Getting the Age Pension

 

Who can get Age Pension?

To qualify for the Age Pension, you need to meet certain criteria: 

1. Age – You must be at least 67 years old, although there were transitional rules for older Australians who were born on or before 31 December 1956. 

2. Residency – You need to have lived in Australia for at least 10 years total, including one stretch of 5 years in a row. Some countries (like New Zealand) have agreements with Australia that might let you qualify with less residency. 

How much will you get?

Your rate of Age Pension is based on your and your partner’s income and assets (also known as means testing). Means testing includes: 

• An income test 

• An assets test 

They apply both tests and whichever one gives you the lower payment is the one that applies to you. 

If your income or assets are too high (above the cut-off), you won’t get a pension at all.  

Unlike Jobseeker Payment and Youth Allowance, you may receive a part Age Pension if your assets are within a lower threshold, but not in excess of the cut-off. This allows many retirees to supplement their retirement savings with a portion of the Age Pension.  

Both full and part age pensioners also receive the Pensioner Concession Card to help with the cost of prescriptions and household bills. 

What counts towards the assets test? 

This includes everything you and your partner own, in Australia or overseas. Assets are usually valued at what they’d sell for, minus any debts. 

Some things don’t generally count as assets: 

• Your home and up to 2 hectares of land surrounding it 

• Lump sum amounts paid in Residential Aged Care (also known as Refundable Accommodation Deposits or Refundable Accommodation Contributions) 

• Superannuation in accumulation phase if you’re under pension age 

• National Disability Insurance Scheme (NDIS) payments 

• Pre-paid funeral expenses or funeral bonds purchased for $15,750 or less (but not both) 

• Burial plots 

• Parts of lifetime income streams depending on when they were purchased 

Assets in a private company or trust might count too.  

If you give away more than the allowed amount, that could still be counted as your asset for five years. 

What counts towards the income test? 

Most types of income count towards the income test, including income from earnings, real estate, businesses, trusts or companies. Also, some annuities and defined benefit superannuation funds will be assessed under the income test. Income from foreign pensions may also reduce a person’s Age Pension under the income test. 

Some income may be exempt, such as: 

• Regular payments from a close relative 

• Payments through the NDIS 

• Other payments from Centrelink or DVA 

• Some compensation payments 

To avoid double assessment for Age Pension purposes, most financial investments are subject to ‘deeming’. Instead of including the income that most financial investments actually earn, Centrelink apply a set interest rate to the total value of your financial investments to figure out your “deemed income.” 

Financial investments subject to deeming include:

• Cash and money in bank accounts 

• Term deposits and debentures 

• Shares (but not ones in private companies) 

• Units in managed funds 

• Money you’ve lent to someone 

• Insurance bonds and friendly society bonds 

• Gold and bullion 

• Gifts made over allowable thresholds 

• Superannuation (if you’re over pension age and it’s still in the accumulation phase) 

• Account-based pensions started after 1 Jan 2015 – or earlier if you haven’t been getting benefits continuously since 31 Dec 2014 (referred to as grandfathered pensions) 

This deemed income is then used in the income test to help decide how much pension you’ll get.  

Not all financial investments are subject to deeming, such as defined benefit superannuation accounts and grandfathered pensions (discussed above). 

The Work Bonus also reduces assessable earned income from employment as an incentive for older Australians to continue to work beyond their retirement age if they wish to do so. 

When and how to apply

You can apply for the Age Pension up to 13 weeks before your 67th birthday. That gives Services Australia time to process the claim and ask for any extra information if needed. If making an early application, payments would commence from your 67th birthday. 

If you apply after turning 67, your payments will start once your application is processed, but they can be backdated to when you first submitted the claim and associated information. Just make sure you’ve answered all the questions and uploaded all documents requested of you initially. Services Australia may request further information from you before they make their determination. 

What if you’re rejected?

If your application is unsuccessful, you’ve got 13 weeks to appeal. You might need to send in more information or clear up any misunderstandings. If your appeal is successful, your payments will be backdated to your original lodgement date (or your 67th birthday, whichever is later). 

Keeping things up to date

If something in your life changes (like your income, assets, or living situation), you need to tell Services Australia within 14 days. If you do, your payment will be adjusted from the date the change happened. 

If you wait longer than 14 days, the new payment rate will only apply from when they process the update – not when the change actually happened. They may also raise a debt if there was an overpayment and the information was not provided within the allowable timeframe.