Allocated pensions Centrelink account based income streams

Allocated pensions Centrelink account based income streams

 
by Christine Hopper

Allocated pensions also known as Centrelink account based income streams

Allocated pension accounts allow retirees to retain the advantages of a superannuation fund account whilst drawing out a personal pension. Allocated pension accounts are also known as allocated annuities and Centrelink account based income streams.

The Centrelink assessment of allocated pensions changed for new cases from January 2015. New assessments will treat your allocated pension accounts and other account based income streams as part of your ‘financial assets’ with no special conditions.

New Allocated pension Centrelink account based income streams assessments

When you apply for a Centrelink Pension or Health Care Card your allocated pension Centrelink account based income streams will count as part of your financial assets for any Asset Test.
For the purposes of any Income Test, your allocated pension Centrelink account based income streams will be added to your other financial assets and your financial income will be calculated under the deeming rules.
As at January 2015, the deemed financial income of a Single Centrelink customer is calculated as 2.0% per annum of the first $48,000 of financial assets and 3.5% per annum of any financial assets in excess of $48,000. For a Couple at Centrelink, the deemed financial income is calculated as 2.0% per annum of the first $79,600 of the total financial assets of the couple and 3.5% per annum of any financial assets of the couple in excess of $79,600.
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Help with Centrelink DSP and Age Pension applications

Help is available. Christine at Financial Care Services is experienced with Centrelink Pension Applications and the many Centrelink financial means tests.

Financial Care Services offers Short Consultations to help you check your financial position against the means tests for an Age Pension, DSP or a Carer Payment.

Christine could also assist you with collating your personal data, estimating how much Pension you could expect to receive and completing the Centrelink forms for you to sign. Normal hourly rate consultation fees apply for assistance with personal data collation, completing Centrelink forms and attendance at a Centrelink office with you.

Financial Care Services is an independent financial advisory service specialising in retirees of modest means and aged care entrants. Our core value in financial advice is to assist with your money plan in the responsible management of your assets to generate the cash flow needed for your lifetime planning. Christine at Financial Care Services understands both the DVA and Centrelink Pensions systems and the Commonwealth aged care fee arrangements.

If you would like further confidential, independent and professional advice about Centrelink, DVA, lifestyle or financial issues please contact Christine Hopper 03 9808 0338.

Allocated pensions Centrelink account based income streams assessed before 2015

Centrelink customers whose allocated pension Centrelink account based income streams were assessed as part of their eligibility for their current DSP, Age Pension or Health Care Card could continue to have that allocated pension Centrelink account based income stream assessed under the old rules whenever their entitlement to that benefit is being reassessed.

For example, Joe retired in 2010 at age 66 years. When he retired Joe used $300,000 of his superannuation to purchase an allocated pension from the OK Superannuation Fund, on his retirement Joe claimed a part Age Pension at Centrelink. The latest balance of Joe’s allocated pension account will be counted for the Assets Test for his Age Pension. For the Income Test, Centrelink will continue to assess Joe’s OK Superannuation Fund allocated pension under the old rules provided that Joe does not change anything.

Changes to an allocated pension Centrelink account based income stream after December 2014

Only allocated pension Centrelink account based income stream contracts in force on 31 December 2014 are eligible for the grandfathering of the income determination.
Any changes to an allocated pension contract after December 2014 could terminate the eligibility for the old rules and transfer the allocated pension Centrelink account based income stream to the normal Centrelink financial asset treatment.

For example, Joe works part time and adds an additional $50,000 to his allocated pension account in the OK Superannuation Fund. The OK Superannuation Fund would issue Joe with a new contract for the increased allocated pension account balance. Centrelink could consider this additional capital contribution as the equivalent of starting a new allocated pension Centrelink account based income stream contract and terminate the grandfathering of the income assessment.

Bob also had an allocated pension Centrelink account based income stream with OK Superannuation Fund but decided to move to Better Superannuation Fund in January 2015. Bob’s contract with Better Superannuation Fund looked the same as his previous contract with OK Superannuation Fund. But at Centrelink, the Better Superannuation Fund contract was a new allocated pension so the old Centrelink Account based income streams rules would not apply to this new contract.

Hint: Seek independent financial advice before you change an allocated pension or account based income stream investment.

Independent retirement lifetime planning with Financial Care Services

At Financial Care Services our objective is to assist clients to arrange their financial affairs responsibly and claim any relevant Centrelink or DVA benefits. Financial Care Services is independently owned and operated, our clients are charged fees for advice. You are welcome to consult Financial Care Services about just one aspect of your retirement financial arrangements or for a review of your overall financial lifetime planning.

A consultation with Financial Care Services helps you understand your retirement living and potential aged care costs together with the DVA and Centrelink implications of rearranging your assets.
Call Christine on 03 9808 0338 to make an appointment for a consultation

Financial Care Services is licensed to offer investment strategy advice and to assist you to invest. Financial Care Services charges fees based on the work involved in advising you and arranging your investments. Financial Care Services does not base fees on the value of your assets nor do we accept any commissions or payments from other service providers.

Allocated pension Centrelink account based income stream ‘exemption’ expires when Centrelink eligibility ceases.

At Centrelink if your eligibility for a benefit ceases then you would be assessed as a new customer when you reapply for a Centrelink benefit.

Consider Ros who established a substantial allocated pension Centrelink account based income stream and became eligible for a part Age Pension in 2010. In 2015, Ros received a large inheritance. Centrelink then cancelled her Age Pension because her Assets her too high. Six months later, after Ros had renovated her home, she reapplied for an Age Pension. Centrelink will now treat Ros’ allocated pension account as part of her financial assets and not allow the special treatment as for pre-existing account based income streams because Ros is a new Age Pension customer.

Not many Age Pensioners receive big inheritances that result in cancellation of the Age Pension. But a significant rise in property values could mean that the beach house is valuable enough for your total assets to exceed the Asset Test limits. A substantial rise in share prices could make your financial investments too valuable for an Age Pensioner.

Allocated pension Centrelink account based income streams for Commonwealth Seniors Health Care Card applicants.

Commonwealth Seniors Health Care Cards are only available to Australian residents who have attained Age Pension Age.
In 2014, new applicants for the Commonwealth Seniors Health Care Card must have attained age 65 years. Thus if you had not attained age 65 years and applied for your Commonwealth Seniors Health Care Card before 31 December 2014 then you cannot have your allocated pension Centrelink account based income stream counted under the old rules for the purposes of the Commonwealth Seniors Health Care Card income assessment.

Commonwealth Seniors Health Care Card holders at 31 December 2014 only retain their assessment of their allocated pension Centrelink account based income stream under the old rules as long as they continue to hold their Commonwealth Seniors Health Care Card. If you went overseas for so long that you were disqualified for the Commonwealth Seniors Health Care Card then you would be a new applicant when you reapplied after your return to Australia.

Assistance with Commonwealth Seniors Health Care Card applications

Help is available. Christine at Financial Care Services is experienced with Centrelink Commonwealth Seniors Health Care Card and Pension Applications and the many Centrelink financial means tests.

Christine could assist you with collating your personal data, estimating your assessable income for the Commonwealth Seniors Health Care Card and completing the Centrelink forms for you to sign. Normal hourly rate consultation fees apply for assistance with personal data collation, completing Centrelink forms and attendance at a Centrelink office with you.

If you would like further confidential, independent and professional advice about Centrelink, lifestyle aged care or financial issues please contact Christine Hopper 03 9808 0338.

Age Care Entrants with allocated pension Centrelink account based income streams

Self-funded retirees who enter Commonwealth regulated aged care will be treated as new customers at Centrelink. Thus a new entrant to the aged care system including new home care recipients, will have their allocated pension Centrelink account based income stream balances included in their financial assets for the purposes of determining their assessable income.

Early retirees and people with transition to retirement account based pensions who suffer sudden and devastating injury or illness might not have started a Centrelink Pension before entering aged care and thus could not claim the pre-2014 treatment of their account based income streams.

Independent aged care financial advice

Before you commit to an aged care placement consult Financial Care Services regarding your personal situation. Christine at Financial Care Services understands the new Accommodation cost system and the various means tested fees for residential aged care and Age Pensions.

A consultation at Financial Care Services could Illustrate the various Daily Care Fees and Accommodation Charges that you could be asked to pay for Commonwealth regulated residential aged care.
Your Illustration could include the financial impact of retaining the former home vacant or leased, or releasing it for sale.

Call Financial Care Services on 03 9808 0338 to arrange an appointment.
Financial Care Services is licensed to offer investment strategy advice and to assist you to invest. Financial Care Services charges fees based on the work involved in advising you and arranging your investments. Financial Care Services does not base fees on the value of your assets nor do we accept any commissions or payments from other service providers.

If you would like further confidential, independent and professional advice about Centrelink, lifestyle or financial issues please contact Christine Hopper 03 9808 0338.

Disclaimer: The information contained in this website is of a general nature only and does not constitute “financial advice”.
You should obtain your own personal financial advice before investing any money or moving in to any retirement village, lifestyle community or aged care facility.
Financial Care Services is licensed to provide financial advice to individual clients based on their personal situations.

All eligibility for Commonwealth benefits will be determined by Centrelink or DVA, based on your personal position as documented and the legislation and Regulations in force at that time.
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To make an appointment for professional advice, call Financial Care Services 03 9808 0338