If you’re an Australian looking to retire, you may be researching what your options are to make sure
you have financial security during your retirement. One option is an allocated pension, which is a type
of superannuation income stream that provides regular payments to retirees. Knowing how an
allocated pension can affect Centrelink payments is key in understanding your retirement finances,
so let’s break down the details.
What Is an Allocated Pension?
An allocated pension is a type of superannuation income stream provided by some super funds.
Withdrawals from an allocated pension are tax-free for those over 60 and taxed at a lower rate for
those under 60. An allocated pension also allows retirees to withdraw up to 10 percent of their
account balance each year without affecting their eligibility or rate of payment from Centrelink.
How Does It Affect Centrelink Payment?
Centrelink will assess any regular income you receive when determining your eligibility and rate of
payment for certain benefits such as Age Pension, Disability Support Pension, Carer Payment, and
Bereavement Allowance. As such, any withdrawals you take from your allocated pension will be
assessed as part of your annual income when calculating this amount.
However, withdrawals up to 10 percent per annum are exempt from assessment by the Department
of Human Services (DHS). Any amounts withdrawn above this threshold may be taken into
consideration by DHS when assessing your annual income and thus could lower your entitlements or
even disqualify you from certain benefits altogether.
For example, if DHS determines that you have exceeded the maximum amount for Age Pension
eligibility due to withdrawals from your allocated pension in excess of 10 percent per annum, then
they may deny or reduce the amount paid on your Age Pension until it meets the minimum level
again. Additionally, if you are receiving a Carer Payment or Disability Support Pension from DHS, any
withdrawals in excess of 10 percent per annum could result in them recalculating the amount
payable on those pensions as well. It is important to note that these changes can happen at any
point throughout the year as DHS must assess all relevant information before making a
determination on entitlement levels and payments. Therefore it is important to consult with either
your financial adviser or Centrelink directly before making changes to ensure you understand how
they may affect any existing entitlements and payments being received by yourself or family
members already in receipt of such benefits.
Understanding how does an allocated pension affect Centrelink payment can help make sure that
retirees have enough money during their golden years without having their financial security
compromised through reduced payments or eligible benefits being discontinued altogether due to
excessive withdrawal amounts over the 10% threshold per annum limit set by DHS. Consulting with a
financial adviser or speaking directly with Centrelink can provide further insight into understanding
how best to manage both an allocated pension and any accompanying payments made available
through Centrelink depending on individual circumstances. For website owners and SEO newbies
alike who wish to create secure retirement savings plans while still enjoying life after work,
understanding these concepts will prove invaluable moving forward!