Are you receiving what you are entitled to?
What is the Age Pension?
The purpose of the Age Pension is to make sure you have enough income in retirement. It is a fortnightly payment made by the government to help you meet the cost of living, if your retirement savings are below a certain level.
To be eligible for the Age Pension, you must have reached a certain age. If you satisfy the age criteria, your current level of wealth is then assessed to determine whether you can receive a payment.
You are also assessed based on whether:
• you are single or a member of a couple, and
• you own your own home.
When can you apply for the Age Pension?
The qualifying age depends on when you were born, as set out below.
How are you assessed?
Once you reach the qualifying age, your current wealth (your assets and your income) is measured to determine your eligibility. To receive a payment, you must meet both an asset and an income test. Both tests are applied to your circumstances, and the test that results in the lowest payment is used.
The assets test
If the value of your assets is below the minimum level, you qualify for a full pension. If your assets are above the top level, you will not receive a payment. If the value of your assets falls between these two levels, you will receive a part pension.
Information taken from Department of Human Services website, effective from 1 Jan 2016.
What are deeming rates?
To help Centrelink gain a complete picture of your income from all sources, your financial investments are generally assessed under a single set of rules. This is known as deeming. Rather than use the actual income you receive,
Centrelink uses an assumed rate of income and applies this to your financial investments.
Special treatment of superannuation savings
To encourage you to save for your retirement, Centrelink treats your superannuation savings differently to your other financial assets. Until you reach Age Pension age, your superannuation savings are not counted when determining how much money you will receive from Centrelink.
Once you reach Age Pension age, the full value of your superannuation savings is counted under the assets test. If you have not used your superannuation savings to start a retirement income stream, your superannuation savings are also deemed under the income test.
The income test
The income test works in a similar way to the assets test. Your income must fall pension, or between two levels to receive a part pension.
For every dollar that your income is above the full pension level, your Age Pension will be reduced by 50 cents as a single, or 25 cents as a member of a couple.^ If you are a member of a couple, your income is combined with your partner’s to determine your eligibility. Your income under the income test is not measured simply on the amount of income you receive. Special rules apply.
F – per fortnight A – per annum
Gifting assets
To prevent people from giving money and assets away to their family, friends or charities for the sole purpose of increasing their Centrelink benefits, special gifting rules apply. In one financial year, you can give away assets up to the
value of $10,000 without affecting your Centrelink payment. You can only give away a total of $30,000 over a rolling five year period.
Putting it all together
Centrelink uses a set of tests, including the income test and the assets test, to assess your wealth and make sure that you receive the right amount of money from the government in the form of the Age Pension. Other rules, such as
deeming rates and the Work Bonus, may impact your pension payments.
We can help you navigate the rules that Centrelink uses to calculate your financial situation, and structure a financial strategy that will provide the right amount of income to maintain your lifestyle into retirement.
Upcoming changes to the Asset Test
From 1 January 2017, the asset test free area and the assets taper rate will increase.
The assets test free areas will increase to:
$250,000 for a single homeowner
$375,000 for a homeowner couple
$450,000 for a single non-homeowner
$575,000 for a non-homeowner couple
Pensioners will be subject to a new taper rate of $3 for every $1,000 above the new assets test free areas.
As a result of these changes, the amount of Age Pension you are entitled to may reduce resulting in a change of lifestyle or the need to increase your income from other sources.
Information taken from Department of Human Services website, effective from 1 Jan 2016.
