Over recent weeks I have received a number of enquiries from advisers with clients wanting to “retire early” in order to spend time with their older partner who is already receiving an age pension.
The questions I have been receiving are around the younger partner wanting to stop working, often a couple of years before they reach the age pension age and applying for the Jobseeker Payment to carry them through until they qualify for the age pension.
Before going too far, we need to revisit exactly what the Jobseeker Payment is.
Many will recall that the Jobseeker Payment rose to prominence, along with the JobKeeper Payment, when the pandemic first graced our shores back in early 2020.
However, that was quite coincidental.
The Government had previously announced plans to consolidate several income support benefits into a new single income support payment, to be known as the Jobseeker Payment. Previous benefits rolled into the Jobseeker Payment included NewStart Allowance and the Sickness Allowance. The transition to Jobseeker Payment took effect from 20 March 2020.
The Jobseeker Payment is an income support payment payable to people under age pension age who are unemployed or are temporarily incapacitated from work or study due to sickness.
To qualify for a Jobseeker Payment a person must, in most circumstances, satisfy a “mutual obligation” requirement.
This requires them to engage with an employment service and enter into a job plan. This generally requires the job seeker to be looking for and accepting suitable work, attending appointments with their employment service provider, and attending job interviews and other suitable activities. In addition, undertaking voluntary work may contribute to satisfying mutual obligation.
Applicants may have full-time or part-time mutual obligation requirements.
A point system for satisfying mutual obligation has recently been introduced.
Failing to satisfy mutual obligation requirements may result in disqualification from receiving the Jobseeker Payment.
Where an applicant for Jobseeker Payment is aged 55 to 59, they can meet their mutual obligation requirement doing a combination of paid and voluntary work. If they have been in receipt of Jobseeker Payments for more than 12 months, they can fulfil their mutual obligation requirement by undertaking 30 hours of voluntary work per fortnight.
For those aged 60 and over, mutual obligation can also be met by undertaking a minimum of 30 hours of voluntary work per fortnight thereby removing the need to be actively seeking employment.
In addition to mutual obligation, applicants for Jobseeker Payments may also be required to satisfy three waiting periods.
The Ordinary Waiting Period is a period of one week and needs to be served by all applicants unless otherwise exempt.
The Income Maintenance Period applies where a person leaves their employer and they receive termination payments or accrued leave entitlements.
For example, if a person were to cease employment and they received payment of (say) eight weeks accrued annual and long service leave, they will generally be precluded from receiving Jobseeker Payments for eight weeks.
Where a person has liquid assets such as money in the bank, they may need to serve a Liquid Asset Waiting Period. This can range from 1 to a maximum of 13 weeks and is calculated by deducting a reserve amount ($5,000 for a single person or $10,000 for a couple) from the total liquid assets and dividing the result by $500 (single) or $1,000 (couple).
For example, a single person with liquid assets of (say) $10,000 would have a Liquid Asset Waiting Period of 10 weeks (i.e. $10,000 – $5,000 = $5,000 ÷ $500 = 10 weeks).
Where a person is affected by both the Income Maintenance Period and the Liquid Asset Waiting Period, they can be served concurrently.
When it comes to understanding the Jobseeker Payment there are a lot of moving parts. This is only a brief summary of the Jobseeker Payment.
Importantly, for those people approaching age pension age (currently 66.5 or 67, depending on date of birth), simply deciding to stop working and receiving income support benefits from the Government in the lead up to qualifying for the age pension without doing something in return, may not be an option. Aside from the various waiting periods, mutual obligation requirements will still need to be met.
Additional information on Government income support benefits can be found at https://www.servicesaustralia.gov.au/
By Peter Kelly on 17 August 2022
PK believes people have the right to accurate, affordable and unbiased information that addresses all aspects of their preferred retirement lifestyle, thereby giving them the opportunity to make informed decisions that will empower them to live out their lives with dignity, certainty and security.
Tealey’s ambition is to change how people think about their retirement, he wants people to dream, plan and realise retirement is not defined by a magical age prescribed by the legislation.