Nick Bruining: Some simple tweaks to your asset values can get you a bigger part-pension from Centrelink
There’s a simple hack many part-pensioners either ignore or don’t know about that can get them an immediate payment boost from Centrelink. Here’s what you should do right now.
Keeping Services Australia — the parent agency of Centrelink — up to date is often the easiest way to generate extra income for those in receipt of a fortnightly part-payment.
While there’s a legal obligation to notify Services Australia of a $2000 change in your circumstances within 14 days, many people aren’t aware, or ignore the rule.
A part-pension is almost always due to the application of Centrelink’s means-testing rules, which apply an income test and an asset test to determine the rate of pension payable. Whichever test produces the lowest payment is the one used.
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By continuing you agree to our Terms and Privacy Policy.While you might have provided all the details of your assets and investments when you originally applied, in almost all cases the values you gave will not have been updated unless you did so yourself.
Annette Sinclair, a former Centrelink officer and now a specialist Centrelink and aged-care consultant, said most people assumed Services Australia was tracking bank balances, investment valuations and the values of people’s fixed assets like cars, caravans and boats.
“Only some valuations are tracked automatically, and these include shares, managed investment unit prices, and mainstream account-based pension funds,” Mrs Sinclair said.
“ABP providers send six-monthly updates to Services Australia.”
For example, a single asset-tested part-pensioner who withdraws $30,000 from their super fund to spend on a European trip could see an immediate $90 a fortnight increase in their pension — for life.
Unless you’ve provided an update, the “tracked” assets are automatically revalued at the same time payment rates are indexed in March and September.
“But they won’t know about shares or investment fund units you sold, or additional shares and units you might have received through dividend reinvestment programs,” Mrs Sinclair said.
Dividend reinvestment schemes can result in a nasty surprise. While a specific reinvestment transaction might be less than the $2000 threshold, the accumulated effects might see you significantly over the limit compared with what Services Australia has recorded.
If this is picked up at a later date and you have been overpaid, Services Australia has a legal obligation to recover the overpaid amount.
Fixed assets are another area where adjustments to valuations can reap big rewards. Services Australia will accept the scrap value of contents and personal effects, not the insured values. For a single, that might be $5000, and for a couple, $10,000.
While cars, caravans and boats may have been included in your original pension application, Services Australia doesn’t track any changes or reductions in value through depreciation.
“Basically, a new car loses about half its value after three years, yet Services Australia might still have it listed at your original purchase price,” Mrs Sinclair said.
“Make sure you update the values every year with the current private, second-hand values.”
The simplest way of providing updates to Services Australia is via the my.gov.au portal where you have Services Australia linked.
Alternatively, you can visit a Centrelink office or make a phone appointment by calling 13 23 00 and following the prompts.
Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association
Originally published on The Nightly
