Question 1

Hello Craig! I’m about to turn 65 and at the same time collect an inheritance of $1.4 million. I have a current super balance of 750K and still work earning $40k annually. My husband is 72, retired and receiving age pension of about $360 per fortnight declaring my income. He also receives a similar amount from UK pension and an income stream of $200 a fortnight from his super (balance is $120k). We own home in my husband’s name in regional Victoria worth about 700K. We live in modest comfort occasionally drawing on savings of approximately $50K for maintenance, trips etc. I would like to use up to $900K from my inheritance to buy a property in my name as a city base and gift $200K to help children with mortgages.  

• Are all my assets (including super) now counted against my husband by Centrelink even though I’ve not yet reached pensionable age?
• Would the situation change if I put the maximum non-concessional contribution into my super using bring-forward provisions?
• Could we establish a new accumulation account for my husband and use that to make a bring-forward non-concessional contribution on his behalf?

Hello,

Your super won’t be counted against your husband’s age pension eligibility until you reach age pension age (67). Unless you convert the funds into a pension earlier.

You could put $360,000 into your super to shield it from the age pension asset test for the next two years but given the level of inheritance it may not help.

A couple who owns their home loses the age pension once their combined assets reach $1,031,000 (as at August 2024).

Note that Centrelink doesn’t care whose name the property is in, but you can only have one property per couple considered as your ‘main’ residence.

Any gifts over $10,000 are also counted in the assets test for five years.

You may have to factor in nil age pension payments for a while when planning what to do with your inheritance, as you may need to draw down on some of this money to fund your lifestyle.

Therefore, don’t tie up too much in a second property that doesn’t produce an income.

Yes, your husband can open a super fund and you can contribute up to $360,000 in that. He can then transfer back his existing pension to combine all of his super, then restart a new larger pension.

Given there is a lot going on and the money involved, you may wish to seek personalised financial advice.

Question 2

Why does the age pension assets test give a much lower result than the income test when using the deemed amount of income that would be derived from the same quantum of assets?

As background, Centrelink applies an income and assets test to determine your income support eligibility.

Whichever test gives you the smaller payment is applied.

Deeming rates are currently set very low. Therefore, if you only have ‘assets’ then the assets test normally is the harsher of the tests.

However, where the income test generally kicks in is for people who may be working part time or have some type of income payments that is not asset tested, such as an overseas payment or defined superannuation benefit income payments.

Question 3

The government home equity scheme? Say I draw a full age pension. If I access the max 50 per cent allowable, is this amount then assessed as income, to affect my pension, or not?

The government Home Equity Access Scheme (previously called the pension loan scheme) can pay fortnightly payments up to 150 per cent of the fortnightly age pension.

It’s a government-backed reverse mortgage scheme with a no negative equity guarantee.

If you are already a full age pensioner, i.e. receiving 100 per cent of the maximum age pension, then you can get an additional 50 per cent payment via this scheme.

This payment is not income tested by Centrelink so won’t affect your existing age pension payments.

If you just let the payments build up in your bank account then of course it would be asset tested and deemed.

But I assume anyone who wants access to this scheme actually needs the payments to fund their lifestyle.

Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.