If you qualify for the age pension, money in superannuation counts towards the Centrelink means test, writes George Cochrane.
WE HAVE an investment property worth $450,000 producing rent of $22,500 a year. Our own home is valued at $650,000 and we have combined superannuation annuities of $720,000 and cash savings of $324,000. I earn $4000 a year, my wife $36,000 and she also receives a Commonwealth superannuation pension of $34,000. Would we be entitled to a part pension and, therefore, access to the national health card? If we both ceased working, would this assist in qualifying for any entitlement? Considering my wife has $234,000 in term deposits and a "working" account, would part of this money be better invested elsewhere, as currently it is taxable at the marginal rate? P.R.
I assume you are over the age-pension age of 65 for men and, currently, 64? for women, in which case money in superannuation is counted by the Centrelink means tests.
Married homeowners can have assets up to $1,018,000, excluding the house, before the part pension disappears, or income up to $65,572.
Given you have investments of $1.5 million over and above your house, you are well above the limit, while your assessable income of more than $115,000, excluding your non-taxable annuity income, puts you above the income test limit. The Commonwealth Seniors Health Card is available to self-funded retirees earning up to $80,000 but you are well over that, too, even though it ignores your superannuation annuity income.
Spreading the deposit guarantee
Referring to your recent column: "If your aggregated balance of at-call and fixed-term deposits with an institution is less than or equal to $250,000 it will continue to be guaranteed after February 1 under the Financial Claim Scheme." I have two queries: 1. If I have a joint account with my wife then is the guarantee for $500,000? 2. If my aggregated balance is over $250,000, then is the guarantee nil or is it on the first $250,000? K.R.
Yes, you could spread your term deposits to remain less than $250,000 with each "approved deposit-taking institution", or ADI, and thus retain the guarantee. And yes, with joint accounts, each account-holder is entitled to a guarantee up to the Financial Claims Scheme cap of $250,000. Each person's share of the account will be added to any deposits held in their name and the $250,000 cap will be applied to the total for each, i.e. $500,000 for a couple with a joint account if you have no other accounts with that ADI.
And yes again, if you have a total of $280,000 in your name, the first $250,000 is guaranteed and you would have to sue the liquidator for your remaining $30,000.
If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. Helplines: Financial Ombudsman, 1300 780 808 pensions, 13 23 00.
Frequently Asked Questions about this Article…
Does money in superannuation count towards the Centrelink age pension means test?
Yes. If you are at age-pension age, money held in superannuation (including annuities) is counted by Centrelink as part of the means test when assessing age pension eligibility.
What are the asset and income limits for a married homeowner to receive a part age pension?
According to the article, married homeowners can have assets up to $1,018,000 (the house excluded) before a part pension disappears, or combined income up to $65,572 under the income test.
If I stop working will that help me qualify for a part pension or Commonwealth Seniors Health Card?
Stopping work can reduce your assessable income and may help the income test, but large assets and superannuation balances still count. In the article’s example, investments well above the asset limit and assessable income above the threshold meant ceasing work alone wouldn’t be enough to qualify.
Who can get a Commonwealth Seniors Health Card and what income does it test?
The Commonwealth Seniors Health Card is available to self-funded retirees with taxable incomes up to $80,000. The card ignores certain non-taxable superannuation annuity income, but other income and assets can still affect eligibility.
What is the Financial Claims Scheme (deposit guarantee) cap per person and per bank?
The Financial Claims Scheme guarantees deposits up to $250,000 per person with each approved deposit-taking institution (ADI). If you have deposits at different ADIs you can spread them to retain separate guarantees.
How does the deposit guarantee work for joint accounts — do couples get $500,000 cover?
Yes. For a joint account, each account-holder is entitled to the $250,000 guarantee. That means a couple with a single joint account and no other balances with that ADI could be covered for $500,000 in total (each person’s share is treated separately).
If my total deposits with one bank exceed $250,000, is any of my money still guaranteed?
Yes. If you have, for example, $280,000 with one ADI, the first $250,000 is guaranteed under the Financial Claims Scheme. The remaining $30,000 would not be covered and you would need to pursue the liquidator to try to recover it.
Can I spread term deposits to stay under the $250,000 guarantee limit?
Yes. You can spread term and at-call deposits across different approved deposit-taking institutions so each holding stays at or below $250,000, preserving the deposit guarantee with each ADI.
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