Centrelink Age Pension
Centrelink Age Pension

Eligibility for Centrelink Age Pension benefits is dependent upon a person’s age, how long they have lived in Australia and the level of income and assets they have.

There are two tests used for assessing eligibility for Age Pension payments.


Both of the above tests are applied under the Age Pension assessment. The test that pays the lower rate of pension, or zero, is the one that is used to determine a payment.
 

Income Test 

The Income Test uses social security rules to calculate the amount of assessable income a person has. This may differ from the person’s actual income or even taxable income. Different rules may also apply to the source of income (e.g. employment income) or the type of investment held (e.g. shares or an account based pension). The Income Test is applied to any assessable income to determine the amount of Age Pension payable.

As at 20 September 2016, the income test thresholds for a single person and couples (combined) can be seen below.

Single

Fortnightly Income Up to $164 Above $164 Above $1,918.20
Reduction In pension None - Full Payment $0.50 for every dollar over $164 Full – No payment over $1,918.20
 

Couples

Fortnightly Income Up to $292 Above $292 Above $2,936.80
Reduction In pension None - Full Payment $0.50 for every dollar over $292 Full – No payment over $2,936.80

Please note: These figures do not take into account couples separated due to ill health, where only one member of a couple is eligible to apply for Age Pension benefits; or those pensioners receiving the transitional rate.

Other than the indexation of these rates, no changes to the income test thresholds have been proposed or implemented at this point in time.
 

Asset Test

The Assets Test includes all assessable assets, both those held inside Australia and overseas. This test can also include assets not held directly in a person’s name, such as those held in their spouse's name or through a trust or company structure. Assets are generally assessed at net market value (i.e. the value they can be sold at less any secured debts). Centrelink may apply specific rules to determine the assessable value of certain assets and some assets may be specifically exempt (e.g. principal place of residence).

In the May 2015 budget, the Federal Government first announced changes to asset test thresholds used for assessing a person’s eligibility to receive Age Pension benefits. These changes were eventually legislated and came into effect on 1 January 2017.

The tables below show the asset test limits for a single person and couples (combined) between 20 September 2016 and 31 December 2016 and then under the new thresholds from 1 January 2017.

Please note: These figures do not take into account couples separated due to ill health, where only one member of a couple is eligible to apply for Age Pension benefits; or those pensioners receiving the transitional rate.

According to reports, the new changes to the asset test thresholds have seen more than 50,000 additional Australians receive the full Age Pension entitlements. However, roughly 300,000 retirees on a part Age Pension have had their entitlements reduced, and about 100,000 retirees have lost their Age Pension entitlements all together.

Depending on how the new asset test thresholds affect you, it is worthwhile reviewing your situation with a qualified expert to ensure you continue to meet your annual expenses in retirement while maximising your Age Pension entitlements.

Eligibility for full Age Pension under the assets test

  Up to 31 December 2016 From 1 January 2017
Single homeowners, for full pension assets must be less than $209,000 $250,000
Single non-homeowners, for full pension assets must be less than $360,500 $450,000
Couples (combined) homeowners, for full pension assets must be less than $298,500 $375,000
Couples (combined) non-homeowners, for full pension assets must be less than $448.000 $575.000
Reduction in payment $1.50 for every $1,000 of assets over the above thresholds $3.00 for every $1,000 of assets over the above thresholds
 

Eligibility for part Age Pension under the assets test

  Up to 31 December 2016 From 1 January 2017
Single homeowners, for part pension assets must be less than $793,750 $542,500
Single non-homeowners, for part pensionn assets must be less than $945,250 $742,500
Couples (combined) homeowners, for full pension assets must be less than $1,178,500 $816,000
Couples (combined) non-homeowners, for full pension assets must be less than $1,330,000 $1,016,000


Note: This article is intended to provide general advice only, and has been prepared without taking account of your objectives, financial situation or needs, and therefore before acting on advice contained in this document you should consider its appropriateness having regard to your objectives, financial situation and needs. If any advice in this document relates to the acquisition or possible acquisition of a particular financial product, you should obtain a copy of and consider the Product Disclosure Statement for that product before making any decision.