Pauline and Phil receive an age pension, but want to sell a holiday shack they part own. Can they use the funds to top up their super without affecting their pensions?
Q. Pauline and Phil
We both receive an Age Pension and no other income. We are in the process of selling a holiday shack of which we own 50 per cent and expect to receive about $160,000. My question is, are we allowed to deposit this money into our superannuation account? Or would we need to set up an annuity so that our pension would not be affected? We rent and are assessed on the income test. We are well below the assets threshold.
A. There are rules for the types of superannuation contributions that can be made at various ages. For instance, if you have reached 65 years but are not yet 75, you must satisfy the work test, i.e., you must have worked at least 40 hours in 30 consecutive days in a financial year before your super fund can accept your contributions. This includes non-mandated employer contributions, personal contributions, spouse contributions and government co-contributions. This is known as the work test.
As to whether a $160,000 contribution to super would affect Age Pension payments, the assets and income tests come into play.
The income thresholds are $3036 per couple per fortnight and the assets test limits are $837,000 per homeowner couple, and $1,040,000 per non-homeowner couple.
A Centrelink spokesperson said: “Your member should seek advice from a financial adviser on the superannuation contribution rules and on the risks and benefits of commencing an annuity.
“Superannuation pensions and annuities are assessed under the income and assets test, based on the product type and features.
“Once a person reaches Age Pension age, their superannuation is counted in the assets test and in the income test under the deeming rules.
“Taking money out of superannuation doesn’t affect their Age Pension payment, but what they do with the money may. We’ll count it in the income and assets tests if they put it in the bank or use it to buy an income stream such as a superannuation pension or annuity.”
For detailed information, Centrelink has Financial Information Service (FIS) Officers who can provide information about superannuation and annuities, and how they are assessed under the income and assets test. Note though, that an FIS Officer is not a financial adviser and cannot provide personal financial advice.
Find detailed information on income streams here.
If you have a Centrelink question, please send it to [email protected] and we’ll do our best to answer it for you.