Martin is employed part time and his wife still works full time. They both own property and have some questions about how they will be assessed when it’s time for Martin to apply for an Age Pension.
I am 64 and married. My wife will be 57 this year and working. She will work until she’s 60. I was laid off work in 2014 and currently do odd jobs to make ends meet until I apply for the Age Pension when I turn 66.
Between my wife and myself, the following is our situation:
My superannuation is used to pay off our primary place of residence.
My wife works and her super balance is approximately $120,000, which we forecast to reach approximately $220,000 by the time she retires in three years.
We have a small investment property together on which we owe about $560,000 and which is worth $720,000. This property is still substantially negatively geared.
1. With the above scenario, I am planning to apply for the Age Pension when I turn 66. Is this possible under the current Centrelink rules?
2. Will the investment property be considered by Centrelink as an asset that will prevent me from qualifying for the Age Pension?
3. Is it the value of the investment property (in this case the $720,000) that is taken into consideration by Centrelink or the equity (in this case $160,000) when determining my Age Pension entitlement?
4. Will my wife’s income of approximately $70,000 per annum prevent me from receiving the Age Pension?
A. First, as you still have a couple of years until you are eligible to claim an Age Pension, you should be aware that the rules may change in the interim.
There are many factors that can affect your eligibility for the Age Pension and it is not possible for us to advise if you will indeed receive an Age Pension. However, in general:
- Your eligibility is assessed under the income and asset test and you will be paid under the test that results in the lowest rate. As you are part of a couple, you will be assessed as such and you and your wife’s income and assets will be assessed.
- As you have commenced an income stream from your superannuation, this will also be assessed under the income and asset tests. If your wife decides to commence an income stream from her super, it will be assessed as part of your Age Pension claim.
- The market value of the investment property minus what you owe will be considered an asset. Or the amount of income minus mortgage repayments, rates and the cost of maintaining the property will be assessed under the income test.
- Your wife’s income will also be assessed under the income test.
It would probably be useful for you to make an appointment to speak to a Centrelink Financial Information Services officer to outline the rules that apply to your specific circumstances.
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