Common TPD payment concerns

Another common concern we are asked about with client’s TPD payouts is if they are receiving Centrelink benefits, will it be affected?

It is first important to note that, the approval of your TPD claim will not impact your Centrelink entitlement as it will initially be paid into your superannuation account. Superannuation accounts are excluded from any Centrelink testing you may be subject to until you reach your “Pension Age”. This age is between ages of sixty-five (65) and sixty-seven (67).

The way your Centrelink entitlement may be impacted is when you go to withdraw your TPD and / or superannuation to your bank account. However, if you are under the pension age, the actual withdrawal of your TPD payment and / or superannuation amount may not directly impact your Centrelink ‘means testing’. Your Centrelink ‘means testing’ may only be affected depending on what you choose to do with the funds. For example, if the withdrawn amount (partial or full) is spent or used to pay debts such as a mortgage or legal fees, then there will be no impact on your Centrelink payments. It is the remaining amount left in your bank account that may be treated as ‘financial assets’ for Centrelink testing.

When withdrawing your TPD payment from your superannuation account, you will have the option to withdraw the entire balance or make a partial withdrawal. If you choose to keep the full TPD payment or a portion of it in your superannuation account, Centrelink will not include this in their ‘income tests.’

As there are a range of different Centrelink benefits and payments, the ‘income tests’ vary. It is important to seek independent financial advice when withdrawing TPD and / or superannuation funds.