Is it possible to top up your pension without losing CSHC?

Fiona has a Commonwealth Seniors Health Card, thanks to her account-based pension being subject to ‘grandfathering’ but is worried she can’t make changes.

Q. Fiona
I have an account-based pension that I have had since July 2014 and while I do not receive an Age Pension, I do have access to a Commonwealth Seniors Health Card (CSHC). This is because my account-based pension is not included in the income means test thanks to the grandfathering provisions in place. However, I would like to top up my pension, but I am worried this will mean that I lose those grandfathering provisions and consequently lose my card. Can you offer any help?

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A. You are correct that you would risk losing your grandfathering provisions on your account-based pension if you make any changes.

This was tested in a recent court case where a person with an account-based pension had rolled back their account to the accumulation phase, merged the roll back amount with the top up amount and then commenced a new account-based pension.

Even though the person still had the same pension provider and retained the same name and account number, his entitlement to the CSHC was reassessed and subsequently cancelled.

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Centrelink justified the cancellation on the basis that it was a new pension and the old pension had ceased once he made changes to it.

In determining his eligibility for the CSHC, deemed income from the new pension was included and he was no longer eligible. The Administrative Appeals Tribunal then upheld this decision.

However, we asked Michael Hallinan from self-managed superannuation site for the best ways to avoid losing your CSHC in your situation.

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His advice is quite simple. Instead of trying to top up your existing account-based pension, you should leave it alone and instead commence a second-account based pension.

This means that grandfathering would continue to be applied to your current account-based pension, meaning that it would continue to be exempt from the income test, while only the smaller amount that you put into the second account would be assessed as income.

Of course, that is assuming the amount you are putting into the second account-based pension is not too much to disqualify you from the CSHC.

Do you have money in a ‘grandfathered’ account? Are you too scared to make changes in case you lose your CSHC? Why not share your thoughts in the comments section below?

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Written by Ben