Could move from retail to an industry fund affect couple’s pension entitlements?
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.
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 firstname.lastname@example.org
* 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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