Assessment of income streams

YOURLifeChoices subscriber, Peter, is still two years from reaching Age Pension age but would like to know if his account based pension will be assessed towards his wife’s Age Pension claim.

Q. Peter

My wife will shortly be 64 and will apply for a part-pension. I won’t reach my pension age of 65 for almost two years and have read numerous times that my superannuation won’t be counted in her pension application until that time.

I have an account based pension through my SMSF and am drawing down the compulsory lower limit. Is my account based pension included in her pension application or is it still treated as exempt from the assets and income test until I reach 65?

A. Provided by Centrelink

Peter, this is quite a complex issue but hopefully the following will assist. Superannuation investments in the accumulation phase held by customers under age pension age are exempt under the income and asset test. Where superannuation assets are used to purchase an income stream, such as an account based pension, the income stream is assessed under the income and asset test.

The current account balance of your account based pension is assessed as an asset under the asset test. The gross annual amount which you have nominated to receive for the current financial year less the deduction amount is assessed as income under the income test. The deduction amount reduces the amount of income assessed under the income test. It reflects the return of capital over the term of the product and is calculated by dividing the purchase price (less any commutations) by the life expectancy factor.

The assessable asset and the assessable income of the account based pension will be included in calculating your wife’s Age Pension. The Centrelink website also contains information about the treatment of income streams.

You should consider making an appointment with a Centrelink Financial Information Services Officer to discuss your individual circumstances. You can do this by calling 13 2300.

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