Will I get a pension bonus now?

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Paula is contemplating retirement when she turns 64 next year but is unsure if she will get a pension.

Q. Will I get a pension?
I will be 64 in April next year and would like to think about retiring sometime soon after. My husband will turn 65 later this year but intends to carry on working and will take advantage of the Pension Bonus Scheme. His annual salary is currently $55,000, which will be our only income once I retire. Will I get any pension from Centrelink? And do I qualify for a health care card?

A. YOURLifeChoices
Firstly Paula, the Pension Bonus Scheme was closed for new entrants on 20 September 2009 and has been replaced by a new scheme called the Work Bonus, for which your husband may be eligible. Under the Work Bonus*, the first $250 of fortnightly employment income is disregarded from the income test for pensioners over Age Pension age. For more information, read Centrelink’s Work Bonus fact sheet.

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. Even before applying the income and asset tests however, you need to satisfy the basic conditions of eligibility, which relate to age and residency:

* age – men must be 65; for women this depends upon date of birth* (see table 1)
* residency – applicants must have been an Australian resident for a total of at least 10 years, five of which are in one continuous period (periods of residency in countries which have an International Social Security Agreement with Australia may count)

Table 1 – Age Pension age for women

*Beginning in 2017, the Age Pension age will be increased to 67 years at a rate of six months every two years.

Asset test
Under the asset test you are assessed as either a homeowner or non-homeowner. Certain assets are exempt, for example pre-paid funeral expenses and complying income streams. This can be a complex area and you can find out more by clicking the link to Centrelink’s Asset page. As of 20 September 2011, asset thresholds which will exclude you from receiving any Age Pension are detailed in table 2.

Table 2 – Asset thresholds

Situation

Homeowners

Non-homeowners

Single

$690,500

$825,500

Couple (combined)

$1,024,500

$1,159,500

Illness separated (couple combined)

$1,272,500

$1,407,500

One partner eligible (combined assets)

$1,024,500

$1,159,500

Income test
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. As of 20 September 2011, income thresholds which will exclude you from receiving any Age Pension are detailed in table 3.

Table 3 – Income thresholds

Situation

For full pension/allowance

(per fortnight)

For part pension

(per fortnight)

Single

up to $150

less than $1,661.00

Couple (combined)

up to $264

less than $2,542.00

Illness separated (couple combined)

up to $264

less than $3,286.00

You can find more information about the income test for the Age Pension by clicking the link to Centrelink’s Income test for pensions.

If you are assessed as eligible for the Age Pension, you will also receive a Pensioner Concession Card.

It is also worth noting that 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.

For more information on concession cards, refer to Concession cards explained.

As there are many factors which can affect your eligibility for the Age Pension, we strongly encourage both you and your husband to contact Centrelink to discuss your individual circumstances. Centrelink offers a free Financial Information Service (FIS) which 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.

You may also find it useful to read the Centrelink publications which are available to explain your entitlements.

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