Noel Whittaker
Noel Whittaker

Increase your pension with bonds

IN last week’s column I used out of date figures for pension eligibility.  Today I am taking opportunity to provide you with the updated figures and also talk about ways to increase your pension by using funeral bonds. 

From 20 September 2010 a couple who own their own home can have $978,000 of assets before losing access to the aged pension.  For a single homeowner this is $659,250. 

The figures for the income test are $62,795.20 for couples and $41,033.20 for a single.  For example, a couple could own their own home, have $900,000 of assessable assets and still receive a combined pension of $116.60 a fortnight. 

Pensioners prize the part pension, even though it is small, because in most cases it gives them access to a range of discounts as well as the pensioner concession card. 

One way to reduce assets to make yourself eligible for a part pension is to arrange for  payment of your funeral while you are still alive.   You can do this by pre-purchasing a burial plot and also by pre-paying funeral expenses or by investing in funeral bonds.

The amount of money spent on the burial plot is exempt from the assets test and the income test regardless of the value of the plot - Centrelink will not take into account any money you pay to a funeral director provided you have a contract that sets out the services to be undertaken

Funeral bonds are a more flexible alternative because they give the investor the option of appointing a specific funeral director to receive the proceeds or leaving the bond open so the proceeds can be paid directly to the family.  We recommend the latter option because there can be problems if the bond is assigned to a funeral director and the funeral costs less than the value of the bond.  If the family are the beneficiaries, any surplus funds can be used for any purpose they see fit.

The relaxation of the rules mean that retirees who are just above the assets test cut off point, will be able to qualify for a part pension.  For example, a couple with $998,000 of assets as well as the family home, would be ineligible for the age pension because they have too many assessable assets.  However, if they gifted $10,000 to their children or a charity and invested $10,000 each in funeral bonds, their assessable assets would drop by $30,000 and they would qualify for an age pension of around $1200 a year plus most of the fringe benefits.  The benefits alone are thought to be worth at least $1500 a year.

Noel Whittaker is a director of Whittaker Macnaught Pty Ltd.  His advice is general in nature and readers should seek their own professional advice before making any financial decisions.  His email is

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