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Age Pension Eligibility and Payment Rates

The Age Pension and Asset and Income Tests

The Australian Government's Age Pension is designed to provide income support for eligible older Australians and is indexed twice each year, in March and September. Your eligibility is assessed on the basis of your age, residency status and an assessment of your income and assets.

There was no increase made to the Age pension in September, 2020. This is because both the inflation measures utilised to determine indexation have shown a reduction in the cost of living. This is the first time since 1997 that the pension hasn’t increased as a result of indexation.

Current Basic Age Pension Payments - from September 20, 2020 to March 19, 2021

Taxable income
Single
Couple Each
Couple Combined
Couple Separated
Maximum Rate per fortnight
$860.60
$648.70
$1,297.40
$860.60
Maximum Pension Supplement
$69.60
$52.50
$105.00
$69.60
Energy Supplement
$14.10
$10.60
$21.20
$14.10
Total Fortnightly Rate
$944.30
$711.80
$1,423.60
$944.30
Total Annualised Rate
$24,551.80
$18,506.80
$37,013.60
$24,551.80

Qualifying for an Aged Pension

To qualify for the Age Pensions, you must:

  • Be an Australian resident and reside in Australia on the day that you lodge your claim (you also need to meet the 10-year qualifying Australian residence requirements), and
  • Be at least 65 years old - with the eligibility age gradually increasing to 67 for both men and women, as per the table below:
If your birthdate is: You will be eligible at age:
1/7/1952 to 31/12/53 65 years and 6 months
1/1/1954 to 30/6/1955 66 years
1/7/55 to 31/12/56 66 years and 6 months
From 1/1/1957 67 years

Income and Asset Tests

Your age pension entitlement is calculated by reference to how much other income you receive (the "Income Test") and how much your assets are worth (the "Assets Test"). You can have a certain amount of income and assets and still receive the maximum rate Age Pension; but if your income or assets exceed certain thresholds then your Age Pension reduces on a sliding scale. Note that the Test that results in the lowest payment rate will apply.

Age Pension Income Test

Most types of income ("assessable income") are taken into account when determining your Age Pension entitlement, including:

  • Financial investments (including money in super funds if you have reached age pension age);
  • Employment income (if you are still working); including amounts salary sacrificed into super
  • Income from sole trader or partnership businesses
  • Distributions or dividends from private trusts and private companies
  • Real estate income, including income from rental properties, boarders or lodgers
  • Income from outside Australia, including non-Australian pensions

Some financial investments (eg. term deposits, shares, managed funds) are "deemed" to earn a certain rate of income, regardless of what they are actually earning. This is referred to as "deeming" and the rate has been very topical recently, given historically low interest rates).

The current deeming thresholds and rates, effective 1 May, 2020 are as follows:

Single Couple Rate
First $53,000 First $88,000 0.25%
Over $53,000 Over $88,000 2.25%

Current Income Test Thresholds effective July 1, 2020 to June 30, 2021 - Fortnightly income figures

  Full Pension Part Pension No Pension
Single Up to $178 Between $178 and $2066.60 More than $2066.60
Couple Combined Up to $316 Between $316 and $3163.20 More than $3163.20
Illness separated (couple combined) Up to $316 Between $316 and $4093.20 More than $4093.20

Individual pensioners from July 1, 2019 have also been able to earn up to $300 a fortnight from "personal exertion" without it counting towards the Age Pension Income test - this is called the Work Bonus.

Age Pension Assets Test

The value of the various assets you own are taken into account when determining your Age Pension entitlement. Generally, the value of the assets is based on what you would receive for them if you sold them at market value.

Assessed assets include (but are not limited to):

  • Real estate assets (excluding your principal home – unless it is used to conduct a business or it is on more than 2 hectares of land)
  • Life interests (eg. where you transfer an asset to another person but retain an interest in the asset)
  • Retirement village entry contributions – if you pay less than the threshold (currently, $210,500), you are considered to be a non-homeowner and your entry contribution is included in the assets test. The threshold is called the "extra allowable amount" (EAA) and is the difference between the asset limit for home owners and non-home owners
  • Financial investments
  • Superannuation investments (super owned by you or your partner is included in your asset test if the owner is over age pension age)
  • Income streams
  • Business assets
  • Funeral investments (although there are a range of different funeral investments that may be either partially or fully exempt from the assets test)

Current Asset Test Thresholds effective July 1, 2020

    Full Pension: Assets less than Part Pension: Assets between No Pension if Assets exceed
Single Homeowner $268,000 $268,000 and $583,000 $583,000
  Non-Homeowner $482,500 $482,500 and $797,500 $797,500
Couple (combined) Homeowner $401,500 $401,500 and $876,500 $876,500
  Non-Homeowner $616,000 $616,000 and $1,031,500 $1,031,500
Illness separated (couple combined) Homeowner $401,500 $401,500 and $1,031,500 $1,031,500
  Non-Homeowner $616,000 $616,000 and $1,246,000 $1,246,000
A couple, one partner eligible (combined assets) Homeowner $401,500 $401,500 and $876,500 $876,500
  Non-Homeowner $616,000 $616,000 and $1,091,000 $1,091,000

Determining whether you are entitled to a pension and to what amount can be complicated, and the above summary and scenarios are a useful guide but may not be all inclusive. We also have an Age Pension Calculator available to assist in determining your eligibility and entitlement to a pension.

Both the commentary above and our calculator should be read in conjunction with the information on The Australian Government's Department of Human Services website.

Note also there are several strategies you could consider which may help you optimise your income and asset base to ensure you are entitled to the maximum Age Pension possible.

 

If you would like to arrange professional advice in relation to the above matters, please complete the Inquiry form below providing details and you will be contacted accordingly. You will receive a fee quotation in advance of any advice or services being provided.