Just the facts you need to know
Australia’s most secure form of retirement income is the Age Pension. It is government guaranteed, delivered to your bank account fortnightly, and eventually (when you reach your 80s), paid to a whopping 80% of this cohort.
So you would think this ubiquitous form of income would be easy to understand and easy to apply for.
That’s a big assumption.
At Retirement Essentials, we know this isn’t the case as our Age Pension experts spend hours on the phone or in online consultations talking our members through the fine print.
There’s a reason for this. One of the strengths of our Age Pension system – how finely targeted it is – is also one of the weaknesses when it comes to understanding individual entitlements and then applying.
So today we offer a plain English ‘no brainer’ overview of the key things you need to know to keep you up to date on all pension entitlements if you:
- already receive an Age Pension
- are planning on applying
- or if you’ve already applied, and only just missed out.
Read on to understand the key rules and entitlements and feel free to share this information with family and friends if they, too, find Centrelink requirements just too complex to follow.
How old do you have to be to get an Age Pension?
The age of Age Pension entitlement varies. It is currently 66.5 years of age for those born before 1 January 1957, but will move to 67 years of age on 1 July 2023.
However, you may apply for the Age Pension up to 13 weeks before you reach the age of entitlement. There are no guarantees that entitlement age will not be increased again, but there is currently no stated intention or legislation to do this.
How much can you have before you miss out on the Age Pension completely?
As you are probably aware, Age Pension entitlement is based upon two different assessments.
The income assessment requires that you earn below the current income threshold depending upon whether you live as a single, couple and are a homeowner or not. Here’s a link to the current income thresholds. These thresholds were increased on 1 July this year and will be reviewed again in September.
The assets assessment also requires that the assets you hold (with the exception of the family home, home contents and cars and similar) are below the current thresholds, which again differ according to your status as a single, couple and homeowner or not.
The tricky part is that your assets (except those mentioned above) are generally ‘deemed’ to earn a certain amount of income. This deemed income is added to your other income (e.g. wages, income streams, investment property earnings) and your total income must still come within the income thresholds. Many retirees have a hard time understanding how an asset can also be deemed as a source of income for the Age Pension, and that’s very understandable. Here’s more detail which may help.
How often do deeming rates change?
Deeming rates are set by Services Australia, usually on 1 July every year. That said, they have been both adjusted and frozen at different times across the past 12 months, in response to volatile market conditions and election promises, so it is important that you keep a close eye on the current rates and stay up to date as they change. That said, rates were frozen for a 12-month period from 1 July this year, so you can do your calculations on these current rates with a degree of certainty, at least for the next 11 months. Here are the current rates.
How much does the Age Pension currently pay?
As of 20 March 2022, the maximum fortnightly payment rates are as follows:
| Single person | Couple living together | Couple separated due to ill health | |
| Maximum basic rate | $900.80 | $679.00 each | $900.80 each |
| Maximum pension supplement | $72.70 | $54.80 each | $72.70 each |
| Energy supplement | $14.10 | $10.60 each | $14.10 each |
| Total per fortnight | $987.60 | $744.40 each | $987.60 each |
Is the current Age Pension rate likely to go up anytime soon?
The base rate (i.e. maximum full Age Pension) is reviewed twice a year, in March and September. The formula used is a combination of the latest available Consumer Price Index (CPI) and a benchmark of average weekly earnings, so that Australian Age pensioners keep in touch with ‘real’ incomes. The next review is in September this year, and financial experts are expecting a substantial increase to the base rate as a flow-on effect from rapidly rising prices. Read more about the expected increase here.
If your application has been rejected, is there any recourse?
As we mentioned at the beginning of this article, sooner or later most Australians end up with at least a part Age Pension entitlement. Many may have been rejected the first time they applied, but as they spend down their super or savings, they find they fall within the assets and income parameters. Others may have been rejected because they filled out their application incorrectly. Regardless of which situation applies, we have linked you through to the information on current thresholds above. You can now quickly check your eligibility by using the Retirement Essentials Age Pension Entitlement Calculator. If you are unsure about the results or want to know more about the fine detail Centrelink requires in an application, you can make a time to talk to one of our Centrelink experts and let them help you to better understand your entitlements – or to maximise them whenever you are eligible.
Knowing the Age Pension rules is key to making sure you maximise your income. So if you are unsure about your current or future possible entitlements, why not visit the Retirement Essentials Age Pension Eligibility Calculator and set your mind at rest?
i will be applying for the age pension in december.i will be 66.5 in march.my wife wont be old enough for the age pension for another 3 years.will i be paid as a single pensioner or at the married rate even though the wife wont qualify for another three years.
Hi Pat, thanks for explaining your situation so well! When Centrelink say single/couple it means ‘are you in a relationship with someone?’. So although your partner is not eligible for the Age Pension yet, you are still assessed as a couple and her income/assets are included in your assessment. The couples’ Age Pension is designed to be paid 50/50, this means that the maximum pension you could receive is $744 (your half) until your wife turns of age and begins receiving her portion.
Hi I also will receive my English pension how does the effect my Australian pension
Hi Lesley, thanks for seeking clarity! You will need to request a letter from your English pension confirming how much you will be paid (in pounds) and the frequency. Once you give this to Centrelink they can then review your pension and recalculate accordingly. Depending on your situation there may not be any impact at all but you still need to declare it to Centrelink either way.
I am 72 years old and receive the age pension.
I am also a sole trader (handyman) and earn money doing small jobs
My question is: the money that I have to declare to Centrelink is it gross or after expenses?
Do I declare it weekly or Monthly?
Hi Stan, thanks for reaching out! When you are self employed Centrelink do allow some deductions from your gross income and then assess you on the remaining amount. The best thing to do is provide them with a profit & loss statement (P&L) to clarify your situation. In terms of frequency this is up to you. You can lodge a new P&L as often as you like, technically Centrelink request updates of any variation in your income and/or assets within 14 days of the change but very few of our customers submit new P&L every two weeks. If you genuinely have a lot of variation then you could do one once a month but if your situation is reasonably stable and consistent you could stretch it out to be every couple of months.