Assets you can have that won’t affect your pension

By now you’re sure to be well versed in the changes to the age pension. For those out of the

By now you’re sure to be well versed in the changes to the age pension.

For those out of the loop, here’s a quick recap.

From January 1, more than 300,000 age pensioners will lose all or part of their pensions.

This is because the government has changed how many dollars’ worth of assets you can have before your pension if affected.

Under the new reforms, the assets test threshold has been cut from $1.17 million in assets for couples down to $816,000.

If you’re a single pensioner, you’ll lose your payments if your assets are worth $542,500 or more.

Read more: How the latest age pension reforms could affect you

If you’re one of those affected by the changes, there are things you can do to get yourself below the threshold.

One of the options you have is to invest your money into assets that aren’t means tested for the pension.

Read more: How you can prepare yourself for changes to the age pension

That’s right, there are several assets you can have that won’t affect your pension.

Dixon Advisory’s Nerida Cole points to two main assets you can put  your money into.

“There are two main assets that will give you the most room in terms of the amount of money they can remove from the assessment,” she said.

“The first one is your principal home, which is excluded from the assets test.”

“When the changes were first announced, there was a lot of talk about people upgrading their homes.”

The upgrades can include maintenance and renovations, which in turn can increase the value of your property.

But before you do, you should think about whether the renovations or upgrades you’re planning are a worthwhile investment.

“You should be careful not to over capitalise by spending too much on the property,” Cole advises.

“Your investment might not add value over the long term and can even cost you,  if you invest in things such as putting in a swimming pool.”

Your second main option for assets is useful if you have a spouse or partner who is under the retirement age.

Cole advises you can actually move some money to your younger spouses super accumulation account.

“That is subject to the room they have left in their super account when it comes to contribution limits,” she said.

“You can leave the money in your spouse’s super accumulation account until they are eligible for the age pension and you’re assessed as a couple.”

If neither of these options suit you, there are a few smaller alternatives that may help those who fall just above the assets test threshold.

Gifting and funeral bonds can come in handy if you’re a few thousand dollars over the assets test threshold.

Cole said gifting is an option, particularly if you have adult children.

“Gifting can be an easy way to bring yourself back into pension eligibility,” she said.

“Be aware that the maximum limit you can gift is $10,000 per year or $30,000 over a five-year period.”

Like anything involving money, there are some things you should be aware of before you go handing out money.

“The thing to be very careful of with this strategy, is that you can’t assume your adult child will give it back if you ask and you have no legal recourse for money you’ve chosen to give away” Cole said.

“If you end up short down the track, it’s really up to the good faith of your child to give that money back, but if they’re having a hard time financially, they may not be able to.”

“This can certainly add additional stress, particularly if it causes a breakdown in your relationship with your family.”

What about funeral bonds?

Well, a funeral bond is essentially a way of putting money away to pay for your funeral.

Cole said the government allows you to have a set amount of money invested in funeral bonds.

‘This is a good option if you’re only a little bit over the asset threshold for the age pension,” she said.

“But be careful, as money invested in a funeral bond is locked away and won’t be available to help you with cost of living or medical needs.”

According to the Department of Human Services website, the Funeral Bond Allowable Limit is $12,500 and is indexed in line with CPI pension increases each year on July 1.

It’s important you tell Centrelink about the funeral bonds you own.

Among the information you’ll need to provide is how much has been invested by you into the funeral bonds and whether it is a joint bond.

You’ll also need to let Centrelink know if you make any additional payments or instalments to the bond, invest in another bond or if a joint owner of the bond dies.

The whole issue of the changes to the age pension can be very complicated, particularly where your assets are concerned.

Cole suggests you seek the advice of a financial planner or speak to Centrelink about attending one of their free seminars to get all the information you need.

Will you be affected by the changes to pension?

  1. Di  

    I Sure Hope these Changes also affect the past and Present Trough Dwellers who think these Gems up, including Public Servants who think the Agreed Pension is not an entitlement to those who worked hard all their lives and saved and made something of their savings. It is Harsh when People work hard and earn their way only to have to all taken away or having to hide it from some Government Bully living off the Tax payer. Paying Taxes is fine, however to have it double dipped at the end of your working life is stealing. Two people living and working in the same house hold, paying the level of income tax they do, also should be entitled to their own pensions without impinging on one another. Ill bet none of the above mentioned Trough Dwellers have to worry about their pensions being slashed because they are married to each other. The whole AGED Pension thing is a farce, its the other so called ‘Pensions’ that are pure Welfare, that are being defrauded No one can get away from being OLD.

    • Frank  

      Wait, I was a public servant who had no choice but pay into Superannuation, and couldn’t stack it away in other ways to qualify for an old age pension……With an income stream (between my partner and I) of roughly twice the married aged pension rate, there wont be any topping up or Government handout in the form of gifted old aged pension for us…..😁😁😁😁😁 So be careful about who you might be pointing fingers at (5% and 10% contributed for over 38 years doesn’t mean all that much at the end of the day). Superannuation is a Government conn job and (like always) middle income taxpayers get screwed.

  2. Veronica  

    What about investing in Annuities?

    • jaywalker  

      Annuities are counted as assets.

      I agree with Di, why don’t they ever go after the really rich and the big companies that don’t pay taxes? Too scared they’ll lose their financial support! Age pensions not be considered a privilege. In most European countries, everyone gets a pension regardless of assets because they have paid their taxes.

  3. Mark  

    It is not technically correct to say that the home is excluded from assets test. Home owners assessable assets are assessed differently to non-home owners. That is, you are allowed to have a higher level of assessable assets before your pension is affected if you don’t own your own home. That’s my understanding anyway. I think under the new system there is Defacto value of $200,000 placed on your own home.

  4. Truth 13  

    How about moving money overseas. There are many countries that does not provide any information to the Australian government. If questioned by the Centrelink or the Tax dept., can a person use the “Arthur Sinodinos formula”. Just like Sinkdinos, can the pensioners also say “Can’t remember” , “Can’t recall”, “I am suffering from memory loss”, although I am the Assistant Treasurer, or Head of a political party office or some other stupid person, I can’t remember any bad things I did, etc etc. and then get away ?.

  5. Alan Rawnsley  

    Many Australians don’t remember we have a pension fune it started by Menzie in about 1944 were you paid 7.50 % of your wages into to a seprate pension fund if you look up the info on the computer you will find the Government secrectly stole the money and put it into generall revenue and i understand we are still paying it in the Tax scale. So Our PARACITES Politicians have stole your money for there end so why don’t we Give them the bird AND WE DEMAND TO KNOW WHERE THE MONEY HAS GONE SOMTHING LIKE $400,00000 it was stated that if the fund was still going it was enough to PAY every PENPSIONER $500 a week no meens test or assets test.So thats the RESPECED YOUR polies think of you of course it different for them SO I HAVE COME TO THE CONCLUSION THAT DONT DO AS WE DO JUST DO AS WE SAY

    • Kerri moore  

      Malcolm Fraser transferred the money into general revenue last week’s sydney morning herald had an article on it

  6. i have met couples who have divorced, and then have divided assets but still seem to be living together. does this work?

Leave a Reply

Your email address will not be published. Required fields are marked *