When does super count as an asset?

Anne read Centrelink chief Hank Jongen’s column on how lump sum withdrawals affect the Age Pension and was confused as to why her super was treated differently.

Q. Anne
I read Hank Jongen’s column on superannuation and noted that, according to Centrelink, super is not counted in the assets test if you’re under pension age?

I am 64 and am currently out of work. When the lockdown started in 2020, I could get a JobSeeker allowance, but once the assets test was reinstated, after the initial couple of months, my JobSeeker allowance was cancelled, and I was advised by Centrelink to use money from my super. 

Read: How your super affects the Age Pension

I believe the Age Pension age is 67 for me, so why are they including my super in the assets test and denying me any government assistance?

A. Superannuation is only an exempt financial asset for people below Age Pension age if they have not started to draw from it.

Once you draw from your super, as you were advised to do by whoever you spoke to, your superannuation becomes assessable as a deemed financial asset.

Read: Major changes to Centrelink payments

In this situation, it would have been good to take some independent financial advice about the consequences of this decision on your ability to access future government assistance.

If you accessed the money from your superannuation as part of the government’s early release of superannuation scheme, the remaining money in you super account would not have been assessed as an asset.

When the government announced the early release of superannuation scheme, the temporary rules that allowed for access to $10,000 were designed to spare individuals from the income or assets test.

Read: How selling and downsizing affect your Age Pension

However, if you opted to draw down from your super, which it sounds like you have done, then you now have access to all of your superannuation and it has to be treated by Centrelink as a financial asset.

Being a financial asset, means that it will have deeming applied, which assumes that it earns a set rate of income.

Your situation highlights the importance of consulting with an experienced financial adviser before making any life-changing decisions regarding your superannuation.

Do you have a Centrelink question? Why not ask it in the comments section below?

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

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 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 Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Written by Ben



SPONSORED LINKS

LOADING MORE ARTICLE...