Do your sums before making a super switch

I AM 75 with $900,000 in our self-managed super fund. My wife is 56 with $100,000 in the fund.

If I take out $350,000 and invest it outside super, and withdraw a further $350,000, which my wife can contribute to her super, I would be left with $200,000 in my super. She would then have $450,000 in her super and pay just 15 per cent on any earnings.

Could I then get a part-age pension? I reckon I could earn 8 per cent on my investments with my $350,000 (outside super) and 8 per cent on the investments inside my super.

Money in superannuation is not assessed by Centrelink until the member reaches pensionable age.

Therefore, money held in superannuation by your 56year-old wife would be exempt when your assets are being considered for pension eligibility. Just keep in mind that the maximum nonconcessional contributions that can be contributed by your wife over the next three years would be $300,000.

It’s really a matter of taking advice and doing the sums. MY husband and I are in our 70s, part-pensioners and asset tested. We have no superannuation or annuities.

Our savings are in term deposits, of which we receive per year $5000 less than estimates based on deeming points. On maturing of term deposits we usually take an interest rate lump sum, which in each case is far less than $10,000.

Six years ago we were told by Centrelink that if we take a lump sum up to $20,000 we do not have to report it, but if we take more we do need to report it and provide evidence on what we have spent that amount on. Is this rule still in place?

A department spokesman tells me the receipt of interest on a term deposit is not considered to be a lump sum payment or income, however, what you do with it may affect your payment.

Pensioners are required to advise the Department of Human Services of any changes of $2000 or more in their financial assets; if they add this amount to their bank account, they will need to advise the new balance.

Similarly, they need to advise the department of any changes of $1000 or more to their combined assessable assets – that is, non-financial assets. This includes (but is not limited to) the value of goods, cars, boats, furniture, real estate (including real estate in other countries), personal property, interest in any property, trust or company, and any other right or interest in any other asset (including assets overseas).

If a pensioner reduces their financial assets by a large amount without purchasing an asset, the department may ask for details and some form of supporting documentation. This allows the department to investigate if deprivation and/or gifting has occurred.

The gifting rules are designed to stop people from giving away their assets to gain a higher rate of payment.

Pensioners are required to advise the Department of Human Services of any changes of $2000 or more