HomeView 2017 Media ReleasesFuneral bonds improve Age Pension entitlements

Friendly Societies of Australia (FSA) reports increasing sales of Funeral Bonds following the introduction of stricter pension assets tests which took effect on 1 January 2017. There is anecdotal evidence that a factor in the surge in sales in the last quarter leading up to that implementation date and the continuing buoyancy in the current year is that a funeral bond may ameliorate the affects of the asset test on pension entitlements.

Friendly Societies of Australia (FSA) reports increasing sales of Funeral Bonds following the introduction of stricter pension assets tests which took effect on 1 January 2017. There is anecdotal evidence that a factor in the surge in sales in the last quarter leading up to that implementation date and the continuing buoyancy in the current year is that a funeral bond may ameliorate the affects of the asset test on pension entitlements.

Friendly society funeral bonds are designed to be exempt from the assets test, which determines eligibility for the Age Pension, Veteran’s Service Pension or any other means-tested Government income support benefit. This means money can be put aside for future funeral expenses without it impacting pension entitlements. Friendly society funeral bonds are also designed to be exempt from the income test.

“Funeral bonds allow people to put money aside for future funeral expenses. People have peace of mind knowing their needs will be met while saving family members the burden of arranging or paying for their funeral and it won’t affect their eligibility for the pension” said FSA President Matt Walsh.

“Taking out a funeral bond may even increase pension entitlements,” Walsh said.

“Contributions to a funeral bond of up to $12,500 can be exempt. Existing funeral bond holders can also make further contributions up to this limit. The limit only applies to contributions and excludes bond earnings or bonuses. The limit is normally indexed upwards every 1 July, with the next limit review on 1 July 2017.

FSA members that provide funeral bond products are Sureplan Friendly Society, KeyInvest, Foresters Friendly Society, Centuria Life, Austock Life, Australian Friendly Society, and Australian Unity – Lifeplan.

From 1 January 2017 eligibility for the pension has changed. Under the assets test changes, the benefit-reducing taper rate has doubled to $3 from $1.50 for every $1,000 in assets above a person’s relevant threshold.

To be eligible for means-tested Government income support payments, including the Age Pension and Veteran’s Service Pension, both the assets test and income test must be satisfied. Funeral bonds up to the funeral bond allowable limit ($12,500) are designed to meet the social security definition of an ‘exempt funeral investment’ and are not included.in the calculation of assets for the purposes of the assets test but contributions above this limit must be included to determine eligibility for the Government’s income support payments.

For a fact sheet on the changes and information on funeral bonds please visit our website.

Media Release

For more information please contact:

Daniel McDougall, Senior Manager – Media and Communication

02 8035 8444 or 0407 637 541, This e-mail address is being protected from spambots. You need JavaScript enabled to view it

For more on the FSA please visit our website.

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Mick Gibb
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