You’ve made the decision to retire; the last day of work has come; the cake is eaten and your desk is packed. Now you have the time to consider what comes next. You’ve reached the age where you can apply for the age pension and you think it’s a great idea to supplement your retirement income.
Applying for the Centrelink age pension is not a straight forward process and we’ve had many clients exclaim, “How do people do this by themselves?!” Once you’ve actually made it through the application process and you’re receiving the age pension, do you know what your future responsibilities are in regard to Centrelink?
What are you responsible for?
Centrelink works out your age pension benefit based on the information you’ve provided them. When you first apply, you are required to specify all of your assets and any work income you are receiving. It is your responsibility to update Centrelink if there are changes in your assets or income.
Many people believe Centrelink has access to your bank account and will take it into consideration for your payment rate. This isn’t true. Centrelink can’t access your bank accounts to determine up to date figures. They’re basing your assessment on the last amount you gave them. If your bank account reduces because you’re spending your savings now you no longer have an income coming in, you need to update Centrelink. As your assets will have reduced, you may be eligible for a higher payment. Who wouldn’t want this?!
However, the opposite is also true. If you’ve received an inheritance or had a lotto win, your bank account will be higher than it previously was. This is likely to be considered a ‘change in circumstances’ and you will need to update Centrelink.
Centrelink usually send you a letter every six months with your assets and income clearly listed. It is your responsibility to make sure these are correct. Remember, if Centrelink determine you were overpaid at some stage, you will have to repay the money. If the tests reveal Centrelink has underpaid you, they won’t retrospectively pay you any money you’ve missed out on. The improved pension will be from the current time. So, it’s in your best interest to keep Centrelink updated as to what your assets and income currently are.
There are a few different ways to do this. Some people like to go into Centrelink and work with a person to update their details. Or they call Centrelink and talk it through with their customer service team. However, Centrelink encourages all clients these days to actually update their own assets through the MyGov website. This allows you to update details as often as you need to, ensuring you’re receiving the correct benefit.
We have many clients where one spouse is younger and is therefore not eligible for the age pension at this time. Any money the younger spouse has sitting in an accumulation account in superannuation will not count towards the older spouse’s age pension tests. We emphasise this must be in the accumulation phase, not the pension phase.
However, it’s important to note that, once the younger spouse reaches their age pension age (see table below), 100% of the accumulation account will be counted in the assets and income test. If you don’t make Centrelink aware of this change immediately, they will continue to pay your benefit at a higher rate than you’re now entitled to. Once they’ve realised the mistake, they will require you to pay back the additional amount you’ve received. This could result in you paying back hundreds, if not thousands of dollars.
When are you eligible for the age pension?
|Age Pension age
|Affects people born
|Born before July 1952
|From 1 July 2017
|From 1 July 1952 to 31 December 1953
|From 1 July 2019
|From 1 January 1954 to 30 June 1955
|From 1 July 2021
|From 1 July 1955 to 31 December 1956
|From 1 July 2023
|On or after 1 January 1957
It is important you’re aware of your responsibilities in relation to Centrelink. If you have any questions about this, or you’re unsure if you’re receiving the correct benefit, please give us a call and we can make a time to talk.
This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.