This article provides answers to some frequently asked questions about Centrelink and super pensions.

If I want to change my VicSuper Pension details when should I tell Centrelink?

Changes to a family’s situation, work or lifestyle, including changes to your (or your partner’s) VicSuper Pension, can affect your Centrelink payment. It is important to let Centrelink know of any changes as soon as possible (within 14 days) to make sure that you receive the correct amount of payment. If you are paid more than you are entitled to, you may have to pay back some or all of your payment.

How will making a lump sum withdrawal from my VicSuper commutable pension affect my Centrelink entitlements?

A lump sum withdrawal from your allocated or account based pension is called a commutation. The amount withdrawn is not income for assessment purposes, but Centrelink will recalculate a new Deductible Amount from the commutation date. 

Account based pension payments are counted as income by Centrelink, with a deduction for part classified as return of capital. This Deductible Amount – which is not assessed as income for Centrelink purposes – is calculated by dividing the full purchase price, less lump sum withdrawals (known as commutations) by the ‘relevant number’ (life expectancy factor at the date of  purchase) of the owner or reversionary, if applicable. 

A lump sum withdrawal from your account based pension may increase the amount of income assessed by Centrelink and could result in a lower rate of Pension or Allowance. 

Depending on the amount you require, another option may be to increase the amount of annual income you are drawing from that pension for the current financial year. If taken as extra income, this will increase the gross income for the financial year and may or may not result in a change of rate, depending on whether the asset or income test is (or becomes) the test that affects your rate of pension or allowance. 

Will my pension be affected if I give money to my children as a present?

The general philosophy underlying the Australian pension system is that pensioners will make the best possible use of their own resources to support themselves in retirement. That assumption is built into the means test for the pension. You or your partner can gift or transfer assets of any value, at any time. However, the rate of your pension may be affected if you gift assets worth more than the allowable gifting amount or ‘gifting free area’. 

Any gift (or number of gifts) of greater than the allowable gifting amount will be assessed as a deprived asset for five years from the date of gift. It will also be subject to the deeming provisions. The allowable gifting amount for a single person or a couple is $10,000 each financial year, up to a maximum of $30,000 in a five-year period. 

Can I lend my children money? If there is an agreement to pay it back is it still classified as gifting?

Before you make a loan, you should carefully consider the effect it will have on your own financial security and any impact the loan will have on your rate of pension or allowance. Monies lent are not classified as a gift. You or your partner can loan monies at any time, however, the money lent will still be considered your asset. The amount of the loan is included in your financial assets and you will be considered to receive income from the loan at the applicable deeming rates. 

When I’m going overseas for a holiday does that affect my Centrelink pension?

Under certain circumstances, you can continue to get your payment if you leave Australia. Whether you can continue to be paid, and for how long, depends on many different factors, such as the type of payment you receive, the country to which you are travelling, how long you are going for, and how long you have lived in Australia. 

Because of all the different rules which may affect the decision, it is very important that you tell Centrelink as early as possible about your intended departure. If you don’t tell Centrelink, your payment could be stopped if you leave Australia. 

What if I get short term work, casual or contract jobs, how would that affect my Centrelink entitlements?

Your income, including earnings, affects your Centrelink payment. Centrelink needs to know how much you have earned each fortnight so that you can be paid the right amount. Reporting your gross earnings to Centrelink will ensure you are not overpaid or underpaid. 

You should tell Centrelink of all of your gross earnings from employment, even if you only work for one day. The amount you report should be your actual earnings for the preceding fortnight. 

If you (or your partner) have variable employment income, Centrelink will not be able to calculate and pay your (or your partner’s) payment until you have reported your employment income. This will include fortnights where no employment income has been earned. 

Please note, when the Government introduced the Secure and Sustainable Pension Reform on 20 September 2009, there was a rule in the new legislation to ensure that pensioners were not worse off because of the income test changes. Transitional arrangements were put in place with the expectation that, gradually, all transitional rate pensioners will move over to the new rules. 

As soon as a transitional rate pensioner has a change in their income that gives them at least as good a rate under the new rules, they will be assessed under the new rules for good. It’s not possible to reinstate the transitional rate. 

However, also under the recently introduced Work Bonus, half of the first $500 of fortnightly employment income is disregarded from the income test for pensioners over Age Pension age. The Work Bonus does not apply to pensions paid at the transitional rate. For more information on reporting your employment income, visit www.centrelink.gov.au call the Centrelink Retirement Line on 13 2300. 

How would receiving an inheritance affect my Centrelink pension?

Receiving an inheritance generally means you now have additional assets and/or income. Once you have received your inheritance, you need to let Centrelink know as soon as possible and within 14 days of receipt. Your Centrelink payment will then be reassessed according to your new asset and income position. 

What if I hold a Commonwealth Seniors Health Card?

Commonwealth Seniors Health Card gives older Australians access to concessions on prescription medicines through the PBS and payment of a quarterly Seniors Supplement. You will need to advise Centrelink if you are leaving Australia, either temporarily or permanently, if your address or relationship status changes, or if you believe your adjusted taxable income will be over the allowable limit. 

To be eligible for a Commonwealth Seniors Health Care Card, you have to be of Age Pension or Service Pension age, but not eligible for the Age or Service pension because of income or assets and with an adjusted taxable income under $50,000 for singles and $80,000 for couples or $100,000 for couples separated by illness. There is no Asset Test. 

Centrelink’s Financial Information Service

If you would like to know more about how any of the options you are considering could affect your pension, you can talk to a Centrelink Financial Information Service (FIS) officer. A FIS officer can also explain the general risks or advantages of any financial strategies you are considering. 

Centrelink’s Financial Information Service (FIS) provides Australians with free and confidential information and education services on the varied and complex issues around income, investment, taxation and superannuation issues, Centrelink payments and services and aged care issues. FIS officers do not advise on or sell financial plans or products. 

To talk to a Centrelink FIS officer, call the Centrelink Retirement Line on 13 2300.

This article was written and provided by Centrelink ABN 29 468 422 437