7 Monday, December 10, 2018 with Monica Rule Don’t kiss your test benefits goodbye T he constant changing of super- annuation and Centrelink rules makes it difficult for reti- rees to keep up and to maximise income and benefits. Superannuation fund members have to keep abreast of what can happen if they decide to cease a su- per pension. A super fund member will lose the benefits of the grandfathering provision as soon as they stop their existing pension. If they start a new pension they will be means tested under rules that took effect on January 2, 2015. Super fund members may want to stop their existing pension so that they can add more money from their accumulation account and start a new pension with more money from their accumulation account. Once a fund member commences a pension, they cannot add more money to it. This means, they can- not add more money from their accumulation account or add new contributions to their pension account. A lot of people stop and start pen- sions without realising they need to check first if any of their pen- sions commenced before January 2015. It is particularly important if the person has a super pension that actual earnings on pension assets. A person’s superannuation pen- sion was exempt from the CSHC income test before January 2015. However, from January 2015, su- perannuation pensions are includ- ed in the means test for the card in the same way as other financial investments such as shares and managed funds. This means superannuation pen- sions that started in January 2015 will have deemed income from that pension included in the CSHC income test. What superannuation fund members need to be aware of is that if they cease or change their exist- ing superannuation pension from January 1, 2015 the new rules will affect them. link income test. In some cases, the amount of their super pension counted as nil due to the pension being less than the deductible amount. The life expectancy formula was replaced with new deeming rules on January 1, 2015. A deemed amount of income is calculated on the person’s super pension balance regardless of the investment income actually earned by the per- son’s pension assets. This means, a deemed level of income from their superannuation pension will be included in their age pension income test. Deeming does not recognise the return of their superannuation contributions and the level of pen- sion drawn from the person’s su- perannuation pension account. Deeming assumes a certain rate of 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 a Commonwealth Seniors Health Card (CSHC). The assessment of a person’s eli- gibility for the Centrelink pension and the CSHC changed in January 2015. The new assessment affects people whose entitlements are based on the income test and not on the assets test. Make changes to your superan- nuation arrangements and you could lose grandfathering, result- ing in a tougher formula being applied to your super for the Cen- trelink income test. And if you leave the country for an extended period, you could not only temporarily lose your CSHC — you could permanently lose the income test grandfathering. A person’s entitlement for the age pension was assessed based on the person’s life expectancy before January 2015. The life expectancy formula works out the deductible amount of a person’s superannuation pen- sion. The deductible amount was cal- culated by dividing the pension’s purchase price less any commuta- tions by the person’s average life expectancy determined by the Aus- tralian Government Actuary. The deductible amount repre- sents a return of the person’s super contributions to fund their pen- sion. This deductible amount is excluded from the person’s super- annuation pension and the balance is counted towards their Centre- Dustin Hoffman looks after testy grandfather Robert De Niro in Meet the Fockers. Take care of valuable grandfather testing THE LIFE EXPECTANCY FORMULA WAS REPLACED WITH NEW DEEMING RULES ON JANUARY 1, 2015. Monica Rule is an SMSF specialist and author of a self-managed super handbook. www.monicarule.com.au Grandparents who have responsibility for raising their grandchildren are at a significant financial disadvantage to their peers. That is a key finding of preliminary results stemming from the biggest survey of this carer group ever undertaken in WA. The State-wide project has captured feedback from 300 out of a target 500 grandparent carers and found more than half are trying to survive on an annual income of $50,000 or less. Typically, care is being provided for three children and for 44 per cent of the group surveyed, this was being under- outcomes, services and policies. He said while about a quarter of respondents to date had some paid work, averaging 27 hours per week, almost half had reduced their hours since taking on child care. There were significant daily financial stresses reported by grandparent carers. Half said they could not pay bills, regis- trations or insurances on time and just over one-third had only just enough to get through to their next pay day. Common reasons cited for caring for their grandchildren included parent drug or alcohol abuse, child neglect and do- mestic violence issues. There are more and more grandparents getting involved in child care each year in this State. aged pension and other government sup- port after scaling-back employment or leaving the workforce. This research also revealed that older grandparent carers — aged more than 65 — were far more likely to have weekly incomes of less than $400 than those aged less than 55-years-old. The latest WA survey is being conduct- ed as part of a wider project by Wanslea in association with Edith Cowan University and Curtin University, with Lotterywest funding, and remains open to grandpar- ent carers willing to participate. Dr Coall said responses to date point to some 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 20 per cent of respondents. One-quarter of WA grandparents sur- veyed indicated they did not have the financial resources to care adequately for a grandchild in out-of-home care. Chief investigator David Coall, of Edith Cowan University, said the findings to date reflected previous national research showing grandparent carers were among the poorest family groups in Australia and more likely to be financially disad- vantaged than parents or foster families raising children. He said a 2014 national survey of 335 grandparents raising grandchildren found many relied on the Caring for grandchildren carries heavy cost burden Melissa Williams