"In regard to receiving Age Pension, would money in the bank, shares, and superannuation all be considered assets? If I add all three of these, it comes to over $270,000. Would I still be eligible to receive Age Pension in full?"
- Question from Robyn in Cranbourne, VIC
Top answer provided by:
Kris Jenkins
Hi Robyn,
That’s a great question to ask and something that more people should consider.
In your specific instance – yes, your Cash, Shares and Superannuation (over age 67) will all be assessed – and will be assessed the same way. The values of each asset will be added to the assets test, along with your home contents, your vehicles and personal effects (jewellery, etc.). The total value of your assets will be added up and compared to your relevant assets threshold to determine your eligibility, for example, a Single, Homeowner can have up to $280,000 in assets and still be eligible for the full Age Pension, whereas a Non-Homeowner can have up to $504,500.
Depending on your contents, vehicles and personal effects, you may fall within the relevant assets threshold to be eligible for the full pension however, if you were to surpass the relevant thresholds then you will fall into the realms of the part-pension. The part-pension works on a sliding scale – the higher the amount of assets you have, the lower the pension entitlement you will receive. For example, a Single, Homeowner can have up to $634,750 in assets and still be eligible for a part-pension, but once the upper threshold of $634,750 is exceeded, any pension entitlements will cease.
Being Single or in a Couple can change your assessment
It’s also important to distinguish whether you are Single or a member of a Couple, as if you are a member of a Couple (either living together or Illness Separated), your assets will be combined and added to the assets test (as well as income for the income test). Couples’ thresholds are higher though, so it’s not entirely all doom and gloom.
Determining whether you are a Homeowner or Non-Homeowner will also change the thresholds by which you are assessed too, and for those who are considered Non-Homeowners, they are again allowed a higher threshold.
What assets do Centrelink assess?
Generally, Centrelink will assess your financial assets such as Cash, Term Deposits, Shares, Managed Funds, Bonds, Real Estate, Annuities, Superannuation, business assets, home contents, personal effects and vehicles as mentioned above – they don’t leave any stone unturned! (You can read more about assets here: Asset types - Age Pension - Services Australia).
It’s important to consider that there are specific rules around how much and how often you can gift to friends or family too, before Centrelink assess these amounts – so giving assets away to reduce your asset levels does not always achieve the desired result (Read more here: Gifting - Age Pension - Services Australia).
What about the Income Test?
Centrelink not only assess your Assets, but they also assess your income when working out your Age Pension eligibility.
Centrelink look at any earned income such as salary and wages, business profits and real estate income, for example, but also apply a rate of income deemed to be earned on financial assets – called Deemed Income. Deeming assumes that your financial assets earn a set rate of income, no matter what they really earn – this is added to your other income and applied to the income test to work out your payment rate. At the time of writing, the first $56,400 of your financial assets are deemed to earn 0.25% income and anything over $56,400 in assets is deemed to earn 2.25% income.
Once Centrelink determine your entitlements under the assets and income test, they will then pay you the lower of the two entitlements.
I would certainly recommend speaking to a financial planner about your situation, Robyn, as you want to ensure you can achieve the most out of your retirement. After all, they are the best years of your life!
All the best,
Kris
While the Adviser Ratings Website facilitates the question and answer functionality, all such communications are between users and authorised financial advisers, of which Adviser Ratings has no affiliation. Adviser Ratings is not the advice provider and does not provide financial product advice and only provides information that is general in nature.
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