When an entitlement such as the Age Pension has been in place for more than a century, it’s tempting to assume that the rules are well-known and easy to follow. Not so, unfortunately. Every day the Retirement Essentials Customer Services Team hears from retirees who either didn’t know about rules or didn’t thoroughly understand them, much to their financial detriment.
As you know the team at Retirement Essentials is dedicated to helping to make things as easy as possible for those who are planning for or living in retirement. Today we share a summary of five aspects of Age Pension eligibility that continue to confuse applicants often resulting in lower payments. These mistakes range from timing, reporting, complexity of the means test and partner rules to ways to value your assets. Read on to see if it’s timely to check how you are complying with all these different requirements.
1. Timing your application
Most 60-somethings are aware that the eligibility age for the Age Pension is 67. But you don’t have to wait to apply until your 67th birthday. You can do so up to 13 weeks before. Given current wait times of two – four months for applications to be processed, your aim is to receive benefits as soon as you are able. But this doesn’t mean that you should wait until 13 weeks before your birthday to check your potential eligibility. This can and should be done much further in advance. How you manage your money (including your super) for at least the five years prior to retirement can have a major effect on things like gifting, younger spouse options, your access to super and more. Knowing your likely level of eligibility will help to guide your decisions in the lead up to Age Pension age in the most efficient manner.
2. Getting around to it
This is also related to timing. However, procrastination can be much more detrimental than missing out on a month or two of payments. Many retirees simply don’t get around to checking their eligibility or they apply much later than they could have. There is no back pay for this oversight. Yes, just to repeat, even though you may have been eligible years ago, Centrelink will only pay you back to the lodgement date of a successful application. We wrote about this when Geoff, who was out of pocket by more than $70,000, gave us permission to highlight this error. He was philosophical about it, but not everybody would be. It’s a very easy mistake to make if you start retirement self-funded and don’t notice when you have spent your super down to a level that means you have now become eligible. Keeping an eye on changing income and assets limits is useful in this case, as well as changes to deeming rate thresholds. But you still have to apply to make things happen!
3. Double reporting
This is another very common error and that’s because it is far from clear on the application for the Age Pension whether super is an asset, a form of income or both. It is logical to understand it as both, but this can lead to ineligibility as Centrelink does not treat super income as income. That’s right, it requires you to list your super savings (whether in accumulation or decumulation) as a financial asset. Centrelink will then deem this amount to earn a certain amount of income and that is the amount used for the income part of the means test. (Bear in mind that annuities and lifetime income streams are treated differently). If you have previously missed out on the Age Pension and wonder if you did double enter your super, you can quickly and easily check this using the free Retirement Essentials Age Pension Eligibility Calculator.
4. Misunderstanding partner rules
Again, this is very easy to do. Many people who are older than their partners will apply for an Age Pension first and assume they simply enter their own assets. That’s not how it works. Even though you are applying as an individual, Centrelink will assess you based upon your combined ‘couple’ assets. This applies also to couples who are romantically involved but run separate households. In the eyes of Centrelink, they are a couple. Knowing this is important as it means that you can review your assets and check if the ‘younger spouse’ rule might help enhance your eligibility or increase your payments. An understanding super consult can help with this.
5. Emotional valuations
It’s extremely common for those applying for an Age Pension to let their hearts rule their heads when stating the value of their assets. In particular, household contents are often valued in the tens or hundreds of thousands of dollars, when Centrelink only requires a garage-sale valuation, say $10,000 or $5,000. Cars, too, can be overvalued. Their showroom price has little to do with their on-road value. Revaluing your car as it depreciates and reporting the lower value to Centrelink makes sense. Any reduced valuation can contribute to increased payments over time.
Retirement Essentials offers many different tailored consultations for those seeking bite-sized advice to manage their retirement income and entitlements. Two in particular are helpful for those seeking to understand their Age Pension eligibility, how to apply and how to maximise any entitlements they may receive. Understanding the basics of the Age Pension can help set you up for a streamlined entitlements experience – and more income along the way. Why not start by checking your future eligibility using the free Age Pension Entitlements Calculator?
Next you may wish to talk to an Age Pension Specialist in a 30-minute consultation which will:
- Assist you with any Centrelink entitlements questions you may have.
- Help you with specific circumstances relating to your Centrelink entitlements
- Provide confidence that you understand Centrelink’s rules and their impact on you.
- Help you understand more about the application process.
We charge $155 upfront for our consultation discussion
And if you already understand your Centrelink status, you may wish to learn if you can make any changes to your situation to maximise your Centrelink entitlements.
Did you score five out of five?
Were you aware of all of these potential Centrelink mistakes?
Are there any others you feel our members might like to know?
How accurate is the retirement essentials pension calculater. I have entered my details and found that the result is more than what centrelink have assessed. I am married but my wife still has 10 years before she reaches 67 and is working part-time.
Hi William, Centrelink’s rules/formula for calculating the Age Pension are known so I can assure you our calculator is accurate presuming the correct data is entered. There are other calculators out there if you wish to compare or if you think you may not be receiving the correct amount of pension from Centrelink then we could have a consultation with you (HERE) to discuss ways to maximise your pension.
I am on the aged pension.My partner was on jobseeker, but his physical disability made it too hard to meet the fortnighly requirements. His shocking treatment from Centrelink caused him give up his allowance and start to draw down from his super. He is not eligible for the pension for 2 years. Does his draw down effect my pension?
Hi Lyn, yes it potentially will impact your pension. We’d have to ask some questions to know for sure and explain it properly. For further assistance please book a consultation with us HERE.
Hi thinking of getting a new car (under finance). Am I required to tell centerlink and in what way does it affect my pension. Regards Shane. Keep up the good work and have a safe and Merry Christmas.
HI Shane, yes you should advise Centrelink or any changes to your income/assets. If you’d like to discuss the impacts then please book a consultation HERE.
I have a joint mortgage with a friend and we share the house and expenses. We are not romantically involved. Will this effect my pension, plus at 78 I am still working fulltime.
Hi Brian, you may need to provide additional documents to clarify the situation but Centrelink should ultimately recognise you as a single applicant who simply shares expenses and living arrangement rather then has a relationship.
great article, whilst I was aware of most of these it is great to have a refresher and make you have a think about putting things in place early.
Thanks for this positive feedback Richard – it really is important to look ahead, do your forecasts, and adjust your retirement income settings across the retirement journey – so many things can change along the way, warmest, Kaye
Greetings to yous and thank you for your time and for the excellent information and support you provide for us Seniors.
May I ask please, are aged Pensioners after being on the Pension for some time, required to or should they ever submit a Tax Return please?
I have unfortunately, had to in the past, due to the Aged Pension being so meagre, make small withdrawals from what’s left of my Super, to pay some bills even though I don’t drink, smoke or gamble, have worked all my working life since the age of 16 and never been unemployed!
Thank you.
I look forward to hearing back from you please at your earliest suitable convenience and thanks again!
Cheers, all best and a safe and Happy Christmas to you and the team.
Kind regards, James.
Hi James, generally speaking no you would not need to lodge a tax return presuming the Age Pension is your primary source of income. If you still work part-time or casually then yes you may need to lodge one. We recommend double checking with a tax agent as to whether you are required to lodge or not.
Centrelink took more than 12 months to determine my wife’s eligibility for age pension and eventually backdated it for 12 months during this time they continued to reduce my pension due to income she earned and also used out of date asset details. Given my wife’s pension was backdated and approved do they now have to go back and adjust the deductions made from my payments and correct my asset holdings.
Hi Gerard, sorry to hear of the lengthy delays Centrelink put you and your wife through. They will not automatically go back and review your pension payments, you would need to call them on 132 300 to request it.
Good article. thank you. How does Centrelink evaluate or determine myself as the only director of my company that owns a few shares and 2 apartments? appreciate any help.
Hi Damian, we can definitely go through with you how Centrelink assess private companies/trusts via our consultation service. CLICK HERE to make a booking.
Good morning
I am 73 years of age and my husband is 83 years and retired. I still work fulltime but am planning on retiring in March 2025.
My super has been used to pay off the house so I will not have any available to me.
At this juncture, my husband does not receive any benefits at all from Centrelink because of my income but we will both be applying for the age pension in March.
Is it possible for my husband and I to apply for the age pension in advance prior to my retirement? Whenever I go onto the application and key in my income, it immediately deems me ineligible.
Your advice would be very much appreciated.
Thank you
Kind regards
Hi Merrilyn, it is possible to apply for the Age Pension up to 13 weeks prior to becoming eligible so long as you are certain you will become eligible during that period. So in your case you need to be certain that you will retire in March. If so then I would recommend booking a phone application (HERE) so that we can talk through your application and what the process will look like.
Merry Christmas to all at Retirement Essentials
Hubby is 69 finally to tired and ill so retiring in April, we paid off the house and only have about $70000 in super and $90000 in fixed rate savings. I am on ndis and cannot work with carers who look after me when hubby is working, and aged 62, I will apply for jobseeker or if I qualify disability pension when hubby retires
My question is can we leave the money in our fixed rate account or do we have to transfer it to super, as hubby doesn’t feel comfortable changing this as he has terrible anxiety.
Neither of us travel, drink, or smoke, our big spend is day drives and coffee catch ups, so I think pension should suffice with maybe a small drawdown if required
Thank you
Gabriele
Hi Gabriele, our forecasting consultations are great for exactly this kind of scenario! Compare the long term pros/cons of each option so you can decide which is best for you. CLICK HERE to make a booking.
can you confirm the relationship criteria please.
If two people are in a relationship but have never lived together or shared finances, they are considered a couple by centrelink.
How do they decide which residence is the investment property and how can it be considered an investment property if it is the primary place of residence?
Hi Sandra, I’d recommend booking one of our Entitlements Consultations so that we can go through Centrelink’s process with you and explain how you specifically would be assessed. To make a booking CLICK HERE.