Will super fund switch affect the Age Pension?

Could move from retail to an industry fund affect couple’s pension entitlements?

Will super fund switch affect the Age Pension?

Maree* and her husband are concerned that their super fund is not performing as well as many others. However, they fear a switch may have ramifications for their Age Pension. She asks personal finance guru Noel Whittaker for his thoughts.

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Q. Maree
My husband is retired and I am still two years away from retirement age. My husband and I have combined $400,000 in super, we own our own property worth about $300,000 and have about $100,000 in savings. We have no debt. We are classed as asset rich and income poor. My husband receives a part-Age Pension of about $100 per week, supplemented by $300 from his super fund. We are having to break into our savings for any big expenditures such as private health which we wish to keep due to my husband’s health. I am unable to return to the workforce.

We have our super invested with a retail fund, but it has not performed to expectations and the adviser’s fees are high. We would like to move back to an industry fund such as HostPlus, but it has no state office for us to engage with and we are unsure what advice we would be able to get from them via phone.

We have read that this move was detrimental to one pensioner when he lost his part pension as a result of moving super funds, and has not been successful with Centrelink in being re-assessed.

Would we be affected should we move super funds? We don’t want to lose what little we receive.

A. From 1 January 2015, the entire balance of any account-based pension has been subject to deeming. Existing pensioners were allowed to enjoy the benefit of grandfathering, which means they continue to be assessed under the old rules unless they change providers.

The ‘new’ measures affect only pensioners who are assessed under the income test; pensioners assessed under the assets test have no need to worry. From the information provided, it is almost certain you are assessed under the assets test, and there is no reason not to investigate changing providers. Of course, it's important to take further advice to ensure that there are no other detrimental changes if you do switch funds.

Do you have a question you’d like Noel to tackle? Email us at newsletters@yourlifechoices.com.au

* Not her real name

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature, and readers should seek their own professional advice before making any financial decisions.

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    COMMENTS

    To make a comment, please register or login
    gold miner
    24th Jul 2019
    10:34am
    I own my home, have about $100,000 in super and a small parcel of shares. Last year my super fund IRIS for retired people merged with Hesta due to economies of scale. To my shock my age pension was suddenly cut with no explanation. I lodged a complaint with Centrelink immediately and provided evidence from IRIS who warned me switching to another fund could compromise my pension. Acting on this advice I chose to remain with Hesta. A complaint to the Ombudsman resulted in a response from them that my matter with Centrelink's Canberra Complaints is in a queue is awaiting attention. It will soon be 10 months since I lodged my complaint.
    fairplay
    24th Jul 2019
    11:34am
    Gold Miner,would seem you have done nothing wrong and would suggest you approach your Super Fund for advice/help. If they are unable to assist, you could get advice from a competitor fund.It seems you are being unfairly treated by Clink. Tune into 5aa radio station in Adelaide (frequency 1539.... phone 82230000) Leon Byner is the announcer and he has an excellent track record in having these matters resolved very quickly.
    Trust this may assist .....Cheers
    McDaddy
    24th Jul 2019
    1:43pm
    Something is not right, your assets etc are not high enough for Pension to be cut, must be more to it?
    McDaddy
    24th Jul 2019
    1:43pm
    Something is not right, your assets etc are not high enough for Pension to be cut, must be more to it?
    maelcolium
    24th Jul 2019
    2:47pm
    I would cash out of your super fund completely. Even at the highest super fund return published, your fees and the way Clink treat super funds is reducing your income. Better to have it in the bank or low risk shares. Your balance is at the point where it's not worthwhile having savings in super. Oh, and see a decent independent planner to get the right advice - a couple of hours of fees would get you sorted.
    Anonymous
    24th Jul 2019
    3:49pm
    We talked with our super fund earlier this year, gold miner, about making some changes and we were advised against it because of something called grandfathering. We were told that because of our position that legislation that would affect those drawing from super did not apply to us because of the grandfathering which I took to mean that the changes weren't retrospective. Perhaps this is the reason and maybe someone should have made this known to you.
    ozrog
    24th Jul 2019
    4:54pm
    I don't know why people on here are talking to therir super fund about centrelink matters.
    Go talk to centrelink they are the experts not super funds.
    KSS
    24th Jul 2019
    2:38pm
    If someone is considering changing a super account because they want higher returns and then those higher returns are realised, why would you not think that it would affect a pension? The assets would be increasing and therefore you would surely be assumed to be earning more.
    gold miner
    24th Jul 2019
    3:22pm
    I will never cash out mysuper fund as it outperforms bank ineterest and I have most of it invested in growth and high growth funds which i follow. My super is supposed to be 'grandfathered and therefore protected from Centrelink changes however because it was moved to another fund when the old one closed someone in Centrelink has assumed that i chose to do that. That is where the problem lies. Just be careful you do not get caught.
    McDaddy
    24th Jul 2019
    3:39pm
    But even if you lost your grandfathering $100k is not enough to lower your Pension when deemed. There must be something else going on? Income from something else. Part time work?
    McDaddy
    24th Jul 2019
    3:39pm
    But even if you lost your grandfathering $100k is not enough to lower your Pension when deemed. There must be something else going on? Income from something else. Part time work?
    johnp
    24th Jul 2019
    3:50pm
    $100K in super and centrelink cut your pension; that cannot be right surely !!
    All sounds like the typical usual govt and centrelink catch22 or Kafkaesque situation to me !! Is that parcel of shares more significant than stated ??
    Separate question. Could this sort of situation occur if say winding up an SMSF and changing to an industry fund ??
    McDaddy
    24th Jul 2019
    4:04pm
    Yes grandfathering will be lost, but not an issue if you are Asset tested etc
    ozrog
    24th Jul 2019
    4:51pm
    Always best to see a centrelink financial counsler before making any changes. That's what i do.
    gold miner
    24th Jul 2019
    4:55pm
    I have been retired for 13 years. I do not do paid work. My parcel of shares is only worth a few thousand dollars. I suggest people read the Centrelink conditions for superannuation and pensions. because I took out super 13 years ago it is definitley grandfathered . The fact that my old fund closed and arranged with centrelink that if members stayed in the fund it merged with they would not lose their grandfathered entitlements has been ignored in my case. However I am not finisjhed with this matter yet. Will let people know how it all ends.
    McDaddy
    24th Jul 2019
    6:24pm
    Still doesn't add up though. If you lost your grandfathering then your Super balance is deemed. $100k plus a small parcel of shares is not enough to pay a reduced pension.
    Bazza
    24th Jul 2019
    5:38pm
    On a totally different matter, does anyone know if changing a super fund will see me lose my Commonwealth Seniors Health Card? I am hearing mixed messages and maybe someone can provide some info. I am aware that this is not the subject matter that the lead article is but there are similarities. Thank you.

    Bazza
    Bazza
    24th Jul 2019
    5:38pm
    On a totally different matter, does anyone know if changing a super fund will see me lose my Commonwealth Seniors Health Card? I am hearing mixed messages and maybe someone can provide some info. I am aware that this is not the subject matter that the lead article is but there are similarities. Thank you.

    Bazza
    McDaddy
    24th Jul 2019
    6:26pm
    Is your current Superannuation an Income Stream? If yes, is it grandfathered?
    ozrog
    24th Jul 2019
    10:31pm
    Why not call the experts instead if guessing.
    Call or arrange to see a centrelink financial counsler.
    Bazza
    24th Jul 2019
    7:32pm
    Thank you McDaddy.....yes my super is in the income stream mode so your comment is a sigh of relief.As someone who is 69 and apart from the CSHC, I receive no other Govt benefits.Every bit counts even though its small.Best wishes
    Bazza


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