Exempt Funeral Bond Threshold Increases to $16,250 from 1 July 2026

The threshold continues to be indexed annually in line with cost-of-living adjustments.

Understanding the updated threshold

The increase allows new and existing Funeral Bond investors to hold up to $16,250 in contributions that are exempt from Centrelink and Department of Veterans’ Affairs (DVA) assets and income tests.

For advisers, this remains a highly effective strategy to improve client outcomes — converting assessable assets into an exempt investment while setting aside funds for future funeral expenses.

At current settings, this can deliver up to $1,267.50 per annum in additional Age or DVA Pension entitlements for a single investor.

For couples, structure is key. Where each member holds their own Funeral Bond policy, both can contribute up to the threshold, generating up to $2,535 per annum in combined additional pension benefits.

In contrast, a joint policy limits the exemption to a single $16,250 threshold, reducing the total benefit available.

Important considerations

It’s important to distinguish between structures:

• Funeral Bonds: Exempt up to $16,250
• Pre-paid funeral contracts: Generally fully exempt, regardless of value

While both structures provide Centrelink advantages, Funeral Bonds offer flexibility, portability, and independence from a single funeral provider, which may better align with client needs.

Adviser opportunity

The latest indexation increase creates a clear trigger to:

• Revisit existing bonds below the new threshold
• Top up client investments to maximise exempt status
• Identify overlooked opportunities across retiree segments
• Ensure couples are structured correctly to maximise combined outcomes

Even small adjustments can lead to measurable, ongoing pension improvements, reinforcing Funeral Bonds as a practical optimisation tool within retirement planning.