Why is my pension taxed?

YOURLifeChoices subscriber, Colin, would not only like advise on which pension option he should choose when he reaches Age Pension age, but would like to know why it has to be taxed?

Q. Colin
I am 64 years old, and am a retired RAAF officer. I am currently in receipt of a Comsuper pension as a result of my RAAF service, augmented by a partial Disability Support Pension. The Disability Support Pension is untaxed.

I understand that, when I turn 65, I will have the option of either continuing to receive the Disability Support Pension, or move to an Age Pension.

Can you please advise if there are any benefits to moving to the Age Pension, or would I be just as well off staying with the Disability Support Pension?

Also, I understand that, regardless of which option I opt for, the pension I select will become subject of tax once I turn 65. I can see no logic for this. I have been in receipt of an untaxed partial Disability Support Pension for seven years now, and cannot understand why it should suddenly attract tax just because I reach the age of 65.

A. Provided by Centrelink
Centrelink writes to all Disability Support Pensioners prior to them turning Age Pension age and gives you the option of transferring to Age Pension, or remaining on the Disability Support Pension. The letter will give you information to ensure you understand the possible benefits or disadvantages of transferring.

The standard rate of payment, income and asset tests and concession card provided to recipients of Age Pension are the same as for Disability Support Pension.

You can find out more about the income and assets tests for the Age Pension and Disability Support Pension by clicking YOURLifeChoices simple short cut

Once a person reaches Age Pension age, their payment will become taxable whether they remain on Disability Support Pension or transfer to Age Pension.

We recommend you contact Centrelink’s Financial Information Service (FIS) to discuss your individual circumstances. You can speak to a FIS officer over the phone or make an appointment by calling 13 2300.

If, like Colin, you think it is illogical for pensions to be taxed once you reach 65 years of age, have your say on our Meeting Place

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