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Receiving an Age Pension in Australia

Senior pension australiaHave you started planning for retirement in Australia? If you have not, you may be able to receive the national Age Pension supplement. This payment benefit can help you with your basic living expenses as laid out below.

Retirement Planning
Planning for retirement, when you transition from full-time work to your retirement is a major life change. It is one that you should plan for. The government provides a Financial Information Service Seminar for all Australians. It is a free and confidential service that provides information on financial and lifestyle changes that will take place in your retirement.

The government even provides a FIS Officer that you can meet with to help you in your transition. The FIS Officer however is not a Financial Planner or Counsellor like the one you would have at your financial institution like a bank. They are simply there to talk to you about the major changes about to take place and how to prepare for both the financial and lifestyle changes required for retirement.

Partial Retirement
If you are only partially retired or are self-funded for retirement there is a possibility that you would still be eligible for the Age Pension. In fact, you are encouraged to work past the standard eligible Age Pension age of 65 if you so choose. The government provides a Work Bonus incentive for pensioners that decide to do so. Work Bonus is applied to your pension income depending on your wages and income. It is applied to your Age Pension payment before each fortnight payment. It will be applied to all regular wages in or out of Australia, even if you are on leave from a company and still being paid as well as Director’s Fees. However it will not be applied to self-employment earnings, investments, superannuation income, payments to you as a sole trader or partnerships or leave payments if you have terminated employment with the company.

In this way, you can still work part-time and receive your Age Pension benefits without threat of losing your pension income. The process is automatic if you are already receiving Age Pension benefits and applied to your income payments.

Age Pension Eligibility
There is a standard age requirement for the Age Pension. If you were born before July 1952, your eligible age to receive the pension is 65. However as of 2017 the qualifying age will increase by 6 months every 2 years until reaching age 67 in 2023 where it is legislated to stay.  You must also be a resident of Australia and present during the application process in Australia. During your lifetime you also need to have lived in Australia at least 10 years consecutively or a total of 10 years with at least one continuous period of 5 years within the country as a resident to qualify for the Age Pension.

For Age Pension eligibility the government also applies a number of tests including income and asset tests.

Income Tests
For single pensioners you can make up to $160 fortnightly before deductions from your pensions start being made. After that amount; 50 cents of every dollar over that amount will be deducted from your pension. For couples that amount fortnightly allowed is $284 before payment deductions start being made. This is considered the income test. If you make triple the maximum amount of $160 before deductions are made, essentially your pension amount would be $0 because of the deductions from the extra income.

Asset Test Limits
There are a number of asset test limits for the Age Pension. These asset tests determine what the fair market value of your assets would be if you were to sell them today. As an example, any property or land, besides your principle residence is included in your asset test. If you own a condo, beach cottage, or a parcel of land, besides your home, it can be counted against your pension maximum allowable asset limit.

There are a number of asset tests including the following:

  • Real estate assets
  • Granny flat rules
  • Retirement Village contributions
  • Life interests
  • Financial investments
  • Superannuation investments
  • Income streams
  • Business assets
  • Funeral investments
  • Assets given away

Essentially each of these categories is included when testing if you have too many assets to qualify for the Age Pension. If you can support yourself and/or your spouse/partner during retirement because of proper planning for retirement, you will not need the Age Pension, and probably will not qualify for it.

Age Pension Payments
Payments can vary widely depending on your family status, single or a couple as well as the amount of income, assets or other circumstances that could lower your Age Pension payment amount.

The maximum basic rate for a single pensioner is $782.20 fortnightly, while for a couple it is $589.60 for each person. Depending on your housing and living expenses you may qualify for an added Pension Supplement that would equate to $63.90 for a single or $96.40 combined for a couple fortnightly. There is also an energy supplement that is paid automatically to pensioners that receive a number of other possible support payments such as Family Tax Benefit, Special Benefit or Widow Allowance. The entire list can be found here. This added supplement is $14.10 for a single and $21.20 for a couple combined.

Self Service
As most other government support payments in Australia there is a self service option. You can claim your Age Pension online here. It is an easy process to get signed onto the service, Centrelink and it allows you to access a number of payment supplements, benefits and government social services all from the same account. Apply, provide support documentation and they will let you know if you qualify.

Take time to understand the Age Pension process so that you can be secure in your retirement. If you already have significant savings, retirement financial planning and will be financially secure, you will not be eligible for the Age Pension. It is meant for those without retirement income or savings.

If you are dealing with unexpected financial issues that require a cash, there are a few options. If you are already on Centrelink you may qualify for an Advance Payment, there are also a few other senior loan options here.

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