September 27, 2023 — 5.01am
I am approaching 67 years of age and recently started receiving the age pension. I am currently romantically involved with a 41-year-old woman who obviously won’t qualify for the pension for a long time yet. In considering the possibility of wedlock, what effect would it have on my pension should we marry? Since she does not qualify for the allowance, would I receive the pension at a single person’s rate? If so, would income she earns be included or not as our combined income? And do her assets come into play to affect my eligibility?
You do not need to be married to be treated as a couple for Centrelink purposes. Once that person becomes a de facto partner, you will be treated as a couple and your combined assets and income will be used when your eligibility for the pension is being assessed. Money in superannuation in her name would not be included until she reaches pensionable age unless she starts a pension from her fund, which would be most unlikely at her age.
You do not need to be married to be treated as a couple for Centrelink purposes.Credit: Simon Letch
We have four teenage children: a 23-year-old with HECS of $110,000, a 22-year-old with HECS of $48,000, a 20-year-old accruing a $40,000 HECS and an 18-year-old about to start university. With the current changes in HECS payments and tax laws, do you have any thoughts on timing of payment? I am about to have the talk with them about adding to their super out of their wages, but wondering if they should be trying to pay off their HECS first.
At their age it will probably be at least 40 years before they can access their superannuation and there are certain to be many changes in that time. Given good superannuation funds are returning about 7 per cent and the interest on HECS debts is about the same, thanks to inflation, it would make sense to me to focus on the HECS debt.
Once they start work, their employer will be paying 11 per cent of the income into superannuation, which should amount to a substantial sum after 40 years, thanks to the magic of compounding.
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Regarding the lifetime products Centrelink assesses as only 60 per cent for means testing: if your couples pension is calculated on your assets of $600,000, and this gets invested into a lifetime product, it is assessed as $360,000. But does the income derived from this asset mean Centrelink then calculates your pension on your income and not your asset?
I would be wary about putting all your money into a lifetime income stream product because you would lose access to it. A combination of an account-based pension and a lifetime income product allows you to have some money to draw on if you need it.
The products that assess 60 per cent of the asset for the asset test also assess 60 per cent of the income for the income test. Centrelink uses a test that gives you the least pension. It’s really a matter of doing the sums before you make the investment.
My wife and I have Commonwealth Seniors Health Cards. We are in the process of selling an investment property, the capital gain on which will take us over the income threshold, and we expect to lose the cards for a year. The information provided with the card says to advise Centrelink within 14 days of the change in circumstance or the date you become aware that a change is likely to occur, which in our case would be as early as exchanging contracts. Other advice I have seen says the appropriate time to notify a capital gain is within 14 days of receiving a tax assessment calculation of adjusted taxable income at the end of the relevant tax year.
The regulations allow you to exclude a one-off income item such as a capital gain. As you are already in receipt of the card, it is likely Centrelink will cancel your cards when they receive the taxable income information via data matching with the ATO.
I suggest at this point you lodge an appeal against the cancellation, or lodge a new claim while providing an estimate of income (not including the income from the capital gain). Using this two-pronged approach should mean you’ll get your cards back as soon as possible.
Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. Email: [email protected]
