30 June 2022
Reaching retirement age in Australia 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 aren’t the same for everyone.
In this article we’ll review several factors that determine your Age Pension eligibility, 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 4 key factors. They are your:
- Residency status
There are some clear and simple guidelines that determine your eligibility and how much you can get. To get you started, let’s explore the 4 key factors in more detail.
4 key factors that determine your Age Pension eligibility
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|
|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|
For more information please visit the Services Australia website.
2. Residential status
In most cases, being eligible for the Age Pension means you’re an Australian resident who has 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.
If you meet the age and residential requirements, your eligibility 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.
For more details on residency rules for the Age Pension, visit the Services Australia website.
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 (including where only one partner is eligible)||$419,000||$643,500|
Source: Services Australia. Applicable from 1 July 2022 to 19 September 2022. For the most up to date asset test limits, please visit the Services Australia website.
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. This could include:
- Any deposits you might’ve paid to live in a ‘granny flat’ or retirement village for the rest of your life
- Any cash gifts or assets you might’ve given to family members or friends.
For more details on these assets and their impact, including a complete list of the assets considered under the test, visit the Services Australia website.
What assets are exempt from the test?
There are a number of assets exempt from the test. Some of these include:
- Your primary residence and surrounding land (up to 2 hectares on the same title);
- Some rural customers and primary producer 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 your 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.
For example, the difference in asset value limit between single homeowners ($280,000) and single non-homeowners ($504,500) is $224,500. So, if you’re single and a homeowner, the amount of assets you’re allowed to have before your pension’s affected is $224,500 less than if you didn’t own your home.
These limits may change over time. Please visit the Services Australia website for the most recent information.
4. The income test: How much 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. 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 deciding the amount you’ll receive in your fortnightly pension.
To receive the most 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||$3,313.60 (combined)|
|A couple, living apart due to ill health||$4,286.40 (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.
How much is the Age Pension?
As mentioned above, your level of income and the value of your assets affect your eligibility. They also affect how much (the payment rate) pension you get. 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 relationship.
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.
Can you get Age Pension payments alongside your 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 Age 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.
When is the retirement age in Australia?
There’s no one set retirement age in Australia. Your Age Pension qualifying age, the age you can access your super (preservation age), and the age you retire may not all be the same. The age you plan to retire is up to you.
However, many people retire much 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 553. Reasons people retire earlier than planned include ill health, caring for a loved one, and redundancy. It highlights the importance of starting your retirement planning as early as possible.
Need some help planning your retirement?
If this is all new to you, you may find it tricky to stay across everything. Speaking to a financial advisor or asking your super fund for general advice can be a good place to start.
For AustralianSuper members such as 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*.
- Based on data from the Australian Bureau of Statistics and Department of Social Services.
- Services Australia. Applicable from 1 July 2022 to 19 September 2022.
- ABS – Retirement and retirement intensions, Australia (2018-2019)
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.
AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.