Complex system leads to retirees losing thousands in unclaimed aged pension funds

Older Australians are missing out on thousands in entitlements as an overly complex system and a lack of awareness means they simply do not apply for a pension.

Survey data released by building members superannuation fund Cbus found a third of eligible Australians delay their aged pension applications by more than a year.

This is costing a couple up to $46,000 in eligible payments.

For single retirees, the financial impact is equally significant, with individuals potentially missing out on more than $30,646 over the same period.

Cbus Super chief member officer Bernie Dean says workers at the end of their careers often unnecessarily burn through personal savings when they are eligible for the aged pension.

“That additional money could make a huge difference to members and the reason many of them are forgoing the money is because they are simply unaware of their entitlement to the pension and when you can apply,” he said.

Australians can access the aged pension from 67, assuming they meet three other criteria.

A couple living together must make less than $3934 combined a fortnight in income, have less than $481,500 in assets if they are a homeowner and have been Australian resident for at least 10 years, spending at least five years in the country.

Australians could be entitled to a part-pension if they are outside of these criteria.

Cbus says reducing late applicants of just their members and only by 1 per cent could deliver $5.9m more in retirement income for their members.

According to the superannuation fund many of these members miss out due to overly complex pension systems and having to move onto government systems that they may never have used before.

“We believe the pension system needs to be simpler … We hope over the next couple of years it will make it easier for people to apply for and access the payment,” Mr Dean said.

“We want to make sure that our members, after working hard for so long, don’t miss out on money they are entitled to.”

Mr Dean points out if a retiree misses out on their eligible pension for a year, the government will not pay the money back.

“If you apply as you are nearly 67, you won’t get access to the pension payments until it is all approved but which can take some time,” he said.

According to Cbus, missing out on pension payments can have a life changing impact on these retirees, who often have a more modest balance in retirement.

“(The pension) makes a huge difference in terms of big things like getting away for a break but also smaller things like Christmas gifts or a service for the car to make it stay on the road,” he said.

“That additional money makes a huge difference to members, but many are foregoing that money because they are unaware of their entitlement to the pension.”

Mr Dean says the superannuation system has come along way, with tradies who are mid career having the same super balance as those approaching retirement due to increased wages and contributions.