Reaching retirement age and finishing up at work doesn’t mean you automatically get the Government Age Pension. People often want to know ‘How much is the Age Pension?’ and ‘What are the Age Pension payment rates?’ But the answers are not the same for everyone.
In this article we’ll review several factors that determine if you’re eligible, and how much you could get paid.
Determining your eligibility for the Government Age Pension
Around 62%1 of Australians over the age of 65 receive either a part or full Government Age Pension. If you’re approaching retirement age, you might be wondering if you’re one of them.
To determine if you’re eligible, the government will consider your age, residency status, income and assets. There are some clear and simple guidelines that determine your eligibility and how much you can get. To get you started, here’s a rundown of the Age Pension rates.
How much does the Age Pension pay?
Your level of income and the value of your assets affect the payment rate of your pension. There are different Age Pension rates for singles, couples, and homeowners.
If you’re in a couple, whether you’re married, separated, or living with a de facto partner can also affect your payment rate.
Generally, Services Australia will consider you to be in a couple if you’re married, in a registered relationship, or in a de facto relationship2.
What's the most I can earn from the Age Pension?
From 20 September 2021 the maximum Age Pension payments* are:
Singles: A single person can receive $967.50 a fortnight.
Couples – Combined, living together: If you’re a couple and live together then your maximum entitlement is $1,458.60 per fortnight.
Couples – Each, if living apart: For couples living apart, either because of separation due to a relationship breakdown or because of ill health, your payment may be at the Single payment rate .
* Including the maximum basic rate, pension supplement and energy supplement.
Adjustments to the Age Pension rate happen twice a year, in March and September. You can find the most up-to-date rate on the Services Australia website.
4 key factors that determine your eligibility for the Age
1. Qualifying age
Before you can receive the Age Pension, you need to reach what’s known as your qualifying age. This is set by the government and determines the earliest age you can get the Age Pension. Your qualifying age depends on the year you were born.
|If you were born...||your qualifying age is|
|Before 1 July 1952||65 years|
|From 1 July 1952 to 31 December 1953||65.5|
|From 1 January 1954 to 30 June 1955||66|
|From 1 July 1955 to 31 December 1956||66.5|
|On, or after 1 January 1957||67|
2. Residential status
In most cases, being eligible for the Age Pension means being an Australian resident who has lived in Australia for at least 10 years. You must’ve lived in Australia for at least 5 years consecutively. You also need to be in Australia 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. For example, those who have lived or worked in a country that has a social security agreement with Australia, and refugees3.
If you meet the age and residential requirements, your eligibility depends on two tests: An assets test and an income test. The test producing the lower amount of pension paid is the one used.
3. The assets test: The value of your assets
Along with your income, the value of your assets determines your eligibility for the Age Pension, as well as the payment rate you receive. To have the value of your assets determined, they’re subject to what’s called an assets test.
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.
Full Age Pension asset limits
|If you're...||A homeowner||Not a homeowner|
|A couple, combined||$405,000||$621,500|
|A couple, 1 partner eligible, combined||$405,000||$621,500|
What assets are included in the test?
The assets test takes into account the value of assets you own. This could include:
- A car
- Business assets
- Property (not including your primary residence)
- Super and retirement income accounts (yours and your partner’s)
- Investments, such as cash, shares, term deposits and bonds
- Private trusts and private companies.
The test also considers assets that mightn’t seem 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 you might’ve made
- Any cash gifts or assets you might’ve given to family members or friends.
For more details on each of these assets and their impact, as well as a complete list of all the assets considered under the test, visit the Services Australia website.What assets are exempt from the test?
There are a few assets exempt from the test. These include:
- Your primary residence and surrounding land (up to 2 hectares on the same title);
- Some properties larger than 2 hectares (on the same title);
- Accommodation bonds paid if you move into a residential aged care facility;
- Any property or money left to you in an estate that you’re unable to access for up to 12 months from the date of the test, and;
- Money you’re paid from the National Disability Insurance Scheme.
For more details on each of these, as well as a complete list of all the assets exempt under the test, visit the Services Australia website.
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.
Here’s an example to help explain. It uses the asset limits for single homeowners ($270,500) and single non-homeowners ($487,000), and the difference in asset value between the homeowner and non-homeowner is $217,000. This means if you’re single and own your home, the amount of assets you’re allowed to have before your pension is reduced or cancelled is $217,000 less than if you didn’t own your home.
4. The income test: How much you earn
Your income is the other factor considered when determining whether you can get the Age Pension and how much your pension payment rate might be.
You’re allowed to earn a certain level of income before your pension is reduced or cancelled. To have your income assessed, you must take what’s called the income test.
The income test looks at all income sources. This includes employment income – wages you might earn from working – or money you might receive from businesses you own. It also looks at investment income. This includes your super and income created from financial assets, such as savings accounts, managed investments, and shares.
For most pensioners, the standard income test applies when determining the amount you’ll receive in your fortnightly pension.
To receive the maximum Age Pension, your fortnightly income needs to be under $180 if you’re single. Or, under $320 a fortnight if you’re in a couple that lives together, or apart due to ill health4.
For every dollar of income you earn over this limit, your pension will reduce by 50c for a single person, and 50c per couple.
If you earn over a certain amount in a fortnight (known as the ‘cut off point’), you won’t be eligible to receive any payments.
Age Pension cut off points
|IF YOU’RE:||YOUR FORTNIGHTLY INCOME CUT OFF POINT IS:|
|A couple, living together||$3,237.20 (combined)|
|A couple, living apart due to ill health||$4,190.00 (combined)|
Your Age Pension cut off point will be higher if you get the Work Bonus. This is an incentive designed to encourage participation in the workforce by those receiving the Age Pension. All payments may be lower if you don’t live in Australia.READ MORE: UNDERSTANDING THE GOVERNMENT AGE PENSION INCOME TEST
Can I get Age Pension payments alongside my super?
If you’re eligible for the Age Pension and approaching retirement age, you don’t have to spend all your super before you’re eligible for pension payments. You may be able to draw payments from your super to top-up any government pension payments you’re entitled to. You can do this by setting up an account based pension for your super. AustralianSuper’s account based pension is called Choice Income.
Need some help?
If this is all new to you, you may find it tricky to stay across what’s included and
what’s not. Speaking to a financial advisor, or asking your super fund for
general advice can be a good place to start.
For AustralianSuper members like Doug, seeking financial advice* when approaching retirement led to some life-changing decisions. These decisions resulted in early retirement and the chance to spend more time with his wife.
For personal advice, connect with one of our team members who can put you in touch with an accredited financial adviser.
1. Based on data from the Australian Bureau of Statistics and Department of Social Services.
2. Relationship status - https://www.humanservices.gov.au/individuals/enablers/your-relationship-status
2. Resident status - https://www.humanservices.gov.au/individuals/services/centrelink/age-pension/eligibility/residence-rules
3. Income Test data - https://www.humanservices.gov.au/individuals/enablers/income-test-pensions/30406