And answers for 2022
With over 100,000 members who are at or near retirement, the Retirement Essentials’ Customer Service Team answers a LOT of questions on a weekly basis.
Given that nearly 70% of Australians are on a full or part Age Pension, many are concerned with entitlements and making sure that they don’t miss out on what is owed to them.
Some of the questions arise in the comments posted on articles on our website. Others come up during consultations on Age Pensions applications, changes in circumstance or consultations about specific rules.
All are equally important to our team.
We asked the Customer Services Team leader, Steven, to choose the five most commonly asked questions across the course of 2022. And to share some quick answers. Here’s his response, where possible followed by links to articles which explain the detail more fully.
1. Account-Based Pension versus Accumulation?
Many members are wrestling with the need to declare details of their superannuation and income streams when making an application for an Age Pension. In particular they worry whether an Account-Based Pension will be treated differently to one which is still in the accumulation phase. Specifically, they often ask us which one is better to get a higher pension entitlement?
It makes absolutely no difference to Centrelink; both these investments are assessed in exactly the same way.
2. Claiming as a single or couple?
We often hear members ask, given their partner is under age Pension age, is claiming as a single the correct way to start the Age Pension process?.
Incorrect. Your single OR couple status is determined by whether or not you are in a relationship, not who is eligible and therefore applying. So if you have a partner they need to be declared and their income and/or assets will have an impact upon your claim too. This may not be as bad as it sounds, as if they are younger than Age Pension age and their super which is still in accumulation phase, their super is not viewed as part of your assets by Centrelink.
MORE: Single or couple – how Centrelink views your relationship
3. Asset reductions with a mortgage
With more and more retirees leaving work while still paying off a home loan, it helps to clarify how assets are designated. One question we are asked a lot is whether the mortgage against a primary residence offsets your super balance?
Nopity nope, says Steven. Centrelink does not take liabilities off assets and assess the net result. The total value of your assets is what counts in their eyes. And remember that the family home remains exempt from any assets valuation, so the mortgage against this home is not actually relevant in this case.
4. How much are personal contents worth?
We love our possessions and so can often value them much more highly than others might – or than we need to for Age Pension purposes. ‘How should I value my personal contents?’ is a question we are frequently asked.
The best rule of thumb is to strip out sentiment and value your personal contents at garage sale value. This amount is generally no less than $10,000, but usually no more than $30,000. Remember, you are not being asked the insured or replacement value, but the amount you would receive if you had to sell in a garage sale tomorrow. Ensuring that this amount is realistic means many people who have previously overvalued their possessions in an application can review this information and see if it makes a difference. You can check for yourself on our free eligibility calculator.
5. Getting backpay from Centrelink
Often members will come to us and decide that they are finally ready to apply for an Age Pension, having previously delayed this process. They sometimes say, ‘I have been eligible for years, now I’m ready to press the button, so how much back pay will I get?’ It’s then they can discover they have missed out in a big way.
You only get back-paid to the date when you first lodged the claim. This is often not the date you became eligible. Our best advice remains to get onto an application as soon as possible – For the Age Pension you can actually submit your application up to 13 weeks before you reach Age Pension age.
As we said, a lot of these questions have quick and easy answers, if you know the rules. But if you are struggling with an application or re-evaluation, then a phone consultation in which we can answer all your questions and finalise your application may be the best solution. If you are interested in this you can book here.