Age Pension – not set and forget?
Age Pension – not set and forget?
Applying for an age pension is not easy.
There is a comprehensive and complicated application form with an extensive number of questions to be answered and depending on your circumstances, innumerable documents that need to be photocopied and lodged as well.
If an application is successful and the age pension is granted, many age pensioners never want to deal with the bureaucracy of Centrelink again. They do not give a passing thought to the responsibilities and reporting obligations that go with their entitlement to the age pension.
However, it is extremely important for age pensioners to remember they have a legal obligation to notify Centrelink, within a 14 day period, of any change in their circumstances or assets.
The following is not an exhaustive list of changes in circumstances but provide examples of events when a pensioner is required to notify to Centrelink;
- buy or sell shares or managed investments
- receive bonus shares
- open new bank accounts
- have combined assets of more than the amount currently being assessed
- receive a lump sum amount or one-off payment, e.g. inheritance
- move into or out of a nursing home, hostel or retirement village
- are charged with an offence and placed in prison or admitted to a psychiatric institution
- gift more than $10,000 worth of assets in an income year
- sell assets for less than their market value
- start employment, including self-employment
- changes their employment
- travel overseas for a period of more than 6 weeks
- marry, separate, divorce, or become widowed
- rent or sell their home, or purchases another
- leave the home for more than 12 months
Centrelink review the value of share and managed funds automatically twice a year (in March and September). However, to ensure an age pension is being assessed correctly, it is extremely important for pensioners to notify Centrelink if they buy new investments or sell investments to pay expenses, or to travel.
Not only is there a legal obligation to notify Centrelink, but if a pensioner has sold down their investments and do not notify Centrelink, they may also be underpaid their correct pension entitlement.
A pensioner can request a review of their shares and managed funds in between the automatic reviews, especially if they believe a large drop in the value of one of their shares could possibly mean they may be entitled to an increase in their pension. However, be warned – you cannot request a review of one share in isolation – Centrelink will review a pensioner’s entire portfolio. So, if in the case that one share has fallen in value and the other shares have increased in value, by requesting a review of the one share, they may find that after reviewing the entire portfolio, their pension could in fact fall, because of the increased value of the entire portfolio of investments.
It is also important to remember that if you fail to notify Centrelink of changes in your circumstances and Centrelink discovers they have overpaid the pension, they will raise the overpayment from the date the change was effective. On the other hand, if Centrelink becomes aware of a person’s pension being underpaid because of a change which was not notified or notified late, they will only adjust the pension from the date they became aware of the change and not from when the change actually took effect.
So, what is the best way of keeping Centrelink informed? Going into the local Centrelink office, or speaking to someone on the phone can seem either too daunting or requires the patience of a saint.
My suggestion is to establish an online ‘myGov’ account and link your Centrelink account. This is a good place to start.
Unfortunately, what sometime appears straight forward for those people used to dealing with computers and the internet, can be very confusing for others. So do not be afraid if you fall into the latter to ask for assistance, as once you have set up the account it becomes a very easy process – fingers crossed.
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