Volume 8 Edition 5 Financial Care Services Newsletter
Online at : Permalink:https://financialcareservices.com.au/newsletters/vol-8-ed-5
Financial Care Services Newsletter by Christine Hopper
Independent aged care and retirement lifestyle advice for seniors
Volume 8 Edition 5 – 30 May 2018
Age Pension enhancements in 2018 Budget announcements
The 2018 Federal Budget announcement included two proposals that could enhance the cash flow of seniors. Firstly, the Work Bonus allowance could be increased and income from genuine self-employment could count for the Work Bonus. Secondly, the pensioner loans scheme could be extended to allow a senior to be paid 150% of the Age Pension.
Before you get excited about these enhancements please remember that each proposal requires a detailed amendment to the Social Security Act. The Senate would need to pass the appropriate legislation after the House of Representatives has agreed it.
In the meantime, you might explore the current Age Pension provisions.
Age Pension payments to seniors excluded by only one of the Income Test and the Asset Test.
Yes if you are excluded from receiving any Age Pension by just one of the Income Test and the Asset Test then you could get a reverse mortgage from Centrelink to generate fortnightly payments equivalent to the full Age Pension.
For example, Fred and Faye own the vacant land next door to their home; actually the additional block is their garden. The vacant land/garden has become so valuable that Fred and Faye are excluded from any Age Pension by the Asset Test. But their superannuation accounts are dwindling and a cash flow challenge is looming.
A reverse mortgage secured against the vacant land/garden could allow Fred and Faye a regular income and the use of their garden block until they were ready to leave their home. Centrelink would then be repaid from the proceeds of sale of the vacant land.
Fred and Faye signed up with Centrelink for a full rate Age Pension as a Pensioner Loan secured by a reverse mortgage against their vacant land. Their children are not upset that Fred and Faye are spending part of their estate to support their retirement lifestyle.
Similarly Dianne and David are getting the full rate of Age Pension even though the Asset Test would cut them down significantly. Dianne inherited a half share of her mother’s house but she has not realized her share whilst the other joint owner is living there. So Dianne and David applied for a Pensioner Loan secured by a reverse mortgage against their own home.
The Age Pension Loan scheme does have limits on the amounts of fortnightly payments. Also your equity in your property needs to be adequate to support your proposed Age Pension Loan and its accumulated interest. Read more about Age Pension Loans
Age Pensioner Work Bonus
Australians are not required to retire on attaining their Age Pension Age. Many seniors are happy to keep on working after turning sixty five years. We benefit in mental health terms from regular work commitments both voluntary and paid.
The government encourages seniors to stay involved in the workforce. This encouragement includes the Work Bonus adjustment to the ‘income’ for the Age Pension means testing.
The current Work Bonus rules allow for the first $250 per fortnight of earnings from paid employment to be disregarded for the Age Pension Income Test. Any Work Bonus not utilized this fortnight can be carried forward for later use subject a maximum of $6500 of ‘saved’ Work Bonus.
The 2018 Budget included two improvements to the Work Bonus scheme. Firstly the amount of earnings to be disregarded increases from $250 per fortnight to $300 per fortnight per Age Pensioner.
Secondly, the type of employment is to be expanded from ‘employment by an unrelated party’ to include genuine self-employment. The Commonwealth is now formulating rules about the types of ‘work like arrangements’ that could count for the Work Bonus scheme.
Self-employed trades people and professionals who directly invoice their clients could expect to be included in the revised Work Bonus scheme.
Seniors who operate small businesses as ‘sole traders’ or as the sole owner / director / employee of a small company providing goods or services directly to consumers or other businesses, might become eligible for the Work Bonus.
Seniors who work in a family business alongside other family members and possibly also unrelated employees, could be harder to include in the Work Bonus scheme. Centrelink would need to be convinced that the senior was actually working in a role that would otherwise be filled by an unrelated person eligible for Award wages.
The expanded Work Bonus system is unlikely to allow for ‘work’ in managing your own investments or property maintenance tasks for yourself, your family or your community, to count for the Work Bonus scheme even if these task attract some pay.
The Work Bonus is part of the Commonwealth the Social Security legislation. Hence any changes to the Work Bonus rules need to be legislated by Federal government.
Help with navigating the Age Pension system
Christine at Financial Care Services understands many of the Centrelink rules about Age Pensions. Christine could help you check your entitlements.
Contact Christine to arrange a consultation for ‘personal financial factual information’ about a potential full Age Pension or just a Commonwealth Seniors Health Card. Checking your financial eligibility before you apply to Centrelink could save you a rejection letter and then the hassle of applying for another Health Card or income benefit.
New on the Financial Care Services website is our Age Pension Guide.
The Financial Care Services Age Pension Guide is being written by Christine Hopper to explain the basics of the Age Pension rules.
The first segments about Eligibility for an Age Pension are ready for you to read. The next segments about Age Pension Means Tests will be available soon.
Financial Care Services your independent adviser
Financial Care Services is an independent advisory service specialising in retirees of modest means and aged care entrants. Our core values include working with clients in claiming DVA and Centrelink entitlements.
Financial Care Services charges fees based on the work involved in advising you about pensions and aged care fee solutions.
To make an appointment for confidential, independent and professional advice about aged care, retirement lifestyle or Age Pension issues please contact Christine Hopper or call +61 3 9808 0338.
______________________________
Christine Hopper
Financial Care Services Pty Ltd
Independent aged care, strategic lifestyle and Social Security advice for seniors in Melbourne, Victoria, Australia
Telephone – call +61 3 9808 0338
Email – contact info@financialcareservices.com.au
Address – mail to 172 Warrigal Road, Camberwell Victoria 3124
Website – visit financialcareservices.com.au
LinkedIn – connect https://www.linkedin.com/in/christinehopper1
LinkedIn Company – follow https://www.linkedin.com/company/financial-care-services/
Facebook Page – like https://www.facebook.com/fincareservice
Twitter Feed – follow https://twitter.com/fincareservice
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”. 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.
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.
© 2018 Financial Care Services Pty Ltd. All rights reserved