Once someone or a couple retires, the emphasis needs to be on understanding what their cost of living is going to be in retirement. The focus turns to how do we deliver enough income on a regular basis to cover not only the cost of living now but also what the cost is going to be in years to come as inflation rises? This is achieved by getting your investments to deliver as good an income as possible and maximise any pension entitlement.

The bottom line is that the more Age Pension you are entitled to, the longer your investments will last and enable more to be left for the family. Clearly there are going to be people or couples who will never be entitled to an Age Pension, however the concept of ensuring you get the best income from the investment assets you have within your risk tolerance is still the key for them.

But for those who would like to get some pension from Centrelink or DVA (Department of Veterans Affairs) or at least the pension card, the trick is to understand how to maximise your pension entitlement. The following are some ideas that may help maximise the pension entitlement or enable you to get the benefits, if not some pension.

1. When applying for the pension, you need to advise Centrelink/DVA of the “market value” of assets rather than the insurance value e.g. furniture. It is NOT the replacement value or the amount you would get from an insurance claim, it is the market value, and the market value of furniture is effectively “Garage sale value” as that is the market for second hand furniture and you never get much from a garage sale, so keep that figure low. Centrelink put a figure of $10,000, but you do NOT have to use that figure, you can use a much lower figure.The same principle applies to cars, trailers, and caravans etc, use the market value of the asset. If you are not sure look at the wholesale value on sites like Redbook etc.
2. Understand the Centrelink treatment of various investments under the assets test and income test, so that you can take advantage of maximising the pension. E.g. The Income test treatment of Allocated Pensions (also known as Account Based Pensions) are divided into 2 groups:

   1. Pre-January 2015  (subject to special rules) &
   2. Post January 2015 (subject to the deeming rules)
3. There are times when getting good advice about the impact on your pension entitlement on your Allocated Pension, it might be that the alternate category gives you a better outcome. The same principal applies to other investments like Annuities etc.
4. If you have assets like an investment property or shares, where there might be a loan used to purchase this asset which is secured by mortgage over your home. In which case because the loan is secured over your home (which is not counted as an asset by Centrelink) then the loan secured against the home does NOT offset against the value of the asset and therefore Centrelink will count a larger amount of the investment as an asset. It might be worth getting specialist advice from someone who specialises in Centrelink/DVA to see if there is a way of restructuring the loan to get more pension.
5. You might have two properties one which has a much larger value than the other (e.g. a valuable holiday house inherited from family and used as a holiday house for your family). The value of this holiday house may prevent you from getting any pension. By advising Centrelink that the more valuable asset is your home, may enable you to get some pension.
6. Gifting; you are allowed to gift any amount you wish, however any amount gifted in excess of $10,000 in one Financial Year will simply be counted by Centrelink as a Deprived asset,  i.e. they treat the excess amount as If you still have it in the bank for 5 years and they will deem it to be earning interest as well. Gifting does NOT help increase the pension by very much. Be very careful about gifting your home, as Centrelink do not count the home as an asset for pension purposes, and therefore if you gift it to family then the 1^st $10,000 is considered a gift and the residual value will be counted as an asset for 5 years and you could lose your pension completely.
7. Pre-paid funerals are not counted as an asset neither are pre-paid burial plots and certain funeral bonds (but there is a limit of the exemption of funeral bonds of $15,000 per person).

Note: Gifting and prepaid funerals only deliver a fairly small increase in the pension.

1. If you are a couple and one of you is retired and eligible for an Age Pension and the other one is under pension Age (67) then money invested in superannuation in accumulation phase is not counted as an asset by Centrelink. So rearranging your superannuation holdings may deliver more pension for the one who is over 67. You should seek advice and make sure that you get this one right.
2. Granny Flat Right/Agreements are another way of transferring assets to family without affecting the Age Pension.  See our previous article on this topic.

Balance Retirement & Aged Care Specialists have been helping clients with the financial aspect of aged care, retirement villages, pensions, home care, downsizing and retirement for over 24 years. If you need to understand whether you are getting the right amount of pension, or to see if you can get more pension, call us or go to our website to make contact.