When thinking about moving or getting help to stay at home, people naturally think about their finances and how they would be affected if their circumstances changed.
- Many older people receive a full or part Age Pension from Centrelink.
- Veterans, their partners and widows/widowers may receive income support from the Department of Veterans' Affairs (DVA).
- Other retirees receive superannuation pensions or other income streams and/or have other resources which provide some or all of their income.
This section contains information for all these groups about the financial side of their living arrangements. Detailed information about the financial aspects of moving into an aged care home is given in the section on
residential care (paying for your care and accommodation).
For people who receive Centrelink or DVA payments, the following pages give detailed information about these payments and how they can be affected if living arrangements change. It is also important to read the information throughout this book about how Centrelink and DVA assess you in your particular circumstances. For example, if you are thinking about moving into a retirement village, you will find information about how Centrelink and DVA assess retirement village residents in the section on
moving into a retirement village. You can find important information throughout this book about what you have to tell Centrelink and DVA if your situation changes and about other help and services Centrelink and DVA provide.
Centrelink's free Financial Information Service offers information that may help you improve your standard of living by using your own money to best advantage. You do not have to be a Centrelink customer to make use of this service. For more information see in the
'Where to get help and find out more' section. You can contact the Centrelink Financial Information Service by calling 13 2300.
Pensioner Concession Card
A Pensioner Concession Card entitles Centrelink pensioners, Service Pensioners and some other recipients of income support to reduced-cost medicines under the Pharmaceutical Benefits Scheme.
As well as this, pensioners may also be entitled to extra concessions from state and local government authorities. These may include reductions in property and water rates and reductions in energy bills. Pensioner Concession Card concessions vary from state to state.
Age Pension and Service Pension
You may get the Age Pension if you are aged 65 years and over if you are a man or are above certain qualifying ages for women (between 63.5 and 65 years depending on your date of birth), meet certain requirements relating to residence in Australia and have income and assets below a certain amount. You may get a similar payment, the Service Pension, from DVA if you are an eligible veteran, partner or widow. This section is about how Centrelink and DVA work out whether or not you can get some Age Pension or Service Pension and, if so, how much. When Centrelink and DVA calculate your pension, they will look at how much income you (and your partner, if you have one) receive and how many assets you and your partner own. Your situation is checked against both the income test and the assets test. Depending on the level of your income and assets you may be able to get either a full pension or a part pension. In the 2009-10 Budget the Government proposed an increase in the Age Pension qualifying age from 65 to 67, starting from July 2017.
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Which test will apply to you?
Your rate of pension is calculated using whichever test-income or assets-will give you a lower rate. If the lower of the two rates is zero, that means you are not entitled to a pension. However, if you are in this situation, there may be other Australian Government assistance which could help, such as the Pension Loans Scheme described in the
'Pension Loans Scheme' section or the Commonwealth Seniors Health Card.
Pension rates
Pension rates are indexed in March and September each year. You can find the current pension rates by calling Centrelink on 13 2300 or by visiting the Centrelink website (www.centrelink.gov.au).
From 20 September 2009 most pensioners will receive a new Pension Supplement. This will replace the GST supplement, Utilities Allowance, Telephone Allowance and Pharmaceutical Allowance. The Supplement will initially be paid fortnightly but, from 1 July 2010, pensioners will be able to choose to receive around half of the new Supplement on a quarterly basis. You can obtain further information by calling Centrelink on 13 2300 or visiting the Centrelink website (www.centrelink.gov.au).
The income test
Under the income test used for the Age Pension and the Service Pension, income is defined as any money, valuable consideration or profits you may have earned, derived or received from any source. It includes income from outside Australia. It is different from taxable income.
The income test also uses special deeming rules for assessing income from financial assets. For more information on how deeming works see the section below.
Income above a free area may affect the rate of pension a person or a couple receive, or it may mean they cannot get any pension. This is called the income test.
How the income test works
Single pensioners:
- From 20 September 2009 if your income is more than the income test threshold, your pension reduces by 50 cents for every dollar above this amount. Previously, the withdrawal rate was 40 cents for every dollar above this amount. Transitional arrangements will apply for existing part rate single pensioners affected by the movement of the income test withdrawal rate from 40 cents to 50 cents.
Pensioner couples:
- From 20 September 2009 if your combined income is more than the income test threshold, your individual pensions reduce by 25 cents each for every dollar above this amount. Previously, the withdrawal rate was 20 cents for every dollar above this amount. Transitional arrangements will apply for existing part rate partnered pensioners affected by the movement of the income test withdrawal rate from 20 cents to 25 cents.
Couples separated by illness:
- The income test is the same as for pensioner couples.
Income thresholds are indexed each July. You can find the current income test thresholds by calling Centrelink on 13 2300 or visiting the Centrelink website (www.centrelink.gov.au).
From 20 September 2009 a Work Bonus will be introduced for those assessed under the new rules to allow those age and service pensioners who want to work to keep more of the money they earn. For these pensioners, only half of the first $500 of fortnightly employment income will be included in the income test.
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How deeming works
Deeming is used to assess income from financial assets to help work out the amount you receive from Age Pension or Service Pension. Financial assets include financial investments and amounts assessed in respect of gifts. Deeming assumes that bank accounts and other financial assets are earning a certain amount of income, regardless of what income they are actually earning.
Deeming rates and thresholds
The Minister for Families, Housing, Community Services and Indigenous Affairs and the Minister for Education, Employment and Workplace Relations set the deeming rates. Deeming rates are monitored to ensure they reflect rates of return available to pensioners. Any changes to the deeming rates are usually made in March or September, when pension rates are indexed.
There is a lower and an upper deeming rate for financial assets, depending on the total value of your financial assets.
The lower deeming rate reflects the expectation that pensioners will generally choose to have savings in investments with very high accessibility and safety, but which tend to provide relatively low income.
The higher deeming rate reflects the expectation that customers with higher amounts of savings should seek higher returns on some of their savings, either by accepting relatively lower accessibility (eg term deposits) or by accepting some more risk (eg shares).
Deeming thresholds are indexed to the Consumer Price Index each July. Rates and thresholds mentioned in this section are current at January 2009. For information on current deeming rates call Centrelink on 13 2300 or visit the Centrelink website (www.centrelink.gov.au).
Financial assets
Financial assets include:
- bank, building society and credit union accounts
- cash
- term deposits
- managed investments, including friendly society bonds
- assets in superannuation and rollover funds held by people of age pension age
- listed shares and securities
- short-term asset-tested income streams
- loans and debentures
- shares in unlisted public companies
- gold and other bullion
- things you have gifted away in excess of the gifting limits, including things which were not counted as assets before you gifted them, such as the family home.
Financial assets do not include:
- accommodation bonds paid to aged care homes
- entry contributions paid to retirement villages
- your home or its contents
- cars, boats and caravans
- antiques, stamp or coin collections
- assets in superannuation and rollover funds held by people who are under age pension age
- assets test exempt income streams (purchased before 20 September 2007)
- long-term asset-tested income streams
- standard life insurance policies
- certain funeral bonds
- holiday homes, farms or other real estate.
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The assets test
An asset is any property or possession you own, either partly or wholly, other than exempt assets. It includes assets held outside Australia and debts owed to you. Under the pension assets test, Centrelink and DVA do not count some assets. Exempt assets include:
- the family home and up to two hectares of adjacent land-possibly more if a 20 year attachment exists
- aids for people with disabilities
- certain amounts paid or invested in preparation for a funeral.
Because Centrelink and DVA do not count the value of your home, the value of any mortgage or loan secured against your home does not reduce the amount of your assessed assets. If you intend to borrow so you can temporarily own both your current home and the one you are about to move to, a Centrelink Financial Information Service Officer can explain how differently structured loans may affect your payment.
The assessable assets a person or a couple own above a threshold, also known as the assets test free area, may affect their rate of pension or mean they cannot get any pension. This is called the assets test.
Mortgages against your home are assessed differently for determining the portion of your assets available to assist with aged care.
Amount of assets you can have before your pension is affected
The amount of assets allowed before your pension is reduced can be found by calling Centrelink on 13 2300 or visiting the Centrelink website (www.centrelink.gov.au). If your assets exceed the lower threshold, your pension will be reduced by $1.50 a fortnight for each $1,000 of excess assets. For partnered pensioners the combined pension will reduce by $1.50 a fortnight. Pension payments will stop if your assets are above the upper limits.
Changes to the assets test which mean more people can get a pension
Since 20 September 2007 the pension assets test taper rate has been halved. This means pensions are only reduced by $1.50 a fortnight (instead of $3) for every $1,000 of assessable assets above the assets limits for full pension. This has resulted in increased pensions for people who receive a part pension under the assets test.
Many people who were previously unable to get a pension because of the level of their assets are now eligible for a part pension. If you think this might apply to you, call Centrelink on 13 2300 or DVA on 13 3254.
In conjunction with the reduction in the assets test taper rate, the 50 per cent assets test exemption for complying income streams was removed for complying income stream products purchased on or after 20 September 2007. Income streams purchased before 20 September 2007 have not been affected by the change.
Assets hardship
Some customers whose assets affect the amount of pension they receive but who are not in a position to use these assets to support themselves may apply to have a rate paid that does not take them into account. This option cannot be granted if the customer can re-arrange their finances to support themselves or if they have put themselves in hardship by gifting assets.
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Gifting of assets
The gifting rules are designed to discourage people from giving away their assets to receive more pension or subsidised care.
You can give away (gift) money or assets of any value at any time but the rate of income support payment (such as the Age Pension or the Service Pension) you receive may be affected if you gift assets (including money or the family home) worth more than the allowable gifting amount free area. Single people or couples can give away up to $10,000 in a single financial year and up to $30,000 over any five financial year period before the gifting rules apply.
- If people give away more than this, it may affect their pension.
- The $10,000 in a single financial year and the $30,000 five year free areas also apply to gifts people make during the five years before their pension is granted.
If you give away something which exceeds those limits in value, the excess amount is counted as a financial asset in your assessment and will therefore be subject to the deeming rules. For example, if you gave away $25,000 cash in one year your net assessable assets would reduce by $10,000 and the excess $15,000 would continue to be counted as a financial asset.
How this affects your pension
Income Test
Income is deemed on the extra amount above the gifting free area for five years. For information on deeming see in the
'How deeming works' section.
Assets Test
The extra amount above the free area is assessed for five years as if it were still your asset. For information on the assets test see in the
'Assets test' section.
How gifting can affect aged care costs
Giving away assets, including money or the family home, may increase the amount you have to pay for aged care.
For aged care fees
Aged care fees are calculated based on income assessments undertaken by Centrelink and DVA, using the same assessment rules and definitions that apply to the pension income test. This includes the rules relating to the deeming of income on assets that have been given away, as described above.
For accommodation payments
Since 1 January 2007, any amount over $10,000 in a single financial year or $30,000 in a five financial year period that has been given away will be included in the aged care assets assessment. In working out the amount to be included in the assets test, all gifts made from 10 May 2006 will be taken into account. People who enter permanent residential aged care or move to another aged care home from 1 January 2007, and who have an aged care assets assessment will be affected by the changes to the rules about assets that have been given away.
If you gift assets in excess of the amounts outlined above, for example your home, these assets are included in the aged care assessment amount.
Important: If you are thinking about giving away any of your assets, you should first talk to a Centrelink Financial Information Service Officer. For contact details see in the
'Where to get help and find out more' section.
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Rent Assistance
Rent Assistance provides extra income support to people who pay rent or board and lodging to private landlords.
Who can get Rent Assistance?
You may be able to get Rent Assistance if you are classed as a non-home owner and if you pay enough rent. In special care situations you may be able to get Rent Assistance even if you own your home.
Rate of payment
You can only receive Rent Assistance if you pay more than a set minimum amount of rent each fortnight.
There are limits on the total Rent Assistance that Centrelink and DVA can pay you. The
amount depends on your family situation and the amount of rent you pay. You may be able to receive more if you have dependent children living with you. All rates are paid fortnightly. They are indexed in March and September. You can find the current rates by calling Centrelink on 13 2300 or visiting the Centrelink website (www.centrelink.gov.au).
Sharing the rent
Single people without dependent children, who share their accommodation with other people, may be paid Rent Assistance at a lower rate (the sharers' rate) than if they were living independently. The most they can receive is two-thirds of the maximum rate of Rent Assistance payable to single people living independently. The sharers' rate of Rent Assistance does not apply to you if you get Disability Support Pension or Carer Payment or a pension from DVA.
Board and lodging
If you pay for board and lodging, Rent Assistance is paid only on the amount you pay for your lodging. If you do not know how much this is, Centrelink or DVA will count two-thirds of what you pay as lodging. The other one-third counts for food expenses, which is not covered by Rent Assistance.
The sharers' rate of Rent Assistance does not apply to you if you pay board and lodging.
What to tell Centrelink or DVA
Centrelink and DVA can only pay you Rent Assistance from the time you tell them you are paying rent. Therefore, if you move into accommodation for which you pay rent, you should tell Centrelink or DVA as soon as possible. You may be asked to provide proof of the amount of rent you pay. Examples of proof include rent certificates signed by the landlord or agent and/or rental lease agreements.
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Special situations where home owners might be able to get Rent Assistance
Generally, Rent Assistance is not available to people regarded under social security rules as home owners. However, there are some special situations in which older people needing care and people who care for them can get Rent Assistance even if they are home owners.
Retirement villages
You may be able to get Rent Assistance if you live in a retirement village. This depends on how much you paid as an entry contribution to move into the retirement village. If it is below a certain amount, known as the extra allowable amount ($124,500 as at December 2008), you may be able to get Rent Assistance if you are paying fees and service charges. You will not be able to get Rent Assistance if you have paid more than the extra allowable amount as an entry contribution because you are then classed as a home owner. For more information about how living in a retirement village affects Centrelink and DVA payments see in the
'Centrelink and Department of Veterans' Affairs assessment' section.
If you move in with friends or relatives because you are frail or in ill health
If you move in with someone else because you are frail or in ill health, you may be eligible for Rent Assistance immediately, even if you still own your home. The person caring for you does not have to be receiving a payment from Centrelink or DVA.
To qualify for Rent Assistance in this situation, you need to be:
- receiving a substantial level of care for at least two weeks and
- receiving a pension or allowance and
- paying enough rent.
For more information about how this situation affects Centrelink and DVA payments see in the
'More about financial assistance if you move in with friends or relatives' section .
If you move to provide care for someone else
You may leave your home to provide substantial care in another home for someone who cannot care for themselves. If this happens you may be eligible immediately for Rent Assistance even if you still own your former home. The person you are caring for does not have to be receiving a payment from Centrelink or DVA.
To qualify for Rent Assistance in this situation, you need to be:
- providing a substantial level of care for at least two weeks and
- receiving a pension or allowance from Centrelink or DVA and
- paying enough rent for the property where you are providing care.
For more information about how this situation affects Centrelink and DVA payments see in the
'More about financial assistance if you move in with friends or relatives' section .
If you move while in good health
You may move in with friends or relatives but still own your home and plan to return to your home. For the first 12 months, you cannot get Rent Assistance. After 12 months, you may be able to get Rent Assistance if you are paying rent.
If you do not own a home and you move in with friends or relatives, you may be able to get Rent Assistance as soon as you move, provided you pay enough rent. In some cases you may be paid at the sharers' rate, which is lower than the rate for people who live independently. More information about how this situation affects Centrelink and DVA payments is in the
'More about financial assistance if you move in with friends or relatives' section.
If you move into a granny flat
Granny flat rights are usually family arrangements to provide company and nearby help for older people. A granny flat can be a separate self-contained dwelling built on someone else's property, or a right to accommodation for life or a life interest in a private home. You may be able to get Rent Assistance if you live in a granny flat. This depends on how much you paid as a contribution to the granny flat. If it is below a certain amount, known as the extra allowable amount ($124,500 as at December 2008), you may be able to get Rent Assistance if you are paying enough rent. You will not be able to get Rent Assistance if you have paid more than the extra allowable amount as a contribution to the granny flat. For more information about how living in a granny flat affects Centrelink and DVA payments see in the
'Agreeing on expectations' section.
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Other financial assistance that can help as you get older
You may find it easier to continue living at home if you make some changes or home improvements. These changes might include replacing steps with an entry ramp, putting in a grab rail in the shower or near the toilet, buying a new refrigerator or installing a security screen door. This section looks at some possible financial assistance to help you maintain your home or make the improvements you need.
Lump-sum pension advance
If you are on a full or part Age Pension or Service pension, you can get an advance of your pension paid as a lump sum. You can use the advance to help with any expenses. You will not have to show receipts or prove how you spent your advance.
How much is the advance?
Centrelink provides advances of between $250 and $500. Similar advances are provided by DVA for veterans and their dependants, and DVA will advance any amount up to $500. The amount of an advance will depend on how much you are normally paid each fortnight and whether or not you:
- have been receiving an eligible payment such as the Age Pension or a Service Pension for at least three months and
- meet the guidelines that show you can repay the advance and still have enough money for your day-to-day expenses.
How often can you get an advance?
There is a limit of one lump-sum advance payment in any 12 month period.
How is the advance repaid?
The advance is repaid over six months by deductions from your fortnightly pension payments. There is no interest payable on the advance.
For example, a $500 advance would be repaid at $38.50 a fortnight over 13 fortnights and a $250 advance at $19.30 a fortnight over 13 fortnights.
How do I get more information or apply for an advance?
Call Centrelink on 13 2300 or get an application form from your nearest Centrelink Customer Service Centre. You need to show Centrelink that you can afford the repayments.
Service pensioners can get an application form from their nearest DVA office. Call 13 3254 to find out the location of your nearest office.
In the 2009–10 Budget the Government announced as part of the Secure and Sustainable Pension Reform package that new flexible advanced payment arrangements for pensioners will be introduced to help them meet unexpected expenses and improve flexibility. Under new arrangements from 1 July 2010, pensioners will be able to seek more than one advance per annum, with the maximum amounts increased to three times the maximum weekly basic pension (more than $700 for each member of a pensioner couple and more than $900 for a single pensioner) or 7.5 per cent of the annual pension entitlement, which ever is the lower. Advances will be repaid over six months by direct deductions from pension payments.
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Pension Loans Scheme
Pensioners on a part pension and some people not eligible for a pension may be able to increase fortnightly income by applying for a loan under the Pension Loans Scheme. The loan is paid in fortnightly instalments, to bring the total payment up to the equivalent of the full pension.
Either you or your partner must own real estate in Australia (such as your home) that you can use as security for the loan. You do not have to use the full value of your real estate as security for the loan. You can arrange to have a guaranteed amount kept aside from the total value of a secured asset, so it will be there if you need it later or wish to ensure that it remains in your estate. This will decrease the amount of your fortnightly instalments.
A competitive rate of interest is charged on the outstanding loan amount. Loan payments are not taxable. You will have to pay costs for securing the loan. These costs can be added to the loan.
If you are renting your home from a landlord, the Pension Loans Scheme is not suitable for you, unless you own other real estate in Australia such as a holiday house or investment property. The lump-sum pension advance might help you. For information on this advance see in the
'Other financial assistance that can help as you get older' section.
Who can apply for a loan?
You may be able to obtain a loan if either you or your partner:
- get a part Age Pension or Service Pension
- cannot get any Age or Service Pension because either your income or the value of your assets (but not both) is too high.
In other words, either you or your partner must have some entitlement to a pension under either the income or the assets tests. For more information about the income and assets tests see in the
'Assets test' section.
You cannot apply if you are a full pensioner, as you already receive the maximum amount of pension. If you are a home owner on a full pension, see below for information on reverse mortgages, which can help you get more income.
How is the loan repaid?
You can leave the debt, including the accrued interest, to be recovered from your estate or you can choose to make repayments at any time.
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Can you withdraw from the loan arrangement?
The scheme is voluntary and you can choose to withdraw from the loan arrangement at any time. The repayment options are set out above.
To find out more about the Pension Loans Scheme call Centrelink on 13 2300. Service pensioners can call DVA on 13 3254.
Reverse mortgages/home equity conversion loans
What are they?
Reverse mortgages, or home equity conversion loans, allow older people to borrow against the value of their homes. For example, they can help finance home improvements by providing a loan secured against the value of the home.
These loans are available from a number of lending institutions, each of which will have slightly different conditions. In South Australia, the South Australian Government has established a statutory corporation, HomeStart Finance, which offers a seniors equity loan.
If you are interested in finding out what reverse mortgage loans are available, you could ask the bank, building society or credit union you normally deal with whether they provide these loans. Mortgage brokers may be able to advise you on the range of loans available and make the necessary arrangements, as may some financial planners.
Advantages and risks of reverse mortgages
A major advantage is they can allow you to stay in your home. You may want to stay in your home but be finding it difficult to pay maintenance costs or make improvements or adjustments to meet your changing needs. Generally, no repayments are required until the property is sold or is no longer occupied (for example, on the death of both partners).
However, these loans and schemes may entail risks and disadvantages. For instance, while you are not making loan repayments the interest is compounding and the amount of debt increases over time. You should not enter into these arrangements unless you are sure you understand the risks and conditions of the loan. It can also be a good idea to talk the idea over with your family or other people who may be affected by your decision. In the end, it is your choice.
Get independent, professional advice first
Before you enter into an arrangement, it is important to seek specific, independent, professional advice on the financial consequences of doing so. You will be in a better position to make a borrowing decision when you understand the possible consequences of your decisions.
The features and conditions of reverse mortgages differ between lenders. However, most products available in Australia have the following features:
- Home ownership status remains. The loans allow you to mortgage your home and retain part ownership.
- Fees. Other charges such as an application fee and a monthly charge may apply. These may be included with the loan and have interest charged as they accrue.
- Lump-sum or regular payments. Depending on the lender, you can receive a lump‑sum payment, regular payments over a number of years (sometimes for life) or a combination of both.
- Repayments. You are not required to make regular ongoing repayments. The amount owing does not usually have to be repaid until you (and your partner) die or move out.
- Compound interest. If you do not make repayments, interest is added to the amount owing so the debt compounds.
- The amount owing usually becomes repayable:
- on your death, if you are single. If you are married and both of you are living in the home, it does not become repayable until both of you die or
- when you (and your partner, if you have one ), have not lived in your home for at least 12 months or
- if you sell your property or
- if your property falls into significant disrepair.
Many home equity conversion loans have a no negative equity guarantee. This means if the balance of the loan exceeds the proceeds of the sale of the property, no claim for this excess will be made against your estate or other beneficiaries. However, the guarantee is dependent on your meeting the terms and conditions of the loan such as keeping your home insured and well maintained or, in some instances, seeking the lender's approval before allowing other people to live in the house.
- The National Information Centre on Retirement Investments can give you information about how home equity arrangements work. You can visit their website (www.nicri.org.au) or call 1800 020 110.
- The reverse mortgage industry body Senior Australians Equity Release Association of Lenders (SEQUAL) can also provide information. You can write to them with general enquiries to PO Box A217, Sydney South NSW 1235, or email info@sequal.com.au. Their website (www.sequal.com.au) provides a list of reverse mortgage lenders who are members of SEQUAL and also a list of SEQUAL accredited reverse mortgage consultants (for example, some financial planners). South Australian residents can contact HomeStart Finance on 08 8203 4000, or visit their website (www.homestart.com.au).
How home equity conversion arrangements are treated under the pension income and assets tests
If you receive a loan under a home equity conversion scheme or reverse mortgage, the loan amount itself is not counted as income. However, income may be deemed on any part of the loan that is held as a financial investment. For explanation of the deeming rules see in the
'How deeming works' section.
Your status as a home owner under the assets test is not affected by taking out a home equity loan. The first $40,000 of an unspent home equity conversion loan is not counted under the assets test for 90 days.
Example: A person takes out a home equity conversion loan of $70,000 and puts the proceeds in a bank account.
Therefore:
- $40,000 is exempt from the assets test for 90 days.
- $30,000 is counted as an asset from when the funds are received.
- The whole $70,000 is subject to the deeming rules under the income test, from the time the funds are received.
Other home equity products
There are other products which are not reverse mortgages but which may allow you to tap into the equity of your home. Some financial institutions offer products where they provide you with a lump sum. In return the financial institution obtains a right to share in a proportion of the sale proceeds of your house when it is eventually sold. If you are considering this or similar loans, make sure you obtain expert independent advice as to the impact on your overall financial situation. Entering into these arrangements may mean you are losing a large amount of equity in your home in comparison to the amount of money you are receiving.
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Other ways of improving your financial situation
There are a number of ways older people can get extra money to help pay for home renovations or other services and products to help them remain independent. Some of them, for instance letting a room or part of your house to a boarder or lodger, may affect your pension.
If I take in a boarder or lodger, how will it affect my pension?
You need to tell Centrelink or DVA if you take in boarders or lodgers if they are not members of your immediate family. Some of the money you get for board and lodging or rent is treated as income by Centrelink and DVA. The percentage of rent money treated as income varies, according to the services you provide. For example, accommodation only-70 per cent; accommodation and breakfast-50 per cent; full board and lodging-20 per cent. However, if you spend more on extra bills than the percentage allowed and can provide evidence of this, you will be assessed on a lower percentage.
Financial help from the family
Most people do not like asking their family for financial help but if you want to stay in the home and you or your family want to keep your home for the family inheritance, it may be worth asking if they can help out.
Maybe a number of family members can each help by putting in a small amount or one or two family members may be able to borrow money for you. As well, your family can make some payments to you as a gift or allowance and in certain cases this is not treated as income for the purposes of Centrelink or Service pensions. Another option is to ask your family to buy your home and allow you to continue living there rent-free. For more information about this arrangement and granny flat rights see in the
'Other financial assistance that can help as you get older' section.
Whatever you decide, ask professionals for legal advice, and get a written agreement to avoid arguments and to protect your interests. Community legal centres, which are available to everyone in the community including those who may not be able to afford a private solicitor, can usually help you with this. It is a good idea to get advice on how your pension might be affected and to get tax advice as well. Remember that the final choice is yours.
Department of Veterans' Affairs
Services of care, compensation and commemoration for veterans and their dependants are provided by DVA. These services include income support payments including the Service Pension and Income Support Supplement. These payments provide a regular income for people with limited means. A Service Pension can be paid to veterans who have qualifying service on the grounds of age or invalidity and to eligible partners, widows and widowers. Income Support Supplement can be paid to war widows and widowers. Both payments are subject to income and assets tests.
Eligible veterans can access Service Pension on the basis of age earlier than the Age Pension paid by Centrelink. Service Pension is paid earlier than the Age Pension in recognition of the intangible effects of war that may result in their premature ageing and/or loss of earning power. Generally, however, pension rates and the income and assets tests applied reflect those used by Centrelink for people who are applying for an Age Pension. For more information, veterans and their dependants should contact their nearest DVA office.
Superannuants and other independent retirees
Changes to the assets test in September 2007 mean some retirees who were not previously eligible for a pension are now able to get a part pension. Regular indexing of the thresholds also means some people may become eligible, for example if they are on fixed incomes or if they have had to draw on their assets to meet the expenses of older age. Independent retirees or their families should contact Centrelink by calling 13 2300 or visiting their nearest Centrelink Customer Service Centre if it appears they might be entitled to some pension.
Many retirees who are not eligible for an Age Pension and the associated Pensioner Concession Card may be eligible for a Commonwealth Seniors Health Card from Centrelink or DVA. . This card provides access to Pharmaceutical Benefits Scheme prescription items and certain Medicare services, at a cheaper rate.
To be eligible for a Commonwealth Seniors Health Card, retirees must have an annual adjusted taxable income of less than:
- $50,000 (singles)
- $80,000 (couples combined)
- $100,000 (couples combined who are separated due to ill health).
Adjusted taxable income is the retiree's taxable income plus net rental property loss, target foreign income (foreign income not normally taxed in Australia, including fringe benefits) and employer provided fringe benefits in Australia. From 1 July 2009, it will include total net investment losses.
From 1 July 2009 the Commonwealth Seniors Health Card income test will be expanded to include reportable superannuation contributions including income that is voluntarily salary sacrificed to superannuation.
From 20 September 2009 Commonwealth Seniors Health Card holders will receive a new Seniors Supplement. This will incorporate the Seniors Concession Allowance and the higher rate of Telephone Allowance. The Supplement will be paid quarterly. You can obtain further information by calling Centrelink on 13 2300 or visiting the Centrelink website (www.centrelink.gov.au).