How to get the pension you’re entitled to

Australians are living longer healthier lives. But many worry about the impact of share market downturns on their retirement savings – or even of running out of money.

If you’re over 66, now’s the time to make sure you’re getting the Age Pension you deserve as recent changes to means testing for retirees could put more money in your pocket.

These changes affect the assessment of the following lifetime income streams that began on or after 1 July 2019:

    1. Lifetime superannuation pensions bought from a super fund, and
    2. Lifetime annuities you buy from a life company with your super or savings.

Lifetime income streams may help boost your Age Pension

Your rate of Age Pension is calculated using both an income test and an assets test. Not surprisingly, the test resulting in the lowest pension rate will apply.

Lifetime income streams are different to many other types of investments, such as bank accounts, account-based pensions and investment properties, where generally 100 per cent of the asset is assessable.

Certain lifetime annuities receive more favourable treatment from the assets test.

“Under the social security assets test, generally 60 per cent of the purchase price of certain lifetime annuities will count as an asset through to age 84, or for a minimum of five years. From then on, only 30 per cent of the purchase price counts as an asset,” explains Andrew Lowe, head of technical services at Challenger.

“Under the social security income test, 60 per cent of any payment you receive from this type of income stream is assessable as income for social security purposes.”

Don’t miss out on an Age Pension if you don’t have to

If you’re on a part Age Pension because of the assets test, investing in a lifetime income stream could raise your Age Pension payment.

See if you’re entitled to more Age Pension

We’re all different, but Mr Lowe gives the example of a retiree who was able to boost her annual Age Pension entitlement from $14,500 to $19,000 by investing part of her savings in a lifetime annuity.

That $4500 made a big difference for her. You may be able to boost your Age Pension by thousands a year and make your savings last longer – simply by changing how you structure your assets.

Lifetime annuities as a source of income

“People use lifetime annuities to complement other sources of retirement income. It’s rare to see 100 per cent coming from one source,” says Mr Lowe.

Put the means test to work for you

Your financial adviser can help you calculate your total spending requirements in retirement, covering both must-haves and nice-to-haves.

Mr Lowe says: “They’ll work out that number so you can compare it to the maximum Age Pension rate.”

If there’s a gap, then a lifetime annuity can help cover your basic living costs for life.

Find out if your retirement income will last for your lifetime

Challenger’s Retire with confidence tool is a simple and easy way to get your retirement income planning started online. Put your retirement income to the test and get results that show:

    • whether you may be eligible for the Age Pension or an increase in payments
    • how long your retirement savings may last, and
    • how much annual income you could get for life by adding a lifetime income stream to your retirement income plan.

Challenger is a preferred partner of YourLifeChoices.

Disclaimer: Age Pension benefits described above will not apply to all individuals. Age Pension outcomes depend on an individual (or couple’s) personal circumstances and may change over time. While lifetime income streams may immediately benefit some Age Pension eligible retirees who are assessed under the assets test, in later years, if assessed under the income test, any ongoing Age Pension benefits may be reduced. Consult your financial adviser about potential impacts on your personal circumstances and whether a lifetime income stream is right for you. The information in this email is provided by Challenger Life Company Limited ABN 44 072 486 938, AFSL 234670 (Challenger Life), general only and has been prepared without taking into account any person’s objectives, financial situation or needs. Because of that, each person should, before acting on any such information, consider its appropriateness, having regard to their objectives, financial situation and needs. Each person should obtain and consider the Target Market Determination (TMD) and Product Disclosure Statement (PDS) before making a decision about whether to acquire or continue to hold the relevant product. A copy of the TMD and PDS can be obtained from your financial adviser, our Investor Services team on 13 35 66, or at All references to guaranteed payments from Challenger refer to the payments Challenger Life promises to pay under the relevant policy documents. Neither the Challenger group of companies nor any company within the Challenger group guarantees the performance of Challenger Life’s obligations or assumes any obligations in respect of products issued, or guarantees given, by Challenger Life.

Challenger Life is not an authorised deposit-taking institution for the purpose of the Banking Act 1959 (Cth), and its obligations do not represent deposits or liabilities of an authorised deposit-taking institution in the Challenger Group (Challenger ADI) and no Challenger ADI provides a guarantee or otherwise provides assurance in respect of the obligations of Challenger Life. Accordingly, unless specified otherwise, the performance, the repayment of capital and any particular rate of return on your investments are not guaranteed by any Challenger ADI.

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Written by Challenger Group

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