Can I get the Age Pension?
Written by Will Lucas
One of the most common questions we get when we’re speaking to people is whether they can get the Age Pension. With over 2.8 million people in receipt of the Age Pension, this should be a question that is clear, widely-accessible and easy to find the answer for. However, Age Pension eligibility remains a complex and intricate web that requires a great amount of expertise, experience, and patience to unravel. While we love helping people to understand and maximise what they are entitled to in terms of government support, we also think more people should understand at least the basics, which I’ve explored below.
Australia’s Age Pension is a vital part of our social security system, providing financial support to older Australians who are in need and ensuring all retirees are able to meet their basic living standards as a minimum. As life expectancy increases and the cost of living continues to rise, the Age Pension plays an increasingly significant role in the Australian economy.
What is the Age Pension?
The Age Pension is a government-funded financial assistance program designed to help elderly Australians who meet certain eligibility requirements. It is aimed at providing a safety net for retirees who do not have sufficient income or assets to support themselves in their later years. The pension is administered by Services Australia and was first introduced in 1908.
Who is eligible?
To qualify for the Age Pension, applicants must meet a range of criteria, including:
Age: As of 2024, the eligibility age for the Age Pension is 67 years. This age has increased in past and there are discussions and proposals to further raise this age in the future, so make sure you’re planning for some room to move here.
Residency: Applicants must be Australian citizens or permanent residents and must have lived in Australia for at least 10 years, with at least five of those years being continuous. There are some exceptions to this under certain circumstances.
Income and Assets Test: The Age Pension is means-tested, which means that both income and assets are assessed to determine eligibility and the amount of pension received. There are thresholds for both tests; if an individual’s income or assets exceed these thresholds, the pension amount will be reduced or they may be ineligible.
Income Test: The income test considers all sources of income, including wages, investments, and rental income. There are different thresholds for singles and couples, and the amount of pension received decreases as income increases. One important consideration here is that Centrelink will estimate, or “deem”, income on your cash savings and superannuation. Currently, a couple can earn a combined $3,822 a fortnight and may still be eligible for some Age Pension.
Assets Test: The assets test assesses the value of assets, excluding your primary residence, to determine eligibility. The thresholds vary based on whether individuals are single or part of a couple. This won’t just be financial assets, it will include things like cars, boats, home contents and any additional property held (Yes, even if you don’t rent out your holiday home it will be assessed). Currently, a home-owning couple may be eligible for a part pension if they have assets less than $1,045,500.
Importantly, when Centrelink assesses your income and assets, your entitlement will be based on the test that makes you least eligible! For example, you could only have a dollar to your name but if you earn $4,000 a fortnight you will not be eligible for any Age Pension payments. Similarly, if you have no income coming in, but you have a holiday home or a collection of cars that puts you over the assets test threshold, you won’t receive anything.
How much can I get?
The Age Pension amount varies based on the results of the income and assets tests. As of September 2024, the maximum basic rates are approximately:
Single: $1,047 per fortnight.
Couple (combined): $1,578 per fortnight.
These amounts are adjusted twice a year (in March and September) to account for changes in the cost of living. In addition to the base pension amount, some pensioners may also receive other benefits, such as:
Energy Supplement: A small amount of additional financial support to help cover the costs of energy bills.
Pensioner Concession Card: Provides access to various discounts and services, including reduced rates on prescription medicines, utilities, and public transport.
Pension Supplement: An extra payment to help with utility, phone, internet and medicine costs.
How to Apply
Applying for the Age Pension involves several steps:
Gather Required Documents: You will need to provide proof of identity, age, residency status, and financial information, including income and assets.
Submit an Application: Applications can be submitted online through the Services Australia website, by mail, or in person at a Service Centre. The quickest and easiest way to complete this is online via MyGov, and your Financial Advisor may be able to help you with this.
Assessment: Once the application is received, Services Australia will assess the applicant’s eligibility based on the criteria outlined. This includes verifying income and asset information.
Decision: You will receive a decision notice outlining whether you are eligible and, if so, the amount of pension you will receive going forward.
Ongoing Reporting: Once you’re receiving the Age Pension, you must report any changes in your circumstances that might affect your eligibility or pension amount, such as changes in income or assets. If you don’t inform Services Australia of a change you may be required to pay back benefits you received.
Retirement Planning and Strategies
The Age Pension is a critical element of retirement planning for many Australians. However, it's important to note that while the pension provides a safety net, it may not be sufficient to cover all living expenses.
Many retirees supplement their Age Pension with personal savings, superannuation, or other investments. Financial planning and advice are essential to ensure that individuals can maintain their desired standard of living in retirement. For those who have accumulated significant superannuation or other assets, strategic planning can help manage tax implications and maximize retirement income.
There’s also a number of strategies that can be used to increase your eligibility for the Age Pension. A few common ones we see are:
Pay down debt: If you have non-investment debt such as a credit card or a home loan, Centrelink will not reduce your assets by this amount. So paying off these debts with cash could instantly drop the amount of assets you are assessed on.
Lifetime annuities: Lifetime annuities are products that pay you an income in exchange for investing a lump sum. The key benefit is an instant reduction in the assets assessed because Centrelink will generally only count 60% of the value of the annuity. For example, a $100,000 investment into an annuity may only be assessed as a $60,000 asset by Centrelink. The big downside of this is that you have less access to your capital so this won’t suit everybody.
Gifting: You are allowed to gift up to $10,000 per financial year up to a maximum of $30,000 over a five-year period and have these funds not counted as an asset by Centrelink. While you are allowed to gift more than this, any amount above this will be viewed as still your own asset for five years after you gift it. This one can sting for a long time!
Funeral bond: You can invest up to $15,500 per person into an investment structure called a funeral bond which will not be counted as an asset by Centrelink. This investment is not accessible and will form part of your estate, often viewed as a pocket of money that could help pay for any final expenses upon passing but this isn’t a requirement.
Home renovations: Since your home isn’t assessed by Centrelink, bringing forward any planned renovations will reduce the assets you have on file. If this was something you had planned to do later, it might help you to receive the Age Pension sooner.
This is not a complete list of all of the options available when trying to improve eligibility for the Age Pension and different strategies will work better for different people. However, if nothing else, it does demonstrate that you may be missing out on benefits that you’re entitled to. As Australia continues to evolve and face demographic changes, the Age Pension system will likely undergo reforms to adapt to new challenges and ensure that it remains fair and sustainable for future generations.
Understanding the eligibility criteria, benefits, and application process is crucial for anyone approaching retirement age. While the pension provides a valuable safety net, it is also important to consider additional financial planning to complement the pension and secure your financial future.
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The information in this article is general information and does not take into account any person’s individual situation. You should always do your own research, or seek professional advice to assist you in making an informed decision about what suits your needs.