Finance Your Budget Ask the Expert: How romantic relationships affect your pension payments
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Ask the Expert: How romantic relationships affect your pension payments

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Licensed financial adviser Craig Sankey answers your burning finance questions. Photo: TND
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Question 1: I’m on the full aged pension living in my own home with around $150,000 in shares and cash. My partner, who is younger and working, wants to move in on a permanent basis. He will not be contributing to the costs of the home and will keep his own monies [separate] from mine. Will this be a threat to my pension?

Question 2: I am 72 and single. If I marry, how does this affect my pension, whether living together with my spouse, or apart?

The above two questions relate to Centrelink’s definition of a couple, so I will answer them together.

For the purposes of Centrelink, you are considered to be a member of a couple if you and your partner are living together, or usually live together, and are:

  • Married, or
  • In a registered relationship, or
  • In a de facto relationship.

Sometimes it’s not easy to determine whether you are in a de facto relationship. In these circumstances, Centrelink will look at a range of circumstances, including:

  • Financial aspects of the relationship
  • Nature of the household
  • Social aspects of the relationship
  • Any sexual relationship
  • Nature of the people’s commitment to each other.

If Centrelink determines that you are a ‘couple’, then all of your assets will be included in the asset test for the age pension.

However, the threshold at which your assets start to affect your pension entitlements will be higher.

For example, a single person who owns their home can have $268,000 in assets before seeing any reduction in pension payments, while a couple who owns their home can collectively have $401,500 before being affected (these figures are as at March 2021 and the figures for non-home owners are higher).

Under the income test, all of your income is combined, and you are each assumed to be in receipt of 50 per cent for income test purposes, regardless of whether this is actually the case.

Note the Centrelink income test rules differ substantially, and are more complicated, if at least one member of a couple is in receipt of a government allowance such as Jobseeker.

If you move from being classified as ‘single’ to being a member of a ‘couple’, then not only do the asset and income test rules change, but a member of a couple receives a lower age pension payment than a single person, by about $230 per fortnight.

This is because couples receive a payment each (if both over age pension age) and it is assumed that their individual expenses are lower because they can share costs.

You may want to contact Centrelink’s Financial Information Service, which could advise you on how these changes would affect your individual situation.

Having a conversation with your partner about the financial effects of them moving into your home would also be a very important step, and if you are affected negatively by a reduction in age pension payments, then having an agreement in place that your partner will contribute financially is also very important.

Question 3: I’m 26 years old and save $800 of my salary every fortnight. At the moment, I’m putting all of it into a savings account, but I would like to invest some of it so that my money works harder for me.

The only trouble is I’m from the UK and might move back in one or two years’ time. And so I’m worried about investing into Australian-based funds. Could you recommend some share options/investment platforms that I could carry over from Australia to the UK?

Great job on your savings each fortnight and it’s understandable you want to achieve a better return than a savings account, as rates are very low.

Regardless of the shares and platforms you invest in, you can still invest in them if you live overseas and/or you become a non-resident.

The main consideration will be around tax. In general, when countries have a tax treaty, as Australia and the UK does, tax is generally only payable in the country of residence, on your worldwide income.

However, there are some specifics in each treaty that differ. There are also capital gains tax considerations when you cease to become an Australian resident for tax purposes, as this may trigger a capital gain.

There are some options and strategies that can be considered but they will be particular to your circumstances.

I suggest seeking advice from a tax adviser or accountant who also specialises in international tax treatments.

Craig Sankey is a licensed financial adviser and head of Technical Services & Advice Enablement at Industry Fund Services

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives. 

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