Tell me about the Pension Bonus Scheme

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Q. On your radio segment on the 1st June 2008 I only heard the end of a comment about pension age people who are not taking the pension but are being rewarded somehow.

As I missed the bulk of the conversation would you be able to provide some more information or direct me to a website. Some background for you.

My pension age parents and myself are farmers and as my parents have a large asset base they are inelligible for the age pension amongst other benefits.

As the farm is to be handed down to me, the “asset” is really a business. They refuse to give any asset away before the execution of their will and as such haven’t planned ahead for this situation.

Josie’s answer: You are referring to the Pension Bonus Scheme (PBS) which has been in operation since 1998 and just like yourself very few people have even heard of it.

The PBS is to reward people who work past age pension age, currently 65 years if you are male and 63 (soon to be 65) for females.

The maximum payable after 5 years if you are single, is a lump sum payment of $32,853.50 or if you are married $27,440 each. Obviously this is worth exploring. The basic conditions of eligibility include:-

• REGISTERING BEFORE a bonus can be accrued. Do not wait until ‘official’ retirement.
• must defer pension for a minimum of 12 months from date of registration.
• must complete at least 960 hours of paid work each year

The amount your parents may receive all depends on the length of time they have not claimed the pension, and meeting the Centrelink income and assets test. Basically, if they are not entitled to any basic Age Pension when they retire, they will not qualify for the PBS. Currently the cut off under the assets test for a home owner couple is $849,500 (does not include family home, however a farm would be included).

Under the income test, the cut off for a couple combined is $2530.50. As your parents currently do not qualify for the age pension, it appears they would also not qualify for the PBS. However, we always recommend that people register regardless of their current income or assets, as life is unpredictable and things can change.

I hope you are seeking advice from an accountant in relation to transferring the farm and possible capital gains concessions and tax advantages of superannuation.

Also recommend your family touch base with a Solicitor and possibly a financial planner to discuss estate planning. No point giving too much away to the tax man.

As per my usual advice, check fees and ensure you understand the strategy before you proceed with any recommendation. If unsure, keep asking questions.

In the interests of not getting into too much detail, and boring my readers, I highly recommend that you make an appointment with an Financial Information Services Officer attached to Centrelink on 13 2300.

They are extremely helpful and I am yet to encounter someone who doesn’t know what they are talking about. You can also access lots of good information on their website - www.centrelink.gov.au (search: pension bonus scheme).

I wish you and your family all the best and happy money organisation. Josie K

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