Hi Tammy, I am retired and about to turn 60. I’m thinking of starting a pension from my superannuation, but I worry that this could negatively impact my husband’s part age pension. He doesn’t receive a huge amount, but we don’t want to lose the Pensioner Concession Card or the benefits we get using this card. I am really confused about what to do. Please help!
Regards, Samantha, Frenchs Forest.
Hi Samantha, thank you for your question.
Firstly, I just wanted to thank Janne for all the wonderful words of wisdom and advice she has imparted through ‘Ask Janne’ over the last 12 years.
Now Samantha, starting a pension from your super fund will impact your husband’s part age pension. There are a few things you should, therefore, consider.
Until you reach age pension age, which in your case is 67, your super is not counted by Centrelink. It is an exempt asset. If you convert your super to a pension, it loses this exemption and will be included when Centrelink calculates your husband’s age pension entitlement.
If you need money from your super fund, you could alternatively draw a lump sum as needed. You still get the benefit of access to your super, but by not converting it to a pension, it will continue to be an exempt asset until you turn 67. You do need to be careful though. When you transfer this lump sum into your bank account, your bigger bank balance does get counted by Centrelink. So, it is a balancing act.
There are also planning opportunities you could consider. If you are eligible to contribute to super, you could move more of your combined assets into your super fund. This would reduce the amount Centrelink counts and potentially increase your husband’s part age pension for the next seven years. You would need to consider any tax implications or other costs first though.
You could also spend or invest money in things Centrelink doesn’t assess. A pre-paid funeral or funeral bond (within limits), gifting money (within limits) or renovating your family home are some options. You do need to be careful though that this is money you can afford to spend.
Seems like a simple answer: keep your money in super, he gets more age pension. However, there is a key benefit to you starting a pension from your super fund. Your super fund currently pays up to 15 per cent tax on investment earnings within the fund. If you start drawing a pension, your super fund stops paying tax! So, if your selected investment option earns $100 of income, the fund pays $0 in tax, and your super balance grows by $100. You are $15 better off.
The answer to your question is, therefore, another balancing act. How much tax will you potentially save by starting a pension? How much part age pension will your husband lose? How would this change the benefits you currently receive?
Ultimately, there is no clear-cut answer. if you have any questions, please call me on 9452 7871.
Regards, Tammy.
Financial planner Tammy Marshman is an authorised representative of Count Financial Limited, AFSL 227232. Phone 9452 7871 or visit planprotect.com.au.
The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.