8 February 2023
People approaching retirement age often wonder ‘how much is the Age Pension?’ and ‘what Age Pension rates apply to me?’. The answers will differ according to your unique circumstances.
Around 62%1 of Australians over the age of 65 receive either a part or full Government Age Pension. If you’re preparing for your retirement, you might be wondering if you’re one of them. In this article we’ll review several factors that determine your Age Pension eligibility, and how much you could get paid.
4 key factors that determine your Age Pension eligibility
To determine if you’re eligible, the government will consider 4 key factors. They are your:
- residency status
These factors can determine whether you’ll receive a full or part pension, and what your pension amount will be.
1. Qualifying Age
The age you retire from work may not be the age at which the government deems you’re eligible for the Age Pension. This is called your Qualifying Age, and it depends on the year you were born.
|PERIOD IN WHICH YOU WERE BORN||AGE YOU MAY QUALIFY FOR THE PENSION|
|From 1 July 1952 to 31 December 1953||65.5|
|From 1 January 1954 to 30 June 1955
|From 1 July 1955 to 31 December 1956
|On, or after 1 January 1957
2. Residential status
Age Pension eligibility is usually reserved for Australian residents who’ve lived in Australia for at least 10 years, with at least 5 of those years consecutively. You also need to be in Australia on the day you apply for the pension.
If you haven’t been an Australian resident for 10 years, there are some circumstances in which you could still be eligible for the Age Pension. For example, you could be eligible if you’ve lived or worked in a country with a social security agreement with Australia, or if you’re a refugee.
For more details on residency rules for the Age Pension, visit the Services Australia website.
If you meet the age and residential requirements, your eligibility for the Age Pension then depends on 2 tests: an assets test and an income test. The test producing the lower amount of pension paid is the one used.
3. The value of your assets
The government assesses the value of your assets in what's called the 'assets test'. This determines both your eligibility for the Age Pension, as well as the pension amount you’ll receive.
Assets included in the test include things like cars, business assets, your super, and any investments you have.
If the value of your assets is under a certain limit (which is different for singles, couples, and whether you’re a homeowner), you could get a full Age Pension. If your assets are worth more than this, your may be reduced, or you might not be eligible for the Age Pension at all.
For more details on asset limits and for a complete list of the assets considered under the test, visit the Services Australia website.
Read more: The Government Age Pension Assets Test
4. How much income you earn
Your income is the other factor considered when figuring out 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. 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.
To have your income assessed, you must take what’s called the income test.
The income test looks at all your income sources, including:
- Employment income, including wages you might earn from working or money you might receive from businesses you own; and
- Investment income, including your super and income created from financial assets like savings accounts, managed investments, and shares. A standard rate called the “deeming rate” is used to work out the value of investment income. The Minister for Social Services sets the deeming rate, and it can change. For more details on deeming visit the Services Australia website.
For most pensioners, the standard income test applies when deciding the amount you’ll receive in your fortnightly pension.
To receive the full Age Pension, your fortnightly income needs to be under $190 if you’re single. Or, under $336 (couple combined) a fortnight if you’re in a couple that lives together, or apart due to ill health2.
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||$3,431.20 (combined)|
|A couple, living apart due to ill health||$4,442 (combined)|
Your Age Pension cut off point will be higher if you get the Work Bonus. This is an incentive designed to encourage those receiving the Age Pension to work. All payments may be lower if you don’t live in Australia.
READ MORE: UNDERSTANDING THE GOVERNMENT AGE PENSION INCOME TEST
How much is the Age Pension? – Current Age Pension rates
Your level of income and the value of your assets affect your eligibility for the Age Pension, as well as how much your pension payments will be. There are different rates for a single pension and couples’ pension.
The following table lists the current maximum pension rates available in Australia per fortnight.
|Per fortnight||Single||Couple each||Couple combined||Couple apart due to ill health|
|Maximum basic rate||$936.80||$706.20||$1412.40||$936.80|
You may also be eligible for additional Pension Supplement payments or Energy Supplement payments, making the total pension payment higher. Visit the Services Australia website to learn more about the Pension Supplement and the Energy Supplement.
Your relationship status and the pension
If you’re in a couple – whether you’re married, separated, or living with a de facto partner – this can affect your payment rate.
Generally, Services Australia will consider you to be in a couple if you’re married, in a registered relationship. It’s important to notify the government about any relationship changes so they can continue to pay you the right amount.
Visit the Services Australia website to learn more about Relationship Changes.
Age Pension increases
Adjustments to the Age Pension rate happen twice a year, in March and September. Any pension increases will reflect changes to costs of living as well as wage increases.
You don’t need to do anything to receive an Age Pension increase – you’ll just see the new amount appear in your account.
You can find the most up-to-date pension rate on the Services Australia website.
Advance pension payments
You may be able to access an advance payment of your pension once you’ve been receiving it for at least 3 months. You’ll pay this back by having small amounts deducted from your pension payments for the next 13 fortnights.
Over a period of 13 fortnights (6 months), you can apply for:
- one advance payment at the highest amount
- up to 2 advances at smaller amounts; or
- 3 advances at the lowest amount.
Visit the Services Australia website to learn more about Advance Payment options.
How the Age Pension works with your super
You might be eligible to receive Age Pension payments alongside your super. If so, you could draw payments from your super to top-up the 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.
LEARN MORE: HOW SUPER WORKS WITH THE GOVERNMENT AGE PENSION
The retirement age in Australia
There’s no one set retirement age in Australia. The age you finish working may not be the same as your Age Pension Qualifying Age, or the age you can access your super (Preservation Age).
You can choose to retire from work whenever you like, however it’s useful to note that many people retire earlier than planned.
According to the Australian Bureau of Statistics (ABS), the average age people plan to retire is 65. But the actual average retirement age in Australia is closer to 554. Reasons people retire earlier than planned include ill health, caring for a loved one, and redundancy. This highlights the importance of starting your retirement planning as early as possible.
READ ABOUT: THE DIFFERENCE BETWEEN PRESERVATION AGE AND QUALIFYING AGE
Support for planning your retirement is available
As we've outlined here, the age for pension eligibility will differ according to your specific circumstances. For that reason, it can be useful to speak to a financial adviser or ask your super fund for general advice.
AustralianSuper member Doug got financial advice in the lead-up to his retirement, which inspired some life-changing decisions. These decisions resulted in early retirement and the chance to spend more time with his wife.
Get help planning your retirement, register for a free webinar, and explore helpful articles and guides.
For personal advice, connect with one of our team members who can put you in touch with an accredited financial adviser4.
- Australian Institute of Health and Welfare, as of 26 March 2021
- Services Australia, updated 11 January 2023.
- ABS – Retirement and retirement intensions, Australia (2018-2019)
- Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. Fees may apply.
This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/pds or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.
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