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 confound applicants and result in lower fortnightly payments. These mistakes run the gamut from timing, reporting, complexity of the means test and partner rules to how 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 waiting to apply until your 67th birthday is not necessary. You can do so up to 13 weeks before. Given current wait times of 2-4 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 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 are now 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 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.
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Were you aware of all of these potential Centrelink mis-steps?
Are there any others you feel our members might like to know?
Another good article,thank you. Im now on a part pension and could have been on it much earlier if Id known that a partner’s assets ie superannuation arn’t assessable until the partner reaches age 67. I learnt this recently from a friend in a similar situation to me
this year I will be 65 and my wife will be 62 and both past our super preservation age and we own our own home. my super is just over 445k and in order to maximise my potential to receive full age pension when i turn 67 for the 3 years until my wife turns 67 i would like to move some of my super to my wife’s super. hers is around 440k. we are both currently unemployed and receive jobseeker payments. can we move the super from me to her while both on jobseeker or does one or both of us have to go off jobseeker benefit.
Hi Karen, our specialty is the Age Pension and Commonwealth Seniors Health card so I can’t be certain of impacts to Jobseeker. I’d recommend calling Centrelink on 132 850 to be safe.
I have just applied & was told our combined income was too much but cant understand why. went in & made minor changes & now get 95% complete on application but can’t talk to anyone(surely i dont hav to psy $155 to do so???) to rectify that.
Hi Jeremy, I logged in and had a look at the data entered and based on the numbers provided the outcome is correct. You can LOGIN and review what you have input in case you made an honest mistake or you can book a consultation with us HERE.
Hi, my wife and I are retired and receive a part pension. We own our home, have some shares and some cash in the bank. We also both have some money invested in super funds. Is there any benefit in putting more cash into super at this stage?
Hi David, there potentially is benefits but to be sure we’d need to understand more about your situation. CLICK HERE to book in an appointment with one of our specialists.
I have only just been advised that you can be taxed on your pension. I still work part time and receive a part pension.
So, when doing my yearly tax return is it true they add your pension to your work pay and calculate your tax payable on the total, leaving me with a tax bill.
Hi Graeme, if the Age Pension is your only source of income then you do not have to pay tax on it however if you do work then yes the Age Pension becomes taxable.
I also work part time,13hour a week.I nearly had a hart attack when I was told I owed $3,425.00 tax last year.I was so shocked.i thought the government wanted us to go back to work..Hence the work bonus.
How are your reps on the rights of a kiwi (non Australian citizen) who is in a failing 14 yr relationship with a gold card Veteran? .. he 72 her 69. I would want to talk to someone who knows details in regard to the above for my $155 half hour.
Hi Robyn, we are familiar with the residency rules/criteria and also the potential ability to use our Social Security Agreement with New Zealand so that the time spent in NZ can count towards the test. I am confident if you book a consultation (HERE) we will be able to clarify the options available.
Can an article be written on how to assess annually the level of assets as they reduce to in order to be below the limit of $301,750?
Hi I’m on the work bonus pay some tax from working and still get the full age pension when i do my tax I’ve got a payment summary from centrelink and no tax payed from it is all ok
When should you start the application process for the Age Pension? I am 65 and thought that I would apply 13 weeks before my 67th birthday.
Should I do this sooner? Also when do I stop work? I currently work 4 days and need this income. Do I wait to get the pension before retirement?
Hi Geniene, you should apply 13 weeks prior to meeting all of the income, asset, age and residency requirements. If your age is the only hurdle then 13 weeks prior to turning 67.
I am confused. if I have 400k in super, does Centrelink class the whole amount as an asset, therefore I am not eligible for the pension at 67?
Hi Mandy, you are correct that Centrelink will class the whole amount of your superannuation as an asset however if the balance was $400K as you said and there are no other assets then you would still be eligible for some Age Pension, just not necessarily the full pension depending on your relationship and living status’.
I am 67 at the end of this month.
Until 10 years ago when I met my now husband, I would have been eligible for a full pension.
For years I was a high earning, high tax paying individual. My massive contribution over the years into the pot of $’s from which the govt divvies out social welfare payments has no relevance to me now as I dared to marry a younger, high income earning person whose salary precludes me from being pension eligible.
My super paid out mortgages so we are debt free. Nice position to be in but again my hard work and contribution to the welfare of others via tax for years and years now means nothing in terms of my receiving any govt financial “reward”.
The system is appalling. I keep working and in doing so support others yet receive none myself.
Explain the fairness of this if you can.
Hi Liz. The aged pension is as safety net for people who do not have any other means to support them in their old age, not a “right” for everybody even when their household still has a high-income earning member. Since you have had a high-paid working career you should have provided for your old age to live comfortably, whereas many others haven’t been so blessed.
Hi there
Great read. I am eligible for a part pension in November this year. I will be 67. I will continue working until the end of September. How can I put in my application 13 weeks early in August and it be accurate for Centrelink.
Hi Lynn, great job planning ahead! You would prepare and lodge your claim based on your situation on the day of lodgement and then update Centrelink as that changes. If you would like to use our service to help I would recommend booking in a phone application HERE so we can guide you through the process.
i receive a fortnighly payment from my government defined superannuation policy. i do not have any visibility of its total value as the fortnightly payment was based on a percentage of my final annual salary. How do i calculate this as an asset.
Hi Peter, great to see you taking proactive steps to understand how you will be assessed! Thankfully you don’t have to worry, defined benefit pensions like yours are only assessed as income based on the amount you receive. Centrelink understand there is no total value/balance and so they should not treat it as an asset.
If I decide to retire overseas (India), can I still receive Age pension?
Hi Kalpesh, the short answer is yes you can but there are a number of rules and potential pitfalls that you should be mindful of. I recommend either doing your research or if you would like us to explain it all then you can book a consultation HERE.
I’m 74 currently working full time and earning too much for the Age Pension, my partner 64 does not work or receive any form of income. I’m wanting to part-retire as of Jan 6th 2025 and reduce my work to 4 days/week.
The issue I have is working out if I will be eligible for a part pension ( Asset test is no issue). As of Jan my pay will reduce to below the upper threshold ( per month ) but for the financial year ( 2024/2025) will still be over the max, due to earnings between July and December. Do I have to wait until 2025/2026 to claim?
Hi Warwick, thankfully for the Age Pension, Centrelink assess your situation as of the day you lodge your claim moving forward. So you will not be penalised for having earnt a higher salary in the months prior to applying.
So still not clear ?,. If I plan to change from 5 days a week to 4 as of Jan 6th and I need to apply 13 weeks in advance, do I declare my earning as of anticipated or actual?
I will be making an appointment with you guys, just like to be informed before
Hi Warwick, we would declare your salary as it is on the day you lodge your claim and then when it reduces we would inform Centrelink. We’d also tell them when lodging of the upcoming reduction in days/hours just to make the transition as easy as possible for them to process.
Is revenue from term deposits counted when applying from the pension and also for tax purposes?
Term deposit interest payments are not assessed as income, Centrelink applies their deeming rate to all bank accounts and other financial assets to determine how much income they generate. CLICK HERE to read more about deeming.
We are 69 and 73 yo. We have a part pension received with you help with application. We have no income so it is asset based. We use our super as income and have some in investmment account. My query is as time goes on and we use these for income ,so we would have less assets will our pension go up. Do we have to report to centrelink at any particular time when circumstances change?
Hi Louise, Centrelink request that you notify them of any permanent increase or decrease in your assets of $2,000 or more within 14 days of the change occurring. The one exception to this though is your superannuation but only if you are with a registered super fund and not a Self-Managed Super Fund. If you have a SMSF then you need to update Centrelink yourself but otherwise all super fund companies in Australia update Centrelink twice per year in March and September.
I work part time and receive part pension but I then get taxed on both ??? Please tell me how this works and any way to stop me having tax- it does not make sense as I am still contributing BUT then have a tax bill?? It was over $2000 last year and I had to do a payment plan
Hi Amanda, we recommend speaking with a tax agent to understand your options
Can I submit an application for age pension and continue to work or do I need to retire before applying for age pension?
Hi Sergio, you don’t necessarily have to retire to apply, it depends on your income. If you refer back to the eligibility report we sent you on 19th July it includes the applicable thresholds.
I turn 67 in April 25. Based on data I have entered into your Age Pension Eligibility Calculator it states that I am eligible for a Part Pension in Jan 2025. Does this mean I should apply 13 weeks before Jan or is Jan the earliest I can apply. Thanks
Hi Geoff, our calculator factors in the 13 weeks for you so you should look to apply in January 2025.
I would just like to say how delicately Karen Court (19/07/24) responded to Liz’s Question (17/07/24). It reminded me of how fortunate any of us are who don’t have to live out our life on the Age Pension. Life options for the Age Pensioner are extremely limiting, often living in unsuitable & insecure accommodation & unable to afford regular healthy food.
Good morning . Apparently I have too many assets for a full or part pension. is it possible to get just the aged pension card itself. After a lifetime of working and paying taxes which I am still doing , I would love a cut on car registration, rates and utilities
Hi Edna, the Age Pension and the Pensioner Concession Card are a package deal so if you do not meet the criteria then you cannot receive either.