Recent changes could affect your age pension
THE amount of age pension a person receives is affected by the assets test and the income test. Several changes have affected how some assets and income are treated. An example of the most recent change relates to the amount of employment income counted once a person reaches pension age.
THE amount of age pension a person receives is affected by the assets test and the income test. Several changes have affected how some assets and income are treated. An example of the most recent change relates to the amount of employment income counted once a person reaches pension age.QI was 65 in late April and my wife was 64 in February. We have asked questions, without success, about how Centrelink considers our super pensions from ComSuper of about $20,000, and $17,000 from ESS Super, for the age pension.I have a part-time job that will pay me $24,000 from Christmas. What is the amount of income that will be counted by Centrelink for the age pension?ANot all the pension you receive from your superannuation funds is counted by Centrelink as income. The actual cash you receive is reduced by a purchase price of the pension. This is calculated by dividing the value of your pension when you started it by your life expectancy at that time.In addition to your super pensions being reduced, not all employment income for people of age-pension age is counted. The first $250 of employment income, over the pension income test limit, is also not counted.The income level at which the full pension is payable is $150 a fortnight for a single person and $132 each for a couple. In your situation, as there is a high likelihood that the value of your ComSuper pension counted would be more than the $132 limit, $6500 of your employment income would not be counted, leaving $17,500 counted by Centrelink.QI sold a family farm worth several million dollars about six years ago and distributed all but $300,000 to my children. I am now 89, do not have any other assets, and live with my daughter. Will I be able to claim any amount of the pension?ACentrelink counts gifts under the assets and deeming rules apply for up to five years. This means only the $300,000 would be counted under the assets test and have deeming applied to assess your eligibility for the pension. You may not be entitled to a full pension but you will get something and therefore should apply.Q I have a self-managed super fund, the value of which is counted under the assets test by Centrelink. But I understand that if I transfer the balance in my SMSF to a financial institution to receive an annuity, the value transferred will not be counted as an asset for my age pension.By managing my SMSF I average better rates of return than the financial institutions. Why is it that withdrawals from a complying SMSF are not treated as an annuity and the value excluded as an asset by Centrelink?AThe exemption for annuities ceased in 2007. To qualify for the exemption you effectively gave your money to a fund manager and had to make do with the pension they paid. On your death, any residual value would go to the fund and not your beneficiaries. In my mind you are better off with your SMSF.Questions can be emailed to firstname.lastname@example.org