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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.

September 2014 Pension Increases

New age pension rates take effect from 20th September 2014 and our calculator has been updated to reflect these changes.

Fortnightly age pension rates have increased by (including the pension supplement and clean energy supplements):

  • $11.50 pf for singles
  • $8.70 pf each for couples

Please refer to the Centrelink website for details on Transitional rates and ‘couples separated due to illness’.

http://www.humanservices.gov.au/customer/services/centrelink/age-pension

Centrelink assessment of income streams

The Government recently passed legislation which will change the way superannuation income streams are assessed for the Age Pension. In 

From 1 January 2015, new account-based superannuation pensions started on or after that date will have new deeming rates applied to these pensions. Those who commenced these pension before this date may be exempt from these changes under 'grandfathering rules'.

Whilst appearing quite straightforward these changes can have significance impact and can be complex.

March 2014 Pension Increases

New age pension rates take effect from 20th March 2014 and our calculator has been updated to reflect these changes.

A single person eligible for the pension is now entitled to an annual age pension - including the pension supplement and clean energy payment - of around $21,913. A whopping $15.70 per fortnight increase.

A couple eligible for the pension is now entitled to an annual age pension - including the pension supplement and clean energy payment - of around $33,036.  …

Moving to the Country

'John' decides to:

  • apply for the age pension and 
  • give up the city life for a more relaxed country lifestyle 

However, he is unsure about selling his city home.

He decides to keep his house in the city and use his super to buy a house in the 'bush'. As the county house become his new home this property is exempt from the age pension assets test. His city property is then become his only asset.

We assist John in obtaining the age pension with the strategy:

Retirement Home vs Aged Care

A client recently needed to make a decision on whether to enter a retirement village or an aged care facility. They needed to sell their home but were worried about the impact on the pension. Especially what impact the excess proceeds from the sale of the family home ($300k) had on the pension.   Considerations included:

1. If the cost of 'entry' to the retirement village was less than $142,500 (Centrelink term this the 'extra allowable amount'), then they would be treated as a non-home owner and may have been able to access higher assets tests and rent assistance etc.

New Pension Rates March 2013

Summary

Pension rates increase - refer Centrelink page

Assets test upper limits increase - refer Centrelink page

Income test upper limits increase - refer Centrelink page

Deeming rates drop - refer below

Centrelink age pension page - refer Centrelink page

Deeming Rates and income thresholds - a refresh…

The age pension decreases once the Centrelink accessed income exceeds a defined level - low threshold. For every dollar earned over this low threshold, the age pension decreases by 50¢, and ceases entirely once it reaches a cut-off threshold.

Brad Pitt works for Centrelink

In the film Killing them Softly, Brad Pitt says ''I like to kill 'em softly, from a distance, not close enough for feelings; don't like feelings, don't want to think about them.'' As with the rest of the film, in the background is a TV reporting a political press-conference that correlates statements such as the above with Government policy.

Centrelink use this same management technique to avoid facing a client. …

Australians applying for pensions overseas - 2 case studies

The following are 2 examples of what happens with age pension applications from two countries – Switzerland and Thailand.

Briefly:

Switzerland

Switzerland has an agreement with Australia that covers age pensions. 

Joe has been living and working there since 1977.

Joe and his wife are entitled to a Swiss pension of $AUD42,000 - $24,000 for Joe and $18,000 for his wife.

Joe lived and worked for 6 years in Australia and he wants to work out if he is entitled to 

The Work Bonus Scheme and SMSF's

There have been a few enquiries of late regarding eligibility of the work bonus scheme ‘against’ working for a self-managed super fund (SMSF).

Under the previous Pensioner Bonus Scheme (PBS), an age pensioner was entitled to a benefit for working beyond the pension age. This did not mean receiving a wage – just working. The age pensioner could have been working for his SMSF to maximise super fund.

Now this PBS scheme has been replaced by the Work Bonus Scheme. …


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