25 September 2023

Retire with entitlements: Centrelink benefits you might not know about

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Barbara Booth* reveals that Centrelink offers retirees access to a large range of benefits – some of which are not widely known or understood.

Photo: AlexRaths

Making the most of your budget in retirement includes knowing which Centrelink benefits could provide you with discounts, and some extra income.

The age pension is an obvious one, but there are also other benefits you could be eligible for.

You may meet the criteria for any of the following benefits, even if you don’t receive any age pension payments:

Pension loans scheme

This is rather like a reverse mortgage managed by Centrelink which allows you to supplement your income from the capital tied up in your family home.

Paid to you as a fortnightly amount, the pension loan scheme can supplement part-pension payments up to the maximum age pension amount.

If you’re not eligible for any pension payment because of the income or assets test (but not both) you can still benefit up to the maximum age pension amount under the scheme.

A proposal to increase these amounts to 150% was announced in the 2018/19 Federal Budget but has not yet been passed into law.

If you decide to sell your home while taking part in the scheme, you can repay the loan or transfer it to another property. Your estate can repay the loan in full if you still owe money under the scheme when you pass away.

Commonwealth Seniors Health Care Card

This card offers those of age pension age discounts on medicines under the pharmaceutical benefits scheme (PBS).

As a card holder, you may also benefit from bulk billing from a GP and concessions on out-of-hospital treatment with the Medicare safety net.

Additional discounts may also be available from State and Council services and private businesses.

These discounts can include concessions on energy bills, rates, transport and recreation.

You only need to meet an income test to be eligible for this card – any assets test does not apply.

There are different income thresholds for singles, couples and couples separated by ill health and these are all indexed annually on 20 September.

For defined benefit scheme members, a State Government lifetime pension – or a taxed defined benefit – does not count towards assessable income for the Commonwealth Seniors Health Care Card. Only the untaxed portion of your benefit is included in the income test.

An exception to this would be if your spouse holds the defined benefit pension and is under age 60.

Low Income Health Care Card

Offering similar discounts to the Commonwealth Seniors Health Care Card, this benefit is for those below age pension age.

You also need to meet the income test to be eligible for the card, based on your average weekly gross income for eight weeks prior to applying.

Depending on your defined benefit scheme rules, you may already be receiving a pension benefit before reaching age pension age.

When this is the case, a tax-free component of up to 10% of the total pension is not assessable for the Low Income Health Care Card income test.

Energy Supplement

Seniors who are receiving some other Centrelink benefits may also be eligible for a tax-free payment towards their energy bills.

The amount you’ll receive and how often you receive payment depend on which benefit you already receive.

For example, if you’re being paid an age pension, you can choose to receive your energy supplement fortnightly with your pension payments or quarterly in arrears.

Commonwealth Seniors Health Care Card holders will receive their energy supplement quarterly in arrears.

Making Centrelink benefits part of your financial plan

It’s always a good idea to seek financial advice before making changes to your income or assets in order to meet the criteria for these benefits – and any others that might apply to you, such as Rent Assistance, Carer’s Allowance and the Age Pension.

Seeking advice from a Centrelink Financial Information Service Officer is another way to get some information about the benefits you may be entitled to.

Take the next step

With the right help, planning for your retirement is easier than you think. For more expert tips, visit the StatePlus website at this PS News link.

* Barbara Booth is a registered financial adviser with StatePlus and can be contacted at [email protected].

StatePlus, formerly known as State Super Financial Services, is one of Australia’s leading providers of financial planning. Since 1990, our retirement experts have provided life changing financial advice to public sector employees and their families. With a StatePlus planner by your side, you can feel confident about reaching your financial goals to live the retirement you really want.

This article was published on 4 October. The information in this article is current at the time of writing the article. This is general information only and does not take into account your personal objectives, financial situation or needs. It is important to seek financial and taxation advice that takes into account your personal objectives, financial situation and needs before making any decisions based on this information.

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