Super and the Age Pension

You may have heard of the Government Age Pension, but what exactly is it? How do you know if you're eligible? The Age Pension is a regular payment from the Australian government. It's paid every fortnight to help cover your living expenses in retirement. For some people, it's their main source of income. For others, it's used to help top up their super and other savings.

Before we jump in, Please note this presentation may include general financial advice which doesn't take into account your personal objectives, financial situation or needs. So before making any decision, make sure the information is right for you and also read the relevant Product Disclosure Statement and Target market determination, which you'll find on the AustralianSuper website. The Financial Services Guide is available at australiansuper.com/representatives

So who's eligible? Well, there are three main things to consider. Firstly, age requirement. You need to be at least 67 years old to qualify for the age pension. Now some people think that they can't receive it while they're still working, but that's not always true. There's no rules that say you must be fully retired. So once you reach age 67, you may be able to apply whether you're still working, working full time, part time or not working at all.

You can also launch your application up to 13 weeks before you turn 67.

Second is residential status. Now in most cases you need to be an Australian resident. You also need to have lived in Australia for at least 10 years and with at least five of those years in a row. There can be some exceptions depending on your circumstances.

And then thirdly, the income and the assets test. Now the age pension, it is means tested, which means Centrelink looks at both your income and also your assets. Now a helpful way to think of it is like a set of scales, both your income and your assets, they get assessed and whichever one reduces your payment the most is the one that's used to work out how much you can receive. So there are two main parts to this process.

Now, firstly with the income test.

This looks at all sources of income, not just what you earn from a from a job. Now this can include things such as income from work, whether that's part time, a full time, part time or casual.

Rental income from properties, business income or profits and also other payments such as pensions or overseas income. Now it also includes income from your financial investment. Now for these, Centrelink uses something called deeming. This means that they estimate how much income your investment earns based on its value, their value, rather than what they are what you actually receive.

Now let's talk about the assets test. The assets test looks at the value of what you own. Now this can include things such as financial investments, so shares, investment properties, bonds. It includes your super and pension accounts, lifestyle assets, cars, boats, other belongings, and also gifts that you sometimes give that you've given away. Now some assets aren't counted. It includes your family home in most cases.

A certain funeral and burial arrangements and sometimes your partner's super if they are under the age pension age.

So both the income, the income tests and the assets tests are applied and whichever test results in the lower payment is the one that Centrelink uses to work out how much you receive. What's important to remember is that your eligibility can change over time as your income or your assets change. For more information or to apply visit Services Australia's website. You can also have a look at Centrelink's website where you'll find.

The Age Pension calculator to help estimate your eligibility as well.

Now, there are a few common misconceptions about the age pension, so let's clear up some of those.

Now firstly, people think that age pension is an all or nothing payment, but it's not always the case. It actually works on a sliding scale, so depending on your circumstances you could receive a full pension, a part pension or none at all. Another misconception is that if you're not eligible now, you never will be. But that's not true because your eligibility can change over time as your income, your assets or even the thresholds change. So even if you don't qualify at one point, it's always worth checking in again later on.

Now many people worry that if they take more money out of their super, their age pension will go down. But in many cases it's actually it's not about how much you withdraw, it's about the value of your assets. Because remember, Centrelink often uses something called deeming. This means that they estimate the income from your investments using a set rate rather than your actual withdrawals. So taking a bit more income, it doesn't always have the impact that people expect.

Now some people assume that if they don't qualify for the age pension, they may miss out on all government support. But you may still be eligible for benefits such as the Commonwealth Seniors Health Card, which can help with cheaper medicines and also other concessions.

And finally, many people think that working in retirement means that they are not eligible, that's not always the case. There is something called the Worth bonus which allows you to earn up to a certain amount from work without immediately reducing your age pension. Also, any unused amount can build up over time and this gives you more flexibility to do part time work.

There is also the seniors and pensioners tax offset.

Which may help reduce the amount of tax you pay in retirement. If you're unsure of how this applies to your situation, there is support available. So Services Australia, they offer FIS officers, which stands for Financial Information Service Officers and they can help you understand things such as how the income and the assets tests work.

How your super and investments are treated and what it could mean for your age pension.

It is a free service and they are there to explain your options in a clear and also simple way.

We also run live webinar on this topic which explore these key areas in a bit more detail. We also include real life case studies worked examples and also you have the opportunity to ask questions. You can register at australiansuper.com/webinars.

Thanks for watching and I hope to see you at one of our upcoming webinars soon.