Drawing super and Newstart payments

DOES a transition to retirement pension affect Centrelink Newstart payments? I am thinking of releasing some of my super as transition to retirement. I have called Centrelink twice and have been told I do not have to declare any release of super funds, but I am still not sure if this is right. Can you advise if this is correct?

Answer this week provided by Kate McCallum, director and financial adviser at Multiforte.

If you commence a transition to retirement pension, your Centrelink payments are likely to be affected.

This is because while your superannuation monies are in accumulation phase – that is a standard superannuation account – and you are younger than age pension qualifying age, then your assets and any income earned within super are not included in the income or assets test.

However, when you commence a transition to retirement pension, you create a retirement income stream and your assets move into the ‘pension phase’. Retirement income streams are assessable under the assets test. The income that you received from the pension may also be assessable depending on the amount.

Centrelink assesses each individual under both an assets and income test, and the lesser amount will be paid.

Where to find out more

For more from Kate McCallum, financial director and financial adviser at Multiforte, visit www.multiforte.com.au or email Kate.