My wife and I are self-funded retirees in receipt of the Seniors Supplement from Centrelink. I understand that the supplement was granted to self-funded retirees as part compensation for not qualifying to receive a Pensioner Concession Card (PCC) and its associated financial benefits. In mid-2015 it was announced that the asset level qualifying to receive a part pension was to be reduced as from July 2017, and would result in many part pensioners losing access to their PCC as from that date.
Immediately that announcement was made the supplement that my wife and I receive was reduced by about 70 per cent or $170 a quarter for each of us. Now that the government has announced that as from October 9, 2017 access to a PCC will be reinstated to those ex-part pensioners adversely affected by the changed asset level qualification, does it follow that the value of the supplement will also be restored to something like mid-2015 levels?
The short answer is no. A departmental spokesman advises that to help ensure payments to senior Australians remain targeted to those who need them the most and to ensure the sustainability of the Commonwealth Seniors Health Card (CSHC), the Government has ceased payment of the Seniors Supplement.
The Seniors Supplement provided quarterly instalments based on an annual rate (at June 2015) of $894.40 a year for single CSHC holders and $673.40 for CSHC holders who were partnered. The final payment of the Seniors Supplement was made for the quarter to June 2015. There are no plans to reinstate the Seniors Supplement.
This means that cessation of the Seniors Supplement affected around 280,000 people with levels of income or assets that have, over many years, been considered sufficient to enable them to support themselves in most circumstances and not require the age pension.
The Commonwealth Government continues to offer the same benefits to CSHC holders as are offered to PCC holders in terms of prescription costs and access to the lower threshold of the Extended Medicare Safety Net.
CSHC holders who have remained continuously in receipt of the card since September 19, 2016, also receive the Energy Supplement, which will remain at its current rate of $366.60 a year for singles and $275.60 a year for each eligible member of a couple.
My wife and I have used a $35,000 equity loan towards purchasing shares over the past two years. The total portfolio value is now $90,000. Is it better to pay down the investment loan with my future work bonuses or purchase more shares from these bonuses and allow the dividends to naturally pay down the investment loan as the portfolio grows? The investment loan rate is 5.1 per cent.
The name of the game is to maximise your tax-deductible debt while minimising your non-deductible debt. Therefore, I suggest any cash you earn be set aside for future purposes such as buying your own residence if you don't have one now, and you continue to build your wealth in shares by increasing the borrowings for those shares as the portfolio grows. Make sure you reinvest all dividends to maximise the compounding effect.
Shall I pay off my investment loan of $178,000 (4.44 per cent a year) from my superannuation ($590,000). I am 65 and still working part time. I own two more houses mortgage free. I have $48,000 in the bank. Planning to retire next year.
I certainly would not be paying off the mortgage while you are working as you would be losing valuable tax benefits - the decision after you retire really turns on whether your superannuation can earn better than the 4.44 per cent you are paying on the investment loan. From my experience it should, therefore I suggest you keep the investment loan going until you decide you wish to make a major change in your situation.
I turned 60 on June 6, 2015, and changed employment in March 2016. I believe that this meets the requirement for a condition of release for my superannuation. Can you explain what this means as far as the effect on my super? My super fund has advised that it would mean that I could withdraw the balance but I still cannot convert my transition-to-retirement (TTR) pension to a regular pension to save on the tax on earnings. Is this correct?
It's not technically correct but there could be a communication glitch. Your fund staff member might have meant that the fund won't let you simply '"elect' to change your existing TTR pension to a new pension post July 1, 2017, and you might have to roll over to a new pension to get the earnings tax exemption. I am sure a follow up call will enable you to get the outcome you want.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: asknoel@fairfaxmedia.com.au.
