‘How does Centrelink assess super and what’s an account-based pension?’

A: I have been retired for a year now and my husband for two. We receive a part-pension from Centrelink. This is mainly due to a property we’ve partially purchased because we’re getting ready to have a tree change. On the sale of our current home, we hope to put the difference into superannuation using the downsizing rule.

How does Centrelink look at the super? We haven’t started to draw on it yet and are currently living off savings and the Age Pension from Centrelink. What is difference between income streams and accounts-based pensions? 

Q: Centrelink does not assess superannuation until you reach pensionable age, unless your super fund is in pension mode. Once you reach pensionable age, it will be assessed under the deeming rules for income test purposes, and the fund balance will be assessed under the assets test.

If you are assessed under the assets test, the deeming rules do not apply. If you decide to take advantage of the downsizing rules, just check first that you satisfy all the criteria; a new book I’ve just published with Rachel Lane, called Downsizing Made Simple, may be perfect for you.

If you need immediate info, Starts at 60 explains the downsizing rule and how it impacts the Age Pension here.

An account-based pension is a type of income stream – it simply means you are drawing an income stream from your super account. You just need to tell the trustee of your super fund that you are switching to pension mode. You can read more about how account-based pensions work here and how they interact with the Age Pension here.

If you have a question for Starts at 60’s money experts, email it to [email protected].