How can you best manage the connection between Age Pension entitlements and income from superannuation? This combination of retirement incomes can be extremely challenging to understand. The first step is to have a thorough understanding of the Age Pension. This includes:
- How to apply
- what the rules really mean and
- what your expected entitlement will be.
Based on this last calculation, you can then consider the many ways of managing superannuation withdrawals to complement Age Pension payments or, to reply upon 100% in the early years of retirement before your eligibility finally kicks in.
Today we step you through everything you need to know to fully understand your current eligibility. And then how to manage an application if you believe you will qualify.
What is the Age Pension?
The Age Pension is the main income support for older Australians. About three-quarters of those who are aged above 67 receive either a full or part Age Pension. This is received in a fortnightly payment from Centrelink, the agency which processes Age Pension applications and payments on behalf of the responsible Federal Government department, Services Australia.
Who can receive the Age Pension?
Eligibility is determined by a range of factors. The first two are age and residency. From 1 July this year, you must be aged 67 or older. You must also have been a resident of Australia for at least 10 years. At least 5 of these years must have been continuous.
Understanding the means test
The next major hurdle to overcome is means testing, which is calculated using both an income and assets test. If you fail either of these tests, you will not qualify. And if you do meet both tests Centrelink will apply the test which gives you the lowest amount of Age Pension. .
The income testis based upon income you receive including employment, rent, business income and other types of pensions.
As well as ‘deemed’ income which is a calculation of what you are likely to have earned from a range of investments, i.e. your assets.
Assessed assets generally include bank deposits, super, shares, property and home contents.
The family home (i.e. where you live) is exempt from the assets test.
Here are the current income and asset thresholds, which you will either ‘pass’ or ‘fail’.
Maximising entitlements within the rules
This is where Age Pension eligibility can become challenging. There are a whole raft of rules that can be used to restructure assets in order to achieve eligibility. For instance, you may be overstating your old car (a deemed asset) based upon sentimental value. That beloved Morris Minor may seem priceless to you, but valuing it at $70,000 is simply unrealistic when a similar model can be purchased for $18,000 on carsales.com.au. If you are one half of a couple, it’s vital that you know about the younger partner rules as re-organising assets such as the status of their super (and the amount of yours) could increase your likely payments. Similarly, knowing what to state as an asset and/or income is critical. Many applicants miss out on Age Pension eligibility as they double state their super – as an asset as well as the income stream they currently receive from it. Centrelink only needs this reported once (as an asset), so it’s important not to shoot yourself in the foot in your application. There are many more such details which can result in a knockback, so understanding how rules are interpreted matters a lot.
When can you apply?
As noted, you need to be of Age Pension age (67 for those born after 1 January 1957) in order to qualify. But you can apply up to 13 weeks beforehand, which means you won’t miss a single week of pension entitlements if you do qualify.
How can you apply?
There are a few ways to start your application. Here’s five things you can do to get underway:
Check eligibility
First up, it will help to check your likely eligibility in case you are so far over the income and asset thresholds that you will not be successful for a long while yet. You can use the Retirement Essentials free Age Pension Eligibility Calculator to see how you are likely to go. Assuming you are eligible, or nearly so, next step is to start an application, which can be done in one of three ways – online, in person, or with assistance. It will help if you have a MyGov account, and a Centrelink Reference Number (CRN) already in place.
Applying in person at Centrelink
Assuming you are able to reach a local Centrelink office, you can visit the office to apply in a face-to-face appointment. You will need to prepare, of course, by downloading the 26-page form, filling it in as best you are able, and collecting all required documents (identity, income, residency etc.). Some Centrelink offices will require an appointment to be made, others will see you on a walk-in basis. The Centrelink Officer present will check your application and documents and upload them for appraisal or request further information.
Applying online
This is the method that Centrelink would prefer you to use. Again, starting with a MyGov account and Centrelink Reference Number (CRN) means you can go directly to the application and work your way through the online forms and document uploads. Is this an easy process? It depends. For some people, it may be fairly intuitive and straightforward. Others can find it frustrating, confusing and have issues with uploads, which is quite a common story. Further confusion can stem from questions about partners and definitions of what are assets and what is income.
Applying with support
Retirement Essentials offers three main forms of support with Age Pension applications:
- Entitlements consultation – a 30-minute phone consultation to answer questions and support your application
- Strategy consultation – 55-minute video meeting to review of your retirement income plans and goals and support to understand the trade-offs you may wish or need to make, followed up with an action plan
Keeping up with the changes
Age Pension rates, thresholds and deeming rates can change every year. There are two rates changes scheduled annually – on March 20 and September 20. Sometimes thresholds will change as well on these dates. Separately asset thresholds and deeming rates and thresholds usually change on 1 July. Retirement Essentials reports all changes before they come into effect. We also update our calculators so that your eligibility and payments can be safely checked ‘in real time’. Keep your eye on your inbox as we advise all such changes by email as soon as they are available.
What’s your situation?
What’s your experience of applying for an Age Pension been like?
Or have you yet to apply? Feel free to share good experience, bad experiences and any concerns in case we can help.
I am in the process of filing out a form. Lots of challenges and yes filling out the form understanding the income and asset test done my head in
Hi David, well done on pushing forward, many retirees miss out on Age Pension due to delaying their claim. If you wish to apply on your own without us but would like some help just getting the form filled in we can help talk you through it via a CONSULTATION.
hello, just wondering if you have information on retirees moving into another country regarding their age pension and what are the rules etc.
thank you
Hi Ber, thanks for seeking further support! We have +100 articles available on our website for you to search and read through HERE.
That link is useless. 100+ articles? Why not just say it in plain language. PAY up and we answer your question.
Hi Mr Swann, I apologise as it appears I have offended you. The link I gave goes to our ‘Articles’ page, where you can search through our catalogue of articles for topics of interest, such as the rules around travelling overseas whilst on the Age Pension which the previous comment was asking about. There is no payment required to do this, I was trying to help the previous commenter (and any other readers) to navigate our site and find content of interest to them.
I have applied and been rejected. I’m repatriating after living in the United States since 1986. Centrelink claims I never supplied all the documents. Problem is I don’t know what documents are missing they haven’t told me. I’m trying to email them but after looking a couple of times for the appropriate email address, I haven’t found it. It’s really has been a long and tedious process up loading all those documents and now I’m at a loss as to how to proceed.
Hi Gregory, thank you for sharing your experience and I’m sorry to hear how hard it has been. You can stop trying to find an email address for Centrelink as they do not offer support via email. You have to either call them (132 300), visit a branch in person or write to them. We would be happy to help you prepare and lodge a new claim whereby we can help you and liaise with Centrelink to ensure all documents are provided. We will send you an email separate to this comment with the services we offer for you to review.
My husband’s application has just been approved 16 weeks after applying and 6 weeks after we were initially advised when the application would be finalised. It has only been finalised since we got our local member’s office to intervene. We are lucky that we were not totally reliant on it but that seems to be the point. Only applications for people expecting the full pension or with almost nothing in the bank are being processed in a timely way.
I have 2 queries.
1) If you get a part pension because of the assets test and the value of the assets drops ( eg you withdrew a large sum from your super and blew it on a round-the-world trip) when does Centrelink recalculate what your pension should now be and how do they do it?
2) How does Centrelink calculate your part pension entitlement if your income fluctuates wildly over the year?
Hi Graham, thank you for seeking additional clarity! Thankfully I have answers for both of your questions.
1) Centrelink will recalculate your pension once you update them on the new asset balance. You could update them once a month if you really wanted to and they would recalculate your payment each time.
2) If you are earning income then Centrelink will ask you to report it each fortnight. This way they can adjust each fortnightly payment up/down in line with your most recent income.
Hi
I reach 10 years residency in Australia on the 14 Sep and will be eligible to apply for full pension based on Assets and age. Please advise when I should put in my application . Would it be 14 weeks ahead ?
Hi Oenone, congratulations in advance on reaching this important milestone! The ability to lodge your claim early can only be used to apply prior to turning Age Pension age. You cannot apply 13 weeks prior to meeting the income, asset or residency requirements so you will need to wait until 14th September before lodging a claim or it will ultimately be declined.
I will be entitled to a UK pension in 5 years (at 67). I have the option to buy additional years missed to increase the amount from 55 GB Pounds per week to 165 GB pounds per week.
An adviser told me to buy up the extra years as it’s good value but I am not convinced. If this UK pension income is counted as income in the local assets test and could impact my Australia pension, it hardly seems worth it. Does anyone have any experience/advice?
Hi Gary, thank you for reaching out. This is an interesting prospect and it is definitely important to be informed before making these types of decisions. Weighing up the foregone funds in exchange for an increased foreign pension and then calculating how this might flow on to potentially affecting your Australian Age Pension benefits, I would be happy to go through all of this in greater detail with you in a consultation. A General Consultation (45 minutes) could address the short term/immediate things to consider or our Strategy Consultation (1 hr) we can deep dive and look at the long term differences of each scenario. You can schedule either of these by clicking here. Thanks, Megan
Can I apply for a pension if my husband has to work 1 year longer than me?
Hi Mary, it’s Sharon here, the short answer is yes. To be eligible as a couple, the Income Test and Assets Test are both applied, you need to qualify under both, and if your combined household income is beneath the Income Test threshold, you are able to receive some Age Pension. When your husband ceases employment, your Age Pension payments may increase if you are paid under the Income Test. I’d be happy to explain this further and speak with you in a personalised discussion. If you would like to book a General Consultation meeting with me this can be booked here
I have completed the on-line eligibility and it shows that I would NOT be eligible for an aged pension. This is based on our combined assets.
If I do go ahead and apply to Centrelink and my application is rejected. Do I then need to re-apply or can I just update details as circumstances change?
Hi Graham, thank you for seeking clarity! The answer is that you would need to lodge a whole new claim and answer any/all questions again. Once you are on the Age Pension you can provide simple balance updates as you go to have it recalculated but to actually be approved you will need to lodge a full claim.
Hi there, Is that an error on your Full Age Pension Rates on the page found on the link? It reads $1604.00 per fortnight for both the Single and the Couple rate. Cheers.
HI Patricia, thank you for the spot check! I believe you may have misread the numbers as they are different but very similar. The full Age Pension for singles is $1,064 however the full Age Pension for couples is $1,604 with the 0 and 6 swapped around.
I’m retired at 67 4 months, my wife is retired at 65 5 months. We both draw down our separate Aware super accounts as income until we get the age pension as well. I pretty much have my head around aged pension and super entitlements for years. I have managed our super pretty well since 2016. I always used the ASIC retirement planner to ensure we withdrew the correct super amounts each until we could receive the age pension as well to ensure maximum amounts. It is (or was) a handy tool to ensure the correct amounts were withdrawn so our super lasted for 25 years. This calculator always indicates I am entitled to the aged pension rate of $817 a fortnight year since 1/7/23. BUT. I applied online to Centre link and they rejected my application based on the income test. I checked our combined income level again and it is well under the cut off point they provide. I then use their own Payments calculator on their system using the same income figures I provide all the time, and it clearly states I’m entitled to $417 per fortnight. I then use your calculator using the same income figures and you indicate $217 per fortnight. I have asked Centrelink for a review and am waiting. Firstly, why is their so much difference on the 3 calculators. Secondly, should I then wait for a reply from Centrelink before I again apply through you guys. VERY FRUSTRATING INDEED.
Hi Rick, thank you for sharing your situation with us! Presumably you should get the same outcome for any/all calculators if entering all of the same information in the same way. Having said that, there are many nuances to how certain income/assets are assessed by Centrelink and as such there may be certain presumptions made for the sake of making the experience simple and easy for users. Regarding your immediate next steps, given you have already initiated a review with Centrelink we would recommend you see that through first before looking to engage as service such as ours for further assistance.