What went wrong?
Five reasons Age Pension applications can fail
Being entitled to an Age Pension doesn’t mean you’ll automatically receive your fortnightly payments from Day One of your retirement.
Being entitled doesn’t even mean your application will be successful. There are quite a few hurdles to overcome if you are planning, or in the midst of, an application. Today Guru Steven Sadler (our very knowledgeable Head of Customer Services) steps us through five reasons Age Pension applications can fail – and how to avoid them.
Don’t double declare your super and your income stream
Centrelink asset and income tests can seem complex. But one hard and fast rule is that you do need to declare (under assets) your superannuation account balance. Centrelink will then deem the amount this balance earns (see current deeming rates here ). What you don’t have to do is to declare the income you drawdown from your super, in the form of an Account-Based Pension or other type of income stream. Yes, this is income, but as Centrelink has already counted it (by deeming an income on your assets), it doesn’t do this twice. Many applicants are surprised to get a knockback due to failing the income test. Some shouldn’t fail it, but they have incorrectly declared income already taken into account.
No longer employed
You may have started your planning early and at that time you were still working and earning a wage or salary. When you are ready to apply for an Age Pension because you are retiring, it’s best to apply after you have stopped working. If not, it is likely your income could prevent you receiving your full entitlements. There is no point in saying, oh, but I won’t be earning $80,000 a year from next week onwards. If that represents your earnings today, that is the amount on which your assessment will be made. Which leads us to a more general point – if you’ve had a couple of goes at filling in a Centrelink application for the Age Pension, take the time to go back and check that each and every detail is current. Getting a knockback and needing to appeal or reapply is an awful lot of effort!
Incorrect or incomplete documents
Centrelink requires legally valid documents to prove your ownership of the assets you declare. Bank account transaction lists are not necessarily legally valid – normally you are required to share a bank statement instead. The difference is that the former often do not have your identifying detail displayed, but bank statements do have all detail required and are thus considered legally valid. Some banks are easier to deal with than others, but you will need to comply with the request for either an ‘out-of-cycle’ or ‘interim’ statement as part of your application.
Yes, you are receiving a pension
A specific error common to many applicants who have a Self-Managed Super Fund (SMSF) is the belief that they are not receiving a pension. That’s understandable as they are obviously not receiving an Age Pension, but a high proportion of SMSF members are currently withdrawing regular payments from their super in the form of an Account-Based Pension. These amounts need to be verified, normally by supplying a member statement in the form of an SA330. Assuming that you are definitely not receiving any form of pension is often a gateway to a mistake.
Out of sight doesn’t mean it doesn’t exist
Much of the detail of our commercial lives can fade from view as we transition to retirement. This often occurs when it comes to private companies or private trusts. We simply forget these entities and so can fail to declare them when we are dealing with a government department or agency. This doesn’t work when it comes to an Age Pension application; you need to declare all company and trust earnings. It may be that you haven’t filed a tax return on these dormant entitles for a year or two or more. Until you’ve done so, and have a Notice of Assessment, there is little point in pushing ahead with an application.
Should you appeal or reapply?
Just because you have had your application refused does not mean that you are ineligible. You may be eligible but have not successfully proven so.
If you get a knockback you have up to 13 weeks to appeal it. But only do so if you know you are actually eligible.
If you have supplied incorrect information, you can always relodge an application as there is no point in appealing an application that is never going to be eligible. But if you do reapply, your benefits will only be dated back to the most recent application date, not the original one.
Need some help to navigate your application – or lack of success so far? Steven and his team are experts at knowing the rules and how they apply in individual circumstances. Perhaps you, too, could benefit from one of Retirement Essentials individually tailored consultations to help with an initial application. Or you might want to consider to consider ways your wider financial situation can be leveraged to maximise your entitlements.