Good news for retirees looking to downsize and move into a retirement community.
Major initiatives in the Federal Budget announced by Josh Frydenberg will provide older Aussies, including self-funded retirees, with more flexibility to add to their superannuation and use the equity in their family home.
“We will allow those aged over 60 to contribute up to $300,000 into their superannuation if they downsize their home, freeing up more housing stock for younger families,” Mr Frydenberg said, changing the limit from over 65, which was announced in the 2017 Budget. The age reduction should come into effect on 1 July, 2022.
Scott Morrison’s government is also changing the Pension Loans Scheme by providing immediate access to lump sums of around $12,000 for singles, and $18,000 for couples, effective from 1 July, 2022. Participants will be allowed to access up to two lump sum advances in any 12 month period, up to a total value of 50 per cent of the maximum annual rate of the Age Pension.
The government’s own reverse mortgage product – the Pension Loans Scheme – was made more flexible in Tuesday’s Budget. Participants will now be able to access up to 26 fortnights’ worth of top-up payments as a lump sum payment. Mr Frydenberg bolstered the scheme with a no negative equity guarantee so borrowers will not have to repay more than the market value of their property.
It will also allow a two-year amnesty for individuals in market-linked, life-expectancy, lifetime pension and annuity products from any provider which were commenced prior to 20 September 2007, including self-managed super funds.
Throughout the amnesty, individuals will be able to exit their existing product and transfer capital and reserves into an accumulation product with a superannuation fund. Individuals can then decide whether they want to stay in that super fund, take a lump sum benefit or move to a new retirement product.
