Age Pension, income test, means test, retirement, entitlements

A recent popular article on the way asset test changes mean more older Australians are now eligible for the Age Pension provoked a lot of interest. Today we look at the other side of the equation – the March 20 changes to the incomes test thresholds.

When people reach Age Pension age they often continue working, but not always because they really want to. Is this you?

Some have been considering applying for Age Pension benefits but are unsure about how it all works. We can understand this as the rules do look complex and the application process does require a lot of detail and proof of identity, earning and assets.

Or maybe you have previously explored your eligibility and discovered that you have been earning ‘too much’. 

Either way, the March 20 changes in income test thresholds and the indexation of Age Pension benefits, offers a timely reminder to check that you aren’t missing out on benefits that you thought were out of your reach. 

There are two important things to remember about the rules attached to Age Pension eligibility.

The first is that the rules change fairly frequently, sometimes with little notice, but there are regular legislated changes on March 20 and September 20 every year. This is when Age Pension entitlements are indexed and this almost always means an increase in the upper thresholds for qualification for the income test and the assets test. So, for instance, on March 20 this year the upper (disqualifying) limit for the income test for a single person was increased from $2243 per fortnight by $75 to $2318 per fortnight.  The lower thresholds change in July each year.  (see more income thresholds here).

The result is that more people will now be eligible.

The second aspect that makes a difference when people might now be eligible is that benefits are not back paid to when you ARE eligible – you actually need to have applied. So if you are almost eligible, it is important to check in and review your eligibility at least every March, July  and September so that you can apply immediately and not miss out on your entitlements any longer than necessary. (You can check your eligibility now by using Retirement Essentials Age Pension Entitlement Calculator).

Doing so has helped Hassan and Meera to secure their Age Pension. Here’s how it worked.

Both Hassan (70) and Meera (68) were still working.

They had an advice consultation to check their entitlements late last year and at the time weren’t eligible. They heard there were changes to the work bonus earlier this year as well as the income test on March 20, so they wondered if these changes might now make them eligible. They booked another consultation for a review of their eligibility and to understand how these changes might help them in potentially receiving benefits:  

As they were still working, they receive employment income of $74,000 per annum between them. They also have accessible rental income of $300 weekly (or $15,600 per annum) and deemed income of $1,200 per annum. This meant that, Hassan and Meera were not eligible for Age Pension benefits, as their combined income was over the previous threshold of $89,211 per annum. As they were not entitled to the Age Pension they could not previously take advantage of the higher Work Bonus of $11,800.

With the income threshold increase as of 20 March, the allowable threshold is $92,144 pa for a couple. This means that they are now under the income threshold and the Work Bonus (of $11,800 each) comes into effect.

The good news is that Hassan and Meera are now eligible for a part Age Pension, based upon assessable income (after the Work Bonus is applied) of $76,000 per annum. They will automatically receive the Pensioners Concession Card as part of their entitlement.  

It pays to review your situation regularly to check if changes to the Age Pension thresholds or rules – or your own earnings or assets – might affect your overall eligibility.

If it all seems too hard, Retirement Essentials offers affordable entitlement consultations, support to apply for an Age Pension or Commonwealth Seniors Health Card and specific tailored advice consultations. You can learn more about this support here.  

or you can check your entitlements here.