New law changing the social security assets and income treatment of new lifetime income streams commenced on 1 July 2019

The social security assets and income tests

Eligibility for the Age Pension is based upon a number of factors and subject to both an assets and an income test (known as the social security means test). The social security means tests are based on a person or couple’s level of assets or income over and above certain allowable thresholds.
Assessable assets above the allowable thresholds will reduce Age Pension eligibility by $3 per fortnight for each $1,000 of assets. Assessable income from investments above the allowable thresholds will generally reduce Age Pension by 50 cents for each dollar of income.
It is important to note that different investments or investment structures (including lifetime income streams) are treated differently under the means tests and can result in different Age Pension eligibility.

The social security means test rules for lifetime income streams

In February of this year the Government passed new laws that changes the means testing rules for certain lifetime retirement income streams (super and non-super lifetime pensions and annuities) commenced on or after 1 July 2019.
These new rules are designed to encourage the use of certain lifetime income streams which feature payments for life, irrespective of how long a person may live and reducing access to capital over life expectancy. These new rules can provide what can be attractive means testing outcomes for investors.
It is important to understand that the new rules only apply to an investment in a lifetime income stream made on or after 1 July 2019. The new rules do not apply to account-based pensions or term income streams (including term annuities). Also, for any lifetime income stream investments made before 1 July 2019 the previous rules (known as the “deduction amount” rules) will continue to apply.

What are the changes under the social security income test?

The new rules will assess 60% pf payments from lifetime income streams under the income test. For example, where a lifetime income pays income of $5,000 p.a., $3,000 p.a. will be assessed under the income test.
This may be more or less than the assessed income derived from alternative investments.

What are the changes under the social security assets test?

The changes to the assets test for lifetime income streams may also generally be seen as attractive and may, for assets test affected clients, improve Age Pension eligibility.
For lifetime income streams that commence on or after 1 July 2019 the new rules will potentially assess:

This assessment may be attractive compared to other investment structures where 100% of any asset is immediately assessable. Where your Age Pension is being reduced because of the assets test, an investment in a lifetime income stream subject to this assessment could immediately improve your Age Pension eligibility.
There are other issues which also need to be considered at the individual client level, before you proceed with this strategy. Some examples are:

We will discuss options with you at your next review.
If you would like a personalised Statement of Advice prepared for you, we will provide a consultancy fee quotation to you before the Statement of Advice is commenced.

Best wishes,
Rohan Gulasekharam
Senior Financial Advisor
Axios Financial Solutions.

Axios Financial Solutions are a team of respected and highly regarded financial planners with offices on St Kilda Rd Melbourne.  Axios helps their clients meet their desired outcomes by providing tailored financial services, strategies, advice and solutions.  You can contact them at or (03) 9869 5555.

Axios Financial Solutions Pty Ltd (ACN 007 299 014), is an Authorised Representative of Charter Financial Planning Ltd, Australian Financial Services Licensee 234665

Please note that the information in this article is of a general nature only and has not taken into consideration your individual circumstances. Should you wish to discuss your personal circumstances please call us on 03 9869 5555 or email

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Melbourne Vic 3004