It may sound daunting, but there are various ways to balance pensions and investments to get the maximum return from your super. Photo: TND
- Question 1: Hi Craig, my husband and I are both 68, retired and on a part age pension. Our super combined is $540,000. Our assets are $40,000. We have not accessed our super yet. Living on $500 age pension per week. Does Centrelink help us access super? Or what is the best, cheapest way to go about getting extra income each week? We own our home with no other income.
Centrelink will not help with choosing a super pension provider or with the paperwork. This is done through the provider themselves.
You could choose to start a pension through your current super fund(s) or now might be a good opportunity to review different options.
Most people in your situation start an account-based pension (also called a super income stream) with their super. It’s very flexible, gives you access to all of your funds and allows you to choose suitable investment options within it.
The main alternative is an annuity, where you lock up some of your funds in return for a guaranteed income for life.
If you do choose an account-based pension, you should look for a fund with a suitable investment option, low fees and a solid past performance history.
Unfortunately, the government currently only provides a comparison tool for mysuper products, not pensions. Hopefully this will change.
Sites like SuperRatings, Chant West and Canstar do offer some product ratings and/or comparisons.
Many industry funds provide advice over starting an account-based pension at no additional charge, so it may be worth speaking with them.
It may all seem a bit daunting, but your situation looks fairly straightforward and once you make a decision, your fund of choice will help you with all the paperwork including providing a Centrelink schedule that can be provided directly to them.
Alternatively, you could seek personalised financial advice.
- Question 2: Our problem is the British government – British state pensions are not indexed in Australia even though all contributions required for a full pension have been made. If we lived in Israel, the Philippines, even America our pension would be indexed each year – but not in Australia – in our opinion this is theft.
Theft is a strong word. But I agree that this policy is unfair and discriminatory.
Australia continues to index its age pension for all pensioners, regardless of where they live. It seems the UK doesn’t index its state pension if you reside in a Commonwealth or former Commonwealth country, e.g. South Africa, Canada, New Zealand and Australia.
However, it does index its state pension if you, say, live in the European Union or Unites States of America.
So, as well as it being unfair, it simply makes no sense.
The group ‘British Pensions in Australia’ have been campaigning for decades to get this changed. With the state of the UK budget, I wish them a lot of luck.
- Question 3: All my share prices have come down. Centrelink is assessing me on old process. Can I get them to assess me on current prices instead of waiting until September?
Yes absolutely. You can contact and update your Centrelink at any time to update your details, including current balances.
If your investment balances have gone down significantly it’s a good idea to be proactive and update your details, which may result in a higher income support payment.
- Question 4: We have sold our principal residence and purchased a block of land. I am currently working full time and my husband receives no pension because we receive $110 interest a month on $962,000, which we will use to pay for land and build. We will have $601,000 in bank at the end of the year ready to start build and I finish work soon. Will we be able to claim age pension to live on while building? My husband is 70 and I will be 67.
Yes, once you stop working you may be eligible for the age pension. This will depend on how much super and other investments you have though.
Ensure you notify Centrelink that the funds you have from the sale of your previous home will be used to build a new one. In that way they won’t be asset tested and will be treated concessionally under the income test.
Craig Sankey is a licensed financial adviser and head of Technical Services & Advice Enablement at Industry Fund Services
Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.
Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.
The New Daily is owned by Industry Super Holdings
