Superannuation effect on Centrelink benefits depends on more than your age

Q. I am a female receiving a part Centrelink disablement pension and a replacement income pension from my super fund. The super fund-based pension will be paid until I am 65. Next year, I turn 63, which means I qualify for an aged pension. Centrelink tells me that at that time it will assess my active super accumulation fund as an asset, regardless of whether I have a disablement pension or an age pension.

Can Centrelink assess an active super accumulation fund as an asset? If I was working part-time until I was 65, and receiving a part disablement Centrelink pension, at age 63 can Centrelink still assess my super accumulation fund as an asset?

A. The age at which women are eligible for the age pension is steadily increasing from 60 to 65, as it is for men. Under Centrelink rules, a person's superannuation is not counted as an asset until they reach age-pension age. Under Centrelink policy, once a person becomes eligible for the age pension they receive it, and other benefits cease.

In your case, the disability pension you receive from the super fund would be counted as income and this would affect the amount of disability pension you receive from Centrelink. Under the income test, a single person can earn up to $138 a fortnight before it affects their pension. For every dollar more than this amount, the pension decreases by 40 until the income reaches $1557.75 a fortnight.

Under the assets test, the full pension is received if a home owner has assets, including superannuation, up to $171,750. Where assets are more than this limit, the pension decreases by $1.50 for every $1000 in excess until the total assets reach $550,500. This means if your current superannuation pension was $600 a fortnight, your age pension would not decrease unless the balance of your superannuation exceeded $123,200.

Q. You said that after July 1, 2009, a pension paid by a super fund, although tax free for someone 60 or over, it will be counted for the purpose of eligibility for the Seniors Health Card. Your example was of a woman whose income was $32,000 and you said her husband could have $960,000 in super at minimum pension rate of 5%. How does this work?

A. The level at which eligibility for the Seniors Health Card ceases is annual adjusted taxable income of $80,000 for couples and $50,000 for singles. Adjusted taxable income is arrived at by increasing your taxable income by net rental property losses, target foreign income and employer-provided fringe benefits.

The policy announced by Treasurer Wayne Swan in this year's budget is to include exempt superannuation income as an add-back for adjusted taxable income purposes. In my example, a 5% pension income would have been $48,000 - taking the couples' income, when combined with the wife's taxable income of $32,000, up to the $80,000 limit.

I believe this budget measure has not been passed. Under current Centrelink rules, a superannuation pension is decreased, when arriving at the assessable amount, by the purchase cost of the pension. This is the value of the superannuation fund, at the time the pension starts, divided by a person's life expectancy. This would mean that in my previous example the husband could have had more than $960,000 in super and the couple could have still qualified for the Seniors Health Card.

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