Centrelink Q&A: Should I switch to the Age Pension?

Man looking at paperwork

A YourLifeChoices reader on the Disability Support Pension is approaching Age Pension age and wants to know which payment would result in him being better off.

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Q. Kim

I am currently on a Disability Support Pension (DSP), and become eligible for the Age Pension in April 2024.

I’m trying to determine if it’s financially better to stay on the DSP or go across to the Age Pension. Depending on who I ask I get varying opinions, many of them anecdotal. 

A. We can’t give Kim a definitive answer, because a lot will depend on his circumstances – such as extra payments and allowances and his marital status – which he has not laid out in his letter.

At a basic level, the payments for both the Age Pension and the Disability Support Pension are the same.

However, you may get a higher rate of payment through the Age Pension because it has more generous levels for the income and assets tests.

You will also be eligible for the Work Bonus scheme.

Recipients of both payments are eligible for a Pensioner Concession Card (PCC), which allows you access to cheaper medicine, bulk-billed doctor visits and help with hearing services.

The attraction of switching to the Age Pension is you get the same money, but no longer need to have your disability assessed.

Travel advantages

You can also travel significantly longer on the Age Pension and still be paid. DSP recipients can only travel for 28 days in a 12-month period. After that their payments may be stopped.

People on the Age Pension can travel for up to 26 weeks in a year. However, after that the amount of pension payable depends on the length of time they had residency in Australia.

Some payments will stop if you transfer to the Age Pension such as the Pensioner Education Supplement and rent assistance payments also vary between the two pensions but, generally, there is a higher rate of Rent Assistance on the DSP.

If you have been invited to apply for the pension, regardless of your decision, you must inform Centrelink about your superannuation. If you fail to do this, Centrelink may stop your DSP once you reach pension age.

Have you ever switched pensions? What motivated your decision? Why not share your experience in the comments section below?

Also read: How will Centrelink assess excess land

Written by Jan Fisher

Accomplished journalist, feature writer and sub-editor with impressive knowledge of the retirement landscape, including retirement income, issues that affect Australians planning and living in retirement, and answering YLC members' Age Pension and Centrelink questions. She has also developed a passion for travel and lifestyle writing and is fast becoming a supermarket savings 'guru'.

One Comment

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  1. One thing that the article did not make clear is that if you have superannuation and on a DSP, when you reach pension age, the superannuation balance is regarded as an asset under the asset test. I assume that also applies to the DSP. I was on a DSP with significant superannuation and that was treated like cash in the bank that could be drawn on application. I was receiving my full rate of DSP and all the benefits that go with it. I owned my home outright and rent assistance payments were not applicable to me.
    When I reached age pension age at 65 then, I converted from the DSP to age pension and I was assessed under the asset and income tests for the age pension. My superannuation was changed to income phase and I was required by Centrelink initially to draw a minimum of 4% of my superannuation balance a year. During coronavirus, this was reduced to 2% but is now back to 4%. The superannuation balance is taken into consideration once a year to determine the minimum that must be drawn.
    One year I did draw much more that the minimum amount as I needed money for home renovations and costs and my aged pension was switched to being assessed under the income which meant a reduction in my age pension payment. I live in Brisbane and get a general rates rebate when receiving the full aged pension. However, once my aged pension was reduced by even a small amount, I lost my full rate rebate which was worth $800 a year to me. There have been changes now to the Brisbane City Council rate rebate scheme so you don’t lose the full rebate now if your pension is reduced. I think you lose about 40%.
    I was lucky as I was able to get an appointment with a FISB financial adviser at Centrelink and they explained the implications of my drawing too much from my superannuation and was able to get me back on track to receiving the full pension again. The FISB staff are excellent, independent and knowledgeable. When you have a more complex matter that can affect your pension entitlements, they are highly recommended. They work within the Centrelink guidelines and rules but endeavour to deliver favourable advice to Centrelink clients.

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