How will my silver and gold bullion affect my age pension?

I’m confused about how Centrelink assesses the gold and silver I own. I’ve been told they are given a deemed income, even though they don’t actually produce any. Of course, as their value rises, my pension decreases. For context, I own and live in my home, which I purchased more than 11 years ago, and still have a mortgage. When I sell an asset, the proceeds go into my mortgage savings account to pay off my principal and interest, meaning my overall asset value remains fairly static.

You are correct that gold and silver are subject to deeming under Centrelink’s rules. This means that even if you do not sell them, their assessed value can impact your pension.

Though they don’t produce an income, your gold assets could still be weighing down your pension.Credit: Simon Letch

If you sell part or all of your metals, you must notify Centrelink. While your metal holdings decrease, your bank balance increases, which Centrelink will reassess. When you pay Capital Gains Tax (CGT) to the ATO, this reduces your bank balance. Once the payment is made, you should report the lower balance to Centrelink, which may result in a higher pension.

If you are receiving only a part pension due to asset limits, you might consider using the proceeds from selling metals to pay down your mortgage.

Centrelink does not count the mortgage balance as an offset against assets, but selling assessable assets such as metals to reduce your mortgage moves that wealth from an assessable to a non-assessable category. This could lead to an increased pension.

I’m 57, have $815,000 in super, and own my home worth $1.3 million. My employer pays super into my fund about six weeks after payday — I get paid on the 14th, but my super doesn’t appear until the 28th of the following month. They say this is legal for employer contributions. But I also salary-sacrifice each month to reach the cap. Since that’s my money, shouldn’t it go into my super account the day I’m paid? I’d prefer my investments to start working straight away.

There is no legislative timeframe placed on employers for paying salary sacrifice contributions to an employee’s super fund. You’ve reached that fortunate position where the earnings on your investments far outweigh your contributions.

For example, if you have $815,000 in super, the annual growth should be at least $57,000 a year, or $1000 a week. If your maximum contributions are $30,000 a year, your net figure after the 15 per cent contribution tax is $25,500, which comes to just $2000 a month.

The timing of contributions – $2000 a month net – is minuscule compared to the size of your fund. In any case, because you are in the balanced and growth areas, unit prices fluctuate daily.

A contribution that is four weeks late may end up being worth more than one made immediately after you were paid. You’re on the right track – just keep doing what you’re doing.

I retired last year but won’t be eligible for the age pension until September. I’m not working and don’t plan to. Should I keep paying for TPD insurance through my super?

Insurance comes at a cost, so weigh the chance of claiming against your financial needs. If you’re not working and don’t plan to, a successful TPD claim may be less likely – especially if your policy requires you to be permanently unable to work in any job.

Premiums also rise with age and can eat into your super. Review your policy and decide if it’s still worth the cost.

I refer to your response regarding the transfer of superannuation upon death. As I understand it, a dependent does not need to take a tax-free lump sum – they can instead be nominated as a reversionary beneficiary and continue receiving the super pension after the spouse’s death. Would this have any impact on how Centrelink assesses the asset?

If you nominate your estate (rather than a non-dependant individual) as the beneficiary, I understand the estate will pay the 15 per cent tax, but no Medicare levy applies. The funds can then be distributed to non-dependents. Is this correct?

Usually, only a spouse will be eligible to receive a death benefit super pension following the death of their partner. Centrelink will assess the super pension received by the surviving spouse under the current rules, subject to the pension type.

You are correct that where the estate is nominated as a beneficiary, the estate will pay tax of 15 per cent on the taxable component of the lump sum death benefit. No Medicare levy is payable. It can then be distributed to beneficiaries to non-dependents as stated in the will.

Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. Questions to: [e-mail]

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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