Navigating the aged care system
Thursday 23 November 2023 at 11:00 am AEDT
The aged care system is notoriously complex. This webinar will outline the aged care landscape including how to access help in the home or get into residential aged care and the costs involved.
Q: My partner has recently moved from TTR into retirement phase (although he is still working full time) and is taking the minimum required drawdown pension. We are currently doing some renovation work at home and we want to use some additional money for the build ie $100K. Am I right in saying that if he takes this money as a lump sum payment (on top of his minimum drawdown) from his pension account, he would be able to add back the same amount of money to his transfer balance account (i.e. and into his pension account) at a later stage?
A: Yes, a lump sum withdrawal from a pension account (also known as a commutation) will reduce the balance of the Transfer Balance Account (TBA) and make space to later add more funds to the retirement phase.
It is not possible to add more money to an existing pension account, so the options are to start a second pension or to transfer the balance of the existing pension back to the accumulation account that holds the additional funds and use the combined balance to start a new pension.
Learn more about the difference between taking a lump sum or additional pension payment from a pension account, including the transfer balance cap implications.
Q: I stopped working last year (age 59.5) due to medical issues, and started “transition to retirement” drawing some pension from my Self-Managed Superfund for living expenses. This is topping up the Centrelink Jobseeker payment.
I’ve turned 60 in March this year, and still use my super for monthly pension. I now want to apply for Disability support pension from Centrelink as my medical condition isn’t improving and cannot go back to workforce.
My question is:
Does my monthly pension ($2,500) affect getting Disability support from Centrelink?
If I stopped drawings and leave it in the Superfund, would it make any difference to the Centrelink assessment?
A: This is a complex area, and we suggest that you speak to the financial information service at Centrelink and/or a financial planner for clarity on your particular situation, however we can offer some general information.
While you are under age pension age (currently 67), super that you are not drawing an income from is not assessed in Centrelink’s assets or income test. Retaining super in a standard accumulation account can therefore improve the amount you are entitled to receive from Centrelink, if your income and/or assets would otherwise be above the threshold where the Centrelink payment begins to reduce.
Funds that are in a pension account are assessable assets and generate deemed income that is counted in the income test.
It is also important you ensure that Centrelink have been aware of your transition pension while you have been receiving Jobseeker, as this benefit is also subject to asset and income testing. If Centrelink have not been aware of your pension, you may have been overpaid.
If you are over 60 and retired, you can draw lump sums as needed from a super account in the accumulation phase for living costs. Investment earnings in this phase are taxed at a maximum of 15%.
If you were to commence a retirement pension (that would be assessed by Centrelink), investment earnings are tax free on that pension.
As you can see, there is a balance to be found between maximising Centrelink benefits and minimising tax on your super account. A professional financial planner can help you with this balancing act and with your future planning more generally.
Learn more about how super affects Age Pension, which is subject to the same tests as the Disability Support Pension.
Getting older can mean we eventually need help with everyday activities.
Find out why aged care deserves to be part of your retirement plan.
Important: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions.
