Dennis has been told to transfer his super into his wife’s account to increase his pension and wants to know if it is legal.
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Q. Dennis
I am currently over pension age and going through the process of applying for a pension. My wife has only just turned 63 and we both have super accounts. I have been told to transfer all my super (approximately $200,000) into my wife’s super as hers will not count as an asset until she reaches pension age of 67 and this will reduce our asset total and increase my pension payment. Could you please confirm if this is the case?
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A. This is definitely the case and is perfectly legal.
While one member of a couple is not at pension age, it is possible to be eligible for a higher rate of pension by transferring superannuation into the partner’s account.
This is because any superannuation held in the younger partner’s name is not counted as an asset until they reach Age Pension age, which would be four years away in your situation.
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Your wife will not have to satisfy a work test to have funds contributed into her superannuation because of her age, and the money in that account will not be considered an asset until she reaches pension age or until she starts drawing money from the account.
This thereby legitimately reduces the impact of the assets test for Age Pension purposes.
You will, however, not be able to transfer all of the money at once because the rules regarding the non-concessional contribution cap will still apply.
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This means you can only transfer up to $150,000 in any given financial year or $450,000 every three years.
Subject to other contributions that may have been made to your wife’s super this financial year, you could look to put up to $150,000 into super prior to 30 June and then transfer the remaining balance in the next financial year.
Have you used this strategy to maximise your pension before your spouse reached pension age? Why not share your thoughts in the comments section below?
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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.
