With Australia’s unemployment rate edging up slightly in June, many Starts at 60 readers nearing the end of their working life and not yet eligible for an Age Pension will be weighing up their options.
That can include using up their savings or tapping into their superannuation to carry them over until the age pension eligibility age of 67.
Ceasing employment since turning 60 and not intending to return to work at the time you access your super is a valid “Condition of release” and allows full access to all of your superannuation.
One other option, is the poorly understood “Jobseeker” allowance payment from Centrelink, particularly useful to older Australians.
Jobseeker is a means tested allowance benefit. Allowances are different to pension payments because they are regarded as a temporary support payment to carry you over until you return to paid employment.
While the normal Jobseeker payment for a single is $789.90, a single over 55 receives a higher rate of $850.60 if they have been on a Jobseeker payment for 9 consecutive months.
Eligible couples receive $725.70 each and as with other income support payments, couples are assessed as a single entity under the means test system.
Jobseeker payments form part of your taxable income for the year.
For those under 60, receiving Jobseeker can also open the door to accessing some of your super before retirement.
If you’ve been in receipt of a Centrelink income support payment for at least 26 weeks, you can apply to have up to $10,000 released from your super every 12 months. Be aware that this withdrawal is taxable.
Jobseekers are subject to an asset and income test but with big differences compared to the age and disability support pension rules.
While the asset means test lower limits are identical to the pension figures, once you exceed the limit, no benefit is payable. It does not taper down in the same way as a pension.
For a single home-owner, the asset test limit is $321,500 excluding the value of the home and for a couple, $481,500. Note that Centrelink will accept the second-hand or scrap value for fixed assets, so don’t calculate this number based on insured values. Importantly, all money held in Superannuation Accumulation phase is exempt from means testing until you hit 67.
Non home-owners are allowed an additional $252,000 in assets whether as a single or as a couple.
The income test is complex and is calculated in the same way as the age pension and is not the same as the ATO’s method.
In essence, if your Centrelink assessable income exceeds $150 a fortnight, your allowance will start to reduce. The cut-off limits vary considerably based on your family situation but for many older kid-free Australians, it is around $1,500 per fortnight and higher, once you’ve been on benefits for more than 9 months.
Importantly, the “mutual obligation” requirements for over 55s is quite different to younger recipients of Jobseeker.
Mutual obligations require you to demonstrate some activity that makes you job ready.
While ideally you’ll continue to seek paid employment, you can meet your obligations through other activities such as formal study or approved voluntary work. In both cases, this needs to take up at least 30 hours per fortnight of your time if you are over 60.
That could see you through until you hit the age pension age of 67.
Between 55 and 60, you must continue to seek work with a maximum of 15 hours doing voluntary work in the first 12 months of unemployment and after 12 months, the same rules for over 60s apply.
One important point to note. If you are over 60, claiming Jobseeker and not simply doing voluntary work or study, then you probably cannot access your super. The rules are, that you can access your super once you cease any employment since turning 60. If you don’t have a job to cease, then by definition you haven’t satisfied this condition of release.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.
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