How will Sandra’s long service leave affect her Age Pension?

Sandra is retiring with 16 weeks of long service leave and is worried about her pension.

Long service leave and the pension

Sandra is retiring with 16 weeks of long service leave and wants to know how this will affect her pension.

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Q. Sandra
I am retiring with 16 weeks of long service leave. I understand that this will now affect my pension. Is this correct?

A. As you are retiring and not being retrenched, any long service leave you are due will not impact when you can claim for the Age Pension – that is, you will not have to wait until this is spent before you can claim.

However, if this is paid as a lump sum, what you do with that lump sum may affect the rate of Age Pension you receive once the income and asset test has been applied.

You can find out more about the income and asset test by reading ‘Income and asset tests’.

Before making any decisions, I think it would be worthwhile to make an appointment to see an independent financial advisor so you can maximise your income options in retirement.

If you have a Centrelink question, please send it to newsletters@yourlifechoices.com.au and we’ll do our best to answer it for you.

Are you eligible for an Age Pension? Do you know your rights? The RetirePlanner™ tool has all the information you need.

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    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.





    COMMENTS

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    purplejan88
    17th Dec 2018
    11:22am
    far out! what is the point of having LSL if it going to affect the age pension?? shouldn't matter if it is a lump sum or paid weekly. it is a bonus to the worker not the bloody government. so sick of grab and take by gov't
    Old Geezer
    17th Dec 2018
    5:57pm
    If you get paid 16 weeks pay when you retire you have to wait 16 weeks before your get the pension or any other welfare. Some people have to wait 2 years or longer.
    Karl Marx
    17th Dec 2018
    10:48pm
    No you don't OG. If retrenched with a retrenchment payout maybe but accrued holiday pay & long service pay don't have to be worked off before an OAP cuts in. That is my experience when I retired. If newstart yes I suspect so. Bottom line is that any after tax money received will be added to your assets & any payment adjusted accordingly.
    When you retire from work your company must provide you an Employment Separation Certificate SU001 that must be sent to centrelink.

    17th Dec 2018
    12:08pm
    Does also depend on her age at the time. A few people still believe it is 65 years - I would look at that problem first.
    Virginia
    17th Dec 2018
    1:03pm
    Do not retire until you have used all your long service up as this actually gives you more long service and more holiday days.
    Karl Marx
    17th Dec 2018
    1:05pm
    When I retired at 65.5 years I received a lump sum for my long service & accrued holidays after tax was deduced. It didn't affect me getting the pension. Pension was paid from the date I retired from work. Centrelink where issued with an Employment Separation Certificate from the company
    Because I now had extra money in the bank it was now an asset and my pension adjusted accordingly
    johnp
    17th Dec 2018
    1:52pm
    Re. Sandra's question. Very poor answer from YLC
    sunnyOz
    17th Dec 2018
    2:34pm
    Agree - very poor
    greenie
    17th Dec 2018
    3:11pm
    Most replies to questions of this mature on this site are very poor. Hardly worth asking.
    The question was also badly posed with no amounts, even rough estimates, given.
    Pass the Ductape
    18th Dec 2018
    8:23am
    Generally, most YLC answers are biased towards seeking financial advice. Clearly, the main aim of the site is to hopefully secure business for institutions offering financial advice services.
    rob101
    17th Dec 2018
    4:26pm
    Long Service Leave is Tax Free BUT does not contribute to Superannuation!



    rob101
    Karl Marx
    17th Dec 2018
    10:51pm
    Long service payment is part of your taxable income so you do pay tax on it. That's why most people I know retire in July - August as it's the beginning of a new tax year to minimise tax payable.
    rob101
    18th Dec 2018
    8:33am
    No you do not pay Tax! I didn't and as a Retired Union Delegate I investigated it at depth! It is NOT Earned Income therefore no Tax is paid!
    etc1
    18th Mar 2019
    2:34pm
    Hi fellow retirees. Can you please try and assist.
    My wife and I have been receiving a small amount of pension because I have been working.At 69 I now have resigned and will retire fully in a month. I have about $15000 coming in unused Long service and holiday leave. 1/How will this be taxed? 2/Do I inform centrelink about it or just ad it to my assets on line and let the calculation happen? 3/ Or will centrelink see it as income and have me use the money before continuing pension. Thanks in advance.


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