Lump-sum withdrawals

Beth wants to know if a lump-sum withdrawal will affect her Age Pension.

Lump sum withdrawals

Beth has been hit with a large insurance bill and will have to withdraw from her savings to cover it, but she wants to know if the lump-sum will affect her Age Pension.

Q. Beth
As a couple, we are on an Age Pension, and to meet our annual combined car/farm and house insurance, I need to draw out some funds from our savings account. I want to take the interest accrued of $4000 dollars, but would like to know if withdrawing this amount will affect our Age Pension?

A. As you are already being deemed on the interest earned on this account, any withdrawal should not affect your Age Pension. Indeed, once you advise Centrelink that your account balance has reduced, you may find that you receive a little extra in your Age Pension payment. However, should you use the money to purchase an asset, such as a car, then this asset would then be included under the asset test.

You can view the current asset test limits here.

You should advise Centrelink of any changes to your financial position as it will need to adjust the deeming of interest accordingly.





    COMMENTS

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    Jaypm55
    24th Oct 2014
    12:25pm
    Is that the same for withdrawing to use for a holiday within the country? I know if you go overseas you do have to let Centrelink know and can only go for a short time. But we want to take our caravan out for a couple of months as wasn't sure how to go about withdrawing from our super and putting it into our access account.
    niemakawa
    24th Oct 2014
    2:26pm
    It will still be classified as an asset, and deemed accordingly. It is merely a transfer from one asset type to another.
    Polly Esther
    24th Oct 2014
    12:44pm
    Pretty sure there is no "Big Brother" to report your everyday movements to, not yet anyway. Just carry on regardless as if nothing untoward is happening, and remember, they'll only know what you tell them. PS be careful how you go, the walls have ears. And if it, you know what, hits the fan I'll deny having said this.
    Star Trekker
    24th Oct 2014
    1:02pm
    Withdrawing the interest will not affect your benefits as it has already been included when deemed. If you withdraw the part of the principle amount that you have previously declared to Centrelink, then tell them as you may get more.
    niemakawa
    24th Oct 2014
    2:24pm
    You have to spend it sometime.
    particolor
    24th Oct 2014
    5:43pm
    STREWTH ?? ..Itemise Your Grocery List and Bills and tell them that too when You contact Centrelink !!
    Pass the Ductape
    24th Oct 2014
    2:34pm
    If someone was to withdraw money from their financial institution and then purchased a car with those same funds - then whilst the car might be considered an asset, the total assets one now owns, is very probably lower. This would come about for instance like this: Say I had $100,000 in savings and I withdrew $30,000 to buy a car - then my bank balance would now only be $70,000. The car, although it was worth $30,000 when purchased, is only classed on it's resale value for Centrelink purposes. This might well be only $20,000 at this point - therefore the total asset value I now hold is only $90,000 ($70,000 + $20,000 = $90,000) and well within the limit of asset holdings one is allowed to have before it affects any benefit!
    pixii
    24th Oct 2014
    5:22pm
    Glad I don't fly with "flying doctor ". Your idea of what "they " know is way off , and if "they" find out from any other sources you will be in "it" , and have to explain and refund , if required , cross check Bank interest, passport activity, tax department,
    MICK
    25th Oct 2014
    9:28am
    A lot harder for the rorters to get away with dishonesty these days.
    Not Senile Yet!
    24th Oct 2014
    9:01pm
    Yep...withdraw your money from your super and Centrelink will find a way to PENALISE you for being selfish!!!!
    No wonder everyone wants out of their Super before they retire!!!!
    No wonder the Government want to stop you from getting out!!!
    Spending your hard earned savings that are in Super and was taxed before you put it their is now considered a CRIME!
    The rules that Govern it only suit the Government .....and now they want to STOP all Super Lump Sum Withdrawals altogether!!!!!
    Rigged against you enjoying your retirement......no wonder everyone is moving it all into SMF as fast as they can!!!!
    Moronic legislation put in place by the Government to prevent you from getting a full pension....the deeming rule is a joke!!!!
    Most people over 50 will never have enough to retire on and the government is making rules do they do not have to pay the Pension in full to the Baby Boomers.....totally rigged system!!!
    MICK
    25th Oct 2014
    9:38am
    A bit of an error there Not Senile. People salary sacrifice. This means that they avoid their marginal rate of tax (49% for some) and pay the lower superannuation rate of 15%. This is a favourite rort whereby the rich pay zilch tax.
    So whilst you are technically right about "being taxed" the reality is that the tax is small.
    Whilst I agree with the latter part of your post we have to realise that governments should not be doling out money like confetti and that those who do not need the pension should not be able to access it no matter how much they want it to improve their retirement lifestyle.
    I lament with your feelings of being screwed.........but how else could a government waste so much money on BS, sending money to the rich and programs which are shells without having pensioners and other Australians contribute.
    Apparently we have a big debt??? The truth is that this government is doing nothing to repay one dollar of that supposed huge debt. Instead it uses the debt to blame Labor whilst running up even more and then blaming Labor again. A game of perverse proportions which does not help pensioners, who are in the firing line for less and less going forward. My prediction from this government if it is re-elected: the reintroduction of Death Duties.....the tax on the next generation!
    genimi
    24th Oct 2014
    10:07pm
    For goodness sake! The woman wants to pay a bill from her bank account, why on earth would anyone think she would be penalised for paying her bills? Sometimes I wonder whether these questions are actually real or made up by the person writing the article.
    Pass the Ductape
    26th Oct 2014
    8:15am
    Hmmmm! Dorothy Dix syndrome perhaps? I've often wondered about that myself.
    Blossom
    10th Mar 2015
    3:29pm
    The part you are using for an insurance account is not an asset.
    If you have already bought the caravan and declared it that part isn't an issue.
    As the holiday money you spend will probably be gradual, as long as it isn't excessive you shouldn't have an issue. Keep you Caravan Park dockets, get receipts for fuel, vehicle servicing, bottled gas and other large expensives just in case Centrelink query it
    ,Get receipts for fuel and other big items just in case Centrelink query how you have spent it


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