Losing your pension because of new changes? Here are some tips to help keep it.
Losing your pension because of new changes? Here are some tips to help keep it. Joshuah Buckle

REVEALED: Tips to avoid cuts to your pension

HUNDREDS of residents on the part-pension around Toowoomba and Darling Downs will have already had their payments cancelled or reduced under sweeping changes from the Federal Government.

The changes to the asset test, introduced on January 1, mean any pensioner over the threshold will lose $3 for every $1000 they are above the line.

The Chronicle spoke to Toowoomba Financial Centre advisor Gerard Ball, who explored some of the options residents could look at to improve their pension:

PRE-PAY FOR YOUR FUNERAL

While quite morbid in nature, Mr Ball said there were some genuine advantages to either putting deposits on funeral plans or pre-paying a funeral bond.

"With a funeral bond, they can pay up to $12,250 into a funeral bond, which is an exempt asset," he said.

"If they're close to the cut-off range, that's one thing they can do.

"They can either pre-pay their funeral plan as opposed to a funeral bond, which is putting them towards their funeral."

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MAKE A GIFT

If you have plenty of cash in the bank that is eating away at your pension, Mr Ball recommends gifting money to relatives and making donating to charities.

"People can also gift $10,000 per year, capped at $30,000 over five years," he said.

"They can give that to a charity or family member, just as long as it's a gift."

RENOVATE YOUR HOUSE OR PAY OFF HOME LOAN

Mr Ball's key advice was to spend money on things that don't count on the asset test, with the first of those being renovations.

Since the family home was not counted to the asset test, he said any improvements to would not affect a person's threshold.

Mr Ball also suggested paying off a residual home loan if you had the equity to do so.

If they've got a residual home loan, they can pay that off and it will take money out of their bank account," he said.

"I had a man who had a home loan and he stood to lose his pension, but he paid it off and it helped keep him under."

GO ON HOLIDAYS

Holidaying is one of the first things pensioners consider when trying to get below asset tests, since it's a purchase for a service rather than a product.

But while Mr Ball said taking a vacation was an option, he recommended caution to ensure there was enough capital left over in case of an emergency.

SUPERANNUATION

Because superannuation is counted towards a person's assets, Mr Ball said pensioners could invest cash into their partner's super if they were the right age.

"If you are a couple and one is a lot younger, they can put superannuation in an account and it will be an exempt asset until they reach pension age," he said.

LIFETIME ANNUITY

Purchasing a lifetime annuity product, which provides regular income in return for an upfront investment, could be an option, according to Mr Ball.

"If they put $50,000 into a lifetime annuities account, it's an asset that depreciates in value," he said.

"In the end it's still an asset but it does drop in value (and) it would help control your assets a bit better."



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