- Centrelink counts the value of your clients’ bank balance towards the asset test. But whilst investment debt is generally subtracted from your assets, personal debt is generally not.
- So what does this mean? Simple: Consider paying down personal debt with assessable assets such as super. This could reduce your clients’ assessable assets which may boost their Age Pension entitlements.
- The added benefits for clients are potentially saving on interest and removing the monthly repayment bill.
Case study: Freedom from debt at last
Greg has spent a lifetime focused on paying his mortgage down. However, recent medical bills and some expenses he hadn’t expected has left him with a $50,000 mortgage at retirement.
By using money from Greg’s super to pay down his debt he is reducing his assessable assets which will in turn increase his Age Pension entitlements by $3,900 a year under the assets test. Plus, he’ll be saving money on interest in the long run.
For Greg, it feels good knowing that the mortgage has finally been paid and he owns his home outright, Plus, it’s one less bill to remember to pay!