Centrelink entitlements
It’s important to know that the Government may be able to help you with your finances in retirement. Every dollar you receive from the Age Pension or other Government benefit is a dollar that you don’t need to provide from your own savings. The options are worth investigating.
Topping up your retirement income with the Age Pension or other Government benefit or allowance can be a great way to help make your savings last longer. But it’s important to understand the rules associated with such benefits.
To qualify for the Age Pension, you must be an Australian Resident. Men must be aged at least 65 years and women 64 (depending on when they were born). The amount you receive from Centrelink usually depends on two things – your income and your assets. From 1 July, 2011, the Age Pension rate per fortnight is $729.30 (single) and $549.70 (each member of a couple) which includes the Pension Supplement.
Assets test
The assets test means you can have a certain level of assets before your pension starts to reduce. Assets are usually valued at their account balance (such as savings in a bank account) or market value (such as value of shares or property). If you have loans secured against an assessable asset, you can deduct the value of the loans.
Your family home is excluded from the assets text, as well as pre-paid funeral expenses, and funeral bonds up to the allowable threshold. But almost everything else you have is included: your furniture, vehicles, life insurance investment policies and other investments.
Income test
As well as calculating your pension payment under the assets test, Centrelink will check how much you receive under the income test. It’s the lower of these two amounts that you will actually receive.
Getting a more favourable result from Centrelink
There are several ways to get a better result in the assets test, such as pre-paying funeral expenses which can help reduce your assessable assets. There are other things you can do such as giving a gift. You may have a family member you were hoping to help out financially.
Making a gift in these circumstances is a completely valid way of reducing your assessable assets. However, any amount over $10,000 cannot be deducted from your assets straightaway. It must be counted as an asset for another five years. So, if you made a gift of $12,000, you would not be able to deduct $2,000 of it immediately.
It’s also important to understand that an asset’s assessable value is determined by its market value, not what it cost you or its replacement cost. Say you own antiques that are worth $60,000. If you suddenly had to sell them, you might only get $10,000. So, this is the figure that you report to Centrelink rather than $60,000.
Discounts and benefits
Successful retirees ensure they get all the discounts to which they’re entitled. Even if you’re only eligible for $1 of Age Pension, you still qualify for a range of pensioner discounts. You will, for example, receive a Pensioner Concession Card that lets you take part in the Pharmaceutical Benefits Scheme, giving you access to prescription medicines at greatly reduced cost.
Also if you do not qualify for the Age Pension, you may be entitled to a Commonwealth Seniors Health Card. This card, like the Pensioner Concession Card, entitles you to take part in the Pharmaceutical Benefits Scheme and to receive free or discounted emergency ambulance services.
If you qualify for the Commonwealth Seniors Health Card, you will also receive a Seniors Supplement, which is a non-taxable payment of $816.40 per year for singles and $616.20 per year each for members of a couple paid quarterly (as at 1 July 2011).
Seniors cards are also issued by Australian states and territories, which entitle holders to things such as concessional travel on state transport services. Local councils may also offer discounts on council rates or other subsidies, so ask them what they offer.
Claim your entitlements
- Pensioners qualify for a range of benefits, even if they receive a minimal Age Pension.
- Even those who don’t qualify for the Pension could still be entitled to federal, state or local Government concessions.
- Ask for a seniors discount where you shop or buy services.
