Financial Care Services Newsletter
by Christine Hopper
Volume 13 Edition 1 – 30 January 2023
Christine at Financial Care Services, the specialist adviser to seniors in transition to new lifestyles
Special Additional Age Pension Work Bonus Credit
During 2022, the media proclaimed that “pensioners wanted to be allowed to work”.
Possibly this slogan meant that Age Pensioners should have all of their work income exempt under the Income Test.
Under that scenario, many seniors who had continued in full time work after attaining Age Pension Age could have an Age Pension to enhance their regular income.
In response, a Special Additional Age Pension Work Bonus Credit was granted for use over thirteen months starting from December 2022.
The impact of the Special Additional Age Pensioner Work Bonus Credit is that you may have an additional $4,000 of work income exempted from the Age Pension Income Test.
The Special Additional Age Pensioner Work Bonus Credit is on a “use it or lose it” basis.
At the end of 2023, any accumulated Work Bonus Credits in excess of the normal limit, will be forfeited.
Age Pension Eligibility tests
The Age Pension is intended to provide the income Australian citizens need for a very modest lifestyle when they are too old to be capable of earning an adequate income from work.
Your Age Pension Age is the minimum age for you to be eligible for an Age Pension.
The Age Pension Age has been increasing slowly.
You must be aged at least 66 years and 6 months to qualify for an Age Pension in January 2023.
But not every senior is ready to fully retire immediately they attain their Age Pension Age.
Many seniors enjoy being active in the paid workforce or operating their own businesses.
Some seniors want to keep working until their partner reaches their Age Pension Age and they have paid down their home mortgage.
Age Pension Income Test
The Age Pension is for seniors who lack sufficient resources to finance a modest lifestyle for themselves.
Thus the Income Test reduces the amount of Age Pension payable to seniors who have other sources of income.
Currently, a single Age Pensioner could have $190 per fortnight of income and not be impacted by the Income Test.
But once her income exceeds $190 per fortnight, then the Income Test reduces her Age Pension payment by fifty cents for each additional dollar on income.
A single Age Pensioner could keep her Pensioner Concession Card and receive at least one dollar per fortnight of Pension provided that her income is not more than $2,061 per fortnight and she is not excluded by the Asset Test.
Age Pension Work Bonus Scheme
The Age Pensioner Work Bonus is a compromise between the general taxpayers who provide the money for the Age Pension and seniors who have attained Age Pension Age but are still active in the workforce.
The Age Pensioner Work Bonus scheme allows each Age Pensioner to have $300 per fortnight of earnings from work exempt from the Income Test.
Work Bonus for Age Pensioner’s work income
The Work Bonus can only be applied to income generated from work by the Age Pensioner.
The work must involve ‘personal exertion’ with the intention of generating income.
For example, Work Bonus can be applied to wages earned by working as a school crossing supervisor.
The Age Pensioner’s net income from his lawn mowing enterprise is eligible for the Work Bonus offset.
But you cannot treat your time and effort exerted in managing your own, or your partner’s, investments as ‘work’ eligible for the Work Bonus offsets.
Similarly, your management and record keeping for your SMSF does not count as ‘work’ for the Work Bonus.
Accumulating Age Pension Work Bonus Credits
You may save up some Work Bonus credits for use later.
Consider, Tom who likes to mow lawns during spring and autumn then travel far away from Melbourne’s winter.
Tom accrues $300 of Work Bonus credit each fortnight.
After ten fortnights away, Tom has $3,000 of saved Work Bonus Credits that he could offset against his next season of work earnings.
In normal times, an Age Pensioner may accumulate one year’s worth of Work Bonus Credit.
An Age Pensioner normally has her Work Bonus Credits capped at $7,800, that is, 26 lots of $300.
Special Additional Age Pension Work Bonus Credit
The Special Additional Age Pension Work Bonus Credit was granted for use over thirteen months from December 2022.
Every Age Pensioner had an additional $4,000 of Work Bonus Credit added to her Work Bonus Credit account at the start of December 2022.
To allow for the Special Additional Work Bonus Credit the cap on Age Pensioner Work Bonus Credit accounts has been lifted to $11,800 temporarily.
But the cap on Age Pensioner Work Bonus Credit accounts will drop back to $7,800 on 1 January 2024.
In practice, each Age Pensioner could have an additional $4,000 of work income ignored for the Income Test between 1 December 2022 and 31 December 2023.
Any part of the special additional Work Bonus Credit unused on 31 December 2023 will evaporate.
Age Pensioners are being encouraged to work a little more to help with the perceived labour shortage in 2023.
But if you are earning serious money then maybe you do not need an Age Pension or a Pensioner Concession Card.
Help with checking your situation against the qualification and means tests.
Seniors who want to work fewer hours could consider their eligibility for an Age Pension whilst still working.
But remember the Special Additional Work Bonus is a one-off $4,000 supplement.
Whilst the Special Additional Work Bonus Credit might be enough to lower your assessable income to just below the Income Test cut-off if you are still working in 2023.
Once you have used your $4,000 of Additional Work Bonus, you would only have the regular $300 per fortnight of Work Bonus to help keep your income was just a little below the Income Test cut-off.
Christine helps clients check their situation against the residency and means tests for the Age Pension.
Contact Christine for the Financial Care Services Age Pension data form to prepare for your Age Pension ‘personal financial factual information ‘consultation with Christine.
You will also receive the Client Services Guide for Christine Hopper that gives you essential information about how Christine works with her clients.
You could then meet with Christine to look at your personal situation.
Christine could explain how Centrelink could calculate ‘income’ for your situation.
If the means tests would exclude you from the Age Pension then you could consider a Commonwealth Seniors Health Card.
A younger partner might be eligible for a Low Income Health Card when the older partner has an Age Pension.
If you have not been excluded from the Age Pension by the age or residency qualifications, and you hope that the means tests would not exclude you then you could apply for an Age Pension.
How to apply for an Age Pension
Centrelink would like you to apply online for your Age Pension.
You are expected to be able to establish a MyGov account then link your MyGov account to your Centrelink account.
Using your smart device you then ‘prove your identity’ to obtain a Centrelink Customer Reference Number, your CRN.
Next you could complete an online Claim Age Pension and upload it with your Income and Assets Declaration plus electronic copies of your supporting documents.
Alternatively, download the forms from the Centrelink website, complete the forms in ink, photocopy your supporting documents and mail the pack to Centrelink in Canberra.
Help to complete a paper Claim for Age Pension
If Centrelink forms are too challenging for your skillset, then Christine could help you write your data into a paper form.
Christine has neat handwriting; she could write your data into the correct little boxes on the Centrelink form.
You would then need to read through the form to check that your personal data was written in correctly.
Then you sign the completed form and mail it to Centrelink.
You might choose to take your Age Pension Claim to a Centrelink office.
Then you could ‘prove your identity’ by showing your personal documents.
Christine at Financial Care Services your independent adviser
Christine at Financial Care Services is an independent adviser specialising in retirees of modest means and aged care entrants.
Our core values include working with clients in claiming DVA and Centrelink entitlements.
Christine at Financial Care Services is here to answer your Health Card and Age Pension questions and guide your understanding of aged care costs.
Help with Centrelink challenges is available from Christine Hopper at Financial Care Services, the specialist adviser to seniors in transition to new lifestyles.
Christine has neat handwriting just right for inserting your data into small printed spaces.
She helps clients complete Centrelink forms.
Christine could help you with collating your supporting documents and then mailing your form to Centrelink.
Assistance with completing Age Pension, Low Income Health Card and Commonwealth Seniors Health Card Claims and the Commonwealth aged care means testing forms is available to clients of Christine at Financial Care Services.
Christine charges fees based on the work involved in advising you about health cards, pensions and aged care fee solutions.
To make an appointment for confidential, independent and professional advice about aged care, retirement lifestyle costs, granny flat or Age Pension issues please contact Christine Hopper or call +61 3 9808 0338.
______________________________
Christine Hopper
Financial Care Services
Independent aged care, strategic lifestyle and Social Security advice for seniors in Melbourne, Victoria, Australia
Telephone – call +61 3 9808 0338
Email – contact Christine@financialcareservices.com.au
Address – mail to 2B Thomas Street, Camberwell Victoria 3124
Website – visit financialcareservices.com.au
LinkedIn – connect https://www.linkedin.com/in/christinehopper1
Past newsletters – see http://financialcareservices.com.au/newsletters/
Newsletter – subscribe http://eepurl.com/js41T
Disclaimer: The information contained in this newsletter is of a general nature only and does not constitute “financial advice”.
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.
© 2023 Christine Hopper @ Financial Care Services. All rights reserved