Home' Aurora : Aurora December 2012 Contents With over 75% of eligible applicants able to
qualify for some Centrelink age pension, a
basic understanding of the rules is beneficial.
Many people are pleasantly surprised when
they learn that they are entitled to some
Government assistance in old age, as
Australia's system is extremely generous.
The following is intended as a broad outline
of the rules enabling you to maximize your
Age eligibility rules: At the present time the
pension qualification age is 65 for males and
for females it is 64.5 years. If you were born
between 1 January 1949 and 30 June 1952
then your pension age is 65. If you were born
after 1 July 1952 and before January 1, 1957,
then regardless of your gender, the pension
qualification age will increase to either 65
and a half, 66 or 66 and a half years old.
For everyone else born after January 1, 1957
your pension qualification age will be 67
years. (Note that the different 'preservation'
ages which apply to superannuation access
bear no relationship to age pension rules.)
Means testing for the Age Pension: There
are 2 components of means testing: 1) an
Assets Test and 2) an Income Test. The test
which generates the lowest eligible pension
amount is applied. Importantly, the family
home is an exempt asset for Centrelink
Most other assets including superannuation
will be included for assessment, once the
applicant reaches age pension qualification
age or else moves super into an income
stream. Even though only one member of a
couple may be applying for the age pension, it
is the combined assets for the couple which
are assessed. If the younger partner holds
their super in accumulation phase, then the
money is not counted for asset test purposes
for the couple until that younger partner also
reaches Centrelink pension age.
If a couple of divergent ages has one
member qualifying on age for an assessment
for the Centrelink pension, the superannua-
tion of the younger partner will count as part
of the couple's assets if it is held in an
account based pension structure i.e. in an
A couple of age pension age, owning their
family home, may have assets of up to
$1,050,000 before they lose eligibility for the
part age pension and will gain the full age
pension if their assets are less than
The maximum 'couple' pension is $582.40
each per fortnight and there is no entitle-
ment once Centrelink-assessed income
exceeds $67,538 for the couple. Remember
however, that actual income received may
be much higher than the Centrelink-as-
sessed income! A single home owner gains
the full age pension when assets are less
than $192,500 and only loses entitlement to
a partial pension once assets exceed
$707,750 in value. The full single pension is
$772.60 per fortnight and there is no
entitlement once annual Centrelink income
exceeds $44,127 per year.
For income test purposes, pensions from the
Government and defined benefit pensions,
(often enjoyed by retired public servants), plus
distributions from private companies and
trusts, wages and rental income from
investment properties are assessed by
Centrelink as income.
Financial investments (including cash in
bank, term deposits and bonds, managed
investments, loans to individuals and super in
accumulation phase after one reaches age
pension age), are deemed to earn a set rate
of return, regardless of what return is actually
received. The deeming rates applied differ
for singles and couples with the first $45,400
of income for the single being deemed to
earn 3% and the balance above this deemed
at 4.5%. Couples are deemed to earn 3% for
the first $75,600 of combined income and
4.5% once above this amount.
Now how you structure your super influences
how much income is applied for the Centrelink
Income test treatment. For example, if you
are a single and you have $300,000 held in a
super accumulation account, (or outside of
super in a bank account for example), then
these funds will be deemed to earn $12,819
for Centrelink income test purposes.
Now if this same super money is held in
account based (allocated) pension phase, it is
treated in a much more 'friendly' fashion
from a Centrelink Income Test perspective.
Only a fraction of the income from the
allocated pension is counted by Centrelink as
income against the Income test.
For simplicity, suppose that all of the funds in
the allocated pension arose from either
employer or salary sacrifice contributions and
not from voluntary after tax contributions.
If the pensioner had a statistical life expec-
tancy of say 22.48 years, then Centrelink
consider that $13,345 (being
$300,000/22.48) is a Centrelink deductible
amount. This amount is deducted for income
test purposes from the actual pension drawn.
If the pension payments in the year are say
$15,000 then Centrelink only assess the age
pensioner as receiving $1,655 of Centrelink
Income from the allocated pension. This
treatment is much kinder than the deeming
treatment for bank accounts or super
accumulation accounts where Centrelink
income is seen as $12,819!
With many age pensioners enjoying
part-time work in retirement, the friendly
income test treatment of allocated pensions
is wonderful and complements nicely the
great work incentives provided through the
Centrelink Work Bonus scheme.
Centrelink Eligibility and Superannuation
The Centrelink 'Income- test- friendly'
treatment of allocated pensions combined
with tax- free income from all super sources
after age 60 are compelling reasons to justify
using superannuation as the vehicle of
choice for retirement savings.
The Centrelink concession card and the
attached benefits (worth anything up to about
$4,000) are available to any citizen who
receives even one dollar of age pension
support. It certainly makes financial sense to
structure savings to maximize possible
For further details or to make an
appointment to meet with a
financial planner at Australian
Catholic Superannuation to discuss
your circumstances, just call us
on 1300 658 776.
*Zilla Lyons is regional manager, Australian Catholic
Superannuation. Disclaimer: This superannuation article is for
general information only. It does not take into account your
personal objectives, financial situation or needs. As a result,
you should consider its appropriateness to your own situation
and obtain independent financial advice before making any
decisions about superannuation.
Superannuation | Pensions | Insurance | Financial Advice
Australian Catholic Superannuation & Retirement Fund | T 1300 658 776 | www.catholicsuper.com.au | E firstname.lastname@example.org
F 02 9715 0090 | 33 Burwood Road, Burwood, NSW 2134 PO Box 656, Burwood NSW 1805 | Offices in Sydney, Port Macquarie, Canberra, Brisbane,
Townsville, Perth SCS Super Pty Limited ABN 74 064 712 607, AFSL 230544, RSE L0002264 Trustee of Australian Catholic Superannuation & Retirement
Fund, ABN 24 680 629 023, RSE R1055436
Book your FREE retirement planning workshop' and learn how to optimise your retirement savings.
*Members aged 55+ and still working could potentially SAVE TAX with an allocated pension.
Our 'Retirement Planning & Allocated Pension' workshops will cover topics such as:
• Transition to retirement strategies
• Optimising your super contributions
• Managing market risk
• Centrelink benefits -- how you may qualify
• Estate planning considerations
Book now on 1300 658 776 or visit www.catholicsuper.com.au/seminars
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