Maximising Centrelink

Clients often come to our website by searching internet typing in these words:

  • Centrelink how much can I earn
  • Centrelink how much will I get
  • Age pension asset test and income limits
  • How to maximise Centrelink benefits
  • How to maximise your Centrelink entitlements
  • Maximising government age pension
  • How to get more government pension
  • How to get more Centrelink payments
  • Strategies to maximise Centrelink benefits.

During our financial planning career getting the most out of government payments has always been on the clients’ agenda. So we review several strategies how maximise Centrelink benefits.  You can ask us online about other strategies.

Let’s look at the earlier popular strategies to increase government income support which are no longer effective if you want to maximise Centrelink benefits yet often queried by clients:

Annuities – Up until September 2004 financial advisors recommended these income stream products.  The benefit was that any money amount used to buy a ‘complying annuity' was fully exempt from the Centrelink Assets Test (providing it passed specific Centrelink criteria of investment and residual capital value terms).  Retirees used annuities as part of their overall retirement planning even though they could not access a lump sum when they needed.  Presently all purchase cost (that is the capital used to buy the annuity) is fully assessable under Centrelink for the purpose of the Assets Test hence this is no longer attractive for clients seeking to maximise Cetrelink benefits.
 
Private Companies and Family Trusts – up until January 2002 clients benefited from using complex entities as they were excluded from the Centrelink Asset Test.  The government subsequently made changes so that the assets held would be deemed by Centrelink as held personally, hence this is no longer attractive for clients seeking to maximise Cetrelink benefits.

The remaining strategies to maximise government age pension’ may be grouped as:

Strategies available to everyone.  Those financial strategies available to everyone do not offer a significant impact on maximising government age pension payments, they are:

  • Gifting - you may gift up to ten thousand per each per financial year, up to a maximum of thirty thousand dollars over a 5 year period.  Then the amount given away being $10,000 will not be counted as a deemed asset for the purpose of Centrelink.
  •  Funeral Plans – you may invest up to ten thousand dollars in a Funeral Bond or a pre-paid funeral plans, and such $10,000 investment are fully exempt both Centrelink Assets and Income Tests.  The reasons for taking such plans are generally other than maximising Centrelink alone.  

Strategies for those who has met specific criteria:

  • Pensioners that have younger spouses – unless the spouse is over the Age Pension age, his/her superannuation investment would be exempt from Centrelink and DVA assessment.  Following this strategy, if you are of the government pension age and your spouse is under, you could be better off placing your super in the super account of your spouse.   You will need to monitor and plan well before both of you are of the Age Pension age if you wwant to maximise Centrelink benefits as a couple.
  • Pension Bonus Scheme -  if you and/or your spouse continue to work past your Age Pension ages, good financial planning could add more than $30,000 for singles or $50,000 for couples at retirement. Make sure that you register for the Pension Bonus Scheme.
  • Keep money in Super - your super assets are not counted under the Assets test until you are the Age pension age and maintain an accumulation (non-pension) superannuation account or an SMSF.  Investments held by the superfund are Asset test exempt until you reach the pension age. This means if your spouse retired and is under the pension age, you may get more as couple if assets are moved to super. 
  • Super Pension - using superannuation or financial assets to draw a super pension will exempt some of the income from being income tested thus could increase the government benefits. When you reach a pension age the Income test deeming rate will apply to superannuation where a pension is not being taken.  When you commence a pension from your superfund Centrelink works out the assessable part of this superannuation pension looking at the difference between the purchase price of the pension from the actual amount of pension paid.  It estimates the pension purchase price by dividing the market value your super at the time when you commenced the pension by the life expectancy. 
  • Allocated Pension Income Streams – these are also referred to as ‘account-based pension’ and which pay income and capital as part of the pension payment, where the capital part of the payment is exempt from the Centrelink income test being of a capital nature.  If you are a client with a high level of income that is deemed for Centrelink purposes it may be prudent to consider this if you seek to maximise Centrelink benefits. .  
 

Our financial advice includes strategies to maximise your Centrelink and DVA benefits, assisting with your application and keeping Centrelink/DVA up-to-date about your circumstances. 

 
If you want to increase your Centrelink pension entitlement, or restructure in view of the Asset or Income Tests, book your FREE first meeting now.

 

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