits their needs, thereby freeing up the stock of larger homes for younger families,” the Budget reads.
Pension Loans Scheme changes
The Pensions Loans Scheme will be changed to allow participants to access lump sum advances of up to 50 per cent. That means participants could access two lump sums valued at 50 per cent over a 12 month period.
That means a single person could receive lump sum payments of up to $12,385 a year and a couple could earn $18,670.
Or, a couple both aged 70 with a home valued at $700,000 would be able to access their fortnightly $718.10 payments as a lump sum instead.
In that instance, the lump sum would be worth $18,670.60.
Changes to the scheme also include the introduction of a No Negative Equity Guarantee. That means that when it comes time for participants to repay the debt, they will not need to pay more than the market value of their property.
Australians can put more into their superannuation
Previously, Australians could only have $1.6 million in their superannuation before it was taxed at their marginal tax rate.
However, savers will now be able to put an additional $100,000 into their super, taking it to $1.7 million.