Noel Whittaker tells how a few tweaks could boost your retirement income

The quarterly Age Pension adjustments come into play on 20 September and, thanks to inflation, all pensioners will get an income boost.

The pension rates are somewhat confusing because there are four changes a year. In July and January each year the thresholds are adjusted and in September and March Services Australia adjusts the amount of pension paid.

These changes can sometimes produce anomalous outcomes, and savvy pensioners should keep an eye on the changes to see if they can tweak their situation to achieve better financial outcomes.

The most recent pension changes took affect from 1 July. Because it only involved an increase in the thresholds, but not the amount of the pension itself, only part-pensioners received an increase in their pension.

That meant the most needy pensioners – those under the asset and income thresholds – got no pension increase at all, despite record inflation. In fact, they went backwards. But part-pensioners who were just over the bottom threshold ended up with a full pension because of the threshold increase.

For example, on 1 July 2023 the level of assets at which the pension starts to reduce for a couple rose from $419,000 to $451,500. That meant pensioners who were missing out on the full pension due to a tiny amount in excess assets ended up with the full pension because of a rise in the cut-off rate.

But when the rate of pension goes up, the upper limit threshold cut-off point automatically increases as well. So now retiree pensioner couples have cracked the million-dollar mark in assets; the cut-off point for a homeowner couple has risen from $986,500 to $1,000,003.

Given the sad state of government finances, there must be some who will be thinking, ‘Why should people with $1 million in assets, plus most likely a luxury home, be getting welfare?’

How the tests intersect

Note how the tests intersect: Centrelink tests you on both the income test and the assets test, and then applies the one that gives you the least pension. But the tests are out of kilter, which can lead to some unusual results.

For example, if you’re asset-tested, deeming is not relevant – it’s only used for the income test.

A couple with $1 million in assessable assets can earn $95,000 a year income because they’re not assessed under the income test. If those assets included $900,000 in financial assets, they would be assessed as having a deemed income of just $18,246 a year, but they still have scope to earn an additional $76,754 a year.

Many pensioners deprive themselves of future income by overvaluing their personal positions. The value of your furniture should be only what you would get for it if you sold it in a garage sale on a wet Saturday morning. This puts $5000 – tops – on most people’s furniture.

For assets-tested pensioners, every $10,000 reduction in assets is worth about $15 a week in extra pension. So by investing $15,000 in a funeral bond and giving $10,000 to charity or your kids, your pension could be increased by $37.50 a week. That’s a 7.8 per cent guaranteed return on your money.

Pension-friendly products

There are now pension-friendly products that may enable self-funded retirees to get a part pension and all the concessions to go with it. For example, a couple with $1.1 million in assessable assets could invest $300,000 in an approved lifetime income product. The term ‘approved’ means that only 60 per cent of its value is assessed for the assets test – it’s as if they’ve disposed of the other 40 per cent.

Their assessable assets would drop by $120,000 to $980,000 and they would qualify for a pension of $68 a fortnight plus all the concessions. They would also receive a lifetime income from the new product, which could be worth $20,000 a year, indexed, depending on their situation.

If you think these sorts of strategies may benefit you, talk to a good financial adviser.

Noel Whittaker is a leading authority on personal investing and financial advice and the author of 23 books including Retirement Made Simple. Go to to use the age pension calculator and the deeming calculator to check on your Age Pension eligibility.

Do you find the assets and income tests for the Age Pension confusing? Should there be a simpler method? Have your say in the comments section below.

Also read: Age Pension payment rates: 20 September 2023 to 19 March 2024

Noel Whittaker
Noel Whittaker
International bestselling author, finance and investment expert, radio broadcaster, newspaper columnist and public speaker, Noel Whittaker is one of the world’s foremost authorities on personal finance. He is currently an Adjunct Professor and Executive-in-Residence with the Queensland University of Technology, as well as a committee member advising the Australian Securities and Investment Commission.
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