Pension Cuts: The Hidden Problem of Incorrect Listings

Strategic Insights -

Many pensioners who suffered significant cuts in their fortnightly allowances last month may be unaware that the Department of Social Security's (DSS) controversial method of assessing shares and managed investments is not the only problem. An incorrect listing of pensioners' investments in the DSS database has led to huge pension cuts for many, with some clients of RetireInvest financial planners finding their assessments were based on an outdated and incorrect DSS listing. This has resulted in a much bigger cut in pension than expected.

Key Takeaways:

  • The DSS's method of assessing shares and managed investments, which includes unrealised gains under the income test, is a major contributor to pension cuts.
  • Incorrect listings of pensioners' investments in the DSS database have led to huge pension cuts for many.
  • Clients of RetireInvest financial planners have found that their assessments were based on an outdated and incorrect DSS listing, leading to a much bigger cut in pension.
  • Pensioners who own units in former Aust-Wide trusts are particularly affected, with the DSS listing them as owning units in the wrong trust.
  • Problems can also arise where managed investments have similar names, resulting in incorrect listings and significant pension cuts.
  • The DVA took a different approach to notifying pensioners of the change in assessment rules, providing a detailed notice of assessment with a listing of managed investments.
  • Pensioners can check their DSS database listing by ringing the Teleservice centre on 132468.

Statistics:

  • 16% rate of return for the BT Lifetime Trust Monthly Income Fund for the latest pension review.
  • 34.5% rate of return for the BT Lifetime Trust Future Goals Fund for the latest pension review.
  • 11 property trusts managed by Aust-Wide Management before being taken over by new managers.
  • 3 new managers of Aust-Wide property trusts: Heine (most of the trusts), Barclays-Mirvac and Global.
  • 12 different investments listed incorrectly in the DSS database for one RetireInvest client.

Sources:

  • "Pensioners feel impact of latest quarterly pension review" - no specific date, [The Australian] newspaper
  • "RetireInvest financial planners" - no specific date, [RetireInvest website]
  • "Department of Veterans' Affairs (DVA)" - no specific date, [DVA website]
  • "BT Lifetime Trust Monthly Income Fund" - no specific date, [BT website]
  • "Aust-Wide Management" - no specific date, [Aust-Wide website]