Jim and Sue are both retired and their investment assets have recently reduced. They had a weekly income of $966 from a combination of the age pension and their own account based pensions. They are now interested in understanding how the reduction will impact their income. So let’s look at their situation.
| Name | Jim and Sue |
| Age | both 67 |
| Marital Status | Married |
| Employment | Both retired |
In January 2020 Jim and Sue retired. Following their application for the age pension this was their situation
Their Assets
- Jim’s holds an account based pension worth $200,000
- Sue holds an account based pension worth $85,000
- They have a bank account with $80,000 in cash
- They have furniture and one car worth around $20,000
- Their home is worth $550,000
Their Expenses
- Living expenses 1$780 p/week
Their Income
- Their combined income from their account based pension 2$274 p/week
- Their couples age pension entitlement is 3$692 p/week
- Total weekly income $966 (saving $138 p/w)
Their account-based pensions balance have recently dropped by 410% due to the drop in the share market. Because the balances of the account based pension have dropped, Jim and Sue should contact Centrelink for a reassessment of their age pension eligibility. Let’s look at the possible outcome following the reassessment.
| Account based combined pension value | Weekly income from account based pensions | Age pension entitlement | Total weekly income | |
| Before the crash – Jan 2020 | $285,000 | $274 | $692 | $964 |
| After the crash Mar 2020 | $256,500 | $247 | $708 | $955 |
| Difference | $28,500 less | $9 less |
Whilst Jim and Sue are receiving less from their account based pensions dropping in value by $28,500 asking for a reassessment would result in their weekly income only dropping by $9 due to an increase in age pension.
In addition, Jim and Sue will benefit from the Government’s stimulus package of two $750 payments to age pensioners.
It is definitely worth looking at the current age pension you are receiving and using the eligibility calculator to see if any reduction in your super, account based pension and other investment assets can increase your age pension entitlement.
Note: The March 2020 rate changes increased the minimum fortnightly rate by $8.30 per person in a couple.
Assumptions:
- The weekly living expense was calculated using the maximum ASFA modest lifestyle figure for couples (as at Dec 2019) of $40,560 per annum
- Account based pension income was calculated using the regulated rate of 5% per annum of the account balance for a 65 – 74 year old.
- Age Pension Rates were calculated using the Retirement Essentials Age Pension eligibility calculator as at 13 March 2020.
- The drop in value of the account based pension was 10% as at 13 March 2020.
