Should his wife’s super be assessed as an asset?

Bob is confused about the status of his wife’s super balance.

Elderly couple walk through a maze of money problems

Bob is confused by the information on the status of his wife’s super balance. Is it an asset or not? Centrelink appears to have counted it as one, but Bob’s not sure that this is correct.

Q. Bob
I am confused by the different advice online from Centrelink and other sources.

I am 70 and my wife is 59. She has a personal super fund with a balance of approximately $500,000.

I read on the YourLifeChoices website:

“If you have a spouse, their super is assessed under the income and asset tests only once they have reached Age Pension eligibility age or commence the pension phase – where the super fund pays an income stream or pension”.

But Centrelink seems to have counted this as an asset when deciding on my eligibility for an Age Pension. Is their assessment correct?

A. If your wife is under Age Pension age and is not receiving an income from her superannuation, then generally it shouldn’t be assessed as an asset. See the text below from Centrelink website which confirms.

‘Treatment of superannuation and rollover investments

If you are under age pension age, your superannuation investments are usually disregarded for income and assets test purposes. When you or your partner reach age pension age, whether you receive Age Pension or another payment, superannuation investments are:

  • included as assets under the assets test, and
  • regarded as financial investments. They are added to the value of other financial investments and all financial investments are deemed to calculate income.

We will use the balance from your latest member statement to determine the asset value of your superannuation and then use this value in working out the amount of income to be deemed for this investment.

If you have reached age pension age and your partner has not, your superannuation will be assessable however your partner’s superannuation will not be assessable until they reach age pension age.’

As I am not fully aware of your circumstances, you should query with Centrelink direct why your wife’s superannuation is being counted towards your Age Pension eligibility.

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    COMMENTS

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    Fredklaus
    30th Jan 2017
    10:30am
    you can't eat something that can't be transferred into cash,be it super, furniture, investments that can't be sold,only the super rich can afford to employ experts to manipulate by using trusts and havens and company structures
    TREBOR
    30th Jan 2017
    11:56pm
    That is what I've been saying for a very long time now.

    All through life these days, in order to establish the 'independence' of women on one hand, and then permit the demand within society for The Mandatory Dual Income Family as the yardstick by which you can purchase a home or whatever, the Guv/Centrelink will bend over backwards to support that.

    The moment, however, Fred/Freda Nurks needs to get on some Centrelink payment for any reason, suddenly his/her spouse's income etc is considered in the equation.

    When that asset does not send any income to the family unit - it has no value as an income-producing asset - and should rightly be excluded.

    The same applies in retirement.... an asset such as a Windbag or a boat costs money - it does not return money (unless you count the odd fish on the table), and thus is not an asset for consideration.

    Once again - the Good Colonel C'Link WILL demand that you accept a reduction in pension if you should sell your Windbag and boat, and have some cash in the bank.

    So what it comes down to is The Good Colonel wants it both ways - he wants to reduce your pension for having that Windbag and boat, and then sting you again when you no longer have that Windbag and boat.

    Good work if you can make the rules to suit yourself.
    East of Toowoomba
    30th Jan 2017
    12:12pm
    Her SUPER balance might be included if she's taken early retirement and has drawn down her SUPER as either a lump sum or as an income stream.
    KSS
    30th Jan 2017
    12:30pm
    Or as a part of a transition to retirement plan?

    30th Jan 2017
    1:08pm
    Even after retirement age my super transferred to a income stream account is counted as an asset
    Rosret
    30th Jan 2017
    2:49pm
    I am a tad confused here. She can access her superannuation if she is retired. She doesn't have to reach pension age.
    They won't receive any government top ups until she is 65 though.
    Does the 70 year old man have super or does he want to qualify for the pension?
    If he wants a pension then he doesn't qualify for any share because he is married to someone with a super portfolio who is under 65.
    If she is working then she still has to support her 70 year old partner if he has no super.
    She is in the old one income scenario. She is the breadwinner and his age is irrelevant.
    Have I interpreted this correctly?
    john
    30th Jan 2017
    9:12pm
    Sounds like me , not at 70 yet , a few years off that but not many. But I'm still confused.
    And have been told I can re apply , won't that be fun. All that paperwork again. And I've been assessed at the moment on a illegibility test over the phone at $80 dollars approx a fortnight, and a CSHC.
    But my wife has to report her income, every fortnight if we get the 80 dollars a fortnight and the CSHC granted.
    So she is part time if she gets a couple more hours here and there , then the $80 if I get it, will be $80 or less depending. What a laugh. Really my wife can get a relief day here and there and that puts us on occasion out of the loop. If I get a CSHC does that mean that I lose that every time my wife goes over her pay amount and reports it and the $80 dollars a fortnight disappears? Is it worth even bothering, I think the government wants you to give up!
    This is my pension, I'm after, not hers , yes she has a super fund , its hers, not mine ,of course I will benefit from it as she has mine but she can't retire until after she's 66, its hilarious isn't it , but not funny.
    No we are not wealthy far from it, and yes even if Old Geezer gets off his horse , I believe for the decades of work I did, I have earned from my taxes a pension, of some description without having to jump through hoops.
    Also I paid for my employers defined benefit payment I get with over 30 years of work for one business.
    In the early seventies my father retired on a pension paid fortnightly after many years working for a government entity, he had paid money into this, all his working life, along with taxes, he also received an old age pension from the Federal Govt.
    Whats changed? Because borderline living within your means I suspect has many hundreds of thousands of people retired who are not given what they deserve. Roll along the next election and hopefully Turnbull and Shorten will be removed forever. Because they have no idea!
    Remember there was a saving set up for the very fact of paying out pensions to all, where has that money been moved to. Consolidated revenue, for "Other things" it seems they've abandoned the original reason for having this fund set up , many years ago. Who lost it that it needed to be bled off over the last couple of decades????? Any body know?
    Rae
    31st Jan 2017
    7:42am
    Yes John there are some very unfair aspects to the changes to defined benefits.

    Firstly the contributions were all fully taxed but now instead of real amounts of non concessional being used the government "deems " the amount. In other words just makes it up. There was no compensation offered for the lost tax concessions or the 9% guarantee that was never paid to these workers.

    The 16X they deem the pension to be worth is around three times what it actually was worth. Not that that matters as you have to hand over the money to get the pension so don't have any lump sum left and cannot change that anyway.

    Yet salary rises were denied workers on the grounds that they would get a bit of a government part pension and card and that has been betrayed.

    However. If the wife retires but does not draw down her pension until pension age but leaves it in accumulation funds then that 70 year old can get the full pension until she reaches 67 or 70 whatever as it keeps changing.

    Even with the new changes multi millionaires can leave funds in accumulation funds only paying 15% tax on earnings indefinitely and drawing down funds from it as desired and allowable.

    30th Jan 2017
    3:02pm
    I don't think that there is sufficient information given here for me to make an informed comment. Is the wife still working? Has she transferred her super into an income stream?
    Radish
    30th Jan 2017
    3:09pm
    I cannot see why it would not be classed as an asset.
    Old Geezer
    30th Jan 2017
    3:50pm
    Super in accumulation mode is not classified as an asset until you reach pension age. If you are on a disability pension you can have heaps in super which is not counted if you are below pension age. Some people lose their disability pension when they reach pension age.
    Old Geezer
    30th Jan 2017
    3:49pm
    If her super stays in accumulation mode and she is below pension age it is not counted. This strategy is used a lot where one partner is a lot older than the other one.
    almost a grey hair
    30th Jan 2017
    8:47pm
    yeh spot on This information id freely available in the public domain--websites --news papers --tv --books all you have to do is read it and act before you sit down in a centrelink office.Arm yourselves with knowledge
    Motiv8
    30th Jan 2017
    7:04pm
    Hi
    If your wife has not retired, is salary sacrificing a significant proportion of her salary into super (now significantly capped), and drawing an income from a transition to retirement fund to replace that income, the salary sacrificed is considered voluntarily foregone income, and the income assessed is the gross amount. This would happen also if her salary exceeded the minimum income threshold before a household qualified to receive a benefit via the retired partner. In this way, the household is considered an economic unit independent of the need for government support. Interesting is that the new super changes work on individual super accounts, not on household income derived from dual super income householders. Eg, a household of dual income stream holders of separate super accounts would be able to earn proceeds from 3.2 m before tax kicked in, whereas a household of one incomestream holder supporting two would be tax penalised after their super asset principal reached 1.6 million. A bit inconsistent policy-wise.
    Rae
    31st Jan 2017
    7:49am
    Anyone on an income that allows accumulation of 1.6 mil can afford independent accounting and super advice surely. The median wage earner will save around $240 000 over 40 years within super so very few will ever have the worry of having to deal with 1.6 mil. What a fabulous problem it would be.
    Sallad
    30th Jan 2017
    7:15pm
    If her Super is in Pension (income stream) mode ie. Allocated pension/ ac based pension / TTR (transition to retirement income stream) then her Super is assessable in determining Bob's Age Pension entitlement. There is nothing to stop her rolling it back into "Accumulation" mode when it ceases to be 'assessable' under Centrelink rules.
    Sallad
    30th Jan 2017
    7:25pm
    Further to my earlier post if Bob's wife's super IS in Accumulation mode and appears to be assessed (counted) then it's possible that a CL assessor has 'coded' it incorrectly. All Bob needs to do is query the assessment requesting it be "reviewed ". It's obvious that a coding error has occurred & is quite easily fixed.
    almost a grey hair
    30th Jan 2017
    8:42pm
    Once again the writer has not provided enough informationto provide the correct answer. He has not stated wheether the "super " is still in an accumulation account whereby it would not be included. However if she has purchased an Accumulated Benefit Pension from which she receives an income at specific intervals then that income would be assessed and his pension would be adjusted accordingly. This is another case of being a little bit ignorant of the rules and a visit to a financial advisor would have helped. Just think of the money you have saved by not doing so.Its going to now cost you a lot more in lost pension. Oldies they're all the same don,t want to spend anything and some nice person will always help out. NOT
    john
    30th Jan 2017
    8:45pm
    Having had a long long conversation with centrelink the other day, I can tell you your wifes super is definitely assesed as an asset.
    Like it or not.
    If the girl on the call centre is right and I guess she is, thats it as far as I know.
    But I'm wondering if any one knows , this centrelink set up is so confusing and discouraging, that it feels like its rigged to have you give up.
    Sallad
    30th Jan 2017
    9:20pm
    Sadly Centrelink is very good at only 2 things ..... and they are the best in the world in this respect:
    1/ Losing things and 2/ Making mistakes.
    As evidenced by the recent overpayment debacle several untrained or poorly trained staff are taken on board. Medicare staff are being forced to field Age Pension enquiries WITHOUT proper training.
    My strong advice to Bob is to APPEAL the decision. The case will then go before an ARO (Authorised Review Officer). They are quite experienced and knowledgeable when it comes to Social Security Rules.
    As said before, if Bob's wife is UNDER age pension age and has her SUPER in ACCUMULATION phase ....... it is NOT assessable in determining Bob's pension rate.

    See: http://guides.dss.gov.au/guide-social-security-law/4/8/2/40
    And: http://guides.dss.gov.au/guide-social-security-law/4/8/2/10
    Please note that the Guide to Social Security Law is not very user friendly especially to the Layman.
    Motiv8
    30th Jan 2017
    9:27pm
    However her income is.
    Old Geezer
    30th Jan 2017
    10:36pm
    She could have no income. It is not usual for one partner not yet of pension age to have their super in accumulation mode and have added the maximum allowed so that they get the OAP when the older partner is of pension age. It is a strategy used by many financial planners.

    It gets very interesting when a person of pension age is still married to his wife but now has a younger partner.
    Rae
    31st Jan 2017
    7:57am
    Yes OG and Bob really needs to see that planner and get things sorted out properly. It is allowable that a couple retire, the younger wife takes a lump sum under allowable limits, the husband, of pension age, gets a full oAP until she hits pension age. Why wouldn't you do this if you can. I do believe the older person will get to keep that card which is more than most of us promised it gets. The system is blatantly unfair and discriminates. Not that anyone cares.
    whatsupdok
    30th Jan 2017
    8:55pm
    I'm on the aged pension, if I withdraw my super is it counted as income?
    Sallad
    30th Jan 2017
    9:29pm
    Short answer NO.
    What they will ask you is what you have done with the money.
    If spent on yourself (or your spouse) ....no problems.
    If spent on someone else it will be treated as a gift (GIFTING rules come into play.
    If retained in the bank .... it's still assessed as an asset and will be subject to the deeming rules.
    In most cases reduction in assets COULD result in an increase in your pension rate IF you receiving a part pension.
    Rae
    31st Jan 2017
    8:02am
    It is only classified as income when withdrawn if it is defined benefit pension money. It is not taxed but the percentage of it that is non concessional is now deemed to only be 10% regardless of the real amounts involved.

    I hope the super funds are careful because if taxation of pensions ever comes back then the real amounts will need to be calculated again correctly otherwise double taxation will occur.

    The government has literally turned the super/ centrelink rules into a dog's breakfast.
    Motiv8
    30th Jan 2017
    9:05pm
    i've found a very good source for super/pension advice is the Trish Power website, always updated after major policy changes, and good tables to illustrate.
    john
    30th Jan 2017
    9:17pm
    I think the proof is in the pudding, the government(s) over time have fiddled with super rules and created a monster with centrelink that it is easy to see why so many people are so confused, tell me anyone who thinks that the governments present and past have ever done anything to simplify the system.
    With out a doubt... NO!
    Motiv8
    30th Jan 2017
    9:24pm
    The system is inequitable even on paper I WILL lobby.
    Old Geezer
    30th Jan 2017
    10:38pm
    The super just like the OAP system is full of loopholes where people can rearrange their affairs for maximum welfare.

    Let's face it people have had too good for too long and the party must be nearly over.
    TREBOR
    31st Jan 2017
    12:01am
    Which people exactly are those, OG?

    Does that include politicians, public servant and those with the wherewithal to 'arrange their financial affairs to reduce their liability' - or just the peasants on some sort of Earned Pension?

    When IS the party over? When does the 'age of entitlement' end FOR ALL?

    This country can't afford ANY of it any more.... except that it can afford to pay for Social Security that has been paid for in advance.

    Time to pay the rent or get out......
    Rae
    31st Jan 2017
    8:09am
    All the people I know that are using the rules to gain government welfare have hundreds of thousands in accumulation accounts OG and that is perfectly legal. If it looks and acts like a mess it usually is a mess.

    My best friends got the OAP for several years and then when she hit aged pension age they drew down the $80 000 from super that they were always going to use.

    In fact I know quite a few couples using this strategy. It gets them $32 000 extra tax funds for a couple of years and the card that is so highly valued.

    Fine for them and legal but I couldn't do it and my income is nothing like $80 000 a year.

    I knew as soon as the LNP muttered "fair" that it definitely wouldn't be.
    Old Geezer
    31st Jan 2017
    9:28am
    Trebour there are lots of people who do this. Many of my own extended family use this strategy. Some people also had rental properties in the younger partner's name so that they get the tax write offs to keep their income low. That's why they now want the gross rental income not the net rental income from rental properties.

    Before the days they limited how much you could put into super. A couple I know had 2 kids. He had a government job and she had a part time income. He put everything he could into his government super and then sacrificed the rest into his own SMSF fund. He had little income and he paid no tax but his super funds did pay the 15%. He saved thousands. Because their income was low as a couple they got maximum family tax benefits and a health care card. Which gave then more than enough to live on.

    There are just so many loopholes in the welfare and tax systems.

    How many parents invest their kids money in their own name so that their kids can get welfare? This is a well known strategy.
    Not Senile Yet!
    30th Jan 2017
    10:55pm
    Dear John
    What has changed is in fact quite simple...
    During the 90's or thereabout...exact date buried in Parliamentary Documents....when Compulsory Super was introduced....maybe before or maybe after....Our Government decided to Spend the Billion put aside for the Aged Pension of the future!
    The Administration of same had a Loophole.....when set up it was believed the neither Party...LABOR or LNP.....would ever grant the other acces to the Retirement Funds held to pay/substitute future aged Pensions for what we are now labelled.....the baby boomers!
    So what happened was the GREATEST LEGAL THEFT of tax held by BOTH LABOR & LNP agreeing to access and Close the Fund while at the same time implementing the Compulsory Super Scheme!
    The Country was in a Mini-Recession at the time....so they BOTH agreed....which made it Legal....to access and spend the Money on job creation schemes!
    You will not be Surprised to Learn that the biggest of the job creation schemes was yo Build a NEW PARLIAMENT HOUSE IN CANBERRA!
    So the Carrot for LABOR.....Who were in Opposition.....was a Brand Spanking New .....Workplace!
    Because they were so busy flogging how great the New Compulsory Super Scheme was......no one saw what was going on behind the scenes!
    I have no doubt none of the MP'S at the time really wanted us to know either!
    To this day....you cannot get a straight answer on the Subject whatsoever!
    I can assure you that is was Legal....however....it was also the biggest Con by any Parliament in the Western Hemisphere and Morally Corrupt!
    As the Fund no longer exists.....it would have covered 1/2 of the Baby Boomers Pensions.....they now have to Fund Aged Pensions from General Tax Revenue!
    Of course they now plead poor...because they spent the money in the Cookie Jar!
    From that time onwards....Both Parties....have been Deceptive about that whole period.....Ostriches is the word!
    No one has ever received a proper explanation regarding how much went where.....not even a Final Costing for the New Parliament!.....which by the way is owned....as it has been paid for in Full!
    After that time...they knew they would be unable to pay for all the Baby Boomers Aged Pensions.....so both Parties set about devising the Assets Test to minimise the cost of providing Aged Pensions!
    It is a Deliberate ploy by Government to use Propaganda to sing aloud ......that they are Broke!
    Through changes to the Means Test...by stealth.. .they managed to minimise what they have to pay!
    Compulsory Super was initially designed to be Tax Free!
    They soon realised that was impossible ...so they changed that by stealth as well!
    So here we are 2017...20yrs later....and they are still at it!
    Labelling Aged Pensions as WELFARE....Which it is not.... never was....and was never meant to be!
    The Original Legislation doe actually use the Word.....Entitled.....when referring to the Aged Pension!
    It was a Separate Department...run separstely from all other Welfare Recipients!
    They changed that by Stealth as well....combiining it with Welfare under Centrelink....to save on Admin Costs!
    Remember Welfare was only ever Unemployment Benefits....Widows Allowance....Single Mothers' Benefit...and Disability Benefit!
    All re-Labelled under changes to now be Pensions...except Unemployment Benefits!
    Change by Stealth.......re-labelling and promoted as Pensions....then putting them all together under the guise of Admin Savings...then remarketed as Centrelink Controlled under One Umbrella Administration and ONE GOVT DEPARTMENT!
    By Stealth Age Pensions were amalgamated into Welfare!
    Perfect fiddle...that then allowed further modification that allowed further adjustments/cuts.....because Aged Pensions were no longer an Entitlement....they were now Welfare!
    Sneaky is what one could claim it....Deliberate Propaganda and Moral Corruption is what Baby Boomers call it!
    But the Real Bone of Contention is Right there in the facts...The LNP could not achieve this without the LABOR PARTIES Agreement and they have been complicent in agreeing to the changes!
    In my POV....It is one of Austealian Politics greatest Moral Corruptions....and it continues as they Attack the Aged Pensioners with a Vengeance to minimise their Expenditure and remove the Entitlement Factor/Mentality that was always part of the Aged Pensioners Legislation!
    ALL MP'S ARE QUIET ABOUT THIS SUBJECT...SO QUIET THAT THE WORD CONSPIRACY.....IS GROWING AMONGST ALL THE BABY BOOMERS THAT ARE BEING ATTACKED BY USING AGE DISCRIMINATION.....which the Govt has also given itself an Exemption from !
    you work it out yourself....is it a Condpiracy to cover up the Billions they Legally Stole/Mis-Used???
    Either way....Both Labor & LNP....do not deserve any support by the Baby Boomers whatsoever....they have deliberately screwed us over.....by changing the Intent of the Aged Pensioners Legislation!
    I could never Vote for ether...ever again!
    TREBOR
    31st Jan 2017
    12:03am
    Brilliant expose`, NYS. Take two jelly beans.
    TREBOR
    30th Jan 2017
    11:48pm
    Has Centrelink got it wrong.

    Yes - next question...... yes - that gorgeous redhead from the Trebor Times?.... I don't have the time available right now to respond in full - check with my admin and organise a meet later tonight... I'll need dinner and some sleep then.

    Oh - Miz Petty Rottweilen from the Feminist Advocate.... no - I stand firm in my position that no elected representative should use his or her position for any gain - least of all sexual favours....next question....
    Green frogs
    1st Feb 2017
    7:37am
    There seems to be lots of hype about eating healthy and getting active doing things. Wonderful I'm all for it, I have always eaten healthy and worked hard now I'm retired on the pension and find the money doesn't go far enough to join a yoga or tai chi class or swimming at the local pool at around $15 per visit the most I could afford is 1 class per week. It really needs to be done daily .
    What if the government included some of these for free ? it just may keep some retirees away from the pokies and get some life happening