Understanding the Age Pension - your questions, answered

For many Australians, knowing when they want to retire and when they can afford to retire are two completely different things.  And for most people, their income in retirement will be made up of a mix of the Government Age Pension and their savings.

But how do you know what Government benefits you might be entitled to, if any?  And what happens when your circumstances change?  Navigating the Age Pension process can be confusing and raise a lot of questions.  We’ve compiled and answered some commonly asked questions about the Age Pension, to help you understand the process.

1. How do I know if I am eligible?

To be eligible for the Age Pension you must be an Australian resident and have lived in Australia for at least 10 years, and meet the minimum age requirement and applicable income and asset test thresholds. 

When applying for the Age Pension, you must meet the residence rules.  On the day you claim, you must be an Australian resident, living in Australia and physically be in Australia. 

Since 2017 the minimum age requirement for the Age Pension has been progressively increasing by 6 months every two years until 1 July 2023 when the pension age will be 67, as noted in the table below:

Both your income and assets are considered when assessing your eligibility for payment.  The income test measures how much money you receive, including the income you earn and income your investments are deemed to earn. Generally, the assets test measures the value of what you own, including most of your assets except your family home and the first 2 hectares of land it’s on. 

If your income or the value of your assets are above set limits, you may only be entitled to a reduced Age Pension payment, or potentially no payment at all.  As a couple in a relationship, it is important to note that the set limits that apply are for both you and your partner’s assets combined, not each of you individually.

2. Can I get the Age Pension if I am still working?

Yes you can, so long as you meet the eligibility requirements.  The Australian Government  is assisting older Australians to continue working while still being eligible to receive an Age Pension with the Work Bonus. 

The Work Bonus allows the first $300 of fortnightly income from work to not be assessed as income under the income test.  Any unused amounts are accrued in the Work Bonus Income Bank (Income Bank) up to a maximum amount of $7,800.  From 1 December 2022 to 31 December 2023, a one-off temporary credit of $4,000 applies, increasing the maximum Income Bank balance to $11,800 over this period.  On 1 January 2025, the maximum Income Bank balance will automatically reset to $7,800.  This Income Bank balance can be used to offset future work income that would otherwise be assessable under the income test.  And the Income Bank amount is not time limited, meaning it can carry forward across future years.

3. If I am eligible for the Age Pension, how much will I get?

How much you will receive will depend on whether you are single, a member of a couple, your living situation and the value of your income and assets.  If you are eligible for the Age Pension, you may also be eligible for other supplements and related benefits.

While any payment you receive will be determined by Centrelink, you can use publicly available calculators, such as  Age Pension Guide’s Age Pension Calculator to provide you with an estimate.

4. If I’m not eligible for the Age Pension, is there anything I can get?

If you reach the Age Pension age, but don’t meet all the eligibility requirements to receive a payment, you may still be eligible for a Commonwealth Seniors Health Card.  This is a concession card that provides you with cheaper health care and some discounts once you’ve reached Age Pension age. 

Each State and Territory also has its own concessions, grants and assistance available.  For more information, click on the link to each State and Territory resource included below:

• Australian Capital Territory Assistance
• New South Wales Savings Finder
• Northern Territory Concessions and Payments and Grants Directory
• Queensland Smart Savings Concessions and Rebates
• South Australia Care and Support including Household Concessions
• Tasmania Discounts and Concessions
• Victoria Concessions and Benefits
• Western Australia Grants and Subsidies

5. What happens if my circumstances change?

Change is an inevitable part of life, and it can have a big impact on your situation.  Some of the most common changes Age Pension recipients encounter are inheriting money, selling their home, or using funds to help family.  There are also legislative changes, such as age limit or income and asset limit changes, that may impact eligibility criteria.  These changes may have an impact on your payment.

If your circumstances change while you are receiving the Government Age Pension, you must tell Centrelink within 14 days.  This ensures your payment will remain correct and you won’t be overpaid by mistake.  Of course, if the change in your circumstances allows you to receive more pension, the earlier you notify the Government, the earlier your payment will increase.

You can also re-apply for the Government Age Pension if your circumstances or the eligibility requirements change.  There are no limits to how many times you can apply.  You will need to make sure all your details are up to date when you do, to make sure your application is assessed correctly.

6. Where can I go for more information?

The Services Australia website provides detailed information on the Age Pension, including who can get it, how much is payable and how you can claim.  They also have dedicated pages on the income and assets tests, deeming rules and how they apply, and the Commonwealth Seniors Health Card.

If you would prefer to speak to someone directly, the Financial Information Service is a free service provided by the Australian Government.  Their purpose is to help educate and inform  on financial matters, and they can talk about more than just the Age Pension.  More information is available on their website or call them on 132 300 to discuss your situation directly.

Our Wealth Concierge team is available to provide you with general advice or refer you on to a financial planner who will be able to provide tailored advice to suit your needs. You can arrange a complimentary consultation by completing an online enquiry or asking in person at your local Bendigo Bank branch.