From 1 January 2015, income stream products – mainly superannuation account – based pensions – are caught under the deeming rules and, therefore, under the Centrelink Income Test. No longer will superannuation pensions attract the Centrelink exempt amount, and as a result, it is likely that Centrelink entitlements, such as the age pension, will be reduced.
Anyone who has either a superannuation account – based pension or annuity and is in receipt of the age pension as at 1 January 2015 will be grandfathered indefinitely and continue to be assessed under the existing rules PROVIDED:
- They do not change product providers after this date;
- They remain continuously entitled to an income support payment thereafter; and
- The income stream payment remains continuously payable after this date.
Similar conditions apply to a reversionary beneficiary if the grandfathering is to be maintained.
If for any reason you temporarily lose your entitlement – such as late lodgement of a review or an unforseen one-off large pension withdrawal or receipt of an inheritance that tips you over the thresholds – you will be brought under the new rules and be caught by deeming.
It would be prudent to review existing arrangements with these changes in mind and to seek professional advice before making any decisions.
This article was provided by Run Meretz, Director & Authorised Representative of Equity Financial Services Australia.