Centrelink Aged Pension rules are confusing. This blog article attempts to explain the Centrelink rules, including the Assets and Income tests, in a simpler way than the bureaucrats can. It is accurate as at 30 September 2024 when last updated.
The Centrelink Aged Pension is the main income support payment for people who have reached Aged Pension age. Information from the government can be found here. At Cornish Wealth Management, we help our clients deal with Centrelink.
Table of contents
Who can get the Aged Pension?
To get the Australian Aged Pension you need to be over aged pension age, and meet the residence, asset and income test rules.
Aged Pension Age
From 1 July 2023, the Aged Pension age is 67 years.
Residence Rules
Whilst there are some exception, to make a claim for aged pension you need to be:
- Living in Australia , which means having Australia as your usual place of home,
- Physically in Australia when you make the initial claim,
- An Australian resident for at least 10 years. This means you are either an Australian citizen or permanent resident.
Asset Test Rules
Centrelink use different thresholds to assess how much your assets impact the Aged Pension.
The thresholds which apply are different for singles, couples, and whether you own your own home or not (the actual value of the home is excluded from the below).
When your assets exceed the amount for the full pension, then the aged pension payments are reduced by $3 for every $1,000 that your assets exceed the full pension threshold.
For Full Pension, assets must be less than:
| Single homeowners | $314,000 |
| Single non-homeowners | $566,000 |
| Couple homeowners | $470,000 |
| Couple non-homeowners | $722,000 |
For Part-Pension, assets must be less than:
| Single homeowners | $695,500 |
| Single non-homeowners | $947,500 |
| Couple homeowners | $1,045,500 |
| Couple non-homeowners | $1,297,500 |
What Assets Are Included?
The market value of most of your assets are taken into account when calculating your Age Pension. This includes, but is not limited to, things such as:
- Property (excluding your home),
- Household contents,
- Motor vehicles, motorbike, boats & caravans,
- Financial investments & any business assets and
- Superannuation if you’re over Age Pension age.
Income Test
Centrelink use different income thresholds to assess how much your income impacts the Aged Pension payments you receive.
The thresholds which apply are different for singles and couples. When your income exceeds the amount for the full pension, then the aged pension payments for singles are reduced by 50 cents for every $1 that your income exceeds the full pension threshold. Couples have a 25 cent reduction each.
For Full Pension, income must be less than:
| Single | $212 p/ft | $5,5,12 p/a |
| Couple (combined) | $372 p/ft | $9,672 p/a |
For Part-Pension, income must be less than:
| Single | $2,500.80 p/ft | $65,020.80 |
| Couple (combined) | $3,822.40 p/ft | $99,382.40 |
What income is included?
In addition to any income you earn from employment, Centrelink will apply an earnings rate to your financial assets. This is known as ‘deeming’.
Deeming Rates
| Deemed at | 0.25% | 2.25% |
| Single | First $62,600 | Assets over $62,600 |
| Couple | First $103,800 | Assets over $103,800 |
For example, if you are single and have $500,000 in the bank or a pension, then you would be deemed to earn $9,981 p/a. This is calculated as follows:
$62,600 x 0.25% = $156.50 , plus $437,400 x 2.25% = $9,841.50.
Aged Pension payment amounts
The full Age Pension payments are:
| Single | $1,144.40 p/ft | $29,754.40 p/a |
| Couple (each) | $862.60 p/ft | $22,427.60 p/a |
| Couple (combined) | $1,725.20 p/ft | $44,855.20 p/a |
The above rates include the Pension Supplement and Energy Supplement.
