‘Why was my pension cut?’

Max’s pension has been cut from $574 a fortnight to just $220, and he wants to know why.

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Q. Max
I am on the Age Pension and was receiving $574 dollars a fortnight. My wife has just reached Age Pension age, has now retired and successfully applied for the Age Pension. We now both receive $220 a fortnight which in total is much less than I received before she applied. Should we find out why or is this standard practice? Can you help?

A. Without knowing your exact circumstances, it is difficult to know precisely the reason why you are now receiving less pension.

However, one of the reasons this reduction can occur once your wife has her pension approved relates to the new assessment for you under both the income and assets tests.

While one member of a couple is not of pension age, the older member of the couple may be eligible for a higher rate of pension. This is because any superannuation held in the younger partner’s name is not counted as an asset until they reach Age Pension age.

In this situation, the age pensioner will only have the value of their superannuation counted under the assets test and the net value of the pension they receive, after deducting the purchase price of the pension, under the income test.

The partner who is not of Age Pension age does not have the value of their superannuation counted unless they are receiving a pension.

However, upon retirement, that sum of money will now be included in your combined assets, and deeming will be applied under the income test.

This is my best guess as to why you are now receiving less pension. However, if this does not describe your current financial situation, you should definitely make an appointment to visit a Centrelink Financial Information Services Officer who should be able to explain the reasons behind your changed situation.

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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 the 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 financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Written by Ben

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