Volume 8 Edition 7 Financial Care Services Newsletter

Online at :Permalink: https://financialcareservices.com.au/newsletters/vol-8-ed-7/

Financial Care Services Newsletter by Christine Hopper

Financial Care Services, the specialist adviser to seniors in transition to new lifestyles

Volume 8 Edition 7 – 30 July 2018

Age Pension means tests, or

Why you might be disappointed if after working and paying taxes for forty plus years you want to retire and live off the Age Pension.

As a long term Australian citizen who has attained age 65 years and 6 months you could apply for an Age Pension. But how much, if any, Age Pension you could actually be paid depends on your circumstances.

Firstly, the payment rate for a member of a couple is lower than the rate for a single person.
Secondly the Asset Test and the Income Test can cut down your payment rate or totally exclude you from any Age Pension.

The means test Allowances increased marginally for July 2018. Here is a summary of the new July 2018 cut off levels.

Age Pensions for single non-partnered seniors

A single person can only be paid the full rate of Age Pension if she has an income of not more than $172 per fortnight and assets of not more than $465,500 or a home plus not more than $258,500 of other assets.

A single person would be excluded from any Age Pension if she has an income over $$1822.40 per fortnight, $47,382 per year, and/or assets of more than $740,500 or a home and more than $533,500 of other assists.

Remember the Income Test reduces your Age Pension by fifty cents for each additional dollar of income over the Income Test Allowance of $172 per fortnight for a single person.
The Asset Test reduces the Age Pension by three dollars per fortnight for every one thousand dollars worth of assets over the Asset Test Allowance for a single person.

The single rate of Age Pension is only available to seniors who are living the single life. If you share domestic arrangements with another adult and present socially as a couple then you will be a ‘couple at Centrelink’. You cannot be treated as a single person at Centrelink just because you and your domestic partner keep your finances separate.

Age Pensions at the partnered rate for senior members of couples

A member of a couple can only be paid the full rate of Age Pension if the total joint income of the couple is not more than $304 per fortnight and their combined assets total not more than $594,500 or they have a home plus not more than $387,500 of other assets.

A partnered person would be excluded from any Age Pension if the total, combined income of the couple is over $2791.20 per fortnight, $72,570 per year, and/or their combined assets total more than $802,000 or a home and more than $1,009,000 of other assists.

Remember the Income Test reduces the total combined Age Pension of a couple by fifty cents for each additional dollar of their total combined income over the Income Test Allowance of $304 per fortnight person.
That is, a reduction of twenty five cents per fortnight is applied to the partnered rate of Age Pension for each one dollar of income of the couple over the Income Test Allowance of $304 per fortnight of the couple.

The Asset Test reduces the total combined Age Pension of a couple by three dollars per fortnight for every one thousand dollars of their total combined assets over the Asset Test Allowance for a couple.
The Asset Test is applied as a reduction in the partnered rate of Age Pension by $1.50, one dollar fifty cents, off each person’s partnered rate of Age Pension for each one thousand dollars that their total combined assets exceed the couple’s Asset Test Allowance.

But wait there is more for seniors who are entitled to at least one dollar per fortnight of Age Pension.

The Pension Supplement and the Clean Energy Supplement are payable to seniors who qualify for at least one dollar per fortnight of Age Pension. These Age Pensioners are also issued with Pensioner Concession Cards.

The Pensioner Concession Card then allows you ‘concession’ rates on your utility bills, municipal Council rates, motor vehicle registration, public transport fares and PBS prescription medicines. Pension Concession Card Holders are normally bulk billed for general medical consultations and public hospital clinics.

Also many businesses offer ‘pensioner discounts’ particularly for services on the slower trading days.

Pension loans for seniors who are severely cut down or totally excluded by just one of the Income Test and the Asset Test.

Social Security is intended to ensure that Australian citizens have at least a modest income. But seniors who own a holiday house or vacant land in suburbia could be hit hard by the Asset Test. They might be eligible for some Age Pension but not enough for a decent standard of living.

The Pensioner loans scheme allows seniors who own property to mortgage their property in exchange for a full Age Pension. Centrelink act as the ‘banker’ for these mortgages and the senior draws down on the loan by fortnightly payments of increased Age Pension. The fortnightly payment from the loan account equivalent to the means test reduction to the Age Pension.

For example Kim owns a holiday home valued by Centrelink at one million dollars. Thus the Asset Test excludes Kim from any Age Pension as a single person. But Kim needs some income for basic living expenses. With a Centrelink mortgage on the holiday home, Kim can ‘borrow’ the full Age Pension from Centrelink. Centrelink charge interest on the loan account. Kim also pays the Centrelink mortgage set up costs.

2018 Federal Budget included an announcement of an extension to the Age Pension loan scheme. The Budget proposal would allow seniors to be paid 150% of the Age Pension with the additional payment treated as borrowings. Under this proposal, a senior on a full Age Pension could have her payments increased via a Centrelink mortgage on her home. This 2018 Budget proposal requires a change to the Social Security legislation.

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 and estimate your Age Pension.

Contact Christine to arrange a consultation for ‘personal financial factual information’ about your potential Age Pension. Checking your financial eligibility for the Age Pension before you apply for an Age Pension or Commonwealth Seniors Health Card could spare you a rejection letter from Centrelink.

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.

Call Christine at Financial Care Services now on 03 9808 0338 to start thinking through your potential for an Age Pension.

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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.

The team at Financial Care Services are here to answer your Age Pension questions and guide your understanding of aged care costs. Help with Centrelink challenges is available from Financial Care Services, the specialist adviser to seniors in transition to new lifestyles.

To arrange an appointment for further confidential, independent and professional advice about DVA, Centrelink, lifestyle or aged care issues please contact Christine Hopper 03 9808 0338.

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, granny flat or Age Pension issues please contact Christine Hopper or call +61 3 9808 0338.

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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
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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.