Age Pension: More Australians entitled to payments from July 2014

In March, July and September of each year, the Federal Government changes the rules for claiming the Age Pension… for the better! The Age Pension income test and the Age Pension assets test are adjusted three times a year in line with increases in the Consumer Price Index.

From 1 July 2014, the income and assets tests are adjusted again which means eligible Australians can own more assets and earn more income and still be eligible for a PART Age Pension. Also, those Australians who may have just missed out on the Age Pension due to failing the income test, or assets test, may now be entitled to some Age Pension.

The investment markets continue to be volatile and investment portfolios of retirees may have changed in value over the past few months, which may also mean that previously ineligible Australians may now meet the income and assets tests, or that the level of entitlements for eligible Australians has changed.

Note: 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.

Age Pension payments

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) and 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).

You can find the latest Age Pension rates in the SuperGuide article Age Pension: March 2014 rates now available.

Age Pension assets test

The LOWER threshold of the Age Pension assets test, that is, the asset limit that entitles an individual to a FULL Age Pension, is adjusted in line with the Consumer Price on 1 July of each year.

The assets test UPPER threshold however, is adjusted on 1 July of each year, and is 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. Due to the six-monthly changes in the Age Pension rate, the UPPER threshold of the Age Pension assets test is adjusted 3 times a year – in March, July and September.

From 1 July 2014, the assets test UPPER threshold for home-owners has increased by $5,250 for singles and $9,250 for couples. What this means is that single home-owners can have more than $760,000 in assets (excluding their home) and still be eligible for a small  PART Age Pension, while home-owning couples can have more than $1.13 million in assets (excluding the home) and still claim a small PART Age Pension.

You can find the latest thresholds for the assets test for the FULL or PART Age Pension, including the Transitional pension assets test thresholds, in the SuperGuide article: Age Pension: Assets test thresholds rise 1 July 2014.

Age Pension income test

The LOWER threshold of the Age Pension income test, that is, the income limit that entitles an individual to a FULL Age Pension, is adjusted in line with the Consumer Price Index on 1 July of each year.

The income test UPPER threshold however, 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. Due to the six-monthly changes in the Age Pension rate, the UPPER threshold of the Age Pension income test is adjusted 3 times a year – in March, July and September.

From 1 July 2014, the income test UPPER threshold has increased by $4.00 per fortnight (roughly $104 a year) for singles, and $8.00 per fortnight (roughly $208 a year), for couples. What this means is that a single person can earn up to $1,845 a fortnight (the equivalent of just under $48,000 a year), while a couple (combined) can earn up to $2,825 a fortnight (the equivalent of roughly $73,000 a year), and still claim a PART Age Pension.

You can find the latest income test thresholds, including Transitional pension income test thresholds, for the FULL or PART Age Pension, in the SuperGuide article: Age Pension: Income test thresholds rise 1 July 2014.

Note: DHS has taken over Centrelink website. All Government information on the Age Pension moved to a new website in July 2012. Instead of visiting a stand-alone Centrelink website, you now need to visit the Department of Human Services website (www.humanservices.gov.au), and access the Centrelink section within the DHS website.

More information on Age Pension changes

For more information on the Age Pension changes, see the following SuperGuide articles:

© Copyright Trish Power 2009-2014

Copyright for this article belongs to Trish Power, and cannot be reproduced without express and specific consent.

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Comments

  1. Trish, my husband and I feel like we’re caught in-between, so to speak, in that at 55-years, we are not fabulously wealthy but now not ‘eligible’ for anything owing to the value of our home plus savings. Is it best to keep working (from hereon in) for as long as we’d both like to, but then just ‘spend it’ relatively conservatively until we hit the eligibility threshold? We’ve either got to go really hard for the next 10-15 years or say to ourselves ‘that’s enough now’ and take it as it comes. Do you have any other types of comments you receive like this and what strategies do you think are wise?

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