The changes coming to the Age Pension on 1 July
Some older Australians receiving the Age Pension can expect a boost in their payments as significant increases in Centrelink eligibility thresholds come into effect in the new financial year.
Thousands of people are likely to qualify for an Age Pension for the first time, and those already on a part Pension could see some sizeable increases in the rate of Pension payable – in some cases, as much as $2,223 a year.
The increases come courtesy of 1 July indexation of Centrelink means-test thresholds which continue to benefit from Australia’s high rate of inflation.
Pensioners already receiving a full Age Pension will not see any change.
Under the means testing system, Pension eligibility is tested against income and assets, and whichever test produces the lowest pension Payable is the one used.
The income test from 1 July
Centrelink-assessable income which exceeds $212 a fortnight for singles will see the full Pension of $1116.30 a fortnight reduced at the rate of 50¢ per $1 over the limit until it is cancelled altogether when income exceeds $2444.60 a fortnight. This is an $8-a-fortnight increase from the current income-free area of $204.
For couples, the new combined income-free area of $372 is a $12 increase on the current level of $360. The full couple’s Pension of $841.40 each a fortnight will cut out when combined income exceeds $3,737.60.
Pensioners who continue working will also have an additional $300 a fortnight added to their income-free area before the Pension starts to get clipped. In the case of couples, each Pensioner can access the extra $300 but you cannot share it with your partner.
The asset test from 1 July
For a single homeowner from 1 July, once Centrelink-assessable assets exceed $314,000 the full Age Pension starts to be reduced at the rate of $3 a fortnight for every $1,000 over that limit. The Pension gets cancelled altogether once assets exceed $686,250. This is an overall increase in the asset test threshold of $12,250.
For homeowning couples, an overall increase of $18,500 means the new lower limit will be $470,000 but the upper cut-off limit will be $1.031 million. Remember, your home – no matter how much it is worth – is exempt from the asset test.
This information is for educational purposes only and does not constitute financial advice. Consult a professional for personalized recommendations.
