What happens to the pension if your kids pay your mortgage?

Rene is about to retire, still owes money to the bank and wants to know what happens if his kids pay off his debt.

What happens to the pension if your kids pay your mortgage?

Rene is about to retire, still owes money to the bank and wants to know what happens if his kids pay off his debt.


Q. Rene
My wife and I are about to retire in four months. We are still paying off our house. How can our children continue repaying the remaining mortgage without transferring ownership of the house to any of our three children, so that we can still be eligible for the Age Pension?

A. No one-off gift will be assessed by Centrelink as income, regardless of the amount but it must be reasonably predicted that it will not be repeated.

However, if your children continue to pay off the mortgage in regular instalments, then in all likelihood this would not be considered a gift and as such would be subject to the income test.

So, if possible, the children can pay off the remainder of the mortgage in one lump sum and it will not affect your pension payments as it will be treated as a one-off gift.

Any gift given must be declared to Centrelink by the person in receipt and by the person gifting, if they are also in receipt of a benefit payment. Both members of a couple can receive a monetary gift, but it will need to be declared.

Whilst being able to gift a sum of money may be a very kind thing to do, the person receiving, if they are on an Age Pension or other assessable payment, needs to be very clear that what they do with the money may affect their payment. As you are planning to use the money to pay off your mortgage you will be fine.

If you’re unsure about how such a gift will affect your Age Pension, you should discuss your individual circumstances with Human Services by calling 13 2300. You can find out more at HumanServices.gov.au.

Do you have a question regarding the Age Pension or other Centrelink benefits?

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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.


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    Chris B T
    24th Feb 2020
    This doesn't include Continual Payments as is already made by Rene, except someone else pays his on going payments instead of him.
    I'm sure the "Lender doesn't care who pays".
    24th Feb 2020
    But centrelink does.
    Chris B T
    24th Feb 2020
    How would centrelink know, you are maintaining payments.
    Centrelink decides how you spend your money.
    It wouldn't show up anywhere, least of all your account.
    Lenders don't report to Centrelink.
    24th Feb 2020
    Chris B T, a simple credit check would show the mortgage and whether it was up to date with payment. Every payment for at least the past year will show on the crdit record (assuming the mortgage is in Rene's name)
    Chris B T
    24th Feb 2020
    It doesn't show who actually Paid It.
    The lender receives Payment and Relies on Payment but are they Reporting to Centrelink and is Centerlink Enquiring on who is Actually Paying.
    Like I said are you under a Spending Requirement with Centrelink.
    These are Progressive Payments, not a Payout Payment.
    Year on year would show Payment but Who Actually Paid the Payment wouldn't be of any concern to Lender.
    24th Feb 2020
    Why in the world would you tell Centrelink that's your children were paying off your mortgage??? It's a case of if you don't tell them they will never know. And you don't tell anybody else as well. I am usually on Centrelink side with the reporting of all financial transactions. However in this case and similar cases, mum's the word. You're obviously very good parents who brought up your children well and gave them good values, this is your reward. A reward that does not need to be raped by Centrelink and the Federal Government. Have a good day, regards Jacka.
    24th Feb 2020
    Yes, hopefully it is still a free world regarding interactions between you and your children.

    Thanks for the update regarding rules.

    How much more draconian can Centrelink rules get?

    You would think that if your children wanted to pay for some large purchase for their parents that it would be nobody's business but that family's business.

    The pot should not call the kettle black - government's and politicians shady dealings exposed to public scrutiny are matters of greater importance but when exposed, blustering and spin are the order of the day.
    24th Feb 2020
    Rules changed on 1 July 2017 and a gift received on a regular basis from an immediate family member is not treated as income. YLC sometimes need to catch up on stuff.
    Guide to social security law covers this

    24th Feb 2020
    You are buggered! Good luck and enjoy your long trip!
    24th Feb 2020
    Congratulations to Rene! How on earth did he manage to raise children like that?? And where did I go wrong? Mine are just waiting for me to die so they can get their hands on my paltry assets! Well done, that man!!
    Chicky Dee
    3rd Apr 2020
    We have questions about moving to live with my son. How will my pension be affected if I sell my house and gift the money to my 4 sons to help them with their mortgages now instead of them waiting until we die. One of our sons is going to buy a property with duel residents so he can care for us. I have health issues that I can manage. My husband is showing signs of dementia and will need support that I may not be able to give re his care. How do I go about this move and not have it affect our pension.

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