As you will know, on 1 January 2017 there will be changes to the assets test for calculating Centrelink pensions. These changes to the assets test may affect your age pension payment.
Many clients are now receiving the Centrelink letter informing them of the impact to their age pension.
Generally, if you a single homeowner and your assets are above $542,500 you will lose your pension. Between $291,000 and $542,500 you will receive a reduced pension. Below $291,000 you will receive an increase to your age pension.
For homeowner couples, you will lose your age pension if your assets are above $816,000. This is significantly lower than the existing $1,123,500 asset threshold. Assets between $453,500 and $816,000 will result in a reduced pension. Assets below $453,500 will result in an increase to your age pension.
If your payment is cancelled on the 1st of January 2017 you will automatically be eligible for a Low Income Health Care Care. If you are of age pension age or over on the 1st of January you will be eligible for a Commonwealth Seniors Health Card (CSHC). These cards will be sent to you automatically if eligible and you will be able to hold the cards indefinitely provided you meet all other requirements. The benefit of the CSHC is it has the same pharmaceutical benefit as being on the age pension.
There have been plenty of coverage regarding the options to maximise ones Centrelink. Many options do not make financial sense however a few, for example gifting and funeral bonds as well as annuities, may interest some people. Generally, the reallocation or spending of funds purely to increase ones Centrelink is not financially sound. If you would like to discuss the options and have not done so already, please give us a call.
We suggest you look at the Centrelink letter and note the combined asset total highlighted. Compare the combined asset total with your own records. It has been common for Centrelink to have incorrect figures and a small decrease in your assets may have a reasonable increase in your age pension after the 1st of January 2017 due to the tapering rate changes. It is worth noting that vehicles and contents of $5,000 per person is assessed as an asset with Centrelink.
By now we have spoken to all people we believe may lose their Centrelink age pension however if you believe you will and you have not spoken to us please call our office as soon as possible.
In addition, should you be receiving a reduced pension after the 1st of January 2017 and you would like to discuss the options on how best to fund the shortfall in your income please call the office.
If you have any questions please do not hesitate to call our office and speak with your financial adviser.