Tag Archives: Age Pension

Millions to get more Age Pension starting from 20 March 2024

By Robert Wright /May 28,2024/

Government Age Pension payments increased on 20 March, so if you’re one of the millions of eligible Australians, you’ll have a little more to spend.

The increases are designed to help address inflation and cost of living increases. Here’s what happened.

Age Pension payments increase in March 2024 due to indexation

Here are the maximum Age Pension payment rates that came into effect from 20 March, which are paid fortnightly, along with their respective annual equivalents. Single payments rose by $19.60 per fortnight, while combined payments for couples increased by $29.40.

Maximum Age Pension payments from 20 March 2024

  Fortnightly* Annually*
Single $1,116.30 $29,023.80
Previous payment $1,096.70 $28,514.20
Couple (each) $841.40 $21,876.40
Previous payment $826.70 $21,494.20
Couple (combined) $1,682.80 $43,752.80
Previous payment $1,653.40 $42,988.40

*Includes basic rate plus maximum pension and energy supplements

The payment rate increased 1.8%, indexed to inflation. Payments last increased in September 2023 and are likely to change again when they are next assessed this coming September.

Tip: Depending on how much super you have, you may be eligible to receive Age Pension payments in addition to income from your super savings.

Income and assets test thresholds increase for the Age Pension

The government reviews the Age Pension income and assets test thresholds in July each year. The upper thresholds also increase in March and September each year in line with Age Pension payment increases.

Whether you are eligible for the Age Pension depends on your age, residency and your income and assets.

If your income and assets are below certain limits (also known as thresholds), you may be eligible.

When determining how much you’re entitled to receive under the income and assets tests, the test that results in the lower amount of Age Pension applies.

Here are the income and assets test thresholds that apply as at 20 March, compared with previous thresholds.

Assets test thresholds comparison

The lower assets test threshold determines the point where the full Age Pension starts to reduce, while the upper assets test thresholds determine what the cutoff points are for the part Age Pension.

If the value of your assets falls between the lower and upper assets test thresholds, your entitlement will reduce.

The higher your assessable assets, the lower the amount of Age Pension you are eligible to receive.

Your family home is exempt from the assets test but, your investments, household contents and motor vehicles may be included.

Asset test thresholds from 20 March 2024

  Full Age Pension limit Part Age Pension cutoff
Single – Homeowner $301,750 (unchanged) $674,000
Previous threshold $301,750 $667,500
Single – Non-homeowner $543,750 (unchanged) $916,000
Previous threshold $543,750 $909,500
Couple (combined) – Homeowner $451,500 (unchanged) $1,012,500
Previous threshold $451,500 $1,003,000
Couple (combined) – Non-homeowner $693,500 (unchanged) $1,254,500
Previous threshold $693,500 $1,245,000

Income test thresholds comparison

The lower income test threshold determines the point where the full Age Pension starts to reduce, while the upper income test threshold determines what the cutoff point is for the part Age Pension.

Income includes things like payment for employment or self-employment activities, rental income, and a deemed rate of income from financial investments such as managed funds, super (if you are over the Age Pension age) or account-based pensions commenced after 1 January 2015.

Income doesn’t include things like emergency relief payments.

Income test thresholds from 20 March 2024

  Full Age Pension limit Part Age Pension cutoff
Single $204 per fortnight (unchanged) $2,436.60 per fortnight
Previous threshold $204 per fortnight $2,397.40 per fortnight
Couple (combined) $360 per fortnight (unchanged) $3,725.60 per fortnight
Previous threshold $360 per fortnight $3,666.80 per fortnight

If you have income between the lower and upper income test thresholds, your entitlement will reduce as your level of income rises.

For example, the Age Pension payment for a single person earning more than $204 per fortnight will reduce by 50 cents for each dollar earned over $204.

For a couple earning more than $360 per fortnight combined, the Age Pension payment for each person will reduce by 25 cents for each dollar earned over $360.

Tip: The Work Bonus may allow you to receive more income from working, without reducing your Age Pension.

The maximum Work Bonus balance that you can accrue is $11,800.


Source: Colonial First State

7 age pension traps to avoid

By Robert Wright /June 03,2022/

After a lifetime of hard work, it’s important you maximise your entitlements in retirement. So you need to structure your finances carefully to make sure you don’t lose your age pension. After all, you’ve earned it. Here are some common traps to be aware of.

Helping loved ones out

It’s only natural to want to help younger family members get a leg up financially. But if you’re nearing or already in retirement, you need to be careful how you go about this, as you could inadvertently affect your age pension entitlements.

If you’re thinking of giving money, the rules are you can gift $10,000 per financial year, and no more than $30,000 over a five-year period.

Any excess amount is counted as an asset, and deemed to earn income, for a full five-year period from the date of the gift.

Buying property

With house prices so high and home ownership getting out of reach for younger Australians, it’s no surprise that many parents want to help their kids get a foot on the property ladder. But with property you need to be extra careful in how you set things up.

Let’s look at an example. A couple aged 55 want to help their daughter buy her first home. Without taking advice they buy a 50% share of a house worth $500,000 so she can obtain a loan.

Fast forward 12 years and the house is now worth $1,000,000, of which their half share is $500,000. Their other financial assets are worth $700,000 so they believed they would be eligible for a part age pension. To their dismay they discover their equity in their daughter’s home has taken them over the assets test cut-off point, meaning they won’t be getting any age pension from the Government.

So what can they do? If they transfer their ownership share to their daughter the capital gains would be as high as $125,000 after the 50 per cent tax discount, on which capital gains tax could be as much as $50,000. And they would have to wait five years to qualify for the pension because Centrelink would treat the $500,000 as a deprived asset. The total value of the capital gains tax and the lost pension could be as much as $150,000!

If they’d been aware of the trap, or taken advice, they could have gone guarantor for their daughter, possibly putting up their own home as part security, and this would have had no effect on their future pension eligibility. Alternately, they could have transferred their ownership to their daughter at least 5 years before they became eligible for the age pension. They still would have had a capital gains tax liability, but at least the 5-year period for counting the gift would have elapsed by the time they applied for the age pension.

Borrowing against the family home to invest

If you’re already, or about to be, on the age pension, purchasing an investment property with the loan secured against your family home (primary residence) can be a trap.

Normally, the debt against an investment asset—for example, an investment property—is deducted from the asset value when working out whether you’re eligible for an age pension. But if the mortgage is secured against another asset like the family home, then the gross amount is counted. So this may affect your age pension as the full value of the investment is counted as an asset.

A way to avoid this could be to secure the asset against the investment instead.

Downsizing the family home

If you’re thinking of selling your family home and buying a smaller place, there’s an added incentive as the Government is allowing downsizer contributions into super for eligible Australians of up to $300,000.

But there could be a Centrelink sting in the tail, as you’re converting an exempt asset (the family home) into a counted asset (money left over) that could affect your eligibility for the age pension.

Let’s look at an example. Ray (70) and Gina (67) receive close to the full age pension, based on their assets and income.

They want to downsize their family home, which they could sell for $2.5 million. They’d prefer to buy an apartment closer to their kids for around $1.5 million.

If they go ahead, they’d have surplus assets of up to $1 million, which will either considerably reduce their age pension, or cut it off altogether.

By consulting their financial adviser, Ray and Gina could decide either to proceed as planned, or perhaps buy a more expensive replacement property and have less surplus capital, with less of an impact on their age pension.

And their adviser could help to invest the surplus capital to generate an income—for example, by making downsizer contributions into super and starting an account-based pension.

There’s plenty to think about if you’re looking at downsizing, so you might want to get some advice.

Leaving a bequest in your will

Many retired couples leave all their assets to each other in their wills if they pass away.

While this is perfectly understandable, it could cause grief to the surviving partner if their age pension is reduced or lost altogether. The asset cut-off points for singles and couples are quite different—$595,750 for a single person and $901,500 for a couple.

Let’s look at an example. Jack and Jenny have assessable assets of $740,000 and are getting around $11,800 a year in age pension payments. Jack dies suddenly and leaves all his assets to Jenny, taking her over the assets test limit for a single person and she loses the pension entirely.

Unfortunately, Jenny can’t get around this by passing the assets on to their children. If you’re a named as a beneficiary in someone’s will, and you gift it away to, say, your children, it’s still counted as part of your assets and subject to the income test for the next five years.

If Jack and Jenny had consulted a financial adviser, one solution could have been to leave specific assets to their children and bypass the surviving spouse altogether.

Starting a super income stream early

If you start a super income stream once you reach preservation age and before you reach age pension age—for example, as part of a transition to retirement strategy—it could affect your entitlements to Centrelink allowances like Jobseeker. So it’s important to get financial advice.

Advice can make all the difference in how you set up your super and pension arrangements in general. If you have a younger partner, one option could be moving assets into super as a non-concessional contribution for the spouse who is underage pension age.

The amount placed in super for the younger spouse is preserved until they meet a condition of release. This may work well if their condition of release is only a few years away but could be a concern if there’s more of an age gap.

Changing account-based pensions

If you’ve been receiving an account-based pension (ABP) for a while, you should be aware of a change made on 1 January 2015 which impacted how much income from the ABP is counted towards the age pension income test.

If you were in an existing ABP you were exempt from the new rules—but only for as long as you continued with the same provider.

So if you change providers you could inadvertently reduce your age pension entitlements.

A financial adviser can help work out the best option for your particular circumstances—the benefits of a new ABP or the higher age pension.

Setting up a family trust

If there’s a family trust or private company involved in your affairs, the rules are even more complex, so you’ll need expert advice before applying for the age pension.

Source: AMP