The Age Pension is a Government benefit paid to eligible Australians to assist them in retirement.
If you’re eligible for the Age Pension, the amount you’ll receive depends on your age and residency, income, and the value of your assets.
There are strategies available that could help maximise your Age Pension entitlements and help you supplement your retirement savings.
The Government Age Pension is a fortnightly income designed to help eligible older Australians to supplement their retirement savings. A number of factors play a part in determining whether you’re eligible to receive the Government’s Age Pension. In this article we look at what these conditions are and their requirements.
Currently, the qualifying age for the Age Pension is increasing by six months every two years until 1 July 2023 when the qualifying age will be 67. However, your Age Pension age may be under 67 depending on when you were born.1
Date of birth
Age Pension eligibility age
Before 1 July 1952
1 July 1952 – 31 December 1953
65 years and 6 months
1 January 1954 – 30 June 1955
1 July 1955 – 31 December 1956
66 years and 6 months
From 1 January 1957
Tip: The age you can access your super and the age you’ll be eligible for the Age Pension won’t necessarily be the same. Generally, you can access your super savings first.
To qualify for the Age Pension you must be an Australian resident (that is, living in Australia on a permanent basis) who has lived in the country for at least 10 years. You must also have lived in Australia for at least 5 years consecutively, and you’ll need to be in the country on the day you apply for the pension.
If you’re not an Australian resident, there are still some circumstances in which you could be eligible for the Age Pension. Special rules apply to residence in countries with which Australia has an International Social Security Agreement. Residence in these countries may count towards the minimum 10-year residence requirement.2
Seek help from a professional
If you’re eligible for the Age Pension and approaching retirement age, you don’t necessarily have to spend all your super before you’re eligible for pension payments.
If you’d like some help assessing your eligibility for benefits, and strategies to maximise your retirement savings, a financial adviser may help set you on the right track. Their job is to help you with every aspect of your financial life, while keeping you on track to achieve your goals.
Start the conversation to see how a we can help you. Call us on 1300 765 811.
Means Test Qualifications
If you’re the right age and meet the residency requirements, Centrelink will then assess your income and assets to determine whether you’re eligible for a full, part, or no Age Pension.
The income test assesses your total income from all sources. The assets test assesses the value of your total assets (excluding the home you live in). Deeming rules are used to work out income from your financial assets, where an assumed rate of return is used rather than the actual earning rate.
To be eligible for the Age Pension, your income and assets must be below certain limits. Below we look at some of the things that are taken into consideration.
The income test
Centrelink will assess you and your partner’s income, including that which you might receive outside of Australia. This may include income from:
super and retirement pensions
It doesn’t include things like:
rental assistance payments from the government
payments through a National Disability Insurance Scheme package
emergency relief payments
regular payments from a close relative
To find out more regarding the income test, visit the Services Australia website to understand what is included in your assessable income.
How much income can I earn before affecting my Age Pension payments?
You’re allowed to earn a certain level of income before your pension is reduced or cancelled.
You need to have income lower than the below amounts (per fortnight) to be eligible for any form of Age Pension.3
Your fortnightly income cut off point is
A couple living together
A couple living apart due to ill health
Tip: Your Age Pension cut off point will be higher if you get the Work Bonus. This is an incentive designed to encourage you to keep working while receiving the Age Pension.
The asset test
Along with your income, the value of your assets determines your eligibility for the Age Pension, as well as the payment rate you receive.
The assets test takes into account the value of assets you own. This could include:
Property (not including your primary residence)
Super and retirement income accounts (your’s and your partner’s)
Investments, such as cash, shares, term deposits and bonds
Private trusts and private companies.
The test also considers assets that might not seem as obvious. These include:
Any deposits you might’ve paid to live in a ‘granny flat’ or retirement village for the rest of your life
Prepaid funeral arrangements
Any cash gifts or assets you’ve given to family members or friends.
For more details on each of these assets and their impact, visit the Services Australia website.
If the value of your assets is under a certain limit (which is different for singles, couples, and homeowners), you could get a full pension.
For most people, the asset limits listed below determine how much your assets can be worth before your pension may be reduced. For every $1,000 your assets are over the limit, your pension payment reduces $3 a fortnight. This is called the taper rate.4
Not a homeowner
A couple, combined
A couple, 1 partner eligible, combined
A couple, separated due to illness, combined
Is my home included in the assets test?
If you own the home you live in (providing it’s on less than 2 hectares of land), it won’t be counted as an asset in the assets test. However, owning your home could still affect the rate of your fortnightly pension payment. That’s because the asset limits set by the Government are different for homeowners and non-homeowners – as shown in the table above.
Where to go to for more information and advice
Around 2.6 million people currently receive at least some of the Government’s Age Pension, equating to over 3 in 5 (62%) of the population aged 65 and over.5 So don’t assume you won’t be eligible. If this is all new to you, you may find it tricky to stay across what’s included and what’s not. Calling us on 1300 765 811 is a good place to start.
Are you also thinking about retiring, but not sure if you can? To ensure you have sufficient funds to enjoy your retirement, we recommend you visit the retirement section on our website, which includes a range of tools and resources to help kick-start your retirement planning.
1 Australian Government Department of Human Services – Age Pension: https://www.humanservices.gov.au/individuals/services/centrelink/age-pension
2 Australian Government Department of Human Services – Residence rules for Age Pension: https://www.humanservices.gov.au/individuals/services/centrelink/age-pension/eligibility/residence-rules
3 Australian Government Department of Human Services – Income test for pensions: https://www.servicesaustralia.gov.au/income-test-for-pensions
4 Australian Government Department of Human Services – Assets test for Age Pension: https://www.servicesaustralia.gov.au/assets-test-for-pensions
5 Based on data from the Australian Bureau of Statistics and the Australian Institute of Health and Welfare: Age Pension – Australian Institute of Health and Welfare (aihw.gov.au)
Important information and disclaimer
This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. NULIS is part of the group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (‘Insignia Financial Group’). The information in this article is current as at February 2022 and may be subject to change. This information may constitute general advice. The information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Opinions constitute our judgement at the time of issue. The case study examples (if any) provided in this article have been included for illustrative purposes only and should not be relied upon for decision making. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the Insignia Financial Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.