How much could you lose by having an overseas pension?
YOURLifeChoices members George and Sue are looking ahead to when they qualify for the Age Pension and would like to know how much they may lose by having an overseas pension.
My wife and I were born in the UK and both worked there for approximately 17 years each. We think we will be entitled to a half UK pension of approximately 50 pounds each and my wife is entitled to hers this year as she is 61. We realise we will have to declare it for tax purposes. She does still work here fulltime.
We have both worked here since our arrival in 1983 and so will be entitled to full Age Pensions when we reach the qualifying age. I am 60. Here are our questions.
Our understanding is our UK pensions will reduce our Australian Pensions at a rate of 50 per cent in the dollar e.g. if our UK pension converts to $150 a week then our Australian Age Pension will be reduced $75 a week, is that correct?
Now the big question. We will have a combined lump sum pension of approx. $500k, I am led to believe if we roll it into some sort of allocated pension we can draw down on that and keep some of our Australian pension.
Our intention is to try and maintain a weekly income of $1000, and draw out lump sums for ticket items; holidays, cars, medicals etc. So the question is, how is the Australian Age Pension affected by an allocated pension, assuming we fall inside all the asset tests?
We are just trying to get all in order for the big day but realise rules keep changing.
A. This advice is general only and you will need to confirm your details with Centrelink.
Centrelink will assess your UK pension as income and if this takes you over the income limit, your pension will be reduced by 50 cents for every dollar you exceed the limit. For example, the current limit for couples combined is $268 per fortnight. If your income, including your UK pension, is $2000 per fortnight, the first $268 will not be assessed. The remaining $1732 will reduce your pension by $866 per fortnight. Therefore, based on a couples combined full Age Pension of $1218.80, you would receive $352.80 per fortnight. These figures are for guidance only, and are based on the current limits, which you can view by visiting Income test limits for pensions.
In regards to your superannuation lump sum, how this income is assessed depends on the type of product you choose. You can find out more by visiting Humanservices.gov.au
This is only a guide to what you may be entitled to. You can make an appointment to speak to a Centrelink Financial Information Services Officer on 132300. This is a free service, which you can access at any time, whether a customer of Centrelink or not, and will help you to better understand your entitlements based on your individual financial position.
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