5th Feb 2013
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Maintaining your Age Pension
Maintaining your Age Pension

YOURLifeChoices member Madeline is due to come into an inheritance, but fears it will all but cancel out her Age Pension. She would like to know if she can minimise the effect.

Q. Madeline
I am due to come into an inheritance shortly and was hoping you could help me. I am 68 and on my own in rather poor health.  The money will probably just about cut out my Age Pension but I hope to keep my health care card.  

I would like to use the money wisely, but do not wish to invest in a super fund, etc, as I was stung before and lost all my retirement savings. I like term deposits or perhaps an account that would keep the principle safe, but pay good interest a few times a year.

I am not terribly good at understanding complicated money matters, but I am a good saver. I have two children with families of their own and I would like to gift some money to them - within Centrelink rules of course.

A. Any inheritance you receive will not in itself affect your Age Pension, but any income it generates may. We cannot give financial advice as we are not licensed to do so and would suggest that you make an appointment ton speak to a Centrelink Financial Information Services officer (FISO), who can give you information about how investments will affect your pension and how deeming on investments work. You can contact them on 13 2300

As a guideline, you can find out how much income you can have before your Age Pension is affected. Remember, even $1 of Age Pension will entitle you to retain your Pensioner Concession Card

I’m sure you’re aware of Centrelink’s gifting limits but just in case you need a reminder, you may wish to read YOURLifeChoices article Insurance payouts and gifting, which covers circumstances similar to your own.  

As well as making an appointment with a Centrelink FISO, you may also wish to contact National Information Centre for Retirement

Investments (NICRI) on 1800 020 110 for further information.





    COMMENTS

    To make a comment, please register or login
    adbob
    5th Feb 2013
    3:09pm
    Sorry Debbie - wrong again.

    It may impact her assets test reduction. If she is already impacted by the assets test it definitely will.

    The amount of incorrect advice on here really is a joke - sadly not a funny one for anyone who relies on it.
    LadyGaga
    5th Feb 2013
    5:12pm
    the inheritance will certainly affect her pension, as I found out to my detriment. The best way to minimise it is to put it into superannuation if you are still eligible to do so.
    biddi
    5th Feb 2013
    5:21pm
    I have a small allocated pension. Recently I inherited $50,000 and my Centrelink payments
    have now dropped by $100 per month. Just can't win.
    Pass the Ductape
    21st May 2013
    11:28am
    C'mon biddi! Don't be mean. Enjoy the fifty grand as best you can and leave what's left in Centrelink's kitty for the rest of us...
    ourjeffie
    6th Feb 2013
    1:59am
    13 2300 is the Centrelink phone number, however I tried all day last Friday to contact them without success - the number was continually engaged. I didn't even get as far as being put in a queue
    Pass the Ductape
    21st May 2013
    11:30am
    Didn't Centrelink put over some spiel lately about how they'd fixed all that waiting?
    FAIL!
    Radish
    6th Feb 2013
    8:22am
    You have to pass the assets test as well as income test and the other posters are correct it certainly will have an impact on the amount of the pension received.
    fredlet02
    8th Feb 2013
    9:51pm
    dont tel em hide it in the shed then just live long enough 2 spend it babe
    biddi
    11th Feb 2013
    2:42pm
    Yep. And when they change the currency, how do you explain all the
    old notes that you'll be popping up?? You're funny :) and you're right!
    Irishwolfhound
    11th Feb 2013
    3:15am
    Check out what your assets are worth, and what your income is. Whichever is the lower amount put your money in there! An allocated pension will be tax free, but make sure it is set up properly. You just cannot win with pensions, you get caught whatever you do with it!
    Irishwolfhound
    11th Feb 2013
    3:15am
    LOL !!! fredlet02 go fredlet!
    mozzie
    29th Aug 2013
    1:23pm
    Hi, just found this site & registered as am hoping I can get some info that I find really hard to work out on the Centrelink site.
    Does anyone know exactly how much in savings a person can have before affecting the age pension. I am due to retire soon, do not own a property, but have a Superannuation & some hard earned savings & all I want is a ball park figure or exactly the amount allowed !!!! help ;0)
    adbob
    29th Aug 2013
    2:15pm
    It depends on whether or not you are single or a couple.

    The Australian age pension system is designed (Menzies changed it to be like this and others since have made it worse) to reduce age pensioners to penury by denying them the pension they previously thought they had earned and paid for (through taxation). Until you reach that point you will be regarded as a criminal and checked up on regularly. When you finally have nothing left Centrelink will think of you as a "client" and start being nice.

    With the exception of your home everything, including the clothes you stand up in, counts as an asset in the assets test. Consequently it is generally best to own your own home if you can afford to. There is also an income test but since returns on investment have fallen the assets test is usually the most severe.

    Income and assets test reductions are calculated separately but only the worst one (for you) is applied. You can find the thresholds easily enough from the centrelink and fahcsia websites. it pays to understand it well since there is a lot of bad advice floating about (including on this site).

    Be very wary of financial advisers. This is their area of speciality but most of them are just out to sign you up for one of their products - they then get commissions - previously secret - nowadays "fully" described in the small print which no normal person is ever going to read. Paid for advice from an industry fund adviser is prolly the safest for simple situations but even there - don't buy a product - don't sign anything on your first date etc.

    The short answer is:

    1: Find out which thresholds apply to you.
    2: Buy (or hold onto) a nice house - (beware - the more it costs the more rates you will pay) so that what's left over doesn't impact your pension entitlement too much.

    How you invest any savings is not easy. Even industry funds tout the great advantages of account based super but half of what they claim is on account of the fact that they are just giving you your own money back.

    It's a very bad situation. Our generation has been ripped off and I don't understand why there's not an enormous amount of anger out there. Pre 2007 it wasn't as bad as this.

    HTH - and don't worry too much- it's only money.
    mozzie
    29th Aug 2013
    2:54pm
    Hi adbob, thank you for your very informed info


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