Vol 5 Ed 3
Volume 5 Edition 3 Newsletter
FINANCIAL CARE SERVICES
Independent aged care, lifestyle and financial advice for seniors
Volume 5 Edition 3 –30 March 2015
Small changes at Centrelink with favourable impacts
Deeming rate reduction 20 March 2015
The Income Test for Centrelink and DVA means tested pensions and the income component of the aged care means tested amount include a ‘deemed’ amount of investment income rather than the actual rate of investment income earned on financial assets.
The rate of interest that Centrelink and DVA, deem pensioners to be earning on their financial assets was reduced by 0.25% per annum effective 20 March 2015.
As from 20 March 2015, a single person is deemed to earn 1.75% per annum on the first $48,000 of her financial assets and 3.25% per annum on any additional financial assets.
A couple at Centrelink are deemed to earn 1.75% per year on the first $79,600 of their joint financial assets and 3.25% per annum on any excess financial assets of the couple.
Remember at Centrelink and DVA, ‘financial assets’ includes loans to family members, ‘excess gifts’ in the last five years, bullion, and new allocated pension accounts in addition to bank deposits, listed equities and other financial investments.
Does the lower deeming rate mean a higher Age Pension entitlement? Only Age Pensioners who are impacted by the Income Test but not the Asset Test could expect an increased Age Pension payment following the reduction in the deeming rates. Age Pensioners with large financial assets are finding that the Asset Test hits harder than the Income Test currently.
Age Pension increase 20 March 2015
The full rate of Age Pension increased on 20 March 2015. For a Single person the maximum fortnightly payment from Centrelink is $860.20 including Supplements.
A couple at Centrelink could each expect a maximum fortnightly payment of $648.40 including Supplements. The lower rate for members of a couple reflects the lower per person costs of a two person household compared with a solo household.
A ’couple at Centrelink‘ is any two adults two share domestic arrangements and present socially as a couple. But as soon as one member of a couple enters residential aged care, they become a ‘couple separated by illness’ for Centrelink purposes. Each member of a ‘couple separated by illness’ gets the Single rate of Age Pension but subject to the Couple’s means test.
The Asset Test cut-off for a Single Age Pensioner homeowner is $722,800 excluding the value of her home. A non-homeowner Single person could have assets of $869,300 and retain one dollar per fortnight of Age Pension plus the Pension Supplements. Read more about the new pension rates and means testing cut-off levels.
DSP and DVA Pensions also increased on 20 March 2015
The DVA Service Pension and the Centrelink Disability Support Pension, DSP, is paid at the same rates and subject to the same means testing as the Age Pension.
The DVA War Widow Pension was increased on 20 March to $874.10 per fortnight including Supplements. DVA pay an Income Support Supplement, ISS, to War Widows with limited financial resources apart from the War Widow Pension. The new maximum rate of ISS is $257.80 including Supplements.
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 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, DVA, lifestyle or financial issues please contact Christine Hopper 03 9808 0338.
Aged care fees linked to Age Pension rates
The basic daily fee for residential aged care is 85% of the single rate of Age Pension. Thus the basic daily care fee increased to $47.49 with effect from 20 March 2015.
The changeover levels for calculating the aged care means tested amount also increased in line with the increase in the Age Pension. The new Maximum Accommodation Supplement is $53.39 per day equivalent to the interest chargeable for an Accommodation Room Price of $306,405.
Centrelink is expected to review the amount of each aged care resident’s Means Tested Amount and daily Care Fee or Accommodation Contribution to take account of the higher changeover points.
The system of aged care fees, charges and accommodation costs is complex. The value of your home and any residential aged care accommodation deposits are treated differently for aged care and Age Pensions.
Help is available. Financial Care Services helps clients understand the financial implications of residential aged care and develop a life guide strategy to generate the cash flow needed.
Financial Care Services is an independent aged care financial advisory service specialising in aged care entrants and Centrelink Pensions.
Financial Care Services 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 DVA, Centrelink, lifestyle or financial advice, please contact Christine Hopper (03) 9808 0338.
Financial Care Services Pty Ltd
Independent aged care, lifestyle and financial advice for seniors in Melbourne, Victoria, Australia
Australian Financial Services Licence Number
299570 (check this at www.search.asic.gov.au/fsr/flb.html)
Authorised Representative Number
252529 (check this at www.search.asic.gov.au/fsr/far.html)
Telephone – call +61 3 9808 0338
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Address – mail or meet at 172 Warrigal Road, Camberwell Victoria 3124
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Disclaimer: The information contained in this newsletter 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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