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’ll be paid.
This article is part of a series exploring the Government Age Pension.
You may also like to read:
- What is the assets test for the Government Age Pension?
- What is the income test for the Government Age Pension?
Determining your eligibility for the Government Age Pension
About 70% of Australians are eligible for some form of the Government Age Pension1. 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?
The payment rate of your pension will be affected by your level of income and the value of your assets. There are different Age Pension rates for singles, couples and homeowners.
If you’re in a couple, how your relationship is defined – married, separated or living with a de facto partner – may also affect your payment rate.
Generally, the Department of Human Services 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 March 2020 the maximum Age Pension payments* are:
Singles: A single person can receive $944.30 a fortnight, or $24,554 per year (approximately).
Couples – Combined, living together: If you’re a couple and live together then your maximum entitlement is $1,423.60 per fortnight or $37,014 per year (approximately).
Couples – Each, if living apart: If you’re in a couple and 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 (see above).* including the maximum basic rate, pension supplement and energy supplement.
When is the next Age Pension payment rate change?
Adjustments to the Age Pension happen twice a year in March and September. The next change will be in September 2020.
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 is known as your qualifying age. This is set by the government and determines the earliest age you can be paid the Age Pension. Your qualifying age is determined by 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. And you must have lived in Australia for at least 5 years consecutively. You also need to be in Australia on the day that 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 for the Age Pension will be determined by two tests – an assets test and an income test. The test that produces the lower amount of pension paid is the one used.
3. The income test: The value of your assets
Along with your income, the value of your assets will be used to determine if you’re eligible for the Age Pension, as well as the payment rate you will receive. To have the value of your assets determines, they’re subject to what’s called an assets test.
If your assets are valued under a certain limit (which is different for singles, couples and homeowners), you could be eligible to receive 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 $1000 your assets are valued at over the asset limit, your pension payment will be reduced by $3 a fortnight or $78 per year (approximately). This is called the taper rate.
|If you're...||A homeowner||Not a homeowner|
|A couple, combined||$394,500||$605,000|
|A couple, 1 partner eligible, combined||$394,500||$605,000|
What assets are included in the test?
The assets test looks at the value of assets you might own such as your vehicle, business assets, properties not considered your primary residence, super and retirement income accounts (yours and your partner’s), as well as investments like cash, shares, term deposits and bonds.
The test also considers assets that may not seem obvious. These include any deposits you might have paid to live in a granny flat or retirement village for the rest of your life, prepaid funeral arrangements you might have made, and any cash gifts or assets you may have given to family members or friends.
Assets considered include:
- Property (not including your primary residence)
- Granny flat interest (money paid to live in someone else’s property for life)
- Private trusts and private companies
- Funeral bonds and prepaid funerals
What assets are exempt from the test?
A number of assets are 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 assets and their impact, as well as a complete list of all the assets considered and exempt under the test, visit the Department of Human Services website.
Will my home be 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, this doesn’t mean owning your own home won’t affect the rate of your fortnightly pension payment, because the asset limits for homeowners and non-homeowners are different.
READ MORE: THE AGE PENSION AND THE ASSETS TEST
4. The income test: How much you earn
Your income is the other factor the government looks at 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’ll have to take what’s called the income test.
The income test looks at all income sources, including employment income – wages you might earn from working or money you might receive from businesses you own. But it also looks at investment income – your super and income created from financial assets like 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 $174 if you’re single, or under $308 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 $2,062.60 a fortnight as a single, or over $3,155.20 as a couple, you won’t be eligible to receive any payments. Your Age Pension cut-off point will be higher if you get the Work Bonus, 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 Government Age Pension and are 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 by setting up an account based pension for your super. AustralianSuper’s account based pension is called Choice Income.
Attend an AustralianSuper Retirement Webinar
Our members can attend a free Retirement Planning webinar to learn about setting retirement savings goals and building up super as they approach retirement. The webinars also provide information about claiming the Government Age Pension and turning tax into super savings.
1. AustralianSuper Retirement booklet
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
This information is general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.
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