How Centrelink entitlements are calculated under the age pension
If you are at least 65 1/2 years old, you’re eligible to apply for the age pension. The maximum age pension is:
- $690.70 per fortnight for a couple.
- $916.30 per fortnight for a single.
Your entitlement is subject to means testing, comprising of two components, an assets test and an income test.
Under the assets test, all of your assets, with the exception of your family home, are counted at market value. The assets test reduces your pension by $3 per fortnight for each $1,000 that the assessed value of your assets exceeds the threshold.
- A couple who own their home are entitled to receive the full age pension if their assessable assets are less than $387,500 ($258,500 for a single).
- For a non-home owner couple, the threshold is $1,051,000 ($768,250 for a single).
Under the income test, government pensions, defined benefit pensions, distributions from trusts and private companies, rental income, interest and earnings from work are counted to calculate your assessed income.
Income from financial investments is deemed to earn a rate of return regardless of what the actual amount received is.
- For a couple the first $85,000 of investment assets is deemed to earn 1.75% and thereafter 3.25%.
- For singles, the threshold is $51,200. The deemed amount is included to calculate the assessed income.
For couples, the income test reduces each person’s entitlement to the age pension by $0.25 cents per fortnight for every dollar ($) of assessed income over $304 per fortnight. A single person can have $172 per fortnight of assessed income then the test reduces the pension by $0.50 cents per fortnight for each additional dollar of income.
The apply for the age pension, you need to register via your online myGov or Centrelink account. If you are unable to claim online, you must print and complete the Centrelink Age Pension form and Income and Assets form. You can apply individually or claim on the same form as a couple.
Applications can typically take 4 – 8 weeks to process, so don’t wait until you attain the relevant age. You may apply up to 13 weeks before you qualify for the Age Pension. From 31 July 2018, retrospective payment of the Age Pension is limited to the date when the application is accepted rather than when you lodge the initial request for the application. So the onus is on you to ensure you include all requirements to ensure you receive your entitlements as quickly as possible.
This article was first published on Wealth Partners Financial Solutions website by Andrew Heaven on 28 September 2018. Read article.
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