How much can I have in the bank before it affects my pension?

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Wally David

I’m a proud husband and father and I advise people on money for a living. I've been doing this money thing for over a decade and have a keen passion for educating people on their options by simplifying information into everyday language and cutting to the chase.

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You’re most likely here after searching Google for answers on different questions about your Age Pension. In this article, we learn how much you can have in the bank before your pension is reduced.

Let’s start with some of the basics.

What is deeming?

When it comes to assessing income from your financial investments, the Government assumes that you will be earning a certain rate of return, regardless of the actual interest rate that you receive. This system is known as deeming.

Deeming applies to most financial investments, with a few notable exceptions including real estate and business assets.

So, what assets are deemed?

Centrelink use the terminology of ‘financial investments’ for those assets that are deemed. This list includes:

  • term deposits
  • bank accounts
  • shares and managed funds
  • loans to family members
  • superannuation funds, if you are age pension age
  • account-based pensions taken out after 1 January 2015 (or for those account-based pensions purchased before 1 January 2015 where you are not in receipt of Income Support payment from the Government)

Click here for a full list of what is classed a financial investment.

How is your deemed income calculated?

The total value of your deemed assets are added together with the deeming rates then applied to that total.

Example: Fred has the following:

– a bank account with $20,000
– a term deposit with $100,000, and
– a share portfolio worth $30,000

Fred will have a total of $150,000 applied to deeming.

Again, the deeming rates are the assumed rates of return Centrelink are applying to your investments. This simplifies the process of obtaining investment returns from you for each and every investment you own.

What are the current deeming rates?

Deeming (assumed) RateSingle PensionerPensioner Couple
1.75%First $48,600First $80,600
3.25%$48,600+$80,600+
SOURCE: Department of Human Services, deeming rates effective from 1 July 2015

How much can I have in the bank before it affects my pension?

A single pensioner can have financial investments (e.g. bank account, shares) of $152,031 and still receive a full pension. This assumes the only source of income is from financial investments and that the total assets (eg. cars, personal belongings) are below the relevant threshold under the assets test.

How was this calculated?

$152,031 in financial investments:
$ 48,600 x 1.75% = $850.50
$ 103,431 x 3.25% = $3,361.50
Deemed income = $4,212

A pensioner couple can have financial investments of $267,600 and receive a full pension. Again, assuming the only source of income is from financial investments and total assets were below the maximum allowed under the assets test for a full pension.

As mentioned, the above figures assume your only source of income is from financial investments. If you have other sources of income, such as overseas pensions; these don’t fall under the deeming rules. This extra income will reduce the amount that you can have in the bank before it starts to affect your pension.

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Please note: The figures outlined above are intended as a guide only. Whilst we endeavour to ensure that the information is correct, we do not warrant its completeness or accuracy, nor that the material is kept up-to-date. 

Commenting and Discussion Guidelines

  • Due to the high volume of requests, it is not always possible to publish and respond to all comments received.
  • We do not provide personalised financial or taxation advice on this forum. All responses are of a general nature and should be treated only as a guide. You should always obtain appropriate professional advice that is relevant to your particular circumstances.
  • Whilst we endeavour to ensure that the information on this website is correct, we do not warrant its completeness or accuracy. You should always verify any information with the relevant organisation, such as Centrelink, the Australian Tax Office or any other regulatory body.

Comments

  1. Mary Bhalla says

    I am a New Zealand citizen and get my pension from NZ of $ 562.00 per fortnight and center link pays me $ 358.00 per fortnight. My rent which is a sharing is $ 510.00 fortnight. However my son who was sharing the rent has been transfered and I now have to pay the full rent of $ $1060.00 pf Would my pension increase? Whom should I contact?

    My son intends to invests $80000.00 in my name as a saving. will it affect my pension.
    I am 68 yrs and cannot work
    please advise

    • Wally David says

      Hi Mary,

      For rent assistance, if you are already receiving the maximum rate, then paying more rent won’t necessarily mean a higher payment.

      If your son invests $80,000 in your name, it will be counted as a financial asset against your pension.

      You can phone Centrelink to notify them of a change. If you don’t fancy the long hold times over the phone, there are other options to update your details, including:

      1) Fax your update to 1300 786 102

      2) Send via post to:

      Department of Human Services
      Reply Paid 7800
      Canberra BC
      ACT 2610

      Remember to write your CRN (customer reference number) at the top of the page and include any supporting documentation.

      I hope this helps.

      – Wally

  2. Jim Frost says

    Hi Wally,

    Great site, we are buying another house which will be our place of residence and will sell the old home, most of my money is tied up in super with a flexi pension, rather than take the money out of the super, to which I can not put back, we were thinking of a bridging loan to cover the sale until the old house is sold, now at this point in time we would own two houses and still have the same amount in my super, how would Centrelink look at this ?

    • Wally David says

      Thank you for your question and feedback, Jim.

      It’s a bit of a tricky situation. You will own two houses during this interim period. Your current home can remain your primary residence and exempt from the assets test. However the second property will effectively be treated as an investment property. For an investment property, Centrelink generally assesses the net value of the property against the assets test. By ‘net’ value, I mean the value of the property less any mortgage secured against it.

      So if the bridging loan is secured against the home that you are not residing (i.e. investment property), the net value should be used by Centrelink.

      On a separate note, you also need to be careful not to lose your Age Pension in the process, as this could affect the grandfathering on your super pensions come 1 January 2015. For more info, please see – Deeming Changes 2015 – Centrelink Treatment of Account Based Pensions

      I recommend you seek professional advice beforehand to estimate the impact on entitlements, and advise on an appropriate course of action.

      – Wally

  3. KS says

    My husband has an investment loan and an offset acct linked to it, both in his name. I want to start either making regular monthly payments into the offset account or depositing my whole salary into it so I can help reduce the interest he’s paying. Would this be legal and what implications will this have on his investment and more importantly on lodging his tax for his investment business? My salary will simply be there in that account instead of sitting around on the other (mine) as it currently does. My opinion is that does not matter but we need to be really sure before we do anything in this direction.
    Thank you in advance.

    • Wally David says

      Thank you for your question, KS.

      It’s difficult to say without knowing all the facts, including what structure the investment and loan are held. I suggest you obtain professional taxation advice for clarification.

      – Wally

  4. Michael Marris says

    we have combined super of $700.000 . if appling for a pension is there a set amount we must take from super each month . house value approx. $400.000 – cars and caravan – $100.000. Money in bank accounts $120.000 would we be eligble for part pension

    • Wally David says

      Thank you for your question, Michael.

      Once you start an income stream with your super (e.g. account-based pension), there is a minimum pension income that you must draw each year. This is set down by the government, and the figure is dependant upon your age.

      For instance, a 65 year old must draw 5% of their account balance to meet this minimum requirement. For more info, you can refer to the Australian Tax Office website.

      A pensioner couple who own their home, can have around another $1,145,000 in assets and potentially still qualify for a part-pension. Remembering that the value of your primary residence is normally exempt from the assets test. There is also the income test to consider. For a guide, please refer to the following useful posts:

      How much can a pensioner have in assets before affecting their payment?

      How much can you earn before it affects your pension?

      I hope this helps.

      – Wally

  5. Phil says

    Hi Wally,

    congratulations and thanks on an extremely informative blog. I’ve found it incredibly useful.

    Could you please help with the below:

    My mother lost her husband last year (2nd Marriage). They were living 60 km’s away and now that he has passed I have bought a house close to my family so that Mum can move in. The plan is for her to rent from me. To do this, she will need to sell her marital home worth approx. $500k. She currently has investments of $440k and was receiving an age pension with her late husband. Can you please let me know if you believe she will still be able to get the age pension and if so a rough estimate of the amount? It seems to me from reading Centrelink and Human Services websites that it is a little unfair if Mum sells her house to be closer to the family and as a result of the sales proceeds loses a large proportion of her pension. To get around the problem she could buy a property close to us but she can’t afford the area we live in and hence the proceeds of the marital home will effectively be invested and hence taken into account in calculating her pension as I understand it.

    Any comment on the above and the rough age pension calculation would be great. Perhaps she would qualify for some sort of rent assistance?

    Thanks again Wally.

    • Wally David says

      Thank you for your question and kind words, Phil.

      A single pensioner who doesn’t own a home, must have assets of less than $918,250 to qualify for any pension. Based on your figures, your mother may end up with more than this amount.

      To qualify for rent assistance, a person must be in receipt of Centrelink payment amongst other requirements. You can read more at the Department of Human Services website.

      I hope this helps.

      – Wally

  6. Mel says

    Hi Wally.

    I have a question for you, I hope you will be able to assist. My father wishes to sell an investment property. He believes that the sale of this property will bring in $180,000, once the bank loan has been repaid to the bank. He also co-owns his place of residence with my Mum (which i understand is not included in this calculation).

    Now, in addition to this, my parents own a small beach house. It is perhaps valued at around $180,000 as well. Now this particular house is only in my mother’s name and my father does not own it.

    How will the above financials affect my father’s pension? (if they do in anyway). Will the small beach house, that is not in his name, have any bearing on what he will get from his pension? My parents are still married and both live in their place of residence together.

    Thank you so much for your assistance. I really appreciate your help.

    Kindest Regards,
    Mel

    • Wally David says

      Thank you for your question, Mel.

      As a couple, Centrelink assess your combined assets and income when calculating your payment, even where only one partner has reached pension age.

      This means the beach house should be included in any assessment of assets for the pension.

      I hope this helps.

      – Wally