Case of Ennis and Alma Revisited

In the SWOT Analysis Post we tabled and "Closeted" the image from our 2009 dated website which we have postulated as the REASON that the Executive Government of that time decided they NEEDED to legislate changes to Age Pension Testing, which changes have been Senate Approved for commencement on 1 January 2015.

Here is that image

As we mention in the SWOT Post, the RED Columns were slightly exaggerated because:

" ...we had thought the legislation said to divide the remaining Capital by the revised Life Expectancy every year, whereas we have now fixed that to divide START Capital by START Life Expectancy, so the effect on the Pensioner is not as bad as in the black closet, BUT obviously the Govt has done its new modelling on the proper Rule and STILL considers the result a PROBLEM."

So to set the record straight we have gone back to the [simulated] case from 2009 and reconstructed the very similar Plan B situation, but having now done the fix for the RED Columns [which of course only apply for the Grandfathered Rule].  PLUS of course we can now do a comparison to the New Rule.

In fact the RED columns are probably every bit as bad as those in the Closet, but simply more linear.

Grandfather Rule Testing

The above shows how the Income Testing of Grandfather Rule start to bite at about 70 years of age and get worse all the way to 85.  The total Age Pension is $649,736 ie 93.34% of the Maximum.

New Rule Testing

Under the New Rule the deeming of the Capital almost cuts in for Year #1 and after that keeps diminishing along with the Capital itself.  The total Age Pension is $696,130 ie 100.00% of the Maximum.

So Ennis and Alma are $46,394 BETTER OFF if they simply "sweep" their 2009 Allocated Pension to a new Account Based Pension, meaning they then come under New Rules and escape Grandfather.