Next month I will lose my age pension because I will be over the limit for the assets test. Can you please confirm what will happen regarding my pensioner concession card – I have heard conflicting reports.
The government wishes to ensure people whose pension and Pensioner Concession Card (PCC) are cancelled on January 1, 2017 continue to receive similar federal government concessions. Therefore, these individuals will be automatically issued with a Health Care Card (HCC) – those over age pension qualification age will also be issued with a Commonwealth Seniors Health Card (CSHC). Issuing an HCC separately ensures dependants of the cardholder will also continue to receive federal government concessions.
The federal government offers very similar benefits to CSHC and HCC holders as those offered to PCC holders, including concessional prescriptions costs and access to a lower threshold of the Extended Medicare Safety Net.
If your assets make you eligible for an aged pension, but your spouse is below 65 and still working, does that exclude the partner not earning from any pension? What if the younger spouse stops working?
To be eligible for the age pension a person must be of pensionable age – therefore you could qualify for a pension if you are of pensionable age. However, your spouse would not qualify simply because they gave up work if they have not yet reached pensionable age. Keep in mind that eligibility for the pension is assessed under both the income test and assets test, so the income your spouse earns from work would be taken into account for your own pension eligibility.
We received our new assessment from Centrelink last week but on inquiry found that their staff are having difficulties understanding and explaining how the new system works. We are a home-owning couple and are entitled to have $816,000.00 in assets.
When they try to explain how they reduce the pension by $3 for every $1000 in assets they start with the full base rate for a couple's age pension, which is $1200 per fortnight. However, this cuts out at $400,000. Add this to the $375,000 exempt sum for the full pension and suddenly the base rate of pension runs out at $775,000. What happens to the next $40,000 – they can't explain.
A department spokesman points out that the full rate of pension for a couple is currently $1322.40 a fortnight, not $1200 as you suggested. It is correct that the assets test free area (the amount of assets before pension is affected) for a homeowner couple will be $375,000 from January 1, 2017.
From January 1, the pension will reduce by $3 a fortnight for every $1000 assets in excess of the assets test free area of $375,000. Therefore, the assets test cut-out limit for a couple who own their home (the amount of assets before pension is cancelled) will be $816,000.
The assets test cut-out limits will continue to increase three times each year, on March 20 and September 20 each year when the full rate of pension is indexed, and on July 1 each year when the assets test free area is indexed.
My wife is under 60 and still works part time. I am 68, retired, and am getting a small part pension. With the pending changes my assessable assets have now been calculated by Centrelink as being more than the $816,000 limit by about $40,000.
My only query is that they have the value to us of our investment unit in full (ie. my 50 per cent share and my wife's as well as being part of my asset) which is what took me over the limit. I am finding it impossible to get through to Centrelink and wondered if you could confirm if the method they have used is correct.
If it's a couple they assess all assets so the full value of the unit will be assessable. However, it may be possible to improve your situation by adopting a few strategies. Can you revalue the unit to a slightly lower value? Is your furniture valued at garage sale value, which is $5000 for most people? If there is cash in the bank, have you thought about contributing it to your spouse's superannuation where Centrelink will not assess it?
I write on behalf of my father who is 84. My mum is 83 and in a nursing home that charges a bond of $400,000. My father has paid $200,000 to the home but large interest fees of $1000 per month from the home (on the $200,000 they don't have) are causing him much distress.
He refuses to sell his house because he believes he would lose his pension if he did so. Could you please advise if this is the case and what we can possibly do? It is creating a huge rift in the family and certainly affecting his health.
My answer must be general as only sparse information has been provided.
If your mother has been assessed as being able to pay $400,000 it means that the government thinks she has more than $160,000 in assessable assets. As the assets are assessed on a 50/50 basis this would mean that mum and dad jointly have about $320,000. The house is not included in your mum's assets because your dad qualifies as a protected person and is living in that property. If you dad sold his property he is right to be concerned about a potential reduction in his (and your mother's) pension entitlement – especially after January 1, 2017.
It is a complex area and I strongly suggest that your parents get in touch with a financial adviser who can provide specialist advice in this area.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: asknoel@fairfaxmedia.com.au.