How a Funeral Bond Investment Affects Your Pension
“A funeral bond is a thoughtful way to help your family at the time of your passing. Let’s explore the recent changes to the Funeral Bond Investment threshold and how this might impact your pension.”
Understanding the Funeral Bond Investment Threshold: What It Means for You
Planning ahead for a funeral can be a thoughtful and caring gift to your family. It helps ease emotional and financial stress during a difficult time. One way to do this is through a funeral bond—a secure investment that sets aside money specifically for funeral costs. But did you know that the Australian Government has rules about how much you can invest in a funeral bond without it affecting your pension or other benefits?
Let’s break it down simply.
What Is a Funeral Bond?
A funeral bond is like a special savings plan where the money invested can only be released at the time of your passing and required a Medical Certificate certifying the death to be processed. Rather than being held by a funeral home, it is held by an independent, friendly society or trustee company. Like all investments, the funeral bond will grow until the the owner of the account passes away, at which point the fund are released to cover funeral expenses.
If there are funds in excess of the funeral costs, this money is returned to the next of kin (NOK). If there is not enough money in the funeral bond to cover the entire funeral costs, it is still helpful in covering (in most cases) the majority of the costs, with a small amount left for the NOK to pay.
At Grace Funerals, we have seen a growing number of families turning to funerals bonds following the death of a loved one. They are a great way to ease the financial burden on loved ones when you pass.
So – What Is the Exempt Investment Threshold?
The Department of Social Services (DSS) sets a limit on how much you can invest in a funeral bond for it to be considered “exempt” from the assets test. This means that if your investment is under the threshold, it won’t count against you when Centrelink assesses your eligibility for payments like the Age Pension. If it is more than the threshold, the entire amount may be included when assessing eligibility for payments.
By staying within the threshold, your may decrease your assets, and may increase your eligibility for higher pension entitlements. (It is always important to check with a financial advisor before making any financial decisions).
What’s Changed Recently?
In the 2024–25 Federal Budget, the government reviewed several social security policies, including those related to funeral bonds
While the exact threshold amount can change over time, the key takeaway is this: staying informed helps you make smart choices.
As of the latest update, the threshold is reviewed annually and adjusted to reflect cost-of-living changes. If you’re considering a funeral bond, it’s a good idea to check the current limit on the Services Australia or DSS website—or speak to a trusted funeral director like Grace Funerals who can guide you through it.
Why Choose Grace Funerals to Help With Your Funeral Bond Needs/
At Grace Funerals, we understand that funeral planning isn’t everyone’s strong suit. That’s why we offer transparent pricing, step-by-step guidance, and personalised support. Whether you’re pre-planning your own farewell or helping a loved one, we’ll walk you through your options and, when needed, refer you to trusted financial advisors for additional support.
Final Thoughts
Funeral bonds are a smart way to plan ahead, and the exempt investment threshold is there to protect your pension. If you’re unsure about how it works, don’t worry—we’re here to help. Reach out to Grace Funerals today on 02 4735 6900, and let’s talk about how we can support you with care, clarity, and compassion.