Like other financial assets, your account based pension is
taken into account to determine your entitlement to social security
benefits.
Assets Test
Your account based pension account balance is included as an
asset for the purpose of the assets test. The balance is revalued
every six months, unless you only receive your pension annually
in which case your account balance is also revalued annually.
Income Test
Your annual pension, less a 'special' deductible amount, is counted
as income. This deductible amount differs from that used for tax
purposes. In this case it is the full purchase price divided by
a life expectancy factor.
The life expectancy factor is your life expectancy (in years)
when you started the Account based pension unless you've elected the
reversionary pension option, in which case it's the longer of
your and the reversionary pensioner's life expectancies.
An example
In this example, Kate Jones rolled over $250,000 into an account
based pension and drew a payment of $18,000 in the first year.
There is no reversionary pension, so Kate's social security treatment
is as follows:
Assets Test
Assessable Assets = $250,000
Income Test
| Assessable Income = |
| Annual Pension - |
Purchase
Price |
| Life Expectancy Factor |
|
| |
|
(as at 2000-02) |
| |
| = |
|
| |
|
| = |
$18,000 - $11,166 |
| |
|
| = |
$6,834 Income Assessed |
Note that the above calculation is an example only and you should
seek professional advice for specific details.
Reproduced with the kind permission of Macquarie
Investment Management Limited
Copyright © 2005-07 Forsyte
Consulting Pty Ltd unless otherwise stated.
