Megan Adviser Retirement Essentials

Our adviser, Megan Marshall had a big win last week. This happened when she helped Fiona to increase her Age Pension entitlement from $506 to $916. That’s an extra $410 a fortnight. It’s such a large increase that we wanted to share how this could happen. And some key tips Megan has to offer for others who feel they may be being under paid. 

(As the detail of the following situation is quite specific, the name of our client has been changed for privacy reasons.)

Making ends meet

Fiona contacted Retirement Essentials as she was very concerned about her cost of living increasing and her assets dwindling rapidly. She was also nervous about making contact with Centrelink about changes to her circumstances in case her pension went down. She couldn’t bear the thought of that happening at the moment! This is a common scenario with many of the members we help. They worry that they may inadvertently make things worse if they contact Centrelink to check their benefits. As Megan pointed out, we are all human and yes, Centrelink staff can get things wrong. Checking entitlements is really important and that’s how she was able to support Fiona – by checking the detail and finding the discrepancies before Fiona got in touch with Centrelink, so she would be armed with the facts of her situation .

Why was Fiona struggling?

When Megan checked Fiona’s eligibility for the Age Pension and likely benefits, she identified that Fiona was being underpaid by $410 per fortnight. Megan estimated that Fiona should receive $916 from what Fiona had shared. Yet her actual fortnightly payment was only $506. Next step was to check Fiona’s current situation against what was listed on her myGov/Centrelink account under income and assets. There were four separate problems:

  • Work income
  • Super fund duplication
  • Incorrect annuity categorisation
  • Overvaluation of personal assets

Let’s consider each point separately

Work income

Whilst the information offered about work income was correct, it was actually backpay, not ongoing employment income so when this was reviewed, it was clear Fiona would no longer be receiving this income.

Super fund duplication

Fiona had transferred funds from her accumulation account to an Account-Based Pension. But both super accounts were listed as assets. There was only one account remaining, so this duplication (which was 2x $150,000) meant a double sum was being deemed by Centrelink, as well as swelling Fiona’s total assets.

Incorrect annuity categorisation

In general, annuities are assessed for the assets test at a discounted rate of 60%. Unfortunately, Fiona’s annuity was being assessed at 100% due to a Centrelink coding error. We all make mistakes, but this was costly in terms of Fiona’s estimated fortnightly income.

Overvaluation of personal assets

The actual value of Fiona’s assets would be viewed by Centrelink much lower than what was listed. It’s worth remembering that household contents are what you would be likely to receive in a garage sale – no more. When Fiona made a more realistic assessment of her possessions, she was able to adjust the stated amount in the declaration of her assets.

Confidence to challenge

After identifying the areas where the information Centrelink had on file seemed incorrect, Megan explained the reasons why to Fiona. She also helped her to frame her questions for Centrelink in order to cut to the chase when she contacted them. As mentioned, Fiona was nervous about challenging Centrelink, but Megan was able to demonstrate that she had strong grounds for a review of her benefits.

Is there a moral to the story?

Yes, of course there is. It really does pay to check. The fortnightly income increase more than covered the cost of Fiona’s consultation with Megan. Better still, because the coding error had been made by Centrelink, they acknowledged this error and awarded back pay on the extra income she had forgone.

The team at Retirement Essentials views this situation as a win-win. Megan was delighted to have helped Fiona understand her entitlements and be awarded extra income.

Fiona was even happier that the nagging worry that she was running down her savings was wrong, she now has sufficient income to manage her expenses more than adequately. 

And the back pay? She has rewarded herself with a week’s visit interstate to spend more time with her grandchildren.

Don’t just sit there – check it out!!!

There is never any need to let concerns about your entitlements get you down. A quick consultation with one of Retirement Essentials experienced advisers will help you confirm what you should be receiving. If this varies from your current payments, then we will identify specific questions and actions for you to undertake when dealing with Centrelink. You can also consider one of our Maximising Entitlements consultations that can also help you identify changes you might be able to make to improve your situation.   

Call for comment

Having four different items incorrectly recorded is unusual, but not impossible. Even one error in your assets and income submissions can make a big difference. Has this happened to you?