The age pension in Australia is payable based on tests for age, income and assets. There is also a residence requirement.
Pensions are inflation-adjusted on a 6 monthly basis on 20 September and 20 March each year.
For current pension payment rates see Centrelink Payment Rates
Aged pension age test
Eligibility for the age pension is based on when you were born. The qualifying age is being transitioned over time to reach age 67 by the year 2023.
|Date of Birth||Qualifying Age at 30 June|
|On or before 30 June 1952||65 years|
|1 July 1952 to 31 December 1953||65 years 6 months|
|1 January 1954 to 30 June 1955||66 years|
|1 July 1955 to 31 December 1956||66 years 6 months|
|On or after 1 January 1957||67 years|
Proposal to increase pension qualifying age to 70 years by 2035
The Social Services Minister has confirmed the Government’s intention to increase the qualifying age to receive the Age Pension from 67 years to 70 years, over 10 years from 2025 to 2035. The Government’s intention is that no-one born before 1 January 1966 would be affected by the change.
This measure is subject to enabling legislation being passed by parliament, for which the Government has NOT (at the time of writing) obtained the necessary support.
Age pension assets test
Access to the age pension is limited according to an assets test. Assets test limits are updated in March, July and September each year. Note the Budget 2015 changes taking effect from 1 January 2017 (see above).
Detailed info: The assets test definitions, rules and thresholds are here: Assets Test
Age pension hardship provisions
The hardship provisions which enable a payment in circumstances of severe financial hardship and where there is little or no entitlement to a payment otherwise.
“Severe financial hardship” is considered to be when
- total income (including any payment paid under the assets test) is less than the maximum rate of that payment
- readily available funds are less than the allowable limit
- there is no other course of action which you could be expected to take to improve your financial position.
For information about the hardship provisions and how to apply, see Asset Hardship provisions
Age pension income test
The general scheme of the income test has a lower threshold under which the full pension is payable, and a taper which erodes the pension entitlement up to a cut-off point where there is no pension payable. Income limits and the effect on pension entitlements are set out here.
Income test levels are CPI inflation-indexed on a 6 monthly basis.
For the income test, the actual income from financial assets (i.e. investments) is not counted, but substituted by income calculated at an assumed (“deemed”) rate. This is intended to encourage the maximisation of investment earnings by ensuring that higher-earning investments do not erode the pension entitlement. There are exceptions, and rules for dealing with failed investments.
Current deeming rates
|Threshold from:||1 July 2015||1 July 2016||1 July 2017||Deemed rate up to threshold||Deemed rate over the threshold|
|Non-pensioner couple - per person(a)||$40,300||$40,800||$41,700||1.75%||3.25%|
|Pensioner couple - combined (b)||$80,600||$81,600||$83,400||1.75%||3.25%|
Source data & further info: DHS
(a) Member of non-pensioner couple (allowee whose partner is also an allowee or is not receiving the pension)
(b) Pensioner couple (one or both members of the couple are receiving a pension)
Deeming rate thresholds are CPI adjusted in July each year. See further deeming rates information here.
Example Calculation: Age couple deemed income
Deeming rules amendment – 1 January 2015
From 1 January 2015 the entire balance in the superannuation fund that is paying an Account Based Pension will be subject to the deeming rates. The new rules apply to people that become eligible for the Age Pension from 1 January 2015. There are grand-fathering provisions to protect existing pensioners until or unless a change of product triggers the new rules.
The changes in detail: Centrelink deeming fact sheet
Age pension residence test
Age pension eligibility requires Australian residence for a minimum of 10 years in all, including at least 5 years of continuous residence.
A detailed description of what is meant by ‘Australian resident’ can be read here.
[update 9 May 2017]
Enhanced Residency Requirements for Pensioners – announced as a Budget 2017 measure, from 1 July 2018 to receive Age Pension or Disability Support Pension, a person will need to have:
- 10 continuous years of Australian residence including at least five years during their
Australian working life
- 10 continuous years of Australian residence and proof they have not received activity
tested income support for cumulative periods of five years or more, or
- 15 years of continuous Australian residence.
Residence during a person’s working life is the number of years a person has resided (lived
permanently) in Australia between age 16 and age pension age.
Under the existing rules, eligibility for the age pension requires you to be an Australian resident for a continuous period of at least 10 years, or for a number of periods that total more than ten years, with one of the periods being at least five years, and to be physically in Australia on the day the claim is lodged.
“Australian resident” for these purposes includes citizen, PR and SCV.
There are some exceptions and further information detailed here: Age pension
- Federal Budget 2017-18
- Federal Budget 2016-17
- Federal Budget 2015-16
- Federal Budget 2014-15
- Centrelink payment rates
- Guide to Social Security Law – 18.104.22.168 Common Pension Rates
- Guide to Social Security Law – 22.214.171.124 Common Provisions Affecting Indexation of Pensions
This page was last modified 2017-12-20