How is super assessed when applying for the pension?

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Jan is approaching retirement and isn’t sure how her super will be assessed.

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Q. Jan
Is your super balance taken into consideration when you apply for the Age Pension? How much can you have in savings as a couple to receive the Age Pension? Is super riskier than bank savings? We are coming up to retirement and would appreciate some honest advice as we are having difficulty getting an unbiased viewpoint.

A. Once you have reached Age Pension eligibility age, your superannuation is assessed under the income and the asset tests. The balance of your superannuation fund, or the amount used to purchase an income stream is assessed as a financial asset and deemed to earn income.

Your spouse’s 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.

In terms of your savings, you need to pass the assets test to be eligible to claim an Age Pension.

Asset test limits are used to determine whether you qualify for an Age Pension and if so, at which rate it will be paid. Your fortnightly Age Pension payment is reduced by $3 for every $1000 you exceed the asset limit. Once you exceed the limits for a part Age Pension, your Age Pension payment will cease.

You also need to be wary of reducing your assets in order to qualify for an Age Pension, as Centrelink considers this a deprived asset under gifting rules and will assess it as such. The limits for gifting are $10,000 in any financial year, but limited to $30,000 over five years. Deprived assets are assessed for five years.

Asset limits for full Age Pensions are indexed each year on 1 July and the limits for part Age Pensions are indexed in March, July and September of each year. The current asset test limits are listed below.

Centrelink asset test limits for Allowances and full Age Pensions from 1 July 2019

Situation

Homeowners

Non-homeowners

Single

$263,250

$473,750

Couple (combined)

$394,500

$605,000

Illness separated (couple combined)

$387,500

$594,500

One partner eligible (combined assets)

$394,500

$605,000


Centrelink asset test limits for part Age Pensions – effective from 20 March 2019

Situation

Homeowners

Non-homeowners

Single

$572,000

$782,500

Couple (combined)

$860,000

$1,070,500

Illness separated (couple combined)

$1,012,000

$1,222,500

One partner eligible (combined assets)

$860,000

$1,070,500

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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.

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Written by Ben

7 Comments

Total Comments: 7
  1. 0
    0

    Deeming Rates on cash safely deposited in Fixed Term Deposits. Unfair rate of 3% on amounts for a couple over $85K.

  2. 0
    0

    Ben, just one question is the income from your allocated pension ( once you reach pension age) assessed as the actual income you take ie between 4-10% OR the deemed income using the deeming rates as these figures could be worlds apart …..look forward to the answer …………..Cheers

  3. 0
    0

    There is no reality to the way Centrelink assess my income stream. It’s like deeming rates made up for bank interest. Total fabrication. I just don’t trust them at all now. It was easy to deal with Hockey’s stupidity. I just stopped spending. Slammed my wallet shut. It appears there were hundreds of thousands just like me. Stupid Government can have consequences they didn’t plan for.

  4. 0
    0

    The whole system is so complicated & confusing! I have no idea how I’m going to get my head around it all when i come to pension age or retirement (whichever comes first). I’m 58 & still work shift but it is getting harder & harder to cope/manage with what it does to my mental & physical health but seems you sink or swim when it comes to needing Centrelink/government assistance if you are financially illiterate (like myself) & have no clue how to work the system to your advantage. It is very scarey to think of a life with no means to pay the basic bills/living costs some day soon! It is so unfair that it is so complicated & people that don’t understand it are forced into poverty/starvation & get nothing. I’m very worried for my future i can tell you!

  5. 0
    0

    Question for Ben
    If my wife is on the pension, homeowner couple one partner eligible (I am 2yrs younger so not yet eligible) at the full rate payable about $690 fn can I take small irregular lump sums from my super as retired say in $2000 lots to boost my wifes 690fn or am I forced to seek employment nudge nudge wink wink and go on Newstart with lets face it not much chance of employment at all.
    I would rather not have any dealings with Centrelink based on their track record.

    • 0
      0

      I’m no expert but you should google ‘preservation age super’ for some useful info (the preservation age is the age at which you can withdraw from your super and it depends on your birth-year). No use thinking of withdrawing from your super until you reach this age. Also – if you are on the pension when you withdraw lump sums, Centrelink will treat it as income, and it will affect your pension.


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