Centrelink payments that disappear from 20 March 2020

By Mark Gleeson, Senior Technical Services Manager

From 20 March 2020, JobSeeker Payment replaces Newstart Allowance as the main working age payment. As part of the Government’s welfare reform package, many payments cease from 20 March 2020.

You should advise affected clients of the changes in order to manage their expectations and to consider possible strategies to maximise their payment. Legislation to implement the changes was passed in 2017.

The following payments will cease on 20 March 2020:

  • Newstart Allowance
  • Sickness Allowance (closed to new recipients from 20 March 2020 and ceases on 20 September 2020)
  • Widow Allowance (closed to new recipients on 1 July 2018 and ceases on 1 January 2022)
  • Partner Allowance (ceases on 1 January 2022)
  • Widow B Pension
  • Wife Pension
  • Bereavement Allowance

Newstart becomes JobSeeker

JobSeeker is effectively the new name for the Newstart Allowance from 20 March 2020 and it becomes the main working age Centrelink payment. Clients receiving Newstart Allowance do not need to do anything and will automatically transfer to the JobSeeker Payment. Clients continue to receive the same rate of payment and continue to hold the health care card, providing their circumstances do not change.

From 20 March, eligible clients can receive JobSeeker Payment if they satisfy at least one of the following requirements:

  • they are looking for work
  • cannot temporarily work or study due to sickness or injury
  • have recently lost their partner

Changes from 20 March 2020 onwards

The following table illustrates the outcomes for clients receiving various payments from 20 March 2020.

Clients currently receiving      

Outcome

Newstart Allowance

Newstart Allowance ends on 20 March 2020 and the client transfers to the JobSeeker Payment. There are no changes if the client continues to satisfy the requirements.

Sickness Allowance

The client continues to receive Sickness Allowance until the medical certificate expires. After expiry, the client may be able to transfer to the JobSeeker payment. No new claims of Sickness Allowance accepted from 20 March 2020.

Widow Allowance

Widow Allowance was closed to new recipients on 1 July 2018. The payment ceases on 1 January 2022 when the last of the existing recipients transfer to the Age Pension.

Partner Allowance

Partner Allowance ceases on 1 January 2022 when the last of the existing recipients transfer to the Age Pension.

Widow B Pension

Widow B Pension recipients will automatically be transferred to the Age Pension from 20 March 2020. Please note, no new Widow B Pensions have been granted since 20 March 1997.

Wife Pension

Wife Pension ends on 20 March 2020 and the client will then have three options:

  1. Transfer to Carer Payment – if they live in Australia and receive both the Wife Pension and the Carer Allowance on 19 March 2020 (and they continue to qualify for Carer Allowance).
  2. Transfer to Age Pension – if at 19 March 2020, they are Age Pension age, receive the Wife Pension and do not receive the Carer Allowance.
  3. Transfer to JobSeeker Payment – if they live in Australia, receive Wife Pension on 19 March 2020, are under Age Pension age and do not receive the Carer Allowance.

Bereavement Allowance

Bereavement Allowance recipients at 19 March 2020 continue to receive payment until the end of their bereavement period which is generally 14 weeks. There are no new claims of Bereavement Allowance from 20 March 2020.

Information relating to some of the ceasing payments

  • Sickness Allowance is an income support payment for individuals who are temporarily incapacitated for work or study and do not have adequate levels of income support. The individuals must be able resume their employment or return to their studies once they have recovered from their incapacity.
  • Widow B Pension is a payment for a widow who did not get a Parenting Payment, has limited money and lost the financial support of their partner. No new claims of Widow B Pension have been granted since 20 March 1997.
  • Wife Pension is an income support payment for female partners of people receiving an Age Pension or Disability Support Pension as of June 1995. No new claims of the Wife Pension have been granted from 1 July 1995.
  • Bereavement Allowance provides short term financial assistance of up to 14 weeks for recent widows.

How can you help your client?

You may wish to use the table above to guide your client through their possible options from 20 March 2020. Clients who are affected should receive communications from the Department of Human Services about the upcoming changes. In most cases, clients will be transferred automatically to the new JobSeeker Payment.

If your client is expected to continue receiving Centrelink benefits, you may wish to explore the possibility of certain strategies to maximise the amount of the payment, for example:

  • Making contributions, within allowable limits, to super for the client or their partner. Amounts held in accumulation phase are not means tested if the client is under Age Pension age.
  • Investing in improvements to their main residence which is exempt from means testing.
  • Certain prepaid funeral expenses and cemetery plots. These are exempt assets and there is no limit. Alternatively, funeral investments or bonds may be an option. Each member of a couple can invest up to $13,250 (2019/20) for a prepaid funeral or cemetery plot and be exempt from means testing.
  • Singles and couples can gift $10,000 of assets per financial year, with a limit of $30,000 in any rolling five financial year period. Gifts in excess of these limits are assessed as an asset, known as a deprived asset, and deemed under the income test for five years from the time of the gift.

More information

If you have any questions, or would like more information, please contact the IOOF TechConnect team on 1300 650 414.

Disclaimer
The information in this section of the website is intended for financial advisers only and is not to be distributed to clients. It has been prepared on behalf of Australian Executor Trustees Limited ABN 84 007 869 794 AFSL 240023, IOOF Investment Management Limited ABN 53 006 695 021 AFSL 230524, IOOF Investment Services Ltd ABN 80 007 350 405, AFSL 230703 and IOOF Ltd ABN 21 087 649 625 AFSL 230522 based on information that is believed to be accurate and reliable at the time of publication.