Entitled to a Pension?
When clients approach a financial planner about their retiree needs they want to know the following:
1. What benefit, if any, might they be entitled too?
2. If they are entitled to a benefit, how much of the benefit will they receive?
Let’s explore these two questions in further detail:
1. What benefits are people entitled to when they retire?
This question is not immediately about the client’s assets and income – that will come later on. What pre-retirees are really asking here is if they will meet the Centrelink requirements to be able to qualify for any type of benefit. At this stage most pre-retirees do not know what benefits are available to them. They want to know at what age they can apply for the benefit and then which benefit they might be able to apply for. For those who are injured and have not reached the Age Pension age, they might be wondering when they can apply for the disability pension as one example.
2. How much will they be able to get and when?
Once it is determined the type of benefits the client may be entitled to the client will want to know how much the benefit will pay. Right now that just want to know a summary of the benefit type they might be entitled to – what it can pay, how often it will be paid and what might affect the payment.
Only after these two questions are answered will the pre-retiree want to know more about their retirement planning and how social security will fit in with it all.
A summary of Gavin’s meetings
Gavin stated that in his first meeting it would be all about getting to know the client and the client understanding what his business can offer them. It is in that first meeting that Gavin and the client will decide whether or not it is worth pursuing the relationship further.
Prior to the second meeting Gavin will collect as much information as possible off the client. During the second meeting, the Engagement meeting, Gavin will summaries or provide a ‘Snapshot’ of the clients current situation and how he believes they will be placed in retirement. He usually has a good idea as to whether or not the client is going to be able receive the Age Pension and if it is possible to set up an Allocated Pension and/or Annuity. Gavin has found that when it comes to Centrelink you are mainly dealing with the Age Pension and the Pensioner Concession card. Rarely, will you have to deal with the other benefit types that Centrelink provides but he will come across a client every once in a while who might require something different e.g., Widow’s pension.
The client then decides whether or not to proceed and become a client of Gavin’s business. Up to this point, Gavin does not charge a fee. Gavin he has been working with retirees for over 30 years he has a good idea during the first meeting if the client will proceed or not. If he believes he cannot help them or that the client is not suited to his business he will simply be up front about it (in a nice way) and direct the client elsewhere.
During the third meeting Gavin provides the SoA outlining the appropriate strategy and what products will be used to support the strategy. As soon as all the paperwork is signed Gavin’s staff implement the strategy and the client/s are on their way to an enjoyable retirement.
One the applications for the Allocated Pension, Annuity and Age Pension are submitted it can take up to 6 weeks before the client will receive the pension.
Centrelink
There are two parts to the claim process when applying for a benefit:
1. Personal – Centrelink will ask a lot of personal information about you and your spouse/partner
2. Financial – Centrelink will want to know everything about your financial situation.
Once the claim form is lodged then you have two (2) weeks to provide Centrelink with all the necessary documents they will require to determine whether or not you are entitled to claim a benefit. A Centrelink officer will, upon receiving the initial claim form, peruse the application to make sure everything is in order. If it is not in order they will let you know, usually on the spot, that they will require additional information. The officer will take photo copies of any original documentation when the application is being submitted and hand back the originals. If all documents are received with in the two (2) week time frame then Centrelink, on approval of the Pension or other benefit, will back date the payments to the date the application was first lodged.
If you have dual citizenship then Centrelink might ask you to apply for a pension from the other country first before deciding whether or not to grant you an Australian Pension.
Normally Centrelink will issue a letter with in 6 weeks stating whether or not a pension will be granted and then shortly after that the client will receive their Pensioner Concession Card.
Whilst retirees don’t expect Advisers to remember all the figures and changes that keep occurring with legislation and Centrelink, they do expect you to know the gist of it all and where to find the information.
Further Reading (where to find the information)
Age Pension and Preparing for Retirement (http://www.humanservices.gov.au/customer/subjects/age-pension-and-planning-your-retirement#a3). Department of Human Services
A Guide to Australian Government Payments (http://www.humanservices.gov.au/corporate/publications-and-resources/a-guide-to-australian-government-payments). Department of Human Services.