The ins and outs of the Age Pension: Eligibility and Income considerations
What you need to know, how much you’ll receive, and how to apply
Along with your superannuation and the savings you’ve accumulated over the years, the Age Pension can be an important source of income for meeting your needs in retirement.
Roughly 2.6 million Australians receive it, and that number is expected to increase as the average life expectancy goes up.
If you’re approaching retirement, you might be wondering if you’re eligible for the Age Pension and, if so, how much you can receive. Below are some of the things Centrelink will consider when you apply.
Who can receive the Age pension?
The age at which you become eligible to receive the Age Pension has been gradually increasing from 65 to 67, as shown by the table below.
| Date you were born | Pension age |
| Between 1 July 1952 and 31 December 1953 | 65 years and 6 months |
| Between 1 January 1954 and 30 June 1955 | 66 years |
| Between 1 July 1955 and 31 December 1956 | 66 years and 6 months |
| On or after 1 January 1957 | 67 years |
Whether or not you’re eligible for the Age Pension will also depend on your residency status. Generally, it’s only available to Australian residents who have lived in Australia for at least 10 years (at least five of those years must be continuous) and were in the country on the day the claim is lodged.
There are a small number of exceptions to these requirements — for example, if you have a qualifying residence exemption or are a resident in a country with which Australia has an International Social Security Agreement.
How much can you receive?
The amount of Age Pension you can receive will depend on your income and assets, as well as whether you’re single or part of a couple. The normal rates from 20 September 2023 are shown below:
| Per fortnight | Single | Couple each | Couple combined | Couple apart due to ill health |
| Maximum basic rate | $1,002.50 | $755.70 | $1,511.40 | $1,002.50 |
| Maximum Pension Supplement | $80.10 | $60.40 | $120.80 | $80.10 |
| Energy Supplement | $14.10 | $10.60 | $21.20 | $14.10 |
| Total | $1,096.70 | $826.70 | $1,653.40 | $1,096.70 |
To maintain their value against increases in the cost of living, the Department of Social Services indexes these rates twice a year using the higher of the Consumer Price Index or the Pensioner and Beneficiary Living Cost Index. They may also be increased further to meet a wages benchmark.
Income and assets test
The Age Pension is means tested, so Centrelink will consider any income and assets you might have when determining how much Age Pension you’re entitled to receive. The hope is that older Australians will rely on the safety nets they’ve built up over the years before turning to the one provided by the social security system.
Two tests will be applied — the income test and the assets test — and you will be paid under the one that produces the lower rate of payment.
The income test lets you receive income up to a certain limit before your Pension is reduced. For singles, the Pension is reduced by 50 cents for every dollar earned above $204. Meanwhile, couples’ combined pensions are reduced by 50 cents for every dollar earned above $360. This applies to all income sources, including superannuation and investments.
Meanwhile, the assets test considers any property (excluding your main residence) and possessions you own, regardless of whether they are held in Australia or another country. Depending on your relationship status and whether you own your home, the amount of Age Pension you can receive is reduced if the total value of your assets exceeds a certain amount. The limits are shown below.
| Your situation | Homeowner | Non-homeowner |
| Single | $301,750 | $543,750 |
| A couple, combined | $451,500 | $693,500 |
| A couple, separated due to illness, combined | $451,500 | $693,500 |
| A couple, one partner eligible, combined | $451,500 | $693,500 |
Your payment might also be affected if you choose to give money away above a certain value. Under current rules, singles and couples can gift up to $10,000 in a financial year and up to $30,000 over five financial years without their Age Pension payments being affected. Excess amounts, however, will be subject to the income and assets test.
Work Bonus
For those who have an opportunity to re-enter the workforce, the Government has policies in place that allow you to earn income up to a certain point without it affecting the Age Pension you receive.
Under the Work Bonus, the first $300 of fortnightly income you receive from work won’t be counted as part of the income test. If you earn less than $300 per fortnight, unused amounts will accrue in a Work Bonus income bank up to $11,800. This can be used to offset future income.
Just keep in mind that the $11,800 limit represents a temporary increase that will only apply until 31 December 2023. After that, it will revert to $7,800.
If you or your partner start any paid work while receiving the Age Pension, you won’t have to apply for the Work Bonus, but you will have to start reporting how much you receive from work to Services Australia. This can be done over the phone or using the Service Australia website, or in person at a Centrelink office.
Greg Burton is an accredited FPA Aged Care Specialist. Contact Carrick Aland’s award-winning Wealth Planning team on 1300 466 998 or visit carrickaland.com.au/wealth-planning/.
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