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In Australia, the government provides you with an income stream in retirement, subject to age and means testing.

What is the Centrelink Age Pension?

In Australia, the government provides you with an income stream in retirement, subject to age and means testing. If you don’t qualify for the full pension, you may still receive a part pension. Being the recipient of the Centrelink Age Pension entitles you to a Pensioner Concession Card giving you concessional rates on your expenses such as medical bills, utility bills and public transport.

How does it work?

You must meet strict residency requirements, such as being a resident for 10 years, and be of ‘Age Pension Age’ as shown in the table below. There are some notable exceptions covered by international social security agreements and assistance should be sought by Centrelink to navigate these requirements.

The Age pension is means tested by an income and asset test. It is important to understand how your current assets impact the Age pension you receive. Your adviser can help you navigate these. Some examples include:

  • Your principal place of residence is exempt from the asset test.
  • Lifestyle assets are included at ‘fire sale’ value not market value.
  • Superannuation is not included in the asset or income test until it is converted to an income stream.
  • Annuities are treated more favourably in means testing than account-based pensions due to the reduced access to capital.
  • Most investment assets are "deemed" to have earned a level of income to include in income testing. Centrelink sets the deeming rate to calculate this and reviews it regularly.

Refer to www.servicesaustralia.gov.au for more detail on means testing limits and how income and assets are assessed.

Rates of payment differ for singles, couples, couples separated by illness, homeowners and non-homeowners. The amount of your pension will then be determined using the income and asset means testing. The lower result of the two tests will be your pension payment. The payment will also include the Pension Supplement and the Energy Supplement.

Centrelink reviews the payment rates on March 20 and September 20 each year.

Refer to www.servicesaustralia.gov.au for details on current pension rates of payment.

What are the benefits?

  • Access to the government pension will help to supplement your retirement income and meet your ongoing living costs.
  • Utilising this pension income will help preserve your retirement savings for future income needs.
  • You may be entitled to other payments and benefits, which include remote area allowance and rent assistance. Your Doctor may provide bulk-billing visits.
  • You will also receive discounts on other costs dependent on your location.

What should I be thinking about?

  • The Age Pension amount you receive is reviewed on a regular basis. If your financial circumstances change, your payment could be impacted.
  • Age pension payments form part of your assessable (taxable) income. You may receive a Senior Tax Offset to reduce tax payable.
  • You will be subject to a number of qualification tests and conditions based on your age, home ownership, marital status as well as the Income and Asset means test.
  • You must notify Centrelink of any significant changes or extended overseas travel (more than 6 weeks), within 14 days, for a review of your entitlements.
  • Centrelink payments are subject to legislative change which may impact your entitlement in the future. A review of your income requirements will be needed should this happen.

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Important information regarding this information

This information is of a general nature. It does not consider your personal objectives, needs or situation. It does not represent legal, tax or personal advice and should not be taken as such. If it has been provided to you with a Statement of Advice (SoA), you should rely on the personal advice in the SoA.

Care has been taken to provide up to date and accurate information relating to the subject area however BR Advice Pty Ltd (ABN 30 612 056 523, AFSL 488655), Blue Rock Private Wealth Pty Ltd (ABN 95 166 927 055, AFSL 452733) and their representatives make no representation as to its accuracy or completeness.

Published: February 2021.

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