If your super has lost value, you can boost your weekly pension by calling Centrelink October 9th, 2022
Part-pensioners with an account-based-pension might be licking their wounds after the rout in financial markets over the past few weeks, but some relief might be at hand.
In most cases, an increase in their fortnightly Centrelink payment is just a phone call or on-line update away. It could also mean that seniors who just missed out on a part-pension previously because of means testing, might now qualify. That means access to the Pension Concession Card which could save you thousands of dollars each year through generous discounts.
Seniors on a full age pension of $1,026.50 per fortnight for singles or a combined $1,547.60 for couples, are not affected.
Seniors with account-based-pensions (ABPs) have been stung by dramatic falls in the value of their investments due to a perfect storm where shares and fixed-interest investments have tumbled in value. Falls in value of up to 20 percent over the past 12 months are common and while that’s undeniably bad news, spare a thought for our British cousins. In the midst of last week’s bond-market turmoil, some UK-defined benefit pension funds were reporting declines of up to 50 percent in a single week.
Almost all experts are recommending investors stick with their existing portfolios, pointing to previous market corrections where the underlying quality of fund assets meant that the account balances eventually recovered.
“The problem is that it is pure luck if you manage to pick the right time to get in or out. If you have switched to cash, when markets start to turn up-wards you’ll miss out while you wait to have your confidence restored.” says WA-based independent financial adviser Annette Sinclair.
“Good financial advisers will have been telling you to have a portion in cash to draw on for your expenses through times exactly like these.” Says Mrs Sinclair
A lift in your Centrelink part-pension could be the result of a decline in the value of your assets due to the reduction in the value of your ABP. Centrelink doesn’t track the values of your investments on a fortnight-to-fortnight basis. Instead, the values are usually updated automatically, twice per year.
In the case of shares, managed investment funds and superannuation funds in “accumulation” phase, the values of these assets in early September were used to automatically recalculate your pension when it changed on September 20. Centrelink obtains the unit and share prices to make those calculations based on the number of units and shares showing on your Centrelink record.
With ABPs however, the values vary depending on when the fund reports to Centrelink and the value being used would have been established on a particular date sometime between July and early September. Most funds have fallen in value since then with a typical capital stable type fund falling by up to 5 percent.
Individuals can notify Centrelink of changes to the value of their ABPs at any time and the decline in the value of your ABP could mean a substantial lift in your pension. Ideally, do it online via your myGov portal or you can ring the details through on 132300
If your Centrelink pension has been adjusted down because of the asset means test, each thousand-dollar decline in value will see your pension increase by $3 a fortnight.
“We just did an update for a client whose automated update was dated 09 September. Between then and now, the balance has reduced from $417,000 to $387,600. That’s resulted in an immediate $88.20 a fortnight increase to their age pension” says Annette Sinclair
If your Centrelink pension is affected by the income test, then the increase would be minimal. Each $1,000 decline in value will translate to a lift of no more than 43 cents a fortnight.
Seniors with substantial assets who dismiss Centrelink because they think they don’t qualify, should re-check their eligibility. Australia’s soaring inflation rate has seen a big lift in the upper cut-off thresholds for Centrelink Pensions.
Remember that your home is fully exempt and only the “scrap” values are used for home contents and other assets.
For a home owning single, the upper asset test cut-off limit is now $622,250 and for couples, a combined $935,000. Non home-owners are allowed an additional $224,500 in assets.
There’s also an income test and a single would need to have Centrelink assessable income of less than $2,243 a fortnight or $58,318 per annum to qualify for a part pension. For couples, the combined amount is the equivalent of $89,211 per annum.
Importantly, ABP payments or withdrawals from super do not count towards the Centrelink income test.