Description - Cash & Accounts

Last amended: 27 May 2008

What is included in cash and money?

Pensioners are not required to advise DVA [2] of reasonable amounts of money that they are holding to meet day-to-day living expenses. Judgement will need to be exercised in determining what is reasonable.

Financial assets included in cash and money in deposits are:

• cash amounts, including cash on hand and in safety deposit boxes, regardless of when the cash was acquired, and
• money on deposit regardless of when the accounts were opened, including bank, building society and credit union accounts, such as:

• savings accounts, including home loan offset accounts,
• cheque accounts,
• interest bearing deposits, and
• term deposits.

Accounts (such as home loan offset accounts) where the interest return is immediately applied to a specific purpose such as a loan, rather than being directly received by the pensioner, are still financial assets for deeming purposes.

Home loan offset and line of credit accounts

Some financial institutions operate accounts which are similar to savings accounts but which do not pay interest direct to the pensioner. Instead the interest earned on the deposit is used to reduce the interest payable on the investors' outstanding home loan. These accounts are known as home loan offset or mortgage saver accounts.

Instead of opening a mortgage saver account that is separate from the housing loan account, pensioners can have a 'line of credit' which allows them to:

• make early repayments to their housing loan account, which reduces the principal amount used to calculate the interest payable on the loan, and
• withdraw money from the account, which increases the amount they owe.