financial advice needed for retiree

[MPmelb]

Hi everyone,

I am writing in relation to my mother who is a retiree and receives the age pension. She is 73 years old and a single pensioner. She has one son, me.

She owns her own home, and 5 years ago she sold her investment property and put the proceeds into a managed fund. The fund actually went down 30% in the first 2 years due to the share market correction, but the last few years has absolutely boomed.

The outcome is a great result for her since she has made a lot of money.

The "downside" she perceives (since she is used to receiving the pension all her retired life) is that she has lost most of her age pension entitlements.

Her question is, is there any way she can have a large sum investment and still keep the majority of her age pension?? (or is there a particular financial structuring she can do to make this possible, and also to decrease the amount of tax she has to pay?)

(she has been told to find a good financial advisor, so anybody that knows one in eastern suburbs of Melbourne, perhaps specialising in retiree income, please feel free to give their details)

Thanks all for your help, very much appreciated.

 

[Ol School Skata]

You could make a time to discuss this problem with Centrelink or DSS (whatever they are called now). They have officers there who deal with this situation daily. I believe they are suitably qualified to give such advice - with no specific product recommendations.

I went through this exact situation with one of my grandparents some time ago. They gave us a framework to work in and from there spoke to a number of 'Advisers and Planners'

OSS

 

[agent007]

Hi everyone,

I am writing in relation to my mother who is a retiree and receives the age pension. She is 73 years old and a single pensioner. She has one son, me.

She owns her own home, and 5 years ago she sold her investment property and put the proceeds into a managed fund. The fund actually went down 30% in the first 2 years due to the share market correction, but the last few years has absolutely boomed.

The outcome is a great result for her since she has made a lot of money.

The "downside" she perceives (since she is used to receiving the pension all her retired life) is that she has lost most of her age pension entitlements.

Her question is, is there any way she can have a large sum investment and still keep the majority of her age pension?? (or is there a particular financial structuring she can do to make this possible, and also to decrease the amount of tax she has to pay?)

(she has been told to find a good financial advisor, so anybody that knows one in eastern suburbs of Melbourne, perhaps specialising in retiree income, please feel free to give their details)

Thanks all for your help, very much appreciated.

Why don't you make an appoinment with Navra?.

http://www.navra.com.au/

BTW, I'm not associated with them. I'm just a client.

Good luck,

James.

 

[The Y-man]

..... or Garryk.

There are various vehicles that the fund can be held in to not be assesable in an asset test and income test. However, definitely specialist area.

Cheers,

The Y-man

 

[JamesGG]

..... or Garryk.

The Y-man

Hiya,

This was my first thought too, as Garry is very good at what he does.

Sadly, he has moved away from the Eastern suburbs and is currently on holiday, I believe.

Cheers

James.

 

[The Y-man]

This might sound a bit left field, but some time ago, I wondered along to a retirement seminar held by RACV Fin Services. I was prepared to be bored witless, but ended up enjoying it immensely. The presenter was a CFP with the RACV, and he had a great sense of humour. Actually explained asset tests, annuities etc in a way that was easy to understand and fun. Not sure if he is still there (he can do pure commission based or fee for service):

Trung Nguyen
RACV FSL#236053
03 9790 3340

Cheers,

The Y-man

 

[lizzie]

an important lesson for the rest of us ... to get our strutures correct "before" we retire. although i imagine none of us are planning on going onto the pension.

 

[kissfan]

The outcome is a great result for her since she has made a lot of money.

The "downside" she perceives (since she is used to receiving the pension all her retired life) is that she has lost most of her age pension entitlements.

Hi MPmelb.

Sorry to hear of your mothers dilemma.

Just wondering, does your mother have to 'apply' for the pension every year according to fluctuations of her managed fund?

By that, I mean, in the 2 years the fund 'lost money', pension remains the same, then the fund goes well so your mother loses entitlements. What if the fund crashes next year (obviously I hope this doesn't happen), does that mean your mum has to re-apply to get back the entitlements that have been taken away?

Regards
Marty

 

[Twentyseven]

You should check out a concept called "deeming". Apparently Centrelink will treat any investments by a pensioner as earning a certain percent only (I think it is 2% or 3%) for the purpose of their assets test and income test.

See the link below:

http://www.centrelink.gov.au/internet/internet.nsf/factors/income_deeming.htm

and

http://www.centrelink.gov.au/internet/internet.nsf/filestores/fis008_0508/$file/fis008_0508en.pdf

Managed Funds are classified as "financial assets" under the Centrelink rules, so it is irrelevant what return your mother's mutual funds are returning because Centrelink assumes that her money is only earning a certain percentage for the purpose of determining her pension.

From memory, if your mother is single and only have around $30,000 in her managed funds, her rate of return is "deemed" at 3% and anything over is "deemed" at 5%.

 

[MPmelb]

Hi MPmelb.

Sorry to hear of your mothers dilemma.

Just wondering, does your mother have to 'apply' for the pension every year according to fluctuations of her managed fund?

By that, I mean, in the 2 years the fund 'lost money', pension remains the same, then the fund goes well so your mother loses entitlements. What if the fund crashes next year (obviously I hope this doesn't happen), does that mean your mum has to re-apply to get back the entitlements that have been taken away?

Regards
Marty

At least every 6 months she has to provide Centrelink an asset report. Based on this asset report, Centrelink will determine her welfare entitlements, if any.

 

[Ol School Skata]

Try this website - Centrelink Financial Information Service.

http://www.centrelink.gov.au/internet/internet.nsf/services/fis.htm

Why not approach them direct?

OSS

 

[The Y-man]

Great point OSS.

Most of my initial knowledge about investing came from seminars held by the FIS (free and usually good food!)

Cheers,

The Y-man

 

[Ol School Skata]

Thanks Y-man.

I do not mean to rely entirely on the information you get from this service, but Y-man as you stated, it is a great starting point. Free, no sales pressure and chance to chat to others in a similar boat.

OSS

 

[MPmelb]

On 3AW radio here in Melbourne there are a lot of ads and guest spots for "Collins House" Financial Advisors and the owner Dominic.

They come across as quite good. Has anybody used this company, and how were they?

Thanks.

 

[Ozlady]

Hi everyone,

I am writing in relation to my mother who is a retiree and receives the age pension. She is 73 years old and a single pensioner. She has one son, me.

She owns her own home, and 5 years ago she sold her investment property and put the proceeds into a managed fund. The fund actually went down 30% in the first 2 years due to the share market correction, but the last few years has absolutely boomed.

The outcome is a great result for her since she has made a lot of money.

The "downside" she perceives (since she is used to receiving the pension all her retired life) is that she has lost most of her age pension entitlements.

Her question is, is there any way she can have a large sum investment and still keep the majority of her age pension?? (or is there a particular financial structuring she can do to make this possible, and also to decrease the amount of tax she has to pay?)

(she has been told to find a good financial advisor, so anybody that knows one in eastern suburbs of Melbourne, perhaps specialising in retiree income, please feel free to give their details)

Thanks all for your help, very much appreciated.

Hi MPmelb, Check out "complying allocated pensions" as I understand it if you can purchase a allocated pension and it is only 50% classed as an asset and is not income tested for centrelink purposes. The set up is usually through superannuation funds but depending on age and circumstances any money can be put into the super and used straight away to purchase the allocated pension. There are various products which can give you and income within set limits or no income at all, just growth. Hope this makes sense, but anything to do with centrelink is never straight forward.