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Negotiating assets and income tests to get an age pension

Created On: 03/03/2022

I am aged 65, separated, and own a two-bedroom villa in an over-55s lifestyle village. I have not worked for 10 years for medical reasons and have a Low Income Health Care card. I receive $600 a fortnight Public Sector Superannuation (PSS) scheme pension and have $106,000 accumulated in a Public Sector Superannuation accumulation plan (PSSap) fund plus $25,000 in a Platinum trust fund. I have been dabbling in shares and built up a portfolio valued at $260,000, paying about $4000 in dividends each year, with a capital gain of $106,000. I find it increasingly difficult to live on the PSS pension. In 16 months’ time, would I qualify for at least a part age pension? If not, can I adjust my assets to comply with the rules? How do they treat shares? Is it on dividend income or the value of the shares held? If I claim a part pension, can I still do some share trading, as it gives me a lot of interest and pleasure? B.F.
From July, 2023, the age pension age increases from 66.5 to 67 for people born since January 1, 1957. When a person’s new claim is determined, all of the person’s assets, including shares, are valued using the latest prices available to Centrelink.

A single homeowner can have assets of $585,750 and income below $54,168 ($2083 a fortnight). Your home is ignored and, if I understand correctly, you live in a lifestyle estate where you own your villa but lease the land on which it rests.

If you were to claim today then the income test would view your PSSap super, your managed fund and your shares, now totalling $391,000, plus any cash as “financial assets”. These would be deemed to earn $298 a fortnight if deeming rates remain the same i.e. the first

$53,000 is deemed to 0.25 per cent and any excess 2.25 per cent. The actual interest and dividends you receive are ignored.

To this is added your PSS defined-benefit pension of $600 (a defined-benefit pension has no asset value for Centrelink purposes) and your total measured income of $898 a fortnight would allow a pension of a little over $590 a fortnight

The assets test would count your $391,000 plus, say, $15,000 for personal assets (e.g. car, furniture, etc) and would allow a pension of about $540 a fortnight. Since it is the lower of the two tests, this is what would be granted.

You can reduce your assets by renovating your home, spending money or giving away up to $10,000 a year, to a maximum of $30,000 in a five-year period. Apart from any necessary home reno, you shouldn’t part with cash: You don’t have that much to fritter away.

On an ongoing basis, your share portfolio is measured using the latest share prices each March 20 and September 20, or more often in the event of a sharemarket crisis. For example, an additional revaluation occurred during the Global Financial Crisis in November, 2008, thus increasing any pension paid to most shareholders.

You can buy and sell shares as much as you like. Centrelink states on its website that it must be informed within 14 days of any change in your assets, and this can be done online, although I note many financial advisers state that only changes above $1000 need to be notified.

I am a 58-year-old woman earning $90,000 a year and with $450,000 in the State Authorities Superannuation Scheme, which is projected to rise to $800,000 by age 65. My partner, 68, has $95,000 in a Transition to Retirement (TTR) fund and $130,000 in Cbus superannuation. He draws $375 per fortnight from the TTR fund and salary sacrifices $700 per fortnight into Cbus. He is still working full-time, earning $52,000 a year. Being 10 years older than me, if he were to retire while I still work, is he entitled to any Centrelink age pension? The Centrelink website is a minefield to negotiate and try to get a simple answer. C.B.
A homeowning couple can receive a part-age pension if they have assets below $880,500 and income below $82,898 a year ($3188 a fortnight). Your combined assets and income are measured.

Should your partner retire then your income alone would prevent any pension being granted. However, when you retire, you would together still have too much in assets to get the pension once you reach pension age of 67.

I suspect your partner enjoys his work, or he would not still be doing it. I also suspect that overseas trips at retirement are still many years away, so I suggest you both continue to work as long as you are able to enjoy it, thus maintaining your current high standard of living.

Note that, when your partner turned 65, he met a “condition of release” and his super benefits are no longer “preserved,” so that his super pension is no longer a TTR pension but a standard, untaxed pension fund with no limits on withdrawal – or at least it should be.

When making a Will, I wish to leave my home to one of my four children, with that beneficiary paying the other three a share of the market value. Will this avoid stamp duty? The other three are in agreement. C.C.
If child No. 1 inherits your home, no stamp duty is payable, only filing fees. If he or she then chooses to make gifts to siblings 2, 3 and 4, these are not necessarily related to the child’s inheritance and there is no gift duty in Australia.

Be careful not to word your Will so that all four are jointly gifted the house