7Monday, December 10, 2018

with Monica Rule

Don’t kissyour testbenefitsgoodbye

The constant changing of super-annuation and Centrelinkrules makes it difficult for reti-

rees to keep up and to maximiseincome and benefits.

Superannuation fund membershave to keep abreast of what canhappen if they decide to cease a su-per pension.

A super fund member will losethe benefits of the grandfatheringprovision as soon as they stop theirexisting pension.

If they start a new pension theywill be means tested under rulesthat took effect on January 2, 2015.

Super fund members may wantto stop their existing pension sothat they can add more money fromtheir accumulation account andstart a new pension with moremoney from their accumulationaccount.

Once a fund member commencesa pension, they cannot add moremoney to it. This means, they can-not add more money from theiraccumulation account or add newcontributions to their pensionaccount.

A lot of people stop and start pen-sions without realising they needto check first if any of their pen-sions commenced before January2015.

It is particularly important if theperson has a super pension that

actual earnings on pension assets. A person’s superannuation pen-

sion was exempt from the CSHCincome test before January 2015.

However, from January 2015, su-perannuation pensions are includ-ed in the means test for the card inthe same way as other financialinvestments such as shares andmanaged funds.

This means superannuation pen-sions that started in January 2015will have deemed income from thatpension included in the CSHCincome test.

What superannuation fundmembers need to be aware of is thatif they cease or change their exist-ing superannuation pension fromJanuary 1, 2015 the new rules willaffect them.

link income test. In some cases, theamount of their super pensioncounted as nil due to the pensionbeing less than the deductibleamount.

The life expectancy formula wasreplaced with new deeming ruleson January 1, 2015. A deemedamount of income is calculated onthe person’s super pension balanceregardless of the investmentincome actually earned by the per-son’s pension assets.

This means, a deemed level ofincome from their superannuationpension will be included in theirage pension income test.

Deeming does not recognise thereturn of their superannuationcontributions and the level of pen-sion drawn from the person’s su-perannuation pension account.

Deeming assumes a certain rateof return on a person’s superan-nuation assets, rather than the

commenced before January 2015,they’re also receiving the age pen-sion from Centrelink and hold aCommonwealth Seniors HealthCard (CSHC).

The assessment of a person’s eli-gibility for the Centrelink pensionand the CSHC changed in January2015. The new assessment affectspeople whose entitlements arebased on the income test and not onthe assets test.

Make changes to your superan-nuation arrangements and youcould lose grandfathering, result-ing in a tougher formula beingapplied to your super for the Cen-trelink income test.

And if you leave the country foran extended period, you could notonly temporarily lose your CSHC— you could permanently lose theincome test grandfathering.

A person’s entitlement for theage pension was assessed based onthe person’s life expectancy beforeJanuary 2015.

The life expectancy formulaworks out the deductible amount ofa person’s superannuation pen-sion.

The deductible amount was cal-culated by dividing the pension’spurchase price less any commuta-tions by the person’s average lifeexpectancy determined by the Aus-tralian Government Actuary.

The deductible amount repre-sents a return of the person’s supercontributions to fund their pen-sion. This deductible amount isexcluded from the person’s super-annuation pension and the balanceis counted towards their Centre-

Dustin Hoffman looks after testy grandfather Robert De Niro in Meet the Fockers.

Take care of valuablegrandfather testing

THE LIFEEXPECTANCYFORMULA WASREPLACED WITHNEW DEEMINGRULES ONJANUARY 1, 2015.

Monica Rule is an SMSF specialist andauthor of a self-managed superhandbook. www.monicarule.com.au

Grandparents who have responsibilityfor raising their grandchildren are at asignificant financial disadvantage totheir peers.

That is a key finding of preliminaryresults stemming from the biggest surveyof this carer group ever undertaken inWA.

The State-wide project has capturedfeedback from 300 out of a target 500grandparent carers and found more thanhalf are trying to survive on an annualincome of $50,000 or less.

Typically, care is being provided forthree children and for 44 per cent of thegroup surveyed, this was being under-

outcomes, services and policies. He saidwhile about a quarter of respondents todate had some paid work, averaging 27hours per week, almost half had reducedtheir hours since taking on child care.

There were significant daily financialstresses reported by grandparent carers.

Half said they could not pay bills, regis-trations or insurances on time and justover one-third had only just enough to getthrough to their next pay day.

Common reasons cited for caring fortheir grandchildren included parent drugor alcohol abuse, child neglect and do-mestic violence issues.

There are more and more grandparentsgetting involved in child care each year inthis State.

aged pension and other government sup-port after scaling-back employment orleaving the workforce.

This research also revealed that oldergrandparent carers — aged more than 65— were far more likely to have weeklyincomes of less than $400 than those agedless than 55-years-old.

The latest WA survey is being conduct-ed as part of a wider project by Wanslea inassociation with Edith Cowan Universityand Curtin University, with Lotterywestfunding, and remains open to grandpar-ent carers willing to participate.

Dr Coall said responses to date point tosome major financial and social challeng-es facing this group and would help indus-try and government develop better

taken with a total household income of between $20,000 and $50,000. Income levels were less than $19,000 for almost 20per cent of respondents.

One-quarter of WA grandparents sur-veyed indicated they did not have thefinancial resources to care adequately fora grandchild in out-of-home care.

Chief investigator David Coall, of EdithCowan University, said the findings todate reflected previous national researchshowing grandparent carers were amongthe poorest family groups in Australiaand more likely to be financially disad-vantaged than parents or foster familiesraising children. He said a 2014 nationalsurvey of 335 grandparents raisinggrandchildren found many relied on the

Caring for grandchildren carries heavy cost burdenMelissa Williams