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.
2018 Budget Measures
Measures for older Australians announced in the 2018-19 Budget include:
- New social security means test rules for pooled lifetime retirement income stream products purchased on or after 1 July 2019
- Pension Work Bonus from 1 July 2019:
- an increase to the Work Bonus fortnightly amount from $250 to $300; and
- extension to eligibility to include self-employment earnings
- From 1 July 2019, the maximum Pension Loans Scheme rate will increase from 1 to 1.5 times the maximum rate of Age Pension
See more information here. Follow progress of legislation here: Social Services and Other Legislation Amendment (Supporting Retirement Incomes) Bill 2018
[9 May 2017] 2017 Budget Measures for pensioners
- Enhanced residency tests for Age pension and DSP are to apply from 1 July 2018 in measures announced in the 2017 Budget. See below under “Age pension residence test”.
- A one-off Energy Assistance Payment of $75 for singles and $125 for couples paid to those who are receiving a pension or other qualifying payment on 20 June 2017 and resident in Australia.
- The qualifying payments include the Age Pension, Disability Support Pension, Parenting Payment Single, Service Pension, veterans’ Income Support Supplement, veterans’ Disability Pension, War Widow(er)’s Pension and permanent impairment payments under the Military Rehabilitation and Compensation Act 2004 and the Safety, Rehabilitation and Compensation Act 1988.
- The Pensioner Concession Card will be reinstated to former pension and veterans’ payments recipients who lost eligibility for their payment following asset changes that commenced 1 January 2017.[/su_spoiler]
Income Test changes 1 January 2016
From 1 January 2016 there is a 10% cap on the income from defined benefit superannuation schemes which can be excluded from the social security income test. The new measure will not apply to military superannuation schemes.
For people with a defined benefit income stream with a deductible amount greater than 10 per cent, the change increases the amount of assessable income included in the social security income test for certain Australian Government payments.
- Social Services Legislation Amendment (Defined Benefit Income Streams) Bill 2015
- Background to the changes
2015 Budget Measures
The 2015 Federal Budget contained changes to pension entitlements tests, including the assets test, in order to “improve fairness and protect the budget position”. See media release 7 May 2015. Although opposed by the Labor Opposition, the changes have been approved by parliament with the support of the Greens in the Senate.
May 2014 Federal Budget
The Federal Budget 2014-15 presented to parliament on 13 May 2014 provides for a number changes to age pension arrangements. The bill has since lapsed, see Social Services and Other Legislation Amendment (2014 Budget Measures No. 5) Bill 2014. This Bill was to:
- pause indexation of income test free areas for pensions (other than parenting payment single) and deeming thresholds for three years from 1 July 2017; (this announced measure has since been dropped)
- index pensions (other than parenting payment single) to the Consumer Price Index from 20 September 2017 (the government has since announced it will abandon this measure);
- reduce social security and veterans’ entitlements income test deeming thresholds from 20 September 2017; and
- increase the age pension qualifying age from on 1 July 2025
Income deeming thresholds
For the purposes of the pension income test, from 1 September 2017 the deeming thresholds will be $30,000 for single pensioners and $50,000 for pensioner couples.
Seniors Health Card link
- From 1 January 2015 it is proposed that tax-free super income streams (so-called “untaxed superannuation income”) will be included in the CSHC income test
- From 20 September 2014 the income thresholds for the Commonwealth Seniors Health Card will be indexed annually to the CPI.
- From after the June 2014 payment the Senior Supplement will cease
Parliamentary Library 2014-15 Budget Reviews:
- Changes to support for pensioners and retirees
- Changed indexation of pensions and tightened eligibility for all benefits
- Changes to Disability Support Pension
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 – now dropped
The Government’s previously announced intention to increase the qualifying age to receive the Age Pension from 67 years to 70 years, to be implemented over 10 years from 2025 to 2035 (and yet to be enacted), has been abandoned. See Minister’s media release and the report from the ABC here.
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||1 July 2018||Deemed rate up to threshold||Deemed rate over the threshold|
|Non-pensioner couple - per person(a)||$40,300||$40,800||$41,700||$42,500||1.75%||3.25%|
|Pensioner couple - combined (b)||$80,600||$81,600||$83,400||$85,000||1.75%||3.25%|
Source data & further info: DHS
Historical Deeming Rates
The current system of calculating deemed income from investments began in 1996.
|From date||Single threshold||Pensioner couple threshold||Non-pensioner couple threshold (each)||Below threshold rate||Above threshold rate|
(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.
[9 May 2017] Budget 2017-18
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 2018-19
- Federal Budget 2017-18
- Federal Budget 2016-17
- Federal Budget 2015-16
- Federal Budget 2014-15
- Centrelink payment rates
- Guide to Social Security Law – 184.108.40.206 Common Pension Rates
- Guide to Social Security Law – 220.127.116.11 Common Provisions Affecting Indexation of Pensions
This page was last modified 2018-12-06