Centrelink entitlements in retirement are always nice if you can get them!!
The Government entity known as Centrelink can bestow on us many benefits that are associated with the Age Pension, but it can be a daunting prospect for many.
In my capacity as a financial adviser, I have helped many clients over the years gain some Centrelink benefits. Many clients believed that it was impossible, or they found that it was just plain too difficult to navigate through the many forms or via their website, with the all the associated jargon required to gain some Age Pension.
Age Pension
The Age Pension entitlement, once you’ve reached the eligible age, is based on 2 tests, the income test and the asset test. The one that results in the lowest amount of Age Pension, is the one that is enforced.
A pensioner couple can gain some Centrelink Age Pension if they have reached the relevant qualification age and have assets less than $891,500 for homeowners and $1,108,000 for non-homeowners.
There are several different ways in which you can increase the amount of Age Pension that you are entitled to. This all depends on your individual circumstances, so its always a great idea to consult a financial adviser who is trained to identify different areas that may be applicable to your circumstances.
Asset sheltering
Superannuation in accumulation phase is not assessed until you reach Age Pension age (this varies depending on your year of birth). By adding money to the superannuation fund of a younger member of a couple, the older partner can benefit from an increased Age Pension payment.
A similar strategy can be implemented for someone who retires before reaching Age Pension age and needs support from Centrelink. There are restrictions around adding and accessing money from superannuation, therefore the strategy should be discussed with an appropriately qualified financial adviser before making any changes.
Other less generous yet effective strategies include:
Gifting
You can gift $10,000 p.a and a maximum of $30,000 in any rolling 5-year period. If you exceed these gifting limits in any way, you will be assessed as though you still have the money or asset.
Prepaid funeral
Prepaid funerals and funeral bonds up to the value of $13,500 are not assessed by Centrelink. Buying one of these may assist in improving your benefit.
Spend it
Your home is not assessed by Centrelink therefore spending money on renovations and maintenance could help improve your Centrelink payment. Spending money on things such as clothes or a holiday may also be helpful. However, this is not something we recommend for clients because spending a dollar of your own money won’t result in you receiving a dollar from Centrelink. Financially speaking, it is much better to preserve your wealth rather than whittle it away and rely on Centrelink.
Lifetime annuities
Investment into a lifetime annuity increases the amount of money retained as income. This increases the amount of age pension that a person qualifies for. A financial adviser can show you projections of how an annuity can potentially increase your pension entitlements
Centrelink can be notoriously difficult to deal with at times, however, with the right financial adviser this can be made a lot more bearable. A financial adviser can assist in times when Centrelink require updated income and asset details. Also, they may also assist if Centrelink get things wrong. In my experience, as a financial adviser there has been numerous times over the years when Centrelink have failed to record the correct details and subsequently requested that funds be repaid. By assisting these clients, I was able to correct Centrelink and give some much-needed peace of mind to my client.
There have been some clients that exceeded the asset and income test, that were still able to access the Commonwealth Seniors Health Card.
This Centrelink benefit can provide you with benefits such as:
- Cheaper medicine under the Pharmaceutical Benefits Scheme
- Bulk billed doctor visits – this is up to your doctor
- A refund for medical costs when you reach the Medicare Safety Net
Other benefits
Your state or territory government and local council may lower any of these expenses:
- Electricity and gas bills
- Property and water rates
- Health care costs, including ambulance, dental and eye care
- Public transport fare
To qualify for the Commonwealth Seniors Health Card, you must meet the following requirements:
- Be Age Pension age
- Meet residence rules
- Not be getting a payment from Centrelink or the Department of Veterans’ Affairs
- Provide your Tax File Number or be exempt from doing so
- Meet identity requirements
- Meet the income test
To meet the income test, from 20 September 2021, you must earn no more than the following:
- $57,761 a year for a single
- $92,416 a year for couples
There are many facets to gaining some Centrelink benefits, having a financial adviser by your side through the journey can certainly ease the burden.
Get in touch with us today for complimentary consultation to discuss your financial position and we can provide you advice tailored to your unique situation.
