You mentioned recently that a couple can earn $292 a fortnight before their pension is reduced. You added that they could also earn $250 a fortnight each from personal exertion. Does this mean a total of $792 a fortnight? I can't seem to find a definition of "personal exertion" on the Centrelink website.
To encourage retirees to take on some casual work to supplement their pension it is allowed for an age pensioner to earn $250 a fortnight from a genuine paid job – not self employed. It is called a work bonus and the recipient must be over age pension age.
So, yes, it would be possible for a couple to have total assessable income of $792 a fortnight and retain the full pension. That is $292 of Centrelink assessable income such as deemed income PLUS $250 each per fortnight of wages under the work bonus. If either earned more than $250 a fortnight from wages the excess would be included in the income test.
More information is available at the Human Services website.
My wife is 62 and currently has a Transition to Retirement super pension as well an associated accumulation account. Her job is being terminated in a few weeks (the business is closing down) but she would like to maintain something like her current arrangement (a super pension and accumulation account) as she is likely to obtain short-term work from time to time but also needs a reliable income stream.
I have heard that, from July 1, 2017, the tax exemption on TTR pension fund earnings will no longer apply, although the pension benefit itself will remain tax-free as she is over 60.
If that is correct, should she convert her TTR pension into a normal super pension, as she will have satisfied a "condition of release"? In that case, can she also keep the existing accumulation account (which I know is still taxed on earnings) as a vehicle for future superannuation payments?
Yes, TTR funds will lose their tax-free status after June 30, but the income stream from the TTR will remain tax-free for recipients aged 60 or over. I agree that it would make sense for your wife to advise her fund that she has satisfied a condition of release and ask them to switch her fund to pension mode. Her funds will then be in a tax-free area while she is drawing a tax-free pension. The difference between the treatment of pension funds and TTR funds is because a normal pension fund is used by retirees – a TTR is used by people still working.
A person cannot contribute to a pension fund but contributions can be made to a separate accumulation fund.
I am a 30-year-old full-time worker. I have realised I never rolled my old super fund to my new one when I changed jobs. I noticed in the old fund's annual report that it did not perform well last year. I am thinking of transferring it to another fund where I can choose better investment mixes and be more hands on. Are there issues with having two funds?
You are much better to have your superannuation in one fund and save annual account keeping fees, but you need to drill down and find out why your fund went backwards. Maybe you did not have a growth-orientated asset mix. I think you are at the perfect age to form a relationship with a financial adviser that should set you on a good course for the future and recommend a super fund with the features you require.
I was wondering how you think Australian share prices will be affected now that Donald Trump has been elected. We will need to sell some shares to pay for a caravan we are purchasing, but not for a couple of months as yet. We do not want to sell now as we are currently on Centrelink and the extra dollars would put us over the assets level.
I have always recommended that anybody investing in share-based investments should have a five to seven-year timeframe in mind at least. Therefore, irrespective of what you believe the markets may do, it would certainly make sense to cash in the shares now if the proceeds were going to be needed within the next six months. The conversion of shares to cash should not affect the treatment of your assets under Centrelink as both are deemed assets – this means they are assessed similarly.
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.