Age Pension Basics: Stay up to date with thresholds and rates
Key Points
Almost 2.6 million Australians receive a Centrelink Age Pension.
The assessment for the Age Pension can be complicated, and ongoing updates to rates, thresholds and rules mean tracking and understanding eligibility can be difficult.
We have organised some key rules into easy to understand tables that allow you to work out what your next step should be.
Use our simple guide to work out where you stand and what you are entitled to.
Working out the asset and income tests
All age pension eligible Australians are going to fit into a category based on their assets, their relationship status, and whether they have a home or not.
The main groupings are around home ownership, and whether you are single or a part of a couple.
In our table below, a green band means full rate pension, red means no pension at all, and like a traffic light amber is somewhere in-between.
The Government applies a test to your assets and income, and will pay you based on the test with the lowest outcome.
It’s very important tp understand there are two SEPARATE tests for the age pension, and the age pension you will receive is based on the test that results in the lowest payment rate.
Getting to the bottom of what is assessable as an asset and income can take a bit of work - call us if you need help.
If you do have an idea of your assessable assets and income, it is worth tracking the tables below to see if recent changes may have impacted you.
Note that the income test does not take into account whether you own a home or not.
Also - some assets will be calculated as having assessable income based on deeming rules.
Deeming calculations can be complex, however it is worth getting to the bottom of the calculations in order to assess eligibility for the age pension (as well as the Commonwealth Seniors Health Card)
If you need help, make contact.
What should you be doing now?
Whether you get a full or part pension, or are not eligible for an age pension payment, there are things you should keep in mind based on your circumstances.
Use your fortnightly payment to check if you are a full-rate pensioner
Check your fortnightly pension to make sure you are getting the maximum.
If you think you are a full-rate age pensioner, and you are not getting the full-rate in the table below, you may need to update information held with Services Australia.
Part-Pensioners: make sure your information is up to date to get the right amount
If your rate of pension is less than the rates in the table above, you are a "part-pensioner".
The assessable assets you have will reduce the amount of age pension you get by a formula.
The way the formula works is that for every $10,000 worth of assets you have over a set limit, your pension will be reduced by $780 per year.
It's worth checking that the correct value is on file for your car or caravan, and that any changes in the value of your savings and investments is known.
Get the Pensioner Concession Card and make it count
Even if you are only eligible for a small amount of Age Pension, you will have access to a whole range of benefit from holding a Pensioner Concession Card.
For some Age Pensioners, the value of holding the card may be greater than the rate of Age Pension itself.
Every age pensioner gets a Pensioner Concession Card
Borrow with the Home Equity Access Scheme. And at 3.95%
Home-owners can borrow against their property using a government-run reverse mortgage scheme known as the Home Equity Access Scheme .
The amount you can borrow is linked to the maximum rate of the age pension - so increases in the Age Pension mean increases in the amount that can be borrowed.
It is government run, and at 3.95 %, the current interest rate sits well below other reverse mortgage rates in the market. This could change, of course, but for now the scheme looks attractive.
It's worth knowing about it if you own property, and it's worth knowing you can access the loan even if your income and assets mean you are not eligible for an age pension. This can be very useful if your assets don't generate income.
Aged Care costs are increasing
As you may well know, the rules around aged care are complex. How you may be impacted by the pension changes will depend on your financial situation and the aged care decisions you make.
With higher cost of living comes higher interest rates, and these rates are part of the cost of aged care: the cost of paying for your residential aged care accommodation by a daily payment instead of a lump sum has just got more expensive.
Furthermore, the daily fee all residents pay is based on the rate of age pension. So that changes over time.
A specialist with knowledge of your situation can help you understand and plan.
There’s no need to worry or panic about these changes. But it is important to understand how they impact on your situation, for better or worse.
We are here to assist if you need us on (02) 9173 8560
*We have simplified, rounded and generally streamlined the rules to make our charts and tables work. We hope this helps you getting a better understanding how you sit in with the system. There are a few quirks we may have skimmed over for simplicity - as there always are with government rules and systems - the objective is to call you to action to get to the bottom of your story.
Not sure what your next move should be?
Why not start with a phone call?
I am always keen to hear people’s stories and find ways to help.
Brendan Ryan CFP
All of my clients have unique situations, but they mostly want the same thing - to get good value and security from the big companies that help them manage their savings, to make sure they get all they are entitled to from the government, and to have confidence in their plans.
More than 25 years experience in finance, and a deep understanding of retirement and government puts me in a strong position to help you get confident you are doing the right thing, and organised in your approach.
Call me on 0412 181 031 or send me an email.
Brendan Ryan CFP