Nicole, Sharon and Steven know the answers
We never fail to be surprised by how many questions our members have when it comes to the detail of Age Pension entitlements. Our recent update on the 1 July Age Pension rule changes attracted 75 comments, which kept our advisers and Customer Services Team busier than ever, explaining the rules. These questions and answers are too good not to share, so today we are highlighting five of the most common entitlement questions we continue to receive.
But first, let’s start with what you can do yourself, to quickly get a snapshot of your own situation, before needing to ask any other questions. The main issue for many people is whether they will actually qualify for a full or part Age Pension. You can find this out by using our free and confidential Age Pension Entitlements Calculator. Your assessment will include Age Pension eligibility and whether you are likely to qualify for a Commonwealth Seniors Health Card or not. This will give you a foundation upon which you can start to plan the details of your retirement income.
Do I need to update my details?
There is often confusion regarding what Centrelink clients might need to do as rates and threshold changes occur.
‘Does all this mean that there will be an automatic adjustment to my part Age Pension from 1 July?’
And our in house Guru, Steven Sadler, clarified this point:
‘Yes, Michael, Centrelink do automatically recalculate all Age Pension payments when changes like this occur, without any action required. Having said that though, Centrelink may have some outdated income or asset values on file for you. So it would be a good idea to check and update everything to ensure you get the most amount of pension entitlement possible.’
So please bear in mind these two reminders:
- You need to supply full details to assess your pension likelihood, so using the free calculator is a first best step.
- And whilst Centrelink will re-evaluate your situation when rates or thresholds change, it’s smart to use these changes as a prompt to review your own income and asset declarations.
Here’s the other Age Pension FAQs that keep coming up
Is Carolyn’s house an asset?
‘I will be considering retirement at the end of 2023. I note the increase to the single home owners threshold in July. My house is valued at approximately $850,000. Does this mean I will not be able to get the Age Pension or will any pension be reduced due to my house value. I am currently taking a small pension stream to top-up my part time employment.’
Trusted Retirement Essentials adviser, Sharon Sheehan, replied:
‘Your own home is an exempt asset for Centrelink purposes, so it is unaffected by any changes to thresholds. It’s only if you don’t live in your own home that it is counted as an asset, for example if it is used as an investment property.’
Is Peter a single or part of a couple?
‘I am still on a ‘part of a couple’ Age Pension but should be on single entitlements as per Section 24 of the Social Security Act, Centrelink informed me. But after five months I’m still waiting on a ruling. My partner is not an Australian citizen, therefore is ineligible for welfare benefits. What is the criteria? Was there a new rule in 2018 regarding the definition of a partner?’
Steven explains the ruling:
‘Thank you for sharing your experience with us! We wish you luck in getting the desired outcome. From our experience Section 24 of the Social Security Act is intended to allow Centrelink to treat special cases as singles (such as victims of domestic violence not yet formally divorced/separated). Situations such as yours where your partner is simply ineligible would not allow you to be treated as a single person. But we’d love to hear if you are successful.’
Julie needs help with Work Bonus credits
‘Can you explain the $4000 income increase to single pensioners. I was told it’s not money but points. How does this benefit work with someone earning $1856 a fortnight? I was approved in April for an Age Pension and since have received some radical and totally different payments each fortnight. Centrelink told me it all has to do with this $4000, but I am so confused about my differing payments.’
Nicole cuts through the confusion:
‘Thanks for reaching out. This is definitely something many people are confused about. What you are referring to is the Work Bonus, not the income test. Once you are approved for any Age Pension you become eligible for the Work Bonus to apply. This means that Centrelink ignores the first $300 per fortnight of employment income when calculating your entitlement. If you have no employment income then your work bonus ‘income bank’ increases by $300, e.g. if for three fortnights in a row you had no employment income then you would have increased the income bank by $900 so in the next fortnight you might earn up to $1200 ($900 income bank plus the $300 for the current fortnight) before Centrelink will assess the income.
Normally you would have to be on the Age Pension for some time without employment income to build up a bank but from 1 December last year Age Pension income banks were increased by $4000 from a maximum of $7,800 for someone who has built their income bank over some time, up to a maximum $11,800). Therefore, if you are earning $1856 per fortnight, the first $300 is ignored, the remaining $1556 is not assessed but does reduce the income bank. When the income bank gets to zero, then the normal situation where $1556 per fortnight is assessable will be the usual outcome. So you probably received higher Age Pension entitlements for the first few payments until the one-off increase in your income bank was exhausted.
If you are still confused about how this applies in your situation, both now and going forward, and want to better understand your situation we are always happy to discuss in more detail during a General Consultation.
Ted is in residential age care
‘I am a homeowner, but I have been in a nursing home for 18 months. Is the value of my home an exempt asset?’
Nicole explains the way this might be viewed:
‘We hope you are doing well, Ted. This is a tricky one. Often, the home is exempt for up to two years, for the purposes of calculating Age Pension entitlements, but it may be exempt indefinitely if a partner remains living in the home. If your home is exempt for only two years there could potentially be a significant effect on your Age Pension payments at the end of this period. However, there is a whole other set of rules for your aged care fees in terms of how your home is assessed and its value may already be impacting your means-tested fee. We can help you to understand broadly how this may work in our General Consultation, but to fully understand your position and to help prepare yourself for upcoming changes I suggest you find a financial planner in your local area that specialises in aged care advice.’
Can Phyllis be penalised for helping out?
‘I’m on a part Age Pension and have loaned $250,000 to my daughter. I have sent Centrelink a contract showing that the funds will be paid back in two years. I’m still counting it as my asset with the remaining $70,000 that I have in hand. Can you tell me if anything will change for me?
Nicole believes more detail is needed:
‘ It’s great that you have been able to help your daughter. In terms of the impact to your entitlements, it depends where the funds have come from. If you took funds you already had in cash or other investments and gave them to her then it is likely that you will have $250,000 less of investment assets, and $250,000 in a loan asset. So essentially your overall assessment may not change as your asset and income position is the same. However, a few other factors can change your assessment. To discuss your situation in more detail, we would be happy to go into more detail in an Entitlements Consultation.
Retirement essentials offers guidance and support across your retirement journey. Two important aspects of this guidance include maximising entitlements and answering your specific concerns in a General Advice consultation. We’re always here to help.