SARAH'S STORY: Pension changes end in divorce
DIVORCE and a realignment of assets was Sarah's answer to managing the impact of the changes to the Aged Pension assets test.
When she read the Aged Pension story in December's edition of Seniors Newspaper, Sarah's initial reaction was: "Oh, my God. We are going to lose our entire pension."
"Today's politicians have over-stepped the greed level," the outspoken pensioner added.
"So I paid heed and took steps necessary to ensure that I was not at risk."
At the time the story was published in December, Sarah*, 68, and her husband Brad*, 66, who were both retired, were living in his house and renting out her house to bolster their income.
The agreement when they married was that neither would have a claim on each other's property, so that they could preserve their homes for the benefit of their own children.
"The changes were going to take us completely off the pension list, which meant I would have to start selling my assets so we could live," Sarah said.
"This then meant his house would continue to earn money and my assets would go. My daughter would end up with nothing.
"I would be living in his house and, if anything happened to him, I'd be out the door and have nothing."
RELATED STORY: SIX EASY STEPS TO AVOID CUTS TO YOUR PENSION
RELATED STORY: PENSIONS: THE CHANGES AFFECTING YOUR HIP POCKET
When her accountant called to discuss the Aged Pension changes, Sarah felt prompted to act.
"I went to my solicitor and talked to my accountant and posed a lot of questions to the tax office," Sarah said.
She recognised her assets were earning a minimal return and her part-payment pension was a small top-up, leaving her cash poor.
Sarah estimated that the she and Brad would be down to about $15,000 per year to live on after expenses.
"I couldn't do it, so I suggested that we legally separate, which my husband was appalled at.
"I could then move back into my place or sell and buy another place and my assets would be safe and so would my husband's," she said.
Sarah told Centrelink what she was planning and they said it was fine. Her accountant was also in agreement.
The whole process cost Sarah a lot of money to complete the separation and sale of her home, but now she and Brad can both receive a full pension.
"Financially we are so much better off. Now we get $22,500 each. It's a no-brainer," Sarah said.
"It only works if you have two separate families. We wouldn't have had to do it if we had shared children. In that case, we would have learned to live on the extra money and stayed together."
Sarah and Brad are in constant contact and have remained friends.
(* Names have been changed.)