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Are You Entitled to the Age Pension?
28 April 2022

Written by Aaron Alston – Senior Financial Adviser

Are you entitled to the Age Pension?

To be eligible for the Age Pension, you must be age pension age and meet specified criteria.

Table 1.1 – Age requirements

Date of Birth Pension Age
1 July 1952 to 31 Dec 1953 65 years and 6 months
1 Jan 1954 to 30 June 1955 66 years
1 July 1955 to 31st Dec 1956 66 years and 6 months
On or after 1 Jan 1957 67 years

 

You also need to meet the following:

  • Residency Test
  • Income Test
  • Asset test

Residency test

You generally need to have been an Australian resident for at least 10 years in total.  For at least 5 of these years, there must be no break in your residence.

There are instances however where you can be eligible for an age pension if you have been an Australian resident for less than 10 years

  • Have a qualifying residence exemption. Refugees or former refugees are exempt from the 10-year rule.
  • On another payment. You may be able to apply to transfer to an age pension
  • Lived or worked overseas. You may be eligible for an age pension however there must be an arrangement between Australia and the other country for social security purposes.

Income test

The government will assess your income from your financial assets.  To work out your income the government uses deeming rules.  Common financial assets used in deeming are savings accounts and term deposits, managed investments, loans, debentures, shares and securities, and some income streams and gifts.  The below tables are the standard income rules for most pensioners.

Table 1.2 – Single person

Income per fortnight Amount your pension will reduce by
Up to $180 $0
Over $180 50 cents for each dollar over $180

 

Table 1.3 – Couple living together or apart due to ill health

Combined Income per fortnight Amount your combined pension will reduce by
Up to $320 $0
Over $320 50 cents for each dollar over $320

Note – You can earn $150 per week from personal exertion and this is not included in the income test.

 

Age Pension and Carer payment cut off points per fortnight

Your situation Income cut off point
Single $2,155.20
A couple living together $3,297.60 combined
A couple living apart due to ill health $4,270.40 combined

 

Asset test

Assets are property or items you or your partner own in full or part, or have an interest in.  Assets include any: financial investments, home contents, personal effects and vehicles, real estate, annuities, income streams and superannuation pensions.  It also includes sole traders, partnerships, private trusts, and private companies.  When your assets are more than the eligible limit, your pension will reduce.  Once assessable assets exceed the lower threshold, the pension reduces by $3 per fortnight for each $1.000 by which assessable assets exceed the lower threshold.

Table 1.4 – If you get a full pension

Your situation Homeowner Non-homeowner
Single $270,500 $487,000
A couple combined $405,000 $621,500
A couple, separate due to illness, combined $405,000 $621,500
A couple, one partner eligible, combined $405,000 $621,500

 

Table 1.5 – If you get a part pension

Your situation Homeowner Non-homeowner
Single $599,750 $816,250
A couple combined $901,500 $1,118,000
A couple, separate due to illness combined $1,063,500 $1,280,000
A couple, one partner eligible combined $901,500 $1,118,000

 

Some Assets are exempt such as the family home, assets in superannuation under pension age and some funeral and accommodation bonds and gifts within allowable limits

Home contents, cars and boats are valued at market value, not what you think you can sell them for (replacement value).

Note: Tables 1.1 to 1.5 have been sourced from https://www.servicesaustralia.gov.au/

Summary

  • To be eligible for the age pension you must meet the residency, income and assets test and be of pensionable age.
  • The assets test has different thresholds depending on your relationship, health and homeowner status.
  • Assessing for eligibility for age pension can be very complicated so it is recommended you seek advice from a Services Australia professional. Visit https://www.servicesaustralia.gov.au/.
  • It is also recommended that you speak with your financial adviser at Hudson, so they can provide you guidance and so they are updated and informed throughout the process.




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