Actuarial valuations 108-04110000

Josie is aged 79 and receiving Age Pension. Josie has a life interest in her late partner's estate which consists of investments worth $150,000. The income received by Josie each year is $7,000.

Based on the quasi life tables, a person who will turn 80 at their next birthday, has a life expectancy conversion multiple of 10.04. The approximate value of the life interest is therefore $7,000 x 10.04 = $70,280.

If the only other assessable asset Josie had is $10,000 in the bank and $5,000 home contents, then she would not be affected by the Assets Test and a referral to the Australian Government Actuary (AGA) is not needed.

The Complex Assessment Officer (CAO) would code an amount of $70.280 on the Other Assets (OAS) screen.

Glenys is aged 59 receiving Disability Support Pension (DSP). Glenys has a life interest in her late partner's estate which consists of investments worth $200,000. The income received by Glenys each year is $10,000. She then surrenders the life interest to her children.

Based on the quasi life tables, a person who will turn 60 at their next birthday, has a life expectancy conversion multiple of 25.80. The approximate value of the life interest is therefore $10,000 x 25.80 = $258,000.

As this will affect Glenys' rate of pension under the Income Test and/or Assets Test, then a valuation of the surrendered life interest should be obtained from the Australian Government Actuary (AGA).

If the customer is assets tested then an annual review should be set up for an actuarial revaluation by the AGA every year until the customer is no longer assets tested.

The CAO would code the deprived amount on the Gifted/Deprived Asset (GIFT) screen.

Doris is an 89 year old customer. Based on the quasi life tables, Doris has a life expectancy of 5.26 years. She receives life interest income of $5,000 per year from her late partner's estate. An approximate value of the life interest would be $26,300.

If the total assets Doris had consisted of a bank account of $10,000 and home contents of $10,000 then it is not necessary to obtain an actuarial valuation of the life interest because the total assets would not come close to the assets threshold. The CAO would code an amount of $26,300 on the OAS screen.