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The 2018 Budget and How it May Affect Your Retirement

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2018 Budget changes to the pension might mean more cruises for some

Love it or hate it, retirement is something all of us will have to face eventually, and we all hope to cruise along when the time does come.   

For those approaching retirement, it can be a time brimming with excitement and relief, but it may also spark anxiety about having enough funds to last you the rest of your life as well as uncertainty about how you will spend such a large volume of spare time.

But finally hanging up your hat means you will have the time to travel, sleep in, garden, take up the hobby tools or read all those books you’ve been wanting to dive into. If retirement is close for you, hopefully you’ve already reduced your debts and budgeted for a slight change of lifestyle and reduced income. However, due to approaching changes to the age pension announced by the Federal Government as part of this year’s budget, you might want to be prepared and educate yourself about how these changes might affect you.

What to expect

Superannuation and self managed super funds (SMSFs) now play a huge role in many Australians’ retirement plans and income.  Listed below are the proposed changes to Super. 

  • Super accounts with small balances will have more protection from fee erosion and unnecessary insurance premiums.

  • Exit fees will be banned on all super accounts regardless of the balance, meaning you will no longer be penalised for consolidating multiple super accounts.
  • Super account fees will be capped at 3% (or $90 per six months) for accounts with balances under $6,000.
  • Super accounts which have been inactive for more than 13 months and with balances under $6,000 will be automatically transferred to the ATO who will arrange to have balance merged with active accounts which have a balance over $6,000.
  • Automatic insurance cover on super accounts will be banned on inactive accounts or balances under $6000.
  • From July 1, 2019, self-managed super funds (SMSFs) and small APRA funds (SAF - essentially a self-managed super fund with a professional trustee) will be able to increase he number of members from four to six.
  • From 1 July 2019, members aged between 65 and 74 who have super balances below $300,000 will be entitled to make voluntary contributions to their super in the first year that they don’t meet the work test requirements. 

Tax Offsets

  • A new tax offset has been proposed for low and middle income earners which may result in up to $530 per person a year. 

Changes to the Age Pension

  • People receiving the Age Pension or the Veterans’ Affairs Pension will be able to earn up to $300 per fortnight without it affecting the amount of their Age Pension, however the allowances will not apply to income associated with financial or real estate investments.

Changes to Aged Care

  • The Government has proposed an additional 13,500 aged care places and 775 short-term restorative care places to assist older Australians. From July 2018 the Government will also combine the Residential Care and Home Care programs there will be greater flexibility for people when choosing a mix of home care and residential aged care.
  • It has also been proposed that an additional 14,000 high-level home care support packages be introduced over the next four years to assist older Australians with tasks such as cooking and transportation.

What to do:

Having a strategy before these changes are implemented is advised for anyone in retirement (or approaching retirement) as you may be able to limit the impact of the changes on you and your pension payments. Being informed about what will happen enables you to take action so your budgeted standard of living isn’t impacted.

Speak to a financial advisor for strategies specific to your unique financial situation. A Bridges financial planner can help you understand social security rules and give you strategies for gaining your maximum entitlements, so you can maximise your overall retirement income. Why not take advantage of a complimentary, obligation-free appointment with a Bridges financial planner today?

Read the Federal Budget summary to find out how these proposed Budget changes may affect your financial situation. Please be aware these are only proposals and the Budget announcements still need to be passed by both the House of Representatives and the Senate before they become law.

This is general advice only and does not take into account your objectives, financial situation and needs. Before acting on this advice, you should consult a financial planner. In referring members to Bridges, Endeavour Mutual Bank Ltd | ABN 43 087 650 011 | AFSL and Australian Credit Licence Number 238 426 | BSB 802 does not accept responsibility for any acts, omissions or advice of Bridges and its authorised representatives. 


Alison Gallagher is a freelance writer, resourcefulness expert and entrepreneur. She has been featured in various publications including Stellar Magazine, Australian Health and Fitness Magazine, and Cleo Magazine. Alison is particularly passionate about sharing practical tips on how to live simply, sustainably and seasonally.