1 January 2015 Changes


Centrelink have announced that

“From 1 January 2015, the deeming rules that apply to financial investments will be extended to account-based income streams, also known as allocated pensions and account based pensions”.

This means that all financial assets are assessed under the same rules.

So let’s have a look at an extreme example of a Centrelink age pension recipient. For simplicity let's say they only had one asset - the account-based income stream.

All these examples are for illustrative only and the outcome may be different depending on your personal circumstances. Before making a decision about your super you should seek professional advice to determine a retirement plan that is appropriate for you having regard for your own investment objectives, financial situation and needs.

Say the age pensioner had $900,000 balance in their account and had a life expectancy of 20 years when they started this ‘scheme’. Then they could have withdrawn $45,000 per year without that income affecting the Centrelink age pension. That is a gradual reduction of $45,000 per year over the life expectancy. The $900,000 balance would also not have been considered under the deeming rules.

The calculations were a little more complex but the Government provided tables so assist here.

As of 1 January 2015 that will no longer be the case. That is, the $900,000 would be added to the deemed assets for income test consideration. The implication shown in Example B below.

What if you already have an income stream before 1 January 2015? 

The rules will be 'grandfathered'. Income streams started prior to this date will be assessed under the 'old' rules as long as you receive a Centrelink pension, benefit or allowance - unless you change the 'product' or scheme.

What is you don't have an income stream on 1 January 2015?

If you start an income stream after 1 January 2015 the  Centrelink deeming rules will apply and no deductible amount will apply when assessing your income.Below are two examples of the impact of the new rules.

Further information is provided by the Government here

Examples - both examples are for couples where the lowest deeming rates applies to the first $79,600.

Centrelink - new deeming rules - Example A

Current

Centrelink - new deeming rules - Example B

Assessment

Post 1/1/2105

Assessment










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