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Most people are aware of the requirement to notify Centrelink if you have a change in circumstances that may affect your Age Pension entitlements. But what happens if you’ve notified them and nothing has changed?
If you have an uneasy feeling you are being paid too much pension and could be forced to repay it – read on.
When you apply for a pension, you provide all the details of your income and assets at the time of your claim. Centrelink applies both the income test and the assets test to those details and pays you the appropriate rate of pension.
But when you have a change in circumstances, things can get confusing and frustrating. You may have provided Centrelink with information about a change such as an inheritance or the sale of your home, or maybe just small changes in your accounts, but nothing has changed with your pension payments.
What is going on? What should you do? Is it better to stay quiet and hope they don’t notice? Will you end up with a debt?
The online update process
Some online updates do not finalise right away. Say you are updating your bank account balances. You log in and go through each account listed, carefully updating the balances to reflect your current financial situation. Hopefully at the end you get confirmation of the successful update, and if the overall change results in a higher or lower pension rate you can see the new rate of payment. Quite often though, the online update does not get finalised, leaving you wondering – what next?
What is happening here is that your information needs to be checked by a Service Officer. This process can take quite a long time, waiting for the next available officer to look at the information and undertake the necessary work to get your payments going at the correct rate.
Once this has occurred, if it is found that you have received more pension than you were entitled to, you will more than likely end up with a debt. Being advised of the debt amount can take even longer as it requires yet another officer to determine how much you were overpaid and if the overpayment is recoverable – resulting in you receiving a debt notice.
So how do you short-circuit this process and perhaps more importantly, should you follow up? Let’s look at an example.
When you have a change in circumstances that results in a reduction in your pension, Centrelink will always backdate the change to the date it occurred. For example, if Susan (see case study) received her inheritance on 14 July but didn’t notify until October, she has already been overpaid and they will recover that money.
If, however, the change results in an increase in your pension, they will only pay you the higher rate from the date you advised the change. So it really is best to advise any changes straight away.
What if I acted in good faith?
Many people think if they received their pension payments in good faith, then they won’t have to pay the money back. While this can be true in limited circumstances, if Centrelink find that you have contributed in any way to the overpayment, or if you should have known you were being overpaid, good faith cannot be established.
For example, if you advised the change outside of the 14 days required, or you told them you finished work but not about the lump sum you received, or you provided incorrect or incomplete information, then good faith may not apply.
Of course, sometimes Centrelink gets it wrong and that’s why there is an appeals process. If you are going to appeal a decision, take time to understand why the decision was made so you know what your argument is.
How to protect yourself against an unwanted debt
There are a number of things that you can do to avoid being issued with an unwanted Centrelink debt.
- Always make sure you notify Centrelink of any changes to your situation within 14 days. (Note, if you are reporting earned income each fortnight, you must advise of other changes on or before your reporting day.)
- When doing an online update, it never hurts to also provide documents to support your update, even if they haven’t asked for them (e.g. bank statements).
- It can be helpful to also submit a letter explaining what has happened, and be specific. For example, “On 14 July I received an inheritance of $250,000 and deposited it into account number xxxx”. Then provide the bank statement showing the deposit and perhaps a letter from the solicitor/executor showing your share of funds from the inheritance.
- Take note whether you are paid under the income test or the assets test, and what the thresholds are for each. These are published regularly.
- If you have advised Centrelink of a change and you think it will result in a lower rate of payment, follow up with them. Ask them to ensure they process your update so you are not overpaid. Also ask them the new rate of payment and get a receipt number.
- Don’t be afraid to use the Services Australia Complaints Line 1800 132 468 if you have tried to get your update completed and been told they are busy, it’s being processed, or another excuse.
- Once the update has been completed, check the information Centrelink has recorded for you to ensure it is correct.
What to do if you have been overpaid
Once it has been identified that you have been overpaid, Centrelink will then decide whether to recover the money.
If so, it will send you a letter advising you of the debt and a brief explanation of why it occurred. It will also give you a due date to pay the amount or give you the option to start a payment arrangement.
You can have the repayments deducted from your ongoing pension. In this case, Centrelink will generally deduct a set amount, but you can ask for this to be reduced if you can’t afford the payments.
If you are no longer receiving payments, you can still arrange a payment plan. However, if you don’t do anything they will take further, more serious action.