5th Nov 2018
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Centrelink Q&A: How will shares affect Age Pension?
Author: Janelle Ward
Will shares affect Age Pension?

Bob is considering selling some shares and wants to know how that will affect his Age Pension payment.

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Q. Bob
I am on a full Age Pension and I am managing quite well, but I own some shares and would like to know the repercussion to the Age Pension if I sell some and take a profit. Will this affect my Age Pension? Also do the dividends I receive affect the Age Pension?

A. Both shares and any money held in a savings account are treated the same by Centrelink and are assessed under the income and assets test.

Under the assets test, the value of the financial asset is assessed and under the income test, the deemed income is counted.

Centrelink considers account-based investments, market-linked investments and some income streams to be financial investments.

Market-linked investments include: managed investments; shares and securities; bonds; notes and debentures; and superannuation if you’re over the Age Pension age.

For the assets test, Centrelink assesses income streams using their current account balance, while for the market-linked investments, it uses not their face value but their net market value – that is, the last trade or sale price of the investment, minus any loan.

When calculating the income from your investments, Centrelink applies the deeming rules. The deeming rules use the gross value of your investments to calculate the amount of deemed income that will be included in the income test.

Centrelink revalues market-linked investments, shares and securities each March and September.

It either:

  • gets the new values from the latest unit prices it has, or
  • asks you for the latest values.

Centrelink says you can ask it to revalue your investments at any time.

If you have a Centrelink question, send it to newsletters@yourlifechoices.com.au and we’ll do our best to answer it, or find someone who can.

Will you be one of the 70 per cent of Australians who receive an Age Pension or will you miss out? The RetirePlanner™ tool has all the information you need.

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    COMMENTS

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    HDRider
    5th Nov 2018
    10:28am
    I actually think the answer you are looking for Bob is: if you take money from shares and use it for a legit purpose you phone them and tell them you cashed em in for whatever and they will then reassess your investments usually in your favor if the purpose was legit. ie needed home repairs etc.
    Old Geezer
    5th Nov 2018
    11:39am
    It will not effect anything.
    Darts44
    5th Nov 2018
    11:52am
    I don't think they answered the question.
    Here is a example:
    I own share in "XXX.AX" , I sale my shares and make a profit of $200000.00, I tell Centrelink about it. What happen to my pension?
    Captain
    5th Nov 2018
    1:14pm
    Darts 44, if you made a profit of $200,000.00 your assets were more than the allowable limit so there would be no pension to affect.
    Jim
    5th Nov 2018
    12:12pm
    The simple answer is no, your shares are assessed as an asset any amount you receive is exactly the same ie it will be assessed as an asset, Centrelink assesses your shares twice a year and automatically adjusts the value of your shares and adjusts your pension accordingly so if you are in receipt of the full pension now you will still be entitled to a full pension after the sale of your shares.
    Darts44
    5th Nov 2018
    12:23pm
    So, I can pocket and spend my profit, and my pension won't be cut off or reduced. Right / wrong?
    Sceptic
    5th Nov 2018
    2:28pm
    If you spend the profit thus reducing your cash assets and if not increasing your non-cash assets, your pension should increase. If your purchase creates a non-cash asset, your pension will be unchanged.
    Greg
    5th Nov 2018
    2:30pm
    Darts44 - forget about it being a profit or loss, it' doesn't matter, it's the value of the shares today that matters. IE: CBA shares are $68.00 today, you have 500 of them = $34,000. Sell the shares today and you get $34,000 into your bank account, so effectively you still have $34,000 in a financial investment, if your pension is worked on your assets they haven't changed, if it's on your income that hasn't changed either as they use the deeming rates on your financial investments.

    Of course you may have made a profit which means capital gains but that has nothing to do with what your pension amount is.

    5th Nov 2018
    3:22pm
    The answer suggests that money in shares and money in a bank account are both deemed for the purposes of income test
    So even if you get 10% returns, the income is only deemed at 1.75% and 3.25% ?????
    Aviatorman
    5th Nov 2018
    9:56pm
    Re- "Centrelink says you can ask it to revalue your investments [shares] at any time". Well last week I visited the local office and was told NO I couldn't. If true it represents a shift in policy. I was a little suspicious that her statement was wrong, as I have had revaluations in the past without any hesitation. In fact they would tell you if it would make a difference or not then let you make the final choice. Appreciate if 'life choices' can confirm please.
    Greg
    5th Nov 2018
    10:49pm
    Of course you can do it at anytime, in fact you are required to do it if there is any material change. I believe it can be done online too which would be the way to go I would think.

    https://www.humanservices.gov.au/individuals/services/centrelink/age-pension/managing-your-payment/change-circumstances


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