Managed investments

This page explains what managed investments are and how they affect your income support pension or payment.

The rates on this page are effective from 20 September 2024.

What are managed investments?

Managed investments are financial investments purchased from investment companies where all the following apply:

• money (or property) is paid or transferred to a body corporate or into a trust fund, managed on the investor’s behalf by a fund manager
• the assets bought with the money invested are not held in the name of the investor but in the name of the body corporate or trust fund
• the investor’s money is pooled with money from other investors in a fund
• the investor has no control over how the money is invested
• the investor has a legally enforceable right to the income or profits derived from their money.

Managed investments can be unit based or account based. Unit based investments are issued in units which represent your portion of the investment. Account based managed investments are not issued in units, instead their value is a cash amount which includes the amount initially invested, plus any additions and capital growth accumulated to date.

Types of managed investments

Managed investments can include any of the following:

• public unit trusts (including property, equity, bond, cash management and mortgage trusts, and common funds) offered by unit trust managers
• insurance bonds (including investment bonds, savings plans, insurance certificates and single premium insurance policies) offered by insurance companies
• friendly society bonds offered by friendly societies
• superannuation fund investments (including public superannuation funds, approved deposit funds, retirement savings accounts and self-managed superannuation funds) offered by a range of institutions
• non-exempt funeral bonds.

How are managed investments valued?

We value all of your unit based investments by multiplying the number of units you own by the unit buy-back price. We use the unit buy-back price on our database, which is brought up to date monthly.

Example: If you own 1,000 ZZZ Trust ordinary units and the last unit buy-back price was $1.90, the total value of these units would be $1,900.

Account based investments are valued using the current total buy-back value provided by you or the fund manager.

Example: If you have an investment in the YYY Capital Guaranteed Fund, the last known value of your investment will appear on the last statement you received from the fund manager. A more current value is available if you ask the fund manager to provide you with the current total buy-back value.

Your income from managed investments

Income is deemed on the value of your managed investments. We do not assess your actual investment dividends or your capital gains. The value of your managed investments is added to the value of your other financial assets. The deeming rules are then applied to your total financial assets to give you your deemed income.

Example: If you own 1,000 ZZZ Trust ordinary units and the last unit buy-back price was $1.90, the total value of these units is $1,900. If this $1,900 was your only financial asset, we would deem it to earn income at the current deemed interest rate of 0.25% ($1,900  x  0.0025 / 26 = $0.18 deemed income per fortnight).

For more information refer to Deeming and Financial Assets.

Your managed investments as assets

The current value of all managed investments is counted as an asset for pension purposes.

Re-valuing your managed investments

All of your unit-based managed investments will be re-valued using the most recent unit buy-back prices available to us:

• in March and September each year
• when you tell us of a change relating to any managed investment or share
• when you request a revaluation of any of your managed investments or shares
• following an event that affects your managed investments or shares.

Your account-based managed investments will only be re-valued when you tell us of a change in their value. You must tell us if the value of your account based managed investments varies by more than $1,000.

What about restructures to managed investments?

DVA monitors managed investments for name changes, mergers, takeovers, restructures and terminations and will update your records in response to these events.

By keeping the name and number of units you hold in your unit based investments up to date, we can ensure that your unit-based investments will be re-valued correctly in March and September each year.

What about superannuation products?

Superannuation fund investments include money invested in public superannuation funds, approved deposit funds, retirement savings accounts and self-managed superannuation funds.

These investments resemble managed investments, but usually cannot be accessed until the person turns 55. If you want to access your superannuation before you have turned 55 you should contact your fund for its rules. The Australian Prudential Regulation Authority has developed special rules that apply to early access and the circumstances include severe financial hardship and compassionate grounds.

For pension or Veteran Payment purposes, these superannuation products are not counted as income producing or an asset until you reach pension age (qualifying age for a war widow/widower, see below) or make a withdrawal from the investment. For members of a couple, exemption status is based on the age of the person who owns the superannuation product.

Once you reach pension age (qualifying age for a war widow/widower), an investment in a superannuation product is treated as a managed investment unless you start to draw an income stream from the superannuation or convert the product into an investment which produces an income stream. For more information refer to Income Streams.

What is pension age?

If you are a veteran receiving Service Pension or a war widow/widower receiving Income Support Supplement, your superannuation funds will become assessable when you reach 60 years of age.

If you are a partner of a veteran and receive Service Pension, Social Security Age Pension, or Veteran Payment your superannuation funds will become assessable when you reach pension age as per the table below:

What is qualifying age?

For assessment of superannuation products, qualifying age only applies to war widows and widowers receiving Income Support Supplement (ISS). Qualifying age is the same age as veteran pension age with qualifying service, i.e. 60 years.

What information does DVA need about your managed investments?

The information you will need to provide depends on the type of managed investments you have.

If you sell your unit-based managed investments, you will need to tell us the following information about those managed investments:

• the name, type and number of units of the investment sold
• how much money you received from the sale of your investment
• how you re-invested or disposed of the money you received from the sale of your investment
• if you are a member of a couple, who owned the investment units.

If you sell your account-based managed investments, you will need to tell us the following information about those managed investments:

• the name and the remaining balance of the investment
• how much money you received from the sale of your investment
• how you re-invested or disposed of the money you received from the sale of your investment
• if you are a member of a couple, who owned the investment.

If you buy managed investments, you will need to tell us the following information about the new managed investment:

• the full name, reference number (if applicable), type and number of units purchased, or total buy-back value (if account-based)
• where you transferred the money from to buy these investments
• if you are a member of a couple, who owns the investment.

We need this information to ensure that we record your managed investments correctly. We may ask you to provide documentation to identify or check the current balance of your managed investments (e.g. the most recent statement of your managed investments issued by the relevant company).

Obligations

When you are granted an income support pension or payment and periodically after that, you will be notified of your obligations. You will be required to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of changes to your circumstances that might affect the rate of income support pension you receive or your eligibility to receive that pension. These obligations apply equally to trustees.

In relation to managed investments, you need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) if any of the following occurs:

• you buy or sell units, re-invest dividends, take up rights issues, or exercise an option to purchase additional units
• you switch from one investment product to another
• you give investments away
• you add to, or withdraw money from, an account based investment
• the value of your account based investments varies by more than $1,000
• you attain pension age (qualifying age for a war widow/widower) and hold a superannuation fund investment.

If you sell or give away your managed investments you would need to tell us within 14 days (28 days if you live overseas or receive remote area allowance):

• the name, type, amount and the number of units you sold or gave away
• how much money you received from the sale of your investments
• if you gave away investments, the date you gave the investment away
• any changes to your other income and assets.

If you buy more investments, you would need to tell us within 14 days (28 days if you live overseas or receive remote area allowance) both:

• the name, type, amount and number of units you bought and the date of purchase
• any changes to your other income and assets.

You would not need to tell us if:

• the unit buy-back prices of your unit based investments change
• the number of units you hold in your unit based investments changes due to an investment restructure of your investment which affects all unit holders (for example, a unit split, consolidation or bonus issue)
• the name of your fund manager or investment changes due to a company or product name change, merger or takeover.

You also would not need to tell us if:

• you are on the maximum rate of pension
• your total income, after the changes to your managed investment income, does not take you over the income free area by at least $2.00 for singles or $4.00 for couples

or

• you are receiving the reduced rate of pension
• your deemed income from your managed investments plus your other sources of income increases by less than $2.00 if you are single or $4.00 for couples.

Usually an overpayment of pension will not occur when you have met your obligations. However, sometimes even if you have met your obligations, an overpayment can occur because we have not been able to process the change before the next payday. We do our best to avoid this occurring, but it is not always possible. To provide you with your exact entitlement we are obliged to recover overpayments of pension where they do occur.

Further information about managed investments and superannuation

The Australian Securities and Investments Commission (ASIC) MoneySmart website provides financial information to help you make the most of your money. The MoneySmart website also has a register of suitably qualified financial advisers who hold an Australian Financial Services licence. You can contact ASIC by telephone on 1300 300 630 or visit www.moneysmart.gov.au

The Financial Planning Association of Australia (FPAA) also provides contact details for financial planners that are members of the FPAA and information about how to choose a financial planner. FPAA’s website is at www.fpa.asn.au

Further information about superannuation, including the early release of superannuation, can be obtained from your fund, or from the Australian Prudential Regulation Authority (APRA). APRA’s superannuation hotline is 131 060 and their website is at www.apra.gov.au

Centrelink runs a free Financial Information Service (FIS) which provides education and information on financial and lifestyle issues to all Australians. Any personal information given to FIS officers is treated as confidential. FIS can be contacted by telephone on 132 300.