There are more myths about the Age Pension than almost any other government payment – and some of them stop people from applying, or cost them money when they do.
In this interview, Justin Bott from Services Australia busts some of the most common misconceptions and explains what you need to do before you apply, including how to set up myGov, which documents to gather, and why applying 13 weeks early could matter.
See also our guides on eligibility for the Age Pension and how to apply for the Age Pension.
We also have an interview with Justin that covers what Age Pension recipients need to report to keep Centrelink up to date.
Robert Barnes
What we’re going to start off with is we’re going to talk about what people often get wrong about the Age Pension. So are there some areas that Australians most commonly misunderstand about how the Age Pension system works?
Justin Bott
Yeah, there are, I think you call them a couple of myths that are out there that can really have an impact on people. And I hear them quite often from customers and certainly when I was a Financial Information Service officer and having a chat with people on a regular basis. So let’s, we’re going to take this opportunity, if you don’t mind, to sort of look at those myths and put them under the spotlight and show them that they’re wrong. So the first one is that I can’t work and get an Age Pension, or this will often come out as I can’t apply for the Age Pension yet because I’m still working. And the Age Pension is not a retirement pension. So it’s not called the retirement pension. It’s called an Age Pension. You meet the eligibility because you’re Age Pension age, which is 67. You meet the residence requirements and then how much you get depends on your assessable income and assets. Now in those income, yes, is obviously wages and there’s an income limit. There’s an amount that you can earn before the pension can’t be paid, but that’s not a small amount of money.
And certainly if you are looking at casual work or part-time work, it’s very, very possible that you are still continuing your casual or part-time work and, or even some full-time jobs. And still have income under those limits. So at the moment, from the 20th of March, 2026, if I’m a single person, I’m allowed to earn about $68,000 before the pension can’t be paid. And as a member of a couple, it’s about $104,000 combined, and the pension can still, can still be paid under that limit. Now you don’t get the full amount for sure, but you can still get some pension. And when you’re getting some pension, you also get all the concessional benefits go with that. So your Pensioner Concession Card and things like that. There’s also something called the work bonus, which means we ignore $300 a fortnight from wages, which is the equivalent of about $7,800 or so per annum, which pushes those figures up even higher. So $68,000 becomes $75,000, $76,000, and $104,000 becomes $111,000, $112,000 or more if partner working. So you can absolutely get an income and still get a pension. So the best place to, uh, that’s going to be the reference for pretty much everything we talk about is Services Australia’s website, which is servicesaustralia.com.au. On the panel on the front, you’ll find one that talks about being an older Australian.
If you click on that, it will give you the updated income and asset limits and you can find out what the actual cutoff points for the pension are. So Myth 1: I can’t work and get a pension at the same time. Myth 2: I’m not allowed to gift anything if I’m on a pension. Now there is, this is a big surprise for people because they sort of assume this is the case. There is actually no law that stops anybody from gifting anything to anybody. There’s no tax, gifting tax, and there’s no law from Services Australia that stops people from gifting. If you’ve got a large amount of money, you’ve got a person with need, you want to hand that money over to that person, you are absolutely within your right to do that. There’s nothing stopping you from doing that. What happens, it’s not that Services Australia doesn’t let you gift or anything along those lines. It’s just that We won’t necessarily recognise you don’t have that money any longer. So from Services Australia’s perspective, the gifting rules are that you’re allowed to give $10,000 in a single financial year, but no more than $30,000 over a rolling 5-year period.
Anything that you give over those amounts, we’re actually going to pretend you still have. We’re going to pretend it’s sitting in a bank account and we’re going to keep that bank account from 5 years from the date that you gave the money away. Until after 5 years’ time, we don’t count it any longer. So it’s not that you’re not allowed to gift, it’s just that we won’t recognise that all of the money that you’re giving away necessarily is gone. We’re going to treat it as, as if you still got it. So that’s myth number 2, that I’m not allowed to gift. Myth number 3 is that I can’t travel overseas and get a pension at the same time. Now that’s important to say, first of all, that what we’re about to say are the rules for the Age Pension alone. It’s very different if you’re on a Disability Support Pension or carer payment or JobSeeker payment. But for Age Pension purposes, it is very possible that you can actually travel overseas, in fact live overseas if that’s what you want to do, and continue to get the payment for the rest of your life. How much you get depends on how long you’ve lived in Australia before you travel, is the basic way to say.
It’s quite a complicated formula. It changes at different stages depending on how long you travel, but it is very possible for you to get the majority of your pension to be paid for you indefinitely while you’re overseas, even if you plan on never returning to Australia. Again, for the nuts and bolts details, go to the website servicesaustralia.gov.au.
Robert Barnes
Great. Um, just coming back to the work bonus, you said $7,800. Is that what we— did that go up to $11,800 or am I misunderstanding? Is that a different rule?
Justin Bott
It’s, it’s the same, but it’s a bit different. So with the Work Bonus, that’s $300 a fortnight that we will ignore of the wages or eligible income from eligible self-employment. So $300 a fortnight, 300 times 26 is $7,800. There’s a thing called the Work Bonus balance. So every fortnight you don’t work, you add to the Work Bonus balance. And so it grows and grows and grows. Now, when you apply for the pension at the very beginning, so your very first application, you start with a Work Bonus balance of $4,000. Everybody does. If I then add 26 fortnights at $300 a fortnight, it takes the $4,000 plus $7,800 to the maximum allowable Work Bonus balance of $11,800. Now that just sits there in the background and you may never use it, but if you return to work, when you return to work, the income that you receive from employment We ignore the $300 a fortnight that we were talking about, but then any excess over that goes off that Work Bonus balance, which is the maximum of $11,800 until that has to go down to zero before the pension’s affected. So to explain it very quickly, say that I’ve been off pension for, I’ve been on Age Pension for 6 months and I’ve built up a Work Bonus of roughly $8,000.
I start work and I earn $750 in the first fortnight. We ignore $300 from that wage because that’s what we do. So the $750 becomes $450. Instead of that $450 be treated as income for my Age Pension, the $450 is offset against my $8,000 Work Bonus balance. The Work Bonus balance goes from $8,000 down to $7,550. It’s absorbed all of that excess wage, which means none of that wage has affected my Age Pension and it won’t affect my pension until that Work Bonus balance eventually goes down to zero. And it’s only then that I start to see my pension actually reducing. So when I don’t work, my Work Bonus balance grows. When I do work, my Work Bonus balance gets eaten into. And it’s, if I’m casual and I’m working here or there, it’ll be up and down all over the place depending on how I’m reporting.
Robert Barnes
Yeah. I suppose that’s really good with seasonal work as well.
Justin Bott
Yeah. It’s our examples that we all often talk about, but seasonal work is right in there. It’s what if I do exam marking for the HSC or for Year 12, or if I work over Christmas break? I work for a month, I earn, I don’t know, maybe we’ll be generous and say I earn $2,000 for that month. For the rest of the year, I’d built up a Work Bonus balance of $8,000 or $9,000, even up to the maximum of $11,800. The $2,000 that I’ve earned is only going to reduce the Work Bonus balance. It’s not going to get anywhere near the zero, which means That $2,000 is money in my pocket and my pension was unchanged because I never used up my full Work Bonus balance. If I’m doing seasonal work, don’t be surprised that it’s months before you actually see any reduction on your pension. And the moment that seasonal work stops, that Work Bonus balance starts growing again. Every fortnight I don’t earn anything, that Work Bonus balance starts going up again.
Robert Barnes
So for someone who’s approaching retirement, they’ve never dealt with Centrelink before, What are some key things that you think that they should understand about how the Age Pension system works?
Justin Bott
The best thing, if you are looking at lodging anything or applying for a pension, the best thing to do is actually having yourself set up to do online work, which means that you’ve got your myGov account linked to your Centrelink record. And having myGov, a lot of people already have myGov linked to Medicare because that’s the sort of thing we needed for proof of vaccinations during the pandemic. MyGov is the, the front door to all of those services. It’s an easy way to prove who you are and then to get access to the linked services that you’ve got. So you create a myGov account, you set yourself up with a Passkey, which is what we highly recommend as a way of using your phone’s security methods to access the record. So uses facial recognition or your fingerprints as a way of accessing your record. And then it’s with your phone, if you’re using the apps, myGov app, you will just be get the choice of which of the services you’ve linked up to and click on those to use it. Click on Centrelink, lodge your applications for payments and pensions online. So that’s the first big tip.
If you are the sort of person that’s comfortable doing things online, use myGov. Go to the myGov website, my.gov.au, to learn how to create the myGov account. And if you go to our website, there’s a lot of tips on how to actually do that as well. If you’re not comfortable doing things online, but you’ve got the ability, so you’ve got the phone or you’ve got the tablet at home and you’re just not comfortable. Second tip to help you in your dealings with Services Australia, with Centrelink, with anything, is to learn how to use that better. And we actually have digital coaches that can help you. So you can make an appointment in your local customer service centre for 15 minutes, half an hour, 45 minutes. You sit down with your device and they will show you how to use it. So if the only reason you’re not an online sort of person is just because you don’t feel comfortable or confident, then using one of our digital coaches, making that appointment is going to make that much easier for you as well. So how to use your online devices more effectively. Just then you’ve got the convenience of being able to do the work you need at home.
I will often say in your jim-jams, eating Tim Tams while doing your updating, your records with Centrelink and Medicare and that sort of thing. Other big tip, if you’re going to be looking at applying for a pension, if you’re doing it online, is gather the documents. So we’re going to need a range of different documents with that proof of application, with the application to prove your circumstances, prove who you are. So gather those documents together first. The more that you can give us with your initial application, so if it’s all in one go, the best the whole process will be for you and the smoother that process will be. You can, to help that, you can actually apply for pensions early, up to 13 weeks before you become eligible. So lodge early, which is another big tip that we recommend. And lastly, if you have complex financial circumstances or realistically, if this is your first real thought about retirement as a whole, about I really don’t know much about superannuation, I don’t know about income streams, I don’t know about retirement planning and I don’t know about Age Pension, then the other thing that I recommend you do is make an appointment with our free and impartial Financial Information Service.
So I, and saying it upfront, I used to be one of these guys for 15 years. It was one of my roles in the agency and I’m a big fan of what they do. So it’s not advisors, they’re not financial advisors. They don’t recommend products, they don’t sell anything. They just give information to help you understand all the nuts and bolts of retirement. What’s super? How do I use it better? What are income streams? Why do I have to engage with financial planners? What do they offer? What am I paying for? And also, Do I have a pension? If I have complicated financial circumstances with trusts or companies or complicated, maybe self-managed super funds that it might be particularly complicated, then having a chat with the Financial Information Service can help with that as well. If you’d like to talk to one of our free Financial Information Service officers, then give us a call on 13 23 00. That’s 13 23 00. Say the words Financial Information Service when asked for the reason for your call. They’ll put you through to one of ours and then we can make an appointment for you either in your local service centre or video conferencing is a way to do it if you’re a little bit further afield.
Robert Barnes
And you said about preparing documentation, what kind of things should they be thinking about? I mean, I’m presuming that it’s anything financial, but a lot of IDs and things like that as well.
Justin Bott
Yeah, so we’re going to require a few things that you’re going to need to prove. So first thing is it’s Age Pension age, so you’re going to have to prove that you’re old enough. So we need Proof of who you are, proof of identity, proof of residency, and then proof of your income and assets is your main big thought. So proof of who you are, we’re talking about, you know, driver’s licences, what’s in your wallet, those sorts of things. Proof of residency, passport or citizenship, or just whatever documents you might have with those. And then the details of your income and assets. So bank balances, cheques, statements for your shares or share certificates. Super statements, income stream statements from your financial planning firms. If you have complicated business structures, if you have trust companies, self-employment, then we’re probably going to be needing to look at things like tax returns and articles of association and all those sorts of documents so that we can work out exactly who you are and what you own. Because the pension is sort of, once you get on these, these sorts of things are basically the payment for life. And we want to make sure that we’re paying people the right rates and giving people what they’re eligible for.
And part of that is going to be a comprehensive assessment of your financial circumstances. It’s almost easier to say what we don’t need rather than what we do. So we’re going to ask you a question about your household contents and personal effects. If you were selling everything in the garage sale, how much do you think it’s worth? We don’t need proof of that. You’re just going to give us your best guess. We’re going to ask you how much your cars are worth. And those, we’re not going to need proof of those either. Again, you’re going to give us your best guess about what the actual resale value of your car is. Importantly for both of those, what would you get if you’re going to sell it today? Not what it’s insured for, not new for old, but what would you get if you’re actually going to sell it today? And the other one might be accessible real estate, like investment properties or holiday homes. You are going to give us how much you think it’s worth on the market today. We don’t need you, or we’re not going to ask you to pay for valuation yourself.
We don’t want you to do that. We will do an initial valuation ourselves. If you’re not happy, you can then come back to us and then we can get a more comprehensive valuation done. It’s only if you think we’re completely off the books with this one that you might want to look at getting evidence or getting an independent valuer. To come in as supporting documentation to say that, look, you’ve got this completely wrong. Otherwise, don’t do it. Don’t spend the money on getting the property value. We’re not going to ask you to do that. We’ll take care of it ourselves.
Robert Barnes
So you can apply early. You can apply 13 weeks before your 67th birthday. And then does it mean that, you know, as long as you are eligible, it applies from your birthday? Are there any things that can complicate things that could mean that you’ll be that you only start receiving payments later?
Justin Bott
No, as long as you’re eligible. So we recommend lodging the application up to 13 weeks early. So that’s 13 weeks before you become eligible for the pension, either because you’ve turned Age Pension age, or it may be that you’re 70 years of age, you’ve been working full-time, your income has been too high, but you know, because a lot of people do, that the 30th of June is your retirement date. And so, you know, from the 1st of July, you won’t have that wage any longer. So you can lodge up to 13 weeks in that case before the 1st of July with evidence from your employer that you’re going to retire on that date. So you can lodge 13 weeks before you turn Age Pension age, but also 13 weeks before the event that you know is going to make you eligible occurs. With that 13 weeks, we can do a lot of the processing in the background, which means hopefully by the time the 13 weeks have actually passed, all of the background work is done and therefore it’s just more of an issue of clicking in and you’re getting paid. There are times when that can’t happen.
Really complicated financial structures can take longer. Often with the pension, we need information or verification from third parties that can delay the whole process as well. So again, with companies and trust structures and that sort of thing. Even if it takes us, like even if you lodge the application on the day of your birth, your birthday, the day you turn 67, and it still took us 3 months to process because of reasons. If you’re eligible from your 67th birthday, we’ll pay you from your 67th birthday. You lodge the claim within time, we pay you from that time. It’s just that you’ll get that 13 weeks, whatever it might be, as a lump sum when you’re initially granted to cover the period. So you’ll still get covered from it. It’s just that it might come as a lump sum. If you lodge 3 months later though, it’ll only go from the day that you lodge, not from the day that you turned Age Pension age. So if you lodge 3 months later because you were gathering the documents or whatever it might be, then you just missed out on money that we won’t backdate it because you didn’t put a claim in.
We need a claim in order to be able to process. The earlier the claim is in, the better the chance that we can actually start payments commencing every fortnight from the moment that you became eligible. Even if there’s a delay because the claim is lodged, you still get that money. It’ll just be as a lump sum in a month’s time or however long it will be. You still get covered by it.
Robert Barnes
In the next video, Justin and I discuss what happens once you’re already receiving the Age Pension. Including what you need to report to Centrelink, what gets updated automatically, and some of the common mistakes that can lead to problems or debts later on.
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