1 July 2021 (updated quarterly)
Once you have reached 'age pension' age and, provided you meet basic conditions of eligibility, you may be entitled to receive a pension from the Commonwealth Government to assist you in supporting yourself in retirement.
To be eligible for an age or service pension, you must meet some basic conditions as outlined below.
These conditions include that:
In addition, you must generally have been an Australian resident for a total of at least 10 years, of which at least five years occurred in one continuous period.
However, exemptions to this residency requirement exists for certain widows, recipients of a Partner Allowance and some classes of refugees.
If you believe that you may qualify for a residency exemption, you should discuss your circumstances with your financial adviser.
If you meet the basic conditions of eligibility, you will be able to apply for an age pension once you reach age pension age. Your age pension age will differ depending upon whether or not you are a qualifying service veteran.
Department of Veterans Affairs members have a service pension age of 60 for both males and females (not planned to be indexed as with Centrelink pension age).
Age pension age for non veterans is between 65.5 and 67 depending on your date of birth.
| Date of birth between | Age eligible for age pension |
|---|---|
| Before 1 January 1954 | Already eligible |
| 1 January 1954 and 30 June 1955 | 66 |
| 1 July 1955 and 31 December 1956 | 66½ |
| From 1 January 1957 | 67 |
As at 1 July 2021, the maximum rate of age pension which you could be entitled to is:
| Status | Pension per fortnight* |
|---|---|
| Single | $952.70 |
| Couple (combined) | $1,436.20 |
* Includes pension supplements and the energy supplement. Refer to current rates at serviceaustralia.gov.au
The actual amount of age pension that you will be entitled to will be based on the lowest results of two tests: the assets test and the income test.
While the assets test determines the total value of assessable assets that you hold, not all assets that you own may be assessable.
Examples of assets which are non-assessable (ie excluded) from this test include:
*providing it does not relate to a funeral for which pre-paid funeral expenses have been paid in advance.
If you are a member of a couple, the combined value of your assessable assets is included in the assets test.
Your assessable assets are then compared against assets the test thresholds to determine your age pension entitlement.
The asset test thresholds that are applied will depend upon whether or not you own your home.
| Status | Full pension threshold* | No pension threshold* |
|---|---|---|
| Single | $270.500 | $588,250 |
| Couple combined | $405,500 | $884,000 |
| Status | Full pension threshold* | No pension threshold* |
|---|---|---|
| Single | $487,000 | $804,750 |
| Couple combined | $621,500 | $1,100,500 |
*Assets limits may vary depending on your circumstances. For example, they may be higher if you are eligible for Rent Assistance or may be different if you are paid under 2009 pension transitional arrangements.
Under the assets test:
Case studySimon and Alice are home-owners with assessable assets of $600,000. Under the assets test, their age pension entitlement would be calculated as: = $1,436.20 – [($600,000 – $405,500) X $3.00 ÷ $1,000] |
Under the income test, the total amount of income that you earn from all sources each fortnight is added together and the result is used to calculate your age pension entitlement per fortnight. Certain exemptions may apply.
| Status | Threshold* | |
|---|---|---|
| Full pension | No pension | |
| Single | $180 pf | $2,085.40 pf |
| Couple (combined) | $320 pf | $3,192.40 pf |
*income limits may vary depending on your circumstances. For example, they may be higher if you are eligible for Rent Assistance or are paid under the 2009 pension transitional arrangements.
Under the income test:
Case study (cont.)Simon and Alice earn assessable income of $800 per fortnight. Under the income test, their age pension entitlement would be calculated as: = $1,436.20 – [($800 – $320) X 50c] |
For the purposes of the income test, the Government assumes that you will be earning a certain rate of return from financial assets that you may hold, regardless of the actual earning rate.
These assets are known as deemed assets and include:
The total market value of your deemed assets is added together and an income is deemed to be earned at the following rates:
| Status | Deemed earning rate | |
|---|---|---|
| 0.25% pa | 2.25% pa | |
| Single | First $53,600 of deemed assets | All remaining deemed assets |
| Member of a couple (combined) | First $89,000 of deemed assets | All remaining deemed assets |
Once your age pension entitlement has been calculated under both the assets and income tests, the actual amount of age pension to which you are entitled can be determined.
While your pension entitlement is calculated under the assets test and the income test, the test that produces the lower result will determine the amount of age pension you are entitled to receive.
Case study (cont.)As Simon and Alice were entitled to an age pension of:
their actual age pension payments will be $851.20 pf (combined). |
There are strategies you can consider that may reduce the amount of your assessable assets or income so that your entitlement to the age pension increases.
You should contact your financial adviser to discuss whether any of these strategies are appropriate for your personal circumstances.
