What happens to your pension when you move into aged care?

George’s mum is moving into aged care and he wants to know what happens to her pension.

Aged care and the Age Pension

George’s mother will move into aged care shortly and he wants to know what will happen to her Age Pension.

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Q. George
I have a question regarding retirement homes/aged care homes. I have an elderly mother who may require an aged-care facility soon. She is a single pensioner receiving the full pensioner rate via Centrelink and has the family home valued at $700,000 and assets to the value of $150,000. What happens to her pension if she moves into aged care? How would she finance the aged-care facility? What happens to her residential home and her assets? What would the weekly costs be for the aged care?

A. The weekly costs for aged care will vary depending on the provider. Most people keep getting the same amount of pension after they move into an aged-care home.

Your mother can ask for her pension to go straight to her aged-care provider. This means Centrelink will pay the pension to her residential aged-care home instead of her. The aged-care provider will then take out their fees and transfer the rest of the money to your mother.

Your mother is required to tell Centrelink within 14 days if she moves into residential aged care or if she sells or rents out her home.

Centrelink will not count your mother’s home in the pension assets test for two years. The two years starts from the date she moves out of her home and into residential care.

After two years in care, Centrelink will count her former home as an asset and her pension may be reduced as a result.


If she decides to earn rental income from her former home, the net rental income counts in the pension income test and her pension may be reduced as a result. 

Are you eligible for an Age Pension? Do you know your rights? The PensionChecker™ tool has all the information you need.

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    Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.





    COMMENTS

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    GeorgeM
    28th Jun 2019
    12:05pm
    Just to note I am a different George.
    "After two years in care, Centrelink will count her former home as an asset and her pension may be reduced as a result.

    If she decides to earn rental income from her former home, the net rental income counts in the pension income test and her pension may be reduced as a result. "

    I don't suppose Politicians have to worry about such rules for getting their pensions? Also, this week we heard of Chris Pyne landing a job which uses his knowledge and contacts of the Ministry he managed in Govt - sound like corruption to me. Besides that, hey guess what - he is also ENTITLED to a big fat pension for life unaffected by any Assets, Income or Couple Combined tests. So new job + Pension.
    Time Morrison acted to cancel these rorts - the "quiet Australians" demand it. Politicians MUST be subject to the same tests as all Australians - no exceptions!
    PatrickRM
    28th Jun 2019
    1:16pm
    I couldn’t agree more George. It’s absolutely scandalous the rorts that politicians can avail themselves. ‘Time for it to stop.
    Cat
    28th Jun 2019
    2:20pm
    Isn't income from investment treated differently than income from work? I would like clarification on that. Income from interest earned from cash investment is not treated the same as work income, so how is income from rent treated? In what way is it assessed against the pension? The article should have stated that otherwise you're still in the dark about that.
    Bazza13
    28th Jun 2019
    2:25pm
    With a house of that value the mother would be expected to fund part of her aged care costs i.e. sell the home It is called an RAD it is100% refundable when she leaves or passes away. The RAD varies from $250000 to $500000+ depending on the facility. Would need to talk to Centre Link & My Aged Care about the rules.
    Cheezil61
    28th Jun 2019
    3:21pm
    Yes i believe this to be orrect also (facility keep the money as a holding deposit (from house sale) invested & get to keep/use the earnings/interest off the investment, unless the person going to Aged Care facility has a spouse who continues to live in the house (or until circumstances change)! I'm told (by Manager at my dad's govt care facility) that the amount is refunded on death of the person in care (& possibly the same if circumstances change).
    Cheezil61
    28th Jun 2019
    3:25pm
    Howver those who have not worked & saved hard all their lives (& are on a pension/don't own their own home) & need such care still get exactly the same care; is this fair? So i wonder if it would be wise to think ahead & sell the family home 5yrs prior to meeding Aged Care Facility & pass this money on to the kids/grandkids/wherever while still working & not have to forfeit it via deeming rules etc??
    Aussie
    27th Aug 2019
    4:08pm
    I will never move to age care place I prefer to live on the street and die there .... may way without been punch and shake and/or treated like shit ..... no thanks My Death My way ... maybe I die overseas while travelling around ..... Happy and Free and treated with respect