Super no pension threat

MY HUSBAND, who is 73, is retired and we own our home. I am 62, working full-time. He is receiving $20 a fortnight from an Australian pension and a foreign pension of $200 a month. He does not have any super, while

I have $450,000 in my super account. Can you please advise how I should manoeuvre my super so that when I reach my pension age of 64.5 years I will be able to at least get a minimum pension payment and a pension card while I am still working part-time? R.T.

For your husband to be getting a part pension of $20 a fortnight, Centrelink must be measuring your combined family income at more than $63,000 a year. Once you reach age pension age, you will get a part pension if your combined family income is less than $64,033 a year and your assets are less than $998,000 a year, excluding your home. Thus, your super, once it begins to be counted by the means tests at age pension age, will not cause the assets test to stop you from getting a part age pension. However, if you are still working, it will probably cause the income test to cut the pension to nil. When you switch to part-time work, your income should drop, allowing a higher age pension for your husband. After you turn 64.5, you will receive an age pension equal to your husband's and a pensioner health card.

I AM 60 and my husband is 65. I am a teacher and have about $345,000 in superannuation with SASS. I have $40,000 in three other super funds, including First State Super, and $7000 in shares. My husband, a bricklayer, has only about $43,000 in super and a $120,000 inheritance. As his health is not good, he has worked about two days a week. Because I earn a reasonable income, his pension, which started at $480 a fortnight, has been reduced to about $100 a fortnight. We own our home. What is the most tax-effective thing for him to do with his $120,000? How can we prevent what little super he has from being eaten away with fees? How can he maximise his Centrelink aged pension? A.L.

The means tests won't count your super until you reach your age pension age of 65 and won't ever count your house while you're living in it.

The income test is diminishing your husband's age pension and I estimate it's determining your combined income at about $59,000 a year. As he is over 65 and still working, he can contribute his inheritance into super this financial year after he has worked more than 40 hours within 30 days, which is known as the "work test".

Your First State Super is a low-cost fund and he can open an account and also consolidate his smaller funds into that. Be sure he does not contribute more than $150,000 out of his non-super savings.

He can start an allocated pension now, or later if he doesn't need the money, and will need to take a minimum pension of 3.75 per cent in 2011-12. An allocated pension is money in the super fund allocated to him and no one else and he can invest it in a number of investment options. Allocated pensions are more "pension friendly" than term deposits as the return of the amount invested, divided by his life expectancy (18.5 years for a 65-year-old man), is ignored by the income test.

Theoretically, he can maximise his age pension by gifting his inheritance to you. You will then contribute it into your super fund, where it will be ignored for five more years.

If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. Helplines: Banking Ombudsman, 1300 780 808 Pensions, 13 23 00.