logo Loading...
loading
logo

Planning for retirement often raises many questions. Examples of these are:

  • How much money will I need to fund my retirement?
  • Will I outlive my money?
  • Can I slow down and work part-time?
  • Will I receive an age pension from Centrelink or DVA?

It is often difficult to answer these questions without first looking at questions we do know the answers to. Such as:

  • How much money do I currently have?
  • Do I have any debts?
  • When do I want to retire?
  • Do I want to work part-time in retirement?

By dealing with the questions we do know the answers to, we are then able to plan for and deal with the questions we initially had difficulty with.

Age Pension Information

The Hudson Financial Planning fee for service offers financial advice for non-members on a fee for service basis. That is for a casual short-term financial advice/planning for a range of services:

  • Eligibility
  • Income
  • Deeming rates
  • Assets test
  • Payment rates

Eligibility

To qualify for Age Pension, you must first satisfy the age and residence requirements. Centrelink then works out how much Age Pension is payable. This depends on your income and assets and other circumstances.

If you are legally blind, you may be eligible for Age Pension (Blind), which usually has no income or assets test.

Age pension age

The age pension age will be increasing from 67 – 70 in 2035 – delaying access for those currently aged in their teens to late 40s.

From 1 July 2017, the qualifying age for Age Pension will increase from 65 years to 65 and a half years. The qualifying age will then rise by six months every two years, reaching 67 by 1 July 2023.

The table below shows the gradual increase in women’s qualifying age for Age Pension over the period leading up to 1 July 2013, and then the increase in qualifying age for both men and women from 1 July 2017.

BornWomen eligible for Age Pension at ageMen eligible for Age Pension at age
Before 1 July 19356065
Between 1 July 1935 and 31 December 193660 and a half65
Between 1 January 1937 and 30 June 19386165
Between 1 July 1938 and 31 December 193961 and a half65
Between 1 January 1940 and 30 June 19416265
Between 1 July 1941 and 31 December 194262 and a half65
Between 1 January 1943 and 30 June 19446365
Between 1 July 1944 and 31 December 194563 and a half65
Between 1 January 1946 and 30 June 19476465
Between 1 July 1947 and 31 December 194864 and a half65
Between 1 January 1949 and 30 June 19526565
Between 1 July 1952 and 31 December 195365 and a half65 and a half
Between 1 January 1954 and 30 June 19556666
Between 1 July 1955 and 31 December 195666 and a half66 and a half
After 1 January 19576767

Income and assets

Your Age Pension payment is calculated under both the income and assets tests. The test that results in the lower rate (or zero) will apply.

If you are legally blind you may be eligible for Age Pension (Blind) which usually has no income and assets tests.

Income test

Your income affects the amount of payment you receive.

Note: This income test does not apply if you receive Parenting Payment Single.

You are exempt from this income test if you are permanently blind and you get Age Pension or Disability Support Pension.

Single, couple combined, illness separated (couple combined) pensioners

Single

Fortnightly incomeup to $160over $160
Reduction in paymentnone – full payment50 cents for each dollar over $160

Couple combined, illness separated (couple combined)

Fortnightly incomeup to $284over $284
Reduction in paymentnone – full payment50 cents for each dollar over $284 (combined)

Transitional rate pensioners

The income test for transitional pensioners is effective from 19 September 2009.

Single

Fortnightly incomeup to $160over $160
Reduction in paymentnone – full payment40 cents for each dollar over $160

Couple combined, illness separated (couple combined)

Fortnightly incomeup to $284over $284
Reduction in paymentnone – full payment40 cents for each dollar over $284 (combined)

How does deeming work?

Deeming is a simple set of social security rules we use to assess income from financial assets. Under the pension income test and allowance income test, any income you get from financial investments is assessed under these rules.

The deeming rules assume your financial assets are earning a certain amount of income, regardless of the income they actually earn. Deeming encourages you to earn more income from your investments and reduces the extent that your payments may vary.

Deeming is used to calculate income for pension, benefit and allowance payments. As Family Tax Benefit is based on taxable income, it is not affected by deeming.

From 4 November 2013:

  • if you are single and getting either a pension or allowance, the first $46,600 of your financial investments is deemed to earn income at 2% per annum and any amount over that is deemed to earn income at 3.5% per annum
  • if you are a member of a couple:
    • if at least 1 of you is getting a pension, the first $77,400 of your and your partner’s financial investments is deemed to earn income at 2% per annum and any amount over that is deemed to earn income at 3.5% per annum, or
    • if neither of you is getting a pension, the first $38,700 for each of your and your share of jointly owned financial investments is deemed to earn income at 2% per annum and any amount over that is deemed to earn income at 3.5% per annum

Assets test

An asset is any property or possession you own either partly or wholly. It includes assets held outside Australia and debts owing to you.

Assets test threshold for full pension

Family situationFor homeowners
full pension assets must be less than
For non-homeowners
full pension assets must be less than
Single$202,000$348,500
Couple (combined)$286,500$433,000
Illness separated (couple combined)$286,500$433,000
One partner eligible (combined assets)$286,500$433,000

Assets test limits for part pensions

Family situationFor homeowners
part pension assets must be less than
For Non-homeowners
part pension assets must be less than
Single$764,000$910,500
Couple (combined)$1,134,000$1,280,500
Illness separated (couple combined)$1,410,500$1,557,000
One partner eligible (combined assets)$1,134,000$1,280,500

Transitional 

Family situationFor homeowners
part pension assets must be less than
For Non-homeowners
part pension assets must be less than
Single$678,000$824,500
Couple (combined)$1,054,000$1,200,500
Illness separated (couple combined)$1,238,500$1,385,000
One partner eligible (combined assets)$1,054,000$1,200,500

Assets test for DSP under 21 (no children)

Family situationFor homeowners
part pension assets must be less than
For Non-homeowners
part pension assets must be less than
16-17 years – single dependent$440,250$586,750
18-20 years – single dependent$471,250$617,750
16-20 years – single independent$567,500$714,000
16-20 years – couple combined$1,013,000$1,159,500

Note: the rate of payment is calculated under both the income and assets tests. The test that results in the lower rate (or nil rate) will apply. Limits will increase if Rent Assistance is paid with your allowance or pension.

Extra allowable amount for retirement village and granny flat residents

If your entry contribution is equal to or less than the extra allowable amount at the time of entry, you are assessed as a non-homeowner. Your entry contribution will count as an asset. You may qualify for Rent Assistance. The extra allowable amount is the difference between the non-homeowner and the homeowner asset test limits, currently $139 500.

Disposing of assets

You or your partner can give away money or other assets to any value you choose at any time, but the rate of income support payment you receive may be affected.

Gifting is a term used when you or your partner:

  • give away assets, including transferring assets for less than market value, and
  • do not receive adequate consideration for the gift or transfer in the form of money, goods or services.

We also use the term ‘deprived asset’ for a gift.

You or your partner can give away money or other assets to any value you choose at any time, but the rate of income support payment you receive may be affected if you gift assets worth more than the allowable gifting amount or ‘free area’.

The gifting rules are:

  • there is an allowable gifting amount or free area for a single person or a couple of $10 000 in a single financial year, and
  • there is an allowable gifting amount or free area for a single person or a couple of $30 000 over a five year rolling period. The rolling five year period is the current financial year plus the previous four financial years.
  • Any asset or amount that you gift over and above either the $10 000 in a single year free area or the $30 000 five year free area is treated as a gift or deprived asset for five years from the date of disposal.

Gifts are:

  • included in your assets until the fifth anniversary of the date of the gift
  • deemed to earn income in the same way as financial assets.

Any amounts you disposed of or gifted in the five years immediately before you were granted a payment can also be considered.

Gifting includes:

  • money or any asset you have transferred to members of the family or other relatives
  • gifts to other people or charities
  • gifts to private trusts or companies where you or your partner are not the controller of the trust or company
  • assets sold for less than their market value
  • relinquishing control of a private trust or company. If you do this you will be considered to have gifted all the assets held by the trust or company
  • transferring your shares in a private company or units in a fixed trust and you do not receive full market value for them.

Gifting does not include you selling or reducing your assets to meet normal expenses, for example, to buy consumer goods like a fridge or washing machine, for home maintenance/improvements, or to pay for holidays. Nor does it include payments for services received, e.g. lawn mowing.

Payment rates

These Age Pension payment rates are effective from 20 March 2014. An income and assets test will be used to work out how much you can get.

Family Situation
Pension rates (per fortnight)SingleCouple eachCouple combinedCouple each
separated due to ill health
Maximum basic rate$766.00$577.40$1,154.80$766.00
Maximum Pension Supplement$62.90$47.40$94.80$62.90
Energy Supplement$13.90$10.50$21.00$13.90
TOTAL$842.80$635.30$1,270.60$842.80

The transitional arrangements apply to certain pensioners who were receiving part pensions as at 19 September 2009 and only applies until they would get an equal or higher rate under the new rules. Rates are indexed by CPI only.

Family Situation
Pension Reform Transitional Arrangements Rates (per fortnight)SingleCouple eachCouple combinedCouple each
separated due to ill health
Maximum rate$699.80$565.10$1130.20$699.80
Energy Supplement$13.90$10.50$21.00$13.90
TOTAL$713.70$575.60$1151.20$713.70

Pensioners who elect to receive their pension supplement quarterly will automatically receive their Clean Energy Supplement quarterly from 20 June 2013. Quarterly payment rates are around $88 for single pensioners and $132 for couples combined.