Centrelink’s systems are not easy to navigate, and their rules are often difficult to understand. As a result, we find a handful of persistent myths often get in the way of clients qualifying for their full entitlements.
Below, we set the facts straight.
Myth #1: You Have To Work Until You Are ‘Pension Age’
While it is true that you cannot qualify for the Age Pension until you reach ‘pension age’ (currently, 67) there is no requirement to work up until to this age.
In fact, if you cease work prior to ‘pension age’, there are more lenient rules to qualify for other relevant payments (e.g. the JobSeeker Payment), from age 55 onwards.
Myth #2: You Can’t Work And Receive The Age Pension
Many people assume any paid work will immediately reduce their pension payment or disqualify them entirely. Centrelink’s rules are however somewhat more flexible.
As a result of the Work Bonus, the first $300 of fortnightly employment income is exempt from the income test. Unused portions of the Work Bonus also accumulate and can then be drawn down to offset future earnings. This ‘Work Bonus balance’ can accrue up to a maximum credit amount of $11,800.
Over and above these amounts, the first $218 of assessable income for individuals and $380 for couples (combined) does not reduce pension payment rates.
Myth #3: You Can Give Away Assets To Receive A Higher Payment
Have you ever thought you might outsmart Centrelink by giving away assets to your family to boost your pension? If so, you are not Robinson Crusoe. Centrelink has measures in place to prevent people from artificially lowering their assessable assets in this way.
While giving gifts is allowed, any amount that exceeds Centrelink’s limits of $10,000 in a single financial year and $30,000 over five financial years will be considered a ‘deprived asset’ and remain part of your assessable assets and income for five years.
Even if you are genuinely trying to help out family or friends in need, any assets you give away (or sell for less than market value) will be captured by this provision.
One notable exemption is that gifting between members of a couple is generally disregarded by Centrelink, as couples are ordinarily assessed on their joint assets and income.
Myth #4: Your Payment Rate And Eligibility Does Not Change
Centrelink is not all-seeing and all-knowing – as part of receiving payments you will also have an obligation to inform them if there are changes to your circumstances so they can adjust your payment rate accordingly.
This can work in your favour, as Centrelink may end up relying on outdated information to calculate your payment. For example, personal assets (e.g. cars, boats, caravans, and home contents) will not be automatically depreciated. If it is reasonable to expect they have reduced in value, updating Centrelink’s records may result in an increased payment rate.
If you have recently renovated your home or taken a holiday, then there is less money in your bank account to be assessed, and you may similarly qualify for increased payments.
If you do not qualify for a payment, it is worth keeping in mind Centrelink’s thresholds and payment rates are constantly indexed, and it is worth checking your eligibility every so often.
Myth #5: You Have To Choose Between Super And The Age Pension
If you have built up a nest egg in super, you have not ‘opted out’ of receiving government support. You may still be able to receive payments from the Age Pension and thereby reduce the rate you need to draw from your savings, depending on your circumstances.
After you reach ‘pension age’ (or if you transfer funds in super to ‘pension phase’ prior) your savings in super are included in the income and assets tests in the ordinary way.
As you draw on your savings over time, the total value of your assets may decline. This could result in you qualifying for a higher payment rate or falling under Centrelink’s thresholds to become eligible for payments and concessions. Again, it is worth regularly updating Centrelink’s records and checking your eligibility.
While the above myths are easily debunked, the specific rules to qualify for Centrelink payments and concessions can be complex and subject to regular change.
If you wish to consider your eligibility for Centrelink payments and concessions, please contact us to arrange a time to meet with one of our financial advisers.