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Ask Paul: I'm inheriting $210k - will I lose my disability pension?

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I am 59 years old and receive the disability support pension while working part time. My mother recently passed away and an expected inheritance of $210,000 is pending.

I have about $20,000 in super (before the coronavirus) and no savings.

My major requirement is to continue the health support offered by the disability pension. Could you guide me as to how to invest the money, please? - Margaret

paul clitheroe

The inheritance will be a great boost to your financial situation, Margaret.

First, let's look at the impact on your pension. The $210,000 plus your $20,000 will not impact on your pension under the assets test whether you are single, in a relationship or a homeowner. It is below the limit.

Under the income test, again it depends on your single or partnered status and whether you are a homeowner.

Here it gets a little more complex. Naturally, your part-time income may already impact your pension. With your inheritance, regardless of what you do, as of May 1, 2020, you will be deemed to be earning 0.25% on the first $51,800 and 2.25% on amounts above this if you are single.

As you can see there are quite a few variable here.

This is quite a complex area and I really think you need some professional, personal advice. Centrelink can help you with the impact of the money on your pension, based on your personal circumstances.

With your money, it is important you invest it safely, but with a reasonable return.

Check with your bank - it may have a special pensioner deeming rate account. Looking online, I can see that Suncorp has a good pensioner rate of 1.8%.

Depending upon your superannuation situation, adding some of this money to super may be worth considering. If you have super attached to your part-time work, that is a potential source of financial advice, as most funds have a service to assist members.

Your personal situation, investment objectives and the complexity of our pension system make a discussion with Centrelink and a personal adviser pretty essential.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.
Comments
Wayne Coles
July 9, 2020 10.51pm

I'm about to get a large inheritance from a family member who lived and worked in the USA , I'm on a pension and my wife is my sole carer , we own our home , well the bank owns it lol, will the inheritance affect my DSP PENSION.?

Jeff East
January 4, 2021 12.37pm

Hi, if I was to receive an inheritance of $15,000 how would this affect my wife's disability support pension.

it is only a small amount so I guess she will not loose her dsp.

Ada Romania
March 11, 2021 6.55pm

Hi I'm on a disability pension and my husband gets a carers pension we are going to receive $510k as inheritance will this effect our Centrelink payment

Ruth McMahon
April 13, 2023 10.57am

Hi my brother 59 ( 17/1/64) is a Disability Pensioner and due to inherit about $400,000 in a couple of months. I am worried about what he should do ?

Chris W
November 30, 2021 7.54pm

Hello Paul,

Financial advice is really really needed here and much appreciated.

I'm on a disability pension in my mid 50's and will soon be inheriting around $180,000 from my father's estate. I also have a 50/50 share in my principal home with my daughter in which we both live (with her partner and my 3 grand children) We have a mortgage in both our names with the bank but it is split in two, I pay my own mortgage and have about 40K left on it, and my daughter pays her own.

My ex and I also own a property in country Victoria, which was our family home before I left. We divorced but didn't settle our affairs as I couldn't bear to sell our home as my ex wanted to stay there, so I've allowed my ex to continue living there. I also have 40k in my Super.

My daughter also has 2 hire purchases for cars and is the primary income earner, supports her family and under a lot of financial stress.

Her income won't allow her to increase her mortgage to get rid of her hire purchases. She has always wanted to be independent and do things her own way but it's obviously not working for her and she has finally realized she needs help. I'm proud that she has managed so far (I don't know how she's doing it!) but worried for her future.

1. Will my disability pension be affected by this inheritance and

2. What can my daughter do to consolidate all her finances so she is not paying premium interest on all of them.

I would appreciate any advice as to what I should do.

Money magazine
Verified
December 1, 2021 7.15am

Hi Chris,

Thank you for your comment.

We have published the final issue of Money for the year so Paul won't be answering more questions until February. We will pass your question on for his consideration.

In the meantime, here are two earlier questions Paul has answered about disability pension and inheritance:

https://www.moneymag.com.au/as...

https://www.moneymag.com.au/as...

- Money team

Kate Murray
August 12, 2022 11.41am

I have recently qualified for the disability pension as i hsve terminal cancer

My super fund has approved my lufe insurance payout

I have 4000 in the bank no other income beside the pension

Will the insurance payment disqualify me from receiving the pension

It is 100,000$