Age Pension explained

The Age Pension remains the backbone of Australia’s retirement income system. It was first legislated in 1908 when life expectancy for men exceeded the pension age of 65. Women were only added to these entitlements two  years later, but could qualify from age 60. Since that time there have been extensive changes to this vital source of retirement income, but it continues to deliver extremely reliable income support for older Australians. It is administered by Services Australia (the Department of Social Services) and delivered through its agency, Centrelink. Over time the face-to face-dealings with Centrelink staff have given way to digital communications. This happens through the myGov website which amalgamates many Commonwealth Government services, including Centrelink, Medicare and the Australian Tax Office (ATO).

Most retirees receive an Age Pension

Currently the Age Pension provides income to almost seven out of ten Australians who are aged 67 or older. By the time older Australians reach their 80s, 80% will receive Age Pension payments. This is largely because, by then, they will have reduced their savings by spending during their earlier retirement years. An Age Pension entitlement is not just a fortnightly payment. It also offers two supplements and those who are eligible will automatically receive a Pension Concession Card which gives recipients reduced medical and pharmaceutical costs and energy, transport and travel discounts.

Who can get the Age Pension?

Eligibility depends upon a few factors. The most important are your age, your residency and your ability to pass the means test. 

On 1 July 2017, the minimum age for both men and women to qualify for the Age Pension began to increase. For those born on or after 1 July 1952 the pension age reached 67 on 1 July 2023. No further age increases are currently legislated.

On the day that you apply for an Age Pension you must be physically in Australia, living in Australia and an Australian resident for at least 10 years (five with no break). Other conditions may also apply.

Means Testing

The Means Test includes both an income and assets test. You must pass both tests in order to be eligible. The limits for a full Age Pension and a part Age Pension vary and can often change. This here’s how the Income and Asset test limits work.

How much will you get?

The Age Pension rates for a full Age Pension are:

Per fortnightSingleCouple eachCouple combinedCouple apart due to ill health
Maximum basic rate$1,002.50$755.70$1,511.40$1,002.50
Maximum Pension Supplement$80.10$60.40$120.80$80.10
Energy Supplement$14.10$10.60$21.20$14.10

The amount you will receive is determined by the current income and asset test limits, but even $1 per fortnight of a part-Age Pension entitlement will allow access to the Pension Concession Card.  Age Pension rates are reviewed twice a year, in March and September in line with the cost of living, the price of goods typical for older households and the current average male weekly wages. These adjustments ensure that those receiving Age Pension benefits are kept in touch with earnings across the broader community. Payments are made fortnightly direct into recipients’ bank accounts. Australians living overseas receive payments fortnightly or monthly, depending upon the length of time that they have been away.

Keep an eye on your entitlements

Even if you aren’t eligible today, it’s highly likely that you will become eligible for at least some pension payment at some point during your retirement.  This is worth bearing in mind as you consider your retirement spending plans. Retirement Essentials members can now access a Safe Spending Simulator which helps you understand how long your savings will last and how they combine with Age Pension entitlements. You can also check your eligibility at any time using the Retirement Essentials Age Pension Eligibility Calculator. 

What else do you need to know?

The Age Pension rules do change a lot and can have a complex interaction with other forms of retirement income including superannuation income streams, annuities, employment income and gifts and inheritances. It’s important to stay up to date with those aspects of the Age Pension that may affect you. Retirement Essentials covers all the information you need to know in our weekly enewsletters so if you are not already receiving them, you can subscribe here.

Don’t forget, if you do receive a benefit, it’s your job to keep Centrelink up to date with any and all changes in your financial situation. This includes changes to income, assets, your housing situation and your partner relationship. Not doing so could prove costly.

Do you need support?

Retirement Essentials offers many different forms of support for those who are receiving an Age Pension as well as those who wish to apply:

Check your eligibility using the free Age Pension Eligibility Calculator at any time

We can also help you complete your application over the phone.

All too confusing?

Our goal is to put you in control, which is why we provide so much information for you.  But sometimes it’s helpful to speak to an expert.  We know because we speak with thousands of people just like you every year.

If you have questions, why not book a 30-minute consultation now.  At a cost of only $75 it will be worth the peace of mind alone!

Book your consultation now.

Any other aspects of the Age Pension that you don’t understand?

We’re here to help, so do let us know if there are any other aspects of the rules that remain a mystery.