What’s New with Age Pension
I promised to prepare a video that will provide an update on the most important information in relation to the Age Pension payment and eligibility.
No wonder it is an important topic for many retirees, after all almost 80% of retirees are receiving some level of Age Pension today.
The problem is that constant changes to Age Pension create lots of confusion for many, and I know for a fact, even with people who are calling my office and with whom I have meetings, that there is a high number of retirees that are missing out on Age Pension payments as they believe they are not eligible.
Or alternatively they are underpaid or they don’t even realize that Age pension could be improve and maximise
So please before you dismiss Age Pension or just accept the payment given and stop trying, contact our office, send me an email through my website, book a meeting and then we can review your Centrelink position.
So today we are going back to the Age Pension school – all you need to know to understand that complicated system.
I will cover the following:
- Who is eligible for Age Pension
- Current Age Pension rates and when they change each year
- How is Age Pension calculated.
- How much can you earn before Age Pension is affected – this is a very common question that I keep receiving
- How much assets can you have
- When income and assets test thresholds change
1. Who is eligible for Age Pension
In order to be eligible for Age Pension you must reach the Age Pension age – currently age of 67 and you need to meet additional rules, such as:
- Residency test
- Assets test
- Income test
I will not be going into details about the residency test, I explained this in detail in my video: Age Pension – Are you eligible? IF NOT, WHY NOT? So please have alook.
Asset Test and Income Test I will discuss in a minute
2. Current Age Pension rates and when they change each year
This is a great timing of my video, because on 20th September 2024 the rate for a full Age Pension increases by $28.10 per fortnight for a single person and $21.20 per person per fortnight for a couple.
A couple separated due to illness will be receiving a single person rate of Age Pension each.
As mentioned, the Age Pension is being increased now on 20th September 2024 and the next potential change will be on 20th March 2025.
3. How is your Age Pension calculated?
Upon your application, Centrelink will perform means testing that consists of two separate tests:
- the income test and
- the assets test.
First Centrelink will assess your income then they will assess your assets which ever of the two test provides a lower Age pension outcome this is what you are going to received.
4. How much can you earn before Age Pension is affected – this is a very common question I keep receiving (Income Test)
So now we are talking about income test Singles – as a single pensioner you can earn up to $212pf ($5,512pa) to be eligible for the full Age Pension payment. You will still receive part Age Pension as long as your earning is below $2,500.80pf ($65,021pa)
Couples – for you to keep the full Age Pension, your combined income must be below $372pf ($9,672pa), but you will be eligible for part Age Pension up to the earnings of $3,822.40pf ($99,382pa).
Those thresholds might be updated again on 20 March 2025.
Also please remember that as a pensioner you can earn an additional up to $300 per person per fortnight (up to $11,800pa) from work. This is what is known as Work Bonus and this income is over and above the Income Test limits I just described.
Since we are talking about Income Test, a very common mistake that I see people make in calculating Income for the purpose of the Income Test is looking at the actual income received from investments such as Pension payments, share dividends, interest earn from a term deposit.
Please keep in mind that Centrelink is not counting your real income. Most financial investments are subject to deeming rules; therefore, you might have a Term Deposit of $100,000 earning 5%pa, which is $5,000. Centrelink obviously know that, but they will only apply the current deeming rates of maximum 2.25%, therefore your deemed income is $2,250 although you really receiving $5,000.
Speaking about the Deeming rates, due to high cost of living the Australian Government decided to keep the lower rate of deeming rates for another period until the end of this financial year which is 30/06/2025.
If you are not familiar with the deeming rules or find them a little bit confusing, don’t worry, I have a number of videos recorded already on this topic:
– Age Pension Deeming Rates – UNFAIR RULES
– How Centrelink assesses assets for Age Pension – To deem or not to deem
– Age Pension Income Test MADNESS
5. How much assets can you have?
Single – you qualify for the full Age Pension if your assessable assets are below $314,000 if you are a homeowner and up to $566,000 if you don’t own your home.
You will not be eligible for Age Pension if your assets are valued $695,500 or more if you own your home or $947,500 if you are a non-homeowner.
Couples – you qualify for the full Age Pension if your assessable assets are below $470,000 if you have your home or $722,000 if you don’t own your home.
You will not be eligible for Age Pension any longer if your assets are valued $1,045,500 or more if you are a homeowner or $1,297,500 if you don’t own your home.
6. When income and assets thresholds change?
- Age Pension rates and the upper threshold for Income Test and Assets test that will calculate your part Age Pension eligibility are adjusted in March and September each year.
- The lower limits of Income and Assets test that determine your full Age Pension eligibility are adjusted in July each year.
By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement
