Changes to Centrelink treatment of account-based pensions
From 1 January 2015 the way account-based pensions will be assessed under the income test for Centrelink purposes is changing.
Any account-based pension commenced on or after 1 January 2015 will be treated as a financial asset and deemed under the income test.
Account-based pensions commenced prior to 1 January 2015 where the pensioner is in receipt of Centrelink benefits at 1 January 2015 will be grandfathered under the existing rules.
Where the grandfathering conditions are not met or where a person ceases to receive Centrelink entitlements, their pension will be treated under the deeming rules when the person next applies for the age pension. As such any existing pension held by persons who are not receiving Centrelink entitlements at 1 January 2015 will be assessed as a financial asset under the income test.
If good investment returns are experienced, the value of their assets may increase and this may cause them to lose their age pension entitlement. Following this, the pension is then assessed as a deemed income stream for future age pension entitlements.
For further information and to review your situation please contact CCA Financial Planners.