SMSF professionals play critical role in Age Pension planning
With the recent ATO statistics indicating a significant proportion of SMSF members in retirement phase may be eligible for the Age Pension, Accurium has highlighted this as an important planning consideration.
Ahead of an upcoming webinar, Accurium technical services manager Melanie Dunn stated that ATO statistics as at the end of the June 2022 quarter show that over 41 per cent of all SMSF members were aged were aged 65 or older and may be considering their eligibility for Age Pension.
Ms Dunn noted that the Age Pension age has been steadily increasing over the past five years from 65 and will reach age 67 from 1 July 2023.
“A retiree must currently be at least 66 years and 6 months old to be of Age Pension age, and this is increasing on 1 July 2023 to 67 for those born on or after 1 January 1957,” she said in a recent online article.
Ms Dunn reminded advisers that a person’s entitlement to Age Pension, if they are eligible to apply, depends on their assets and income, whether they own their home and whether they are a member of a couple. The lower of the entitlement calculated under the Income Test and Assets Test is what a household would receive.
“Whilst many SMSF retiree households may not be eligible for a full Age Pension, currently a home owning couple can have up to $935,000 in assessable assets, and a single up to $622,250 in assessable assets, and be entitled to at least a part Age Pension,” she noted.
“More SMSF retirees than you think may be entitled to the Age Pension.”
ATO statistics of SMSF member closing balances on 30 June 20203, she said, showed that around 65 per cent of all SMSF members in retirement phase had balances of $1 million or less, with just under 40 per cent of members having $500,000 or less.
“Obviously, all of a household’s assets, not just those in the SMSF, will count towards the Age Pension means tests, however this still indicates that many SMSF retirees may be eligible for some Age Pension,” she stated.
On 20 September 2022 the maximum Age Pension entitlement increased $38.90 to $1,026.50 a fortnight for singles and increased by $58.80 to $1,547.60 for couples (combined).
This was an increase of nearly 4 per cent on the March 2022 rates, said Ms Dunn, bringing the annual increase in maximum Age Pension to over 6 per cent.
“SMSF retirees who receive the Age Pension, either in part or in full, may see an increase in their Age Pension entitlements come through in their first payment after 20 September,” she said.
Given the complexity of the Age Pension rules and the fact that social security rules have changed over time, Ms Dunn said SMSF professionals play an important role in keeping retiree clients informed.
“Many SMSF retirees may believe they will never be entitled to an Age Pension or concession card. An expectation of receiving only a minimal amount, not knowing how to apply or if they are eligible, not wanting to ‘be on the Age Pension’, or simply avoiding the potential hassle of the application process, could all be reasons SMSF retirees may have decided not to apply for the Age Pension when they might otherwise be entitled to it,” she said.
One benefit of receiving even a small entitlement to Age Pension is the Pensioner Concession Card (PCC), said Ms Dunn.
“This is like the Commonwealth Seniors Healthcare Card but generally, the concessions are more widely available and significant than those available to CSHC holders,” she said.
“The PCC provides access to cheaper medicines, bulk billed doctor visits, help with hearing services, and depending on your client’s state or territory government and local council may also offer lower utility bills, property and water rates, public transport, vehicle registration and train fares.”
SMSF professionals can help their retiree clients, she said, by informing them about changes which may impact their Age Pension or other concession card eligibility and helping them seek further information or advice about accessing these valuable entitlements and concessions.
“An additional consideration as retirees age is their need for home or residential Aged Care and the complex rules around accessing that support,” she added.
By Legal
17 November 2022
smsfadviser.com
Latest Newsletters
Hot Issues
- Getting to a higher level of financial literacy in Australia
- What is the future of advice and how far off is superannuation 2.0?
- Investment and economic outlook, April 2024
- Australia’s debt service ratio ‘extraordinary’: CBA
- Connecting an adviser with your children
- ACCC scam report
- The Shortest-reigning Monarchs in History
- ATO warns trustees about increasing crypto scams
- Aged care report goes to the heart of Australia’s tax debate
- Removed super no longer protected from creditors: court
- ATO investigating 16.5k SMSFs over valuation compliance
- The 2025 Financial Year Tax & Super Changes You Need to Know!
- Investment and economic outlook, March 2024
- The compounding benefits from reinvesting dividends
- Three things to consider when switching your super
- Oldest Buildings in the World.
- Illegal access nets $637 million
- Trustee decisions are at their own discretion: expert
- Regular reviews and safekeeping of documents vital: expert
- Latest stats back up research into SMSF longevity and returns: educator
- Investment and economic outlook, February 2024
- Planning financially for a career break
- Could your SMSF do with more diversification?
- Countries producing the most solar power by gigawatt hours
- Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’
- Quarterly reporting regime means communication now paramount: expert
- Plan now to take advantage of 5-year carry forward rule: expert
- Why investors are firmly focused on interest rates
- Super literacy low for cash-strapped
- Four timeless principles for investing success
- Investment and economic outlook, January 2024
Article archive
- January - March 2024
- October - December 2023
- July - September 2023
- April - June 2023
- January - March 2023
- October - December 2022
- July - September 2022
- April - June 2022
- January - March 2022
- October - December 2021
- July - September 2021
- April - June 2021
- January - March 2021
- October - December 2020
- July - September 2020
- April - June 2020
- January - March 2020
- October - December 2019
- July - September 2019
- April - June 2019
- January - March 2019
- October - December 2018
- July - September 2018
- April - June 2018
- January - March 2018
- October - December 2017
- July - September 2017
- April - June 2017
- January - March 2017
- October - December 2016
- July - September 2016
- April - June 2016
- January - March 2016
- October - December 2015
- July - September 2015
- April - June 2015
October - December 2022 archive
- A 2022 Advent Calendar for our clients
- Volatility is here to stay
- Three things to consider when switching your super
- Making the most of your super limits
- SMSF professionals play critical role in Age Pension planning
- Positive results from research into the value of financial advice.
- Advisers warned on major timing traps with lifetime CGT cap
- Draft legislation released for franking credit changes
- Budget October 2022-23 - Comprehensive summary
- Federal Budget: all the key points you need to know
- Federal Budget 2022: Winners and Losers
- Federal Budget 2022/23 - Documents and Facts Sheets
- ATO raises ‘illegal early access’ concerns with small business owners
- Investors and recessions
- Rapid interest rate rises reveal global market frailties
- ASIC consulting on changes to SMSF advice guidance
- ATO taking ‘harsher’ stance on loans to members
- How costs can add up
- Take action on valuations now to avoid delays, says ATO
- Four powerful ways to build investing confidence
- ATO provides cyber security tips for SMSFs
- The advantages of investing early
- Partial property sales eligible for downsizer
- The Countries that Consume the Most Beer in the World