Retirees may rely on income from a number of sources, such as super pensions and investment distributions, but the age pension is an important income source that is paid to older clients who meet age and residency requirements and is subject to a means test.
Its important to know what you are entitled to and how often you need to update Centrelink on any changes.
The fees and thresholds used in this document change on a regular basis.
Most Centrelink and DVA payments are means tested to determine the amount of pension or allowance payable. This includes an assets test and an income test. If a client is applying for a pension, both tests are applied. The test that pays the lower rate of pension is the one that applies for that client. We are concentrating on the Asset test in this article.
Note: The client’s principal place of residence is exempt from means-testing.
Clients can have a certain level of assets before the maximum pension starts to reduce.
This asset test threshold will depend on whether the client is a homeowner or a non-homeowner and also whether they are single or a member of a couple. If the client is a member of a couple, all combined assets are included (even if only one is applying for a pension).
Homeowner Assets Test Threshold
If a client is a homeowner, the following table shows the current assets test thresholds:
| Family situation | Full pension payable if assessable assets up to*: | Part pension payable provided assets do not exceed^: |
| Single | $268,000 | $583,000 |
| Couple (combined) | $401,500 | $876,500 |
| Illness-separated couple (combined) | $401,500 | $1,031,500 |
Non-homeowner Assets Test Threshold
If a client is a non-homeowner, the following table shows the current assets test thresholds:
| Family situation | Full pension payable if assessable assets up to*: | Part pension payable provided assets do not exceed^: |
| Single | $482,500 | $797,500 |
| Couple (combined) | $616,000 | $1,091,000 |
| Illness-separated couple (combined) | $616,000 | $1,246,000 |
*The maximum pension reduces by $3.00 for every $1,000 of assessable assets above the threshold. Allowances reduce to nil if assets exceed these thresholds.
^ Limits will increase if rent assistance is paid with the pension.
Source of Table Information https://www.servicesaustralia.gov.au/individuals/services/centrelink/age-pension/how-much-you-can-get/assets-test/assets#assetstestlimits
So, the more you have, the less you generally receive. However, this money is available for you to invest and generate a return for your retirement. We can assist with ways to make sure you are making appropriate choices.
Now let’s use an example to see how much Age Pension could apply.
Helen and Bob are over age pension age. They have assessable assets of $500,000 and their home. The home is an exempt asset.
Their pension entitlement is calculated under the assets test as:
- Step 1 – $500,000
- Step 2 – $401,500 (couple homeowner)
- Step 3 – $500,000 – $401,500 = $98,500
- Step 4 – $98,500 x 3.00 / $1,000 = $295.50
- Step 5 – ($711.80 x 2) – $295.50 = $1,128.10 pf combined or $564.05 pf each
If Helen was only age 63 (for example) she would be too young to qualify for an age pension. Therefore, Bob would receive $564.05 pf under the assets test and Helen would receive no payment (unless she qualified for an allowance or other pension).
There are product and strategies available to potentially lower your asset values which would in turn allow you to receive more Age Pension. We can discuss these with you or your loved ones.
From a reporting perspective, you should update Centrelink in the following fortnight after any amounts change. Typically, people update their assets twice or more per year. We can also assist you in this declaration. We have a service available to make sure you meet your requirements, so that you always receive what you should.