Occurring in 99 per cent of domestic violence cases, economic abuse can affect clients of all backgrounds
Standards International has partnered with Australian adviser Amanda Cassar to launch a new training programme aimed at tackling economic abuse.
Economic abuse is when one person has control over another’s access to economic resources. It was recognised as a form of domestic abuse in the domestic abuse bill last year after calls from charities to make it a standalone criminal offence.
The Financial Abuse Specialist course will be available to advisers globally via the Standards International website from 1 June 2020. It will cost £697+VAT.
The course is a training and certification programme designed to help advisers understand the signs of abuse and how to assist clients. The online training consists of video interviews with abuse survivors, advisers and lawyers. It also includes reading materials, quiz questions and written case studies.
Wealth Planning Partners director Amanda Cassar says: “As advisers we must know our clients in order to give comprehensive and appropriate advice.
“Economic abuse can occur irrespective of socio-economic category, education, race or ethnicity.”
Cassar, who is a global ambassador for financial abuse prevention and remediation, added: “There is no cookie-cutter approach to assisting clients but you can help reduce the risk of exposure to financial abuse through education, and through advising clients about protection options such as trusts or binding financial agreements.”
To achieve the Financial Abuse Specialist certification, course participants are invited to submit testing materials. The certification aims to help consumers and clients identify advisers with the expertise and resources to support them in this area.
Read more about economic abuse and how to get involved with this training programme in the magazine this week.
As you probably know, capital losses from falling share prices are realised only if the company goes into liquidation or the shares are sold.
Leaving investments intact may well offer the best chance to rebuild balances when markets pick up again, as they eventually do. But, this holding pattern can be hard for older people with account-based pensions due to the requirement to draw a minimum income each year. For many people in residential care, this could be 7-15% of the balance at July 1.
Halving the draw-down amount is similar to a measure the government took as a result of the 2008 global financial crisis. The minimum income levels will again be halved for this financial year and next year. If the cash flow is not needed, people might wish to reduce their pension withdrawals. This could be especially so where higher Centrelink pensions may be likely.
Cash Study: Graham is 85 and living in an aged care facility. His account-based pension had a balance of $220,000 on July 1, 2019. He needed to draw 9% of that balance ($19,800) as income in 2019-20.
Graham regularly draws amounts of $1,650 a month, so he has already taken out $14,850 this year. Combined with share market drops and low interest rates, his pension balance has now dropped to $168,000.
Graham wants to minimise how much he draws. The halving of the minimums means he can stop drawing any more income this year and take out less next year as well as he’s also eligible for the two cash bonuses that will be paid of $750 each by Centrelink, as he’s on the Age Pension also.
Interest rates have been falling a lot faster and a lot longer than deeming rates for Centrelink and Veterans’ Affairs recipients, making it practically to even earn the current deeming rates from bank accounts.Higher-risk investments (in better markets) may potentially produce higher returns, but these are often not appropriate for people in aged care and can cause undue anxiety in times of large volatility.
Calls for some time to cut the deeming rates have been answered as part of the stimulus measures and the rates will be cut by 0.75% from May 1,2020.
The benefit for some will mean higher pension entitlements and lower aged care means-tested fees. Do note tho, that pensions will not change if the maximum pension is already received or entitlements are calculated under the assets test.
EXAMPLE: When Edna moved into residential care, she chose to sell her home to pay her $400,000 accommodation cost, leaving her with $350,000 in the bank. She receives an age pension of $849.31 a fortnight and pays $1,133.96 a fortnight in residential care fees.
When deeming rates change on May 1, her pension will increase to $899.77 a fortnight and fees will decrease to $1108.65 a fortnight. This improves her income by $75.77 a fortnight, which helps with extra income to meet her expenses.
Cash bonuses!
Aged Care residents who receive a means-tested pension (Centrelink/Veterans’ Affairs) or hold either a Commonwealth Seniors Health Card or Veterans Gold Card will receive two $750 cash payments as a boost to income. Awesome!
As a bonus, this money is tax-free and not assessable. The first payment will be paid into bank accounts over the next two weeks. The second payment will be paid in late July so keep your eyes peeled for these.
Are you asset rich but cash poor? Turns out, you’re not alone. Data from the ABS (Australian Bureau of Statistics) shows that almost one-third of older Australians in low-income households were asset rich but cash poor.[1] Most wealth is tied up in illiquid assets, in particular the family home.
But you need not scrape by on so little. There are ways to try and boost your income.
1. TAKE ADVANTAGE OF YOUR PROPERTY
Selling up and moving to a cheaper and/or smaller house may free up money to help fund your retirement. But keep in mind that it might affect your benefits if you’re receiving an age pension. Some of the proceeds from the sale might be counted as assessable under the age pension assets test, and this might lead to a drastic cut in your pension. On the flip side, it can also help supplement any loss of pension.
2. SUPPLEMENT YOUR INCOME
Getting a part-time job or monetising a hobby, could boost your cash flow if you are retired. But remember that working when you have become eligible for an age pension may reduce your pension amount. Discuss with your adviser how you might optimise your retirement benefits while working part time. You are able to earn up to a certain amount before your Age Pension is impacted. Do you enjoy knitting, teaching or tutoring, baby-sitting, crafts, cleaning, handyman work or mowing? All can add a few dollars a week extra to your income.
3. RENT OUT YOUR PROPERTY
If you have extra space in your home, you may consider renting it out. Even just one room to a student or occasionally to holiday makers can made a difference. Or if you have another property, like a holiday home, you may look into listing it as a short-term rental? This could impact the tax you pay when you sell your home so you should seek advice on these strategies.
4. REVISIT YOUR INVESTMENTS
Have you invested in securities like shares and ETF’s? This may be a good time to meet with our financial adviser to review your portfolio. Your financial adviser may recommend strategies and ways to reduce your exposure to risk and volatility and possibly increase your income via dividends.
UNDERSTAND THE RISKS
You don’t have to be trapped in a situation where you are asset rich but cash poor. There are ways to boost your income, but keep in mind that some involve taking big risks. So, always seek financial advice to help you weigh your options and make decisions based on your own personal situation.
Did you know there is over 10[1] million Australians with a superannuation account, approximately 36% of which hold more super accounts, which make up $20.8[2] billion in ‘lost super’. Is some of that yours?
Find it
Moved house? Changed jobs? Don’t know where your teenage self stashed your super? It’s easy to track it down.
Consider Combining it
Save on fees, reduce your paperwork, keep track of your hard earned money, grow your retirement fund. But seek professional financial advice first to make sure combining is beneficial for you.
Ask your financial adviser
Many websites offer to help find and combine your super. It is quick, easy and free. You can ask your financial adviser for help, check with your known superannuation provider or the Australian Tax Office.
