Choosing the right Pension

Debbie McTaggart explains the different features of the Age Pension and the Disability Support Pension for those in need.

Q. Margaret
I am approaching 65 and have been contacted by Centrelink to see if I wish to move from my Disability Support Pension (DSP) to an Age Pension. I am not sure which option is better for me. Can you advise the difference between these entitlements?

A. If you are receiving a DSP and are approaching Age Pension age, you will receive a letter from the Department of Human Services asking if you wish to switch to the Age Pension. This is an important decision as once you switch, you can’t revert to a DSP and you may lose some of your allowances.

The Age Pension is generally the most appropriate payment for people who are over Age Pension age. The rate of payment, income and asset tests and concession card provided to age pensioners are the same as for the DSP. Also, once you reach Age Pension age your payment will become taxable, whether you remain on DSP or transfer to an Age Pension.

To help clarify which may best suit your individual needs, it is worth understanding the following differences:

Age Pension

  • there is no medical eligibility review
  • if you are a carer, you may also be entitled to a Carer Allowance if you are on the Age Pension
  • there is no limit to how many hours you can work or volunteer
  • if you are intending to spend an extended period of time overseas, then the Age Pension is more generous
  • you can have more land exempted from the asset test under certain circumstances

Disability Support Pension

  • the higher rate of the mobility allowance is not paid to those on the Age Pension
  • if you are single and sharing private accommodation, you may be eligible for a higher rate of Rent Assistance
  • if you are studying you may be entitled to the Pension Education Supplement
  • Incentive Allowance is only paid to DSP recipients

Possibly the most compelling reason to switch to the Age Pension is if you plan to spend more than six weeks overseas. Changes which came into force on 1 January 2013 mean that, after six weeks, your DSP will be stopped unless you meet certain criteria. If you switch to the Age Pension you can remain outside of Australia for up to 26 weeks before your pension is affected. However, if you leave Australia within two years of switching to the Age Pension, then your pension will be stopped altogether.

You can find out more about how your pension will be affected if you travel overseas by reading the YOURLifeChoices article, Will I get a pension overseas?

You should contact Centrelink before making any decision to switch from one payment to another. Your individual circumstances will be taken into account and you will receive detailed information on how you will be affected.

Written by Debbie McTaggart