Age Pension: Income test thresholds rise 20 September 2014

The UPPER income thresholds for the Age Pension income test lift again on 20 September 2014, which means more Australians are now eligible for a PART Age Pension.

A single person can earn just under $49,000 a year, and still receive a PART Age Pension, while a couple can earn just over $74,000 a year and still receive a small PART Age Pension. Tables outlining the income test thresholds are set out later in the article.

Background: An eligible individual must satisfy the Age Pension income test, and the Age Pension assets test to receive a FULL, or PART, Age Pension. The amount of Age Pension will be based on the test that delivers the lowest amount on Age Pension entitlement. If an individual fails one of the tests, then he or she will not be eligible for the Age Pension.

The income test threshold for FULL Age Pension entitlements is adjusted only once a year, and I call this threshold the LOWER threshold. The LOWER threshold for the income test, that is, the income limit that entitles an individual to a FULL Age Pension, is normally adjusted in line with the Consumer Price Index (measures inflation) on 1 July of each year. For a FULL Age Pension, from 1 July 2014, a single person can earn up to $4,160 a year, while a couple (combined) can earn up to $7,384 a year.

The additional adjustments to the thresholds in March and September affect Australians seeking a PART Age Pension. The income test UPPER threshold is adjusted on 1 July of each year, and also adjusted in March and September of each year. The UPPER threshold is the limit that determines an individual’s eligibility to a PART Age Pension.

In summary, due to the six-monthly changes in the Age Pension rate, and the annual indexation of the income test thresholds, the UPPER threshold of the Age Pension income test is adjusted 3 times a year – in March, July and September.

Note: The actual rate of Age Pension is adjusted twice a year, in March and September. Currently, the Age Pension is adjusted in line with the highest of the Consumer Price Index, Male Average Weekly Total Earnings (MWATE) or Pensioner and Beneficiary Living Cost Index increases. The Pensioner and Beneficiary Living Cost Index is designed to index base pension rates when the living cost index is higher than the Consumer Price Index (inflation). (If you are looking for the latest Age Pension rates, you will find these rates in theSuperGuide article Age Pension: September 2014 rates now available.

What are the Age Pension income test thresholds?

This article sets out the tables (2 for each timeframe) that list the income test thresholds for the following timeframes:

  • From 20 September 2014 onwards (current thresholds)
  • From 1 July 2014 until 19 September 2014

The first 2 tables in the article are the most relevant since the tables apply to the period from 20 September onwards. We include the earlier thresholds, applicable for the earlier period, for your reference.

Income test thresholds effective from 20 September 2014

Note: For income test thresholds applicable before 20 September 2014, see later in the article. 

The Age Pension income test threshold for the FULL Age Pension (effective from 1 July 2014 and updated again on 1 July 2015), and for a PART Age Pension (effective from 20 September 2014 until updated again on 19 March 2015), is set out in the table below.

Age Pension INCOME test thresholds
Situation FULL Age Pension (effective from 1 July 2014 until 30 June 2015) PART Age Pension (effective from 20 September 2014 until 19 March 2014)
Per fortnight Annual income (approx.) Per fortnight Annual income (approx.)
Single $160 $4,160 $1,868.60 $48,584
Couple (combined) $284 $7,384 $2,860.00 $74,360
Couple (separated due to illness) (combined) $284 $7,384 $3,701.20 $96,231

Source: Income thresholds are sourced from DHS (Centrelink)The income test thresholds for FULL Age Pension are adjusted annually on 1 July, and for the PART Age Pension adjusted on 1 July, and then adjusted again on 20 March and 20 September. The annualised threshold income figures are calculated by Trish Power.

The Age Pension income test for Transitional Rate FULL Age Pension eligibility (effective from 20 July 2014, until updated again on 1 July 2015) and Transitional Rate PART Age Pension eligibility (effective from 20 September 2014 until 19 March 2015) is set out in the table below. According to Centrelink, the notional maximum pension entitlement for transitional rate pensioners (including the Clean Energy Supplement), effective from September 2014, is $720.90 per fortnight for a single pensioner and $1,162.80 per fortnight combined for pensioner couples.

Age Pension INCOME test thresholds–Transitional Rate (resident)
Situation FULL age Pension (effective from 1 July 2014 until 30 June 2015) PART Age Pension (effective from 20 September 2014 until 19 March 2015)
Per fortnight Annual income (approx.) Per fortnight Annual income (approx.)
Single $160 $4,160 $1,962.25 $51,019
Couple (combined) $284 $7,384 $3,191.00 $82,966
Couple (separated due to illness) (combined) $284 $7,384 $3,888.50 $101,101

Source: DHS (Centrelink). The income test thresholds for Transitional Rate FULL Age Pension is adjusted annually on 1 July, and for Transitional Rate PART Age Pension is adjusted on 1 July, and on 20 March, and 20 September. If you’re a non-resident eligible for a transitional rate Age Pension, then your income test thresholds are slightly different: see Centrelink website for relevant income thresholds. The annualised threshold income figures are calculated by Trish Power.

For income test thresholds applicable before 20 September 2014, see tables later in this article. You can find more information about the Age Pension rules by reading the following SuperGuidearticles:

Income test thresholds effective from 1 July 2014

The Age Pension income test threshold for the FULL Age Pension (effective from 1 July 2014 and updated again on 1 July 2015), and for a PART Age Pension (effective from 1 July 2014 until updated again on 20 September 2014), is set out in the table below.

Age Pension INCOME test thresholds
Situation FULL Age Pension (effective from 1 July 2014 until 30 June 2015) PART Age Pension (effective from 1 July 2014 until 19 September 2014)
Per fortnight Annual income (approx.) Per fortnight Annual income (approx.)
Single $160 $4,160 $1,845.60 $47,986
Couple (combined) $284 $7,384 $2,825.20 $73,455
Couple (separated due to illness) (combined) $284 $7,384 $3,655.20 $95,035

Source: Income thresholds are sourced from DHS (Centrelink)The income test thresholds for FULL Age Pension is adjusted annually on 1 July, and for the PART Age Pension adjusted on 1 July, and then adjusted again on 20 March and 20 September. The annualised threshold income figures are calculated by Trish Power.

The Age Pension income test for Transitional Rate FULL Age Pension eligibility (effective from 1 July 2014, until updated again on 1 July 2015) and Transitional Rate PART Age Pension eligibility (effective from 1 July 2014 until 19 September 2014) is set out in the table below. According to Centrelink, the notional maximum pension entitlement for transitional rate pensioners (including the Clean Energy Supplement), effective from March 2014, is $713.70 per fortnight for a single pensioner and $1,151.20 per fortnight combined for pensioner couples.

Age Pension INCOME test thresholds–Transitional Rate
Situation FULL age Pension (effective from 1 July 2014 until 30 June 2015) PART Age Pension (effective from 1 July 2014 until 19 September 2014)
Per fortnight Annual income (approx.) Per fortnight Annual income (approx.)
Single $160 $4,160 $1,944.25 $50,550
Couple (combined) $284 $7,384 $3,162.00 $82,212
Couple (separated due to illness) (combined) $284 $7,384 $3,852.50 $100,165

Source: DHS (Centrelink). The income test thresholds for Transitional Rate FULL Age Pension is adjusted annually on 1 July, and for Transitional Rate PART Age Pension is adjusted on 1 July, and on 20 March, and 20 September. If you’re a non-resident eligible for a transitional rate Age Pension, then your income test thresholds are slightly different: see Centrelink website for relevant income thresholds. The annualised threshold income figures are calculated by Trish Power.

You can find more information about the Age Pension rules by visiting the Department of Human Services website, or by reading the following SuperGuide articles:

© Copyright Trish Power 2009-2014

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Comments

  1. ROSS LOWE says:

    we hav e sold our family home for $600000 and wish to buy into a retirement village Our two current villa options are 1 $300000 2$400000 how will either option affect our current full pension

  2. Dallas Achilles says:

    Thanks Trish
    Surprisingly very little media on the threshold increases taking place today.
    I knew that you would however have this info somehow.

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