Age Pension
Do we need to downsize?
Q. Lyn and Graeme
Two years ago my husband and I bought a home on four hectares. He has been on a Disability Support Pension for some years and I have been on Newstart.
I am now eligible to apply for the Age Pension but have just read the application form and have seen a notation that states that “assets do not include the value of the home in which you live (where the total of land area is up to two hectares) we’re worried that we will have to sell up.
A. Provided by Centrelink
Without knowing all the details about your individual circumstances it is difficult to determine your eligibility. Generally speaking, your principal home and adjacent land needs to be under two hectares and on a single title document to be exempt from the assets test. However, in some cases a customer’s whole property (of more than two hectares) may be exempt from the assets test if they meet certain criteria.
A fact sheet with further details can be found by clicking YOURLifeChoices simple short cut
For further clarification about your individual circumstances, you should contact a Centrelink Financial Information Services officer on 13 2300.
Fair go for pensioners
Sometimes, no matter how hard you try, there are people who are much better at explaining things than you are. YOURLifeChoices subscriber, Patricia, has clarified the rules for Age Pension increases.
As Chairperson of the National Fair Go For Pensioners Coalition I would like to make two point points about your Q&A about whether pension rises are likely:
1. People who support an increase can work towards that by becoming active in the lead-up to the Federal election. Fair Go For Pensioners (a coalition of organisations/clubs) is working towards a pension of 35% of male average weekly earnings (following the May 2009 budget it is currently 27.7%).
2. Your answer regarding couple pensions is incorrect. You state that only single pensions are tied to wage rates and that couple rates only rise by CPI.
The correct answer is that the couple rate is tied to the single rate so it also moves with wages. The single rate is two thirds of the couple rate.
Re cost of living adjustments in March and September - all pensions are adjusted by the higher of CPI or the new Pensioner and Beneficiary Index.
Age Pension residency requirements
Strict residency requirements exist for those wishing to claim the Age Pension. YOURLifeChoices subscriber, Jamie, would like to know if he can claim the Age Pension from the Philippines.
Q. Jamie
I am an Australian citizen currently residing in the Philippines. I worked in Sydney for almost nine years before I was reassigned to Manila in late 1996. I am now 63-years old and would like to know if I am entitled to the Age Pension when I turn 65. I am currently unemployed and retired from my previous job when I reached the age of 60.
A. Provided by Centrelink
To qualify for the Age Pension you must be an Australian resident and reside in Australia on the day that you lodge your claim. You also need to meet the 10-year qualifying Australian residence requirements, unless you are claiming under an International Social Security Agreement. There is currently no International Social Security Agreement with the Philippines.
The 10-year Australian residence requirement means you have been an Australian resident for a continuous period of at least 10 years, or for a number of periods which total more than 10 years, with one of the periods being at least five years.
Click YOURLifeChoices simple short cut to find more in formation on Residence requirements.
Age Pension and tax
As tax time fast approaches, YOURLifeChoices subscriber, Dianne, would like to know how the Age Pension is taxed?
Q. Dianne
Do we pay tax on our Age Pension ?
A. The Age Pension received from Centrelink is taxable however, the senior Australians tax offset may eliminate the need to pay tax on the Age Pension.
The amount of tax you are liable to pay depends on your individual financial circumstances and you should contact the Australian Taxation Office (ATO) for further information or click YOURLifeChoices simple shortcut to visit the ATO website.
Does the Work Bonus work for Age Pensioners?
Under the Federal Government’s Secure and Sustainable Pension Reforms, the Work Bonus was designed to make it more financially beneficial for those over Age Pension age to continue working. As seasonal workers are finding out, it may not be a bonus at all.
What is the Work Bonus?
Following the closure of the Pension Bonus Scheme, those who work past Age Pension age are entitled to the Work Bonus. Under the Work Bonus, half of the first $500 of income is not counted towards the income test. Therefore, a maximum of $250 can be disregarded in addition to the normal allowable income-free area.
Do I need to claim for the Work Bonus?
The Work Bonus is automatically applied by Centrelink when you record your fortnightly earnings.
What income is disregarded under the Work Bonus?
Only income derived from salary paid in Australia and outside Australia and director’s fees will be disregarded under the Work Bonus. Income from leave payments, payments to a principal from sole traders or partnerships, investments and superannuation will be exempt from the Work Bonus.
Are my seasonal earning averaged over a full calendar year?
No. Earnings are assessed on a fortnightly basis and will affect any benefits paid within that reporting period.
This is where the problem lies. Under previous rules, earnings were subject to an annual test meaning that seasonal income often fell below the allowable annual threshold. Under the new rules, the fortnightly assessment means that those on the Age Pension who undertake seasonal work may lose part of their pension.
Is this fair? Have your say.
To find out more information on the Work Bonus and the effect it may have on your Age Pension, visit Centrelink.gov.au.
Separation and the Age Pension
YOURLifeChoices subscriber, Jeff, would like to know how best to structure his post-separation funds and how to achieve his dream of a life on the water.
Q. Jeff
We have just sold our house and have decided to go our separate ways. My wife wants a studio apartment and I want to live on a boat. We shall each receive about $170,000. We both receive the Age Pension and a small UK pension. I want to spend as little as possible on my boat and put the balance of my share in a term deposit. I know I can get rent assistance with the marina berth cost but if I am to lose the pension, it is not viable. It is also not viable if I spend a lot on the boat, as I would not have enough to pay my rent. I guess my wife will be in the same boat, no pun intended. How much can I spend on the boat and how much can I put in a term deposit so I lose only the minimum in pension entitlements? Rent at the marina is approximately $160 a week. Would this be a question better suited to an accountant?
A. Provided by Centrelink
There are many people who receive income from investments and/or employment but who are also entitled to a part-rate pension payment.
Broadly speaking, a single person who would otherwise qualify for the Age Pension can receive income of up to $1,485.80 per fortnight, before they lose their entitlement to a part rate pension. If it is derived from employment, the cut off is even more generous as only half of the first $500 per fortnight of employment income is assessed.
Under the assets test, single homeowners with less than $626,000 in other assets (not including their family home), will also generally be eligible for a part-rate pension.
If you’re not sure what you might be entitled to receive, the best thing to do is to apply. Simply call 13 2300 or visit your local Centrelink office. Don’t self-assess or make assumptions about what you may or may not be entitled to. Everyone’s situation is different.
It’s important to remember, that if you’re finding things difficult financially, Centrelink has a Financial Information Service available at no cost, whether you’re a Centrelink customer or not. They are available by calling 13 2300.
Age Pension and Australian residency
The pull of living in Australia may be the promise of a better life or the need to be nearer family but how do you cope financially when you’re not eligible for the Age Pension?
Q. Karen
I am hoping you can help me determine a way to help my ageing parents (78 and 77) who, since their UK pension has been frozen and exchange rates have dropped significantly, are struggling to get by on less than $1,300 per month, with rent payments of $1,000 per month. They both have Commonwealth Concession Cards but no Seniors Card. Mum is diabetic and dad has to have several medications for blood pressure and other minor ailments.
Unfortunately, they emigrated around the time the changes came into effect, whereby people of Age Pension age had to reside in Australia for 10 years before being able to obtain an Australian Pension. Both parents were receiving UK government pensions when they left the UK and this amount has remained the same totalling $1,300 per month between them. They arrived in Australia on 12 November 2000, so in effect on 12 November this year they will have completed their 10 years. During this period my husband and I have subsidised their living as much as possible and watched as their life savings dwindled away to now zero (these were actually quite low and something they hoped to keep on one side to cover burial costs). As it is now, although I have managed to obtain a special benefit payment for my mother, they live a life of poverty afraid to use air conditioners or heating and not being able to pay for much needed dental work.
Can you suggest a way they could qualify for the Age Pension or further Centrelink assistance?
A.
As you are aware, to lodge an Age Pension claim you must be an Australian resident and you also need to meet the 10-year qualifying Australian residence requirements, unless you are claiming under an International Social Security Agreement. Unfortunately, there is currently no International Social Security Agreement with the United Kingdom.
You have already been in contact with Centrelink to apply for a Special Benefit Payment for your mother. However, it’s still worthwhile contacting Centrelink for information on local and community agencies within your area which may be able to assist your parents. Visit your nearest Centrelink Customer Service Centre to speak to one of their staff.
Will I get a pension?
YOURLifeChoices subscriber, Barb, and her husband are looking forward to the next stage of their lives together but are keen to know what they will get from Centrelink.
Q. Barb
I am retired and turn 64 in April. My husband works and turns 65 in February. He intends working on for a while and we will take advantage of the Pension Bonus Scheme. What I would like to know is if I’m entitled to a part pension from April and if so, how much approximately? Also, would I get a health care card? My husband grosses $50,000. That is our only income.
A.
The Pension Bonus Scheme was closed for new entrants on 20 September 2009 and has been replaced by a new scheme called the Work Bonus, for which your husband may be eligible.
The Work Bonus is an incentive for workers over Age Pension age to stay in the workforce. Under the Work Bonus, half of the first $500 of fortnightly employment income is disregarded from the income test for pensioners over Age Pension age. For more information, visit the Centrelink website – Work Bonus factsheet.
The Age Pension is an income and asset tested payment. You are assessed against both the income and assets tests and paid under whichever produces the lower pension rate. Income includes, but is not limited to, work earnings (less the Work Bonus amount, if you are eligible), superannuation and interest from savings and investments. For a member of a couple to be eligible for the Age Pension, your income must be below $59 124 gross per annum. This level will be adjusted in April 2010 in line with the cost of living.
You can find more information about the income test for the Age Pension on the Centrelink website: Income test for pensions.
Any assets owned by you or your partner, excluding your home, may also affect your eligibility for the Age Pension. You can find information about the assets test on the Centrelink website: Assets test.
If you are assessed as eligible for the Age Pension, you will also receive a Pensioner Concession Card. You can find out more about the Pensioner Concession Card on the Centrelink website: Pensioner Concession Card.
If you are over Age Pension age but do not qualify for the Age Pension, you may be eligible to receive a Commonwealth Seniors Health Care Card (CSHC). To be eligible, a couple must have an annual combined taxable income of less than $80 000. You can find out more about the eligibility criteria for the CSHC on the Centrelink website: Commonwealth Seniors Health Care Card.
We strongly encourage you and your husband to contact Centrelink to discuss your individual circumstances. Centrelink offers a free Financial Information Service (FIS) that can help you to plan effectively and maximise your overall income in retirement. You can speak to a FIS officer by calling Centrelink on 13 2300.
Age Pension asset limits
YOURLifeChoices subscriber, Ian, is confused as to why his father will lose half his pension despite being within the published Centrelink asset limits.
Q. Ian
My father has recently sold his house. This money is now in the bank as savings and is below the Centrelink asset limit of $296, 250. On declaring the sale of the house to Centrelink, they state that he will lose approximately half his fortnightly pension.
I am a little dumbfounded as to how they can advise to an 85 year old, this sort of information, given that we have based our calculations on the information they have on their website.
A. It’s important to highlight that pensions are subject to two means tests, called the income and assets tests. Centrelink works out the pension rates under the income test and the assets test and pays whichever is the lower of the two rates.
There are a number of different factors that may affect the rate of a pension. Here is a link to some information on the Centrelink website about what assets Centrelink will take into account when assessing the rate of Age Pension to be paid - Centrelink website - Assessable assets.
Under the pension income test and allowance income test, any income you get from financial investments is assessed under one simple set of rules, known as deeming. Centrelink uses deeming to assess income from financial assets such as bank accounts, term deposits, shares and managed investments. This means Centrelink assume financial investments are earning a certain amount of income, regardless of the income they actually earn. Centrelink add up the customer’s financial assets, then apply the deeming rates rather than using the actual dividends or interest earned. Here’s a link to a factsheet about deeming - Centrelink website - Deeming factsheet
If your father is unsure about how his payment rate is being calculated, he should talk to Centrelink by telephoning 13 2300 or visit his local Centrelink Customer Service Centre. He can also make an appointment to see a Centrelink Financial Information Services Officer free of charge to discuss how his individual circumstances may affect his payment rate.
Your father may also wish to authorise you (or another person) to handle his business with Centrelink on his behalf. This person is called a ‘nominee’. Nominee arrangements are usually voluntary and can be cancelled at any time by contacting Centrelink. Here is a link to a factsheet about nominee arrangements available on the Centrelink website - Nominees factsheet.
Budget Q&A
YOURLifeChoices has received many questions as to how the budget changes will affect pension payments. We have a selection to which Centrelink have very kindly provided the answers.
Q. Recent Budget announcements regarding Age Pension
A. Provided by Hank Jongen, General Manager, Centrelink
For couples, the increase of $10.14 per week ($20.28 per fortnight) represents an increase to the amount currently received through the various allowances and supplements paid to pensioners.
For singles, the basic rate will rise by $32.49 per week, which comprises a $30 per week increase to the base rate, plus an increase of $2.49 per week to the current allowances and supplements paid to them.
From September 2009, the existing allowances and supplements will be replaced with a new Pension Supplement which incorporates and replaces the Utilities Allowance, Pharmaceutical Allowance, GST pension supplement and Telephone Allowance.
The Pension Supplement will incorporate the higher rate of Telephone Allowance for all pensioners, regardless of whether they have internet connections.
The Pension Supplement will be paid fortnightly. From July 2010, pensioners will have the choice to receive some of their supplement quarterly, reducing the amount provided fortnightly.
This is designed to allow pensioners the flexibility to have some of the supplement paid when major household bills are due.
Whether annual supplementary payments are made to any Centrelink customer group is a matter for the Government. The 2009-10 Budget did include permanent, annual supplements for carers of $600. Many on the Age Pension also receive Carer Allowance and will benefit from this annual payment.
Pensioners received bonuses of $1400 for singles and $2100 for couples as part of the Economic Security Strategy last December.
For more information about the changes for pensioners in the recent Federal Budget, visit the Centrelink website - Secure and Sustainable Pensions, or contact Centrelink by phone on 13 2300.
We have received several questions regarding one party in a couple reaching retirement age before the other.
Q. When you are of Age Pension age but your partner is not.
A. Provided by Hank Jongen, General Manager, Centrelink
If you are a member of a couple you may be eligible for the partnered rate of Age Pension. This is the case even if the other member of the couple is not receiving a Centrelink payment. For more information is available on the Centrelink website - Payment rates for Age Pension.
The Age Pension is an income and assets tested payment, and in calculating your eligibility and rate of payment Centrelink will take into account you and your partner’s combined income and assets. For more information about the income test, see the Centrelink website - Income test for Age Pension.
Under the assets test, if you are eligible for Age Pension while your partner is not, you will be assessed under the one partner eligible assets test. For more information, visit the Centrelink
website - Assets test for Age Pension.
For more information, please contact Centrelink on 13 2300.
Q. Elizabeth
I am 69 years old and my husband Frank 72. He is on an age pension. I am on the carers pension and the carers allowance as I look after him he has cancer as well as many other illnesses.
Will we both receive an increase and what will it be?
I have phoned Centrelink but the lines were very busy.
A. Provided by Hank Jongen, General Manager, Centrelink
In this situation, you will receive the increase of $10.14 per week for couples. This represents an increase to the four supplements and allowances you currently receive. These are being combined into the new Pension Supplement, which will be paid fortnightly with your pension. From July 2010 you will be able to choose, if you wish, to receive some of the supplement on a quarterly basis.
Those of Carer Payment will also receive an annual $600 Carer Supplement. This is also paid to those on Carer Allowance. This supplement has now been made permanent and will be paid annually in July (in 2009 it will be paid from June.) In your circumstances, you will receive two lots of $600 annually for a total of $1200.
Have you got a Centrelink related question? Email and we will try and get it answered!
Retirement income options
YOURLifeChoices subscriber, Martin, is nearing retirement age and is keen to know how best to make the most of his money in retirement
Q. Martin
I wonder if you can offer some retirement assistance, I reach retirement age in late May. I need/wish to continue working. I am casually employed and earn approx $38k annually. My employer is happy to work my hours to best suit pension requirements. I have little savings and very little super. My question is should I work as hard as I can so as to get the Centrelink bonus at age 70, or get partial pension some casual work and pay extra super? I am not clear of the criteria.
A. Provided by Hank Jongen, General Manager, Centrelink
The Pension Bonus Scheme may be suitable for you as you intend to work past retirement age, however some people may be better off financially if they claim Age Pension or a Veterans’ Affairs Service Pension while they work.
This can depend on:
· your current level of income and assets
· the amount of income you need in retirement
· taxation issues
· superannuation, and
· health and lifestyle issues.
Centrelink offers confidential, free, independent and expert information through the Financial Information Service (FIS). FIS Officers can give you information to assist in planning for your future and retirement. When deciding whether to claim age pension or defer the claim to the Pensioner Bonus Scheme, I recommend you speak to a FIS Officer who can give you information about the range of Centrelink payments and services available to you.
More information about the Pension Bonus Scheme is available in a booklet published on the Centrelink website
FIS Officers can also help you plan when to claim your bonus. To make an appointment with a FIS Officer or ask for material on investment planning, call Centrelink on 13 2300.
Income & asset limits
Dorothy, and AboutSeniors subscriber and her husband are looking forward to their new life in a retirement village but would like to know how much cash they can keep in their bank account before their pensions are affected.
Q. Dorothy
My husband and I are both pensioners and we are considering selling our home and moving into a retirement village when we sell our home and have bought into a retirement vilage we will have some money over to help with the expenses for the forseable future what we are not sure about is how much money can we have in our joint bank account before our pensions will be affected. we donot have any investments only our bank accounts.
Could you please clarify this for us so we can proceed with our plans
A. Supplied by Hank Jongen, General Manager, Centrelink
Before you and your husband make any decisions, I strongly recommend you make an appointment to see a Centrelink Financial Information Services Officer (FISO).They can look at your individual circumstances and provide information about the impact this may have on your Centrelink payments.
Centrelink’s Financial Information Service is free and confidential and helps people to make informed decisions about investment and financial matters for their current and future financial needs. To make an appointment to speak with a FISO call 13 2300.
In the meantime, here are links to some useful information about the Assets & Income Tests available on the Centrelink website. I’ve also included a link to a factsheet about Deeming Rates, as any interest earned off the money in your bank account will be considered income and may affect the rate of your pension.
Centrelink website - Income & Assets Test for Age Pension
Centrelink website - Deeming factsheet
