Retirement and JobSeeker Payment

JobSeeker Payment mutual obligation requirements

Generally, JSP recipients must show that they are actively looking for work[1] and participating in a range of tasks and activities that will help them into employment. These are known as mutual obligation requirements. There are only limited circumstances where an individual may be exempt from mutual obligation requirements[2].

Job seekers aged 55 years or over can undertake approved voluntary work[3], suitable paid work (including self-employment) or a combination of these activities to fully meet their mutual obligation requirements.[4]

The following table sets out the mutual obligation requirements for job seekers and 55 and over.  For those aged 55 to 59, the requirements differ depending on how long they have received JobSeeker Payment.

Table 1: Mutual obligation requirements for job seekers aged 55 and over

While JSP recipients who meet the above criteria will not be required to search for jobs, they will still be required to:

a)      attend an initial appointment with an employment services provider[5],

b)     attend any other appointments with the employment services provider that specifically relate to an offer of suitable employment[6], and

c)      accept suitable offers of employment and all referrals to job interviews (even where they are fully meeting their mutual obligation requirements through approved voluntary work).[7]

Retirement condition of release

Where a member’s preservation age is 60, there are two ways they can satisfy the retirement condition of release, as shown in Table 2.

Table 2: Retirement condition of release where preservation age is 60

Someone receiving JSP will not be able to satisfy their mutual obligation requirements and satisfy the retirement condition of release under option 1 simultaneously. This is because they cannot declare that they have no intention of being gainfully employed for 10 or more hours per week, while simultaneously assuring Services Australia that they will accept any offer of suitable paid work.

On the other hand, a member who ceases a gainful employment arrangement after reaching age 60, should be able to satisfy the retirement condition of release under option 2 because it doesn’t require the member to make any declarations regarding intention to be gainfully employed. Therefore, this option may still be available to people who are receiving JSP.

Alternative solutions

1.      Commence a Transition to Retirement (TTR) income stream

Where an individual is not able to satisfy the retirement condition of release but has already reached their preservation age (i.e. age 60 or older), a common alternative strategy is to commence a TTR income stream.

In this case, income stream payments are limited to 10% of the account balance and the client will need to consider whether this is sufficient for their needs.  In addition, the account balance of the TTR income stream is asset tested and deemed under the income test which may impact their JSP.

2.      Severe financial hardship condition of release

Another strategy, which is often missed, is whether the client would be able to satisfy the severe financial hardship condition of release.

The severe financial hardship condition of release can be satisfied in two different ways as shown in table 3.

Table 3: Severe financial hardship condition of release

Satisfying severe financial hardship under option 1 will only allow a single lump sum to be withdrawn which is not less than $1,000 and not more than $10,000 in any 12-month period.

However, satisfying the severe financial hardship condition of release under option 2 will result in the member’s entire account becoming unrestricted non-preserved. Once the benefits are unrestricted non-preserved, up to the entire balance can be withdrawn via one or more lump sum withdrawals or used to commence one or more retirement phase income streams.

Other social security payments with mutual obligation requirements

The following types of social security benefits also have mutual obligations / participation requirements:

·       Youth Allowance (job seekers)

·       Parenting Payment Single (where the youngest child is aged 6 or over)

·       Disability Support Pension (for certain individuals aged below 35)

Therefore a person receiving these payments who wants to meet the retirement condition of release may encounter similar issues.

However given that recipients of Youth Allowance are generally aged 25 or less they are unable to satisfy the retirement condition of release due to their age in any case.

Parenting Payment recipients are also generally aged below preservation age, therefore satisfying the retirement condition of release would be quite unusual. If you do come across this scenario, we would suggest confirming with Centrelink directly whether declaring that they have no intention to work for 10 or more hours per week to access their superannuation under the retirement condition of release would impact their entitlement to these payments.

Disability Support Pension (DSP) recipients who are aged 60 or over would not have any mutual obligations / participation requirements and therefore the retirement condition of release should not have any impact on their eligibility for DSP.

However, it’s important to remember that accessing superannuation can impact their entitlements under the income and assets tests, as funds left in accumulation phase under age pension age are income and asset test exempt, whereas accessing an income stream such as an account based pension is asset tested and deemed. Similarly, if the funds are placed outside super in a financial investment, they are also asset tested and deemed.