Aged care choice gets harder

When calculating age pension payments, Centrelink looks at two tests: assets and income. Where Covid-19 has negatively hit your investments, property or super, you may be eligible to receive an age pension or have a current payment increased.

The deeming rates for a single are now 0.25% on the first $53,000 and 2.25% for every extra $1. With cash rates low, you can maximise your earnings potential with no effect on your pension.

A single age pension is $24,551pa. To earn the same amount in term deposits at today’s typical low rate of 1%, you would need $2.45 million in the bank. So taking advantage of an aged pension can result in a lucrative payment.

People in aged care can choose between a refundable accommodation deposit (RAD) or daily accommodation payment (DAP). But since Covid-19 the choice is more difficult. Should you pay the 4.10% DAP interest rate or liquidate assets and accept a potential capital loss? Markets have recovered faster than expected, rendering the decision to liquidate assets important and potentially costly in the long term. To ensure you make the right decision, it’s best to seek expert advice. Luke Robson, financial adviser, HLB Mann Judd, Brisbane