How will these affect you?
Last week we confirmed the 20 March Age Pension rate increase of $4.60 (singles) and $7.00 (couples combined) for 20 March. This week we are pleased to confirm that all Retirement Essentials calculators have been updated with the new rates, ready for you to access.
Many people might dismiss the $4.60 per fortnight for singles as barely covering a cup of coffee. It’s even less in the case of couples. Yes, it’s true this is a small increase. Even lower, however is the increase in the Commonwealth Rent Assistance (CRA) maximum payment which amounted to less than a dollar, despite rental increases in 2024 of nearly 7%.
It is possible that this is the full extent of relief Age Pensioners will be given until the next round of indexation in September. But given the proximity of an early Federal Budget (March 25 brought forward due to the election by mid-May), it’s also a strong possibility that extra cost of living relief specific to older Australians will be included in this early Budget.
In the meantime, how to view these changes? As they say in the classics, it’s often not what you’ve got, rather what you do with it. And whilst that may sound flippant, far from it. Because buried in the detail of the base rate changes are further changes, which can help you review what you’ve got and see how to maximise all entitlements.
We’re referring of course to the income and assets test qualifying limits. They are both now more generous, with a $9.20 – $18.40 increase in income limits and asset limit increases of $1500-$2000. There’s a detailed explainer on how these limits work here, but the following is a quick refresher on why these tests matter so much.
Age Pension qualification:
- To qualify, in addition to age and residency requirements, you need to pass the means test
- This test has two halves – the income test and the assets test.
- You must pass both tests, and whichever calculation delivers the lower fortnightly allowance is the one used to define your payments.
- The qualifying limits for both the income and assets tests have increased.
- The limits for full Age Pension payments change on 1 July
What does this mean?
It means that it is very useful to review your situation, whether you are on the Age Pension, someone who has previously narrowly missed out – or if you have yet to apply. You can review your situation quickly and easily by checking your details on the free Age Pension Entitlements Calculator (APEC).
Remember that your income is calculated in two ways – both the income you declare as well as the income received from your financial assets. Centrelink calculates this second amount by using deeming rates.
Are there options if you ‘almost’ qualify?
Yes, those who are ‘nearly there’ have a few options. It’s always helpful to double check your input information – that you haven’t, for instance, entered super as a financial asset (necessary) and then entered Account-Based Pension (ABP) payments from this super as well – in which case you’ve doubled up. You are almost certain to fail to qualify and may never realise why.
It also helps to consider the value you declare on home contents and your car – these items may mean a lot to you, but in the eyes of Centrelink you only need to declare garage sale value on the former, and a reasonable second-hand market value on the latter. Tom benefitted from this strategy.
Apart from these types of errors or over-valuations, there are options for couples to organise both their super accounts to benefit from so-called ‘younger spouse’ rules. There are also strategies whereby you may roll money back into accumulation if it means the household overall can qualify from higher entitlements. Mark and Ros were happy with the difference this made to their annual income.
The message here is that yes, the overall rate of the Age Pension has increased by very little. But changes in qualifying rates for the income and assets test is a really useful prompt to reassess your situation. The true value of an Age Pension, even if a small part-Age Pension, is often overlooked in the concentration on getting high super balances. Age Pension entitlement includes a base rate, a supplement and an Energy Supplement. It is indexed twice a year to keep up with inflation and ordinary wages. And it means you’ll automatically be issued with a Pension Concession Card (PCC).
What Next?
Step One
You can check the updated Retirement Essentials Age Pension Eligibility Calculator for any change in your benefits. If this doesn’t make sense or you need help with your Age Pension eligibility you can find support here.
Step Two
If you are wondering if you could maximise any entitlements by better understanding your own situation and how your super can and will combine with the Age Pension, either a Maximising Your Entitlements or Retirement Advice Strategy consultation will probably help the most. These 55-minute video discussions led by experienced advisers will help you understand the basics and encourage you to test your strategies and decisions.
Were you aware of the income and asset test changes?
Or did you believe it was just the Age Pension base rate that will move up on 20 March?
