By Peter Kelly on 8 December 2023
Over recent weeks, I have been attempting to help some family members apply for the age pension. One family member is 91, and the other will turn 90 shortly.
In the past, they have not been eligible for the age pension due to dividends received from shares they own in a private company that are distributed to them via a family trust.
While the family trust still owns the shares, the private company has been reinvesting dividends to expand the company. As a result of the dividends ceasing to be paid, the couple are now drawing down on their savings to cover their living costs.
Now, I accept that the minute “private companies” and “family trusts” are mentioned, one conjures up an image of “rich folk”.
But like many others in a similar situation, they are not wealthy.
Over the years, they worked very hard running their own business, and, as was popular both then and now, legal structures were often recommended to manage the business income effectively.
But these structures have a time and a place, and at some point in a person’s life, unravelling the complex maze of structures deserves serious thought.
So, where does this leave us today?
We know that eligibility for the age pension is subject to meeting both an income test and an assets test.
A quick “back of the envelope” calculation suggests these folk would be eligible to receive close to the full rate of age pension.
The current full age pension for a couple is just a few dollars less than $43,000 per annum.
The age pension would make a significant contribution towards covering living costs and would enable them to preserve their rapidly diminishing cash reserves.
So, applying for the age pension shouldn’t be all that difficult, should it?
I have been assisting them in completing the paperwork to support their application.
Currently, there are over 120 pages of application forms and supporting documents that need to be completed and provided to Centrelink.
The whole process has been complicated because of the family trust and the investment in the private company.
One of the couples was born overseas. The age pension application form (quite reasonably) asks for their country of birth and the date Australian citizenship was granted (if they have become an Australian citizen – which they have).
However, the form then goes on to ask the type of visa they arrived on, the visa subclass number, the date the visa was granted, when they started living in Australia, and the name of the ship or airline they arrived on.
In this case, the applicant arrived in Australia in 1950 and has continuously lived in Australia for 73 years. What reasonable chance do they have of remembering the visa subclass number they arrived on or the date the visa was granted?
While I can fully understand the need for Centrelink to ask about a person’s residency when assessing their age pension application, I just hope that not knowing the visa subclass number will not automatically knock their application for the age pension out. Time will tell.
My real concern with the process is the maze of details one must navigate to apply for the age pension.
Sure, there must be checks and balances; however, if I were a conspiracy theorist, I would be asking if the hurdles put in front of average Mums and Dads were an attempt by the government to make the process so difficult people give up and don’t apply for benefits they are rightly entitled too.
It can be a very intimidating process.
OK – I will now get off my soapbox and get back to completing Centrelink form “Mod(PT).2005”.
Wish me luck.