Everything you need to know about the Aged Pension

The Age Pension is a fortnightly payment, paid by the government, designed to support the basic living standards of older Australians. It is paid to people who meet age, residency and asset threshold requirements. Pension rates are  adjusted to align with Australian price and wage increases.

Most Age Pension payments are made by Services Australia. Age pensioners who also receive compensation payments from the Department of Veterans' Affairs (DVA) can have their Age Pension paid by either DVA or Services Australia.

Here we outline how to assess if you qualify for the aged pension, approximately how much you will receive, what the asset threshold is, how to apply for it and what the difference is between the aged pension and the disability pension.

How do I qualify for the aged pension?

To qualify for the Age Pension, you must be:

• an Australian resident (that is, living in Australia on a permanent basis) and
• in Australia on the day the claim is lodged.

 

According to the Department of Social Services, you must also satisfy one of the following:

• be an Australian resident for a total of at least 10 years, with at least 5 of these years in one period
• have a qualifying residence exemption
• be a woman who is widowed in Australia when both she and her late partner were Australian residents, and who has 104 weeks residence immediately before the claim
• be receiving Widow B Pension, Widow Allowance or Partner Allowance immediately before reaching pension age.

 

Special rules apply to residence in countries with which Australia has an International Social Security Agreement.

How much money will I receive?

Pensions are indexed twice a year, on 20 March and 20 September to account for changes in pensioners’ costs of living and wage increases.

The base pension rates are adjusted based on the higher of the increase in the Consumer Price Index and the Pensioner and Beneficiary Living Cost Index. After the adjustment for price increases, the rates are compared to a wages benchmark, and increased to meet the benchmark if necessary.

The wages benchmark ensures that the combined pension rate for a couple is at least 41.76% of Male Total Average Weekly Earnings.

For current Age Pension information, see the Services Australia.

 

What is the asset threshold for the aged pension?

The asset threshold will vary depending on your situation, and whether you are a homeowner or not. 

To learn more about current thresholds, please visit Services Australia - Assets Test.

The pension assets test requires people with substantial assets to use them for living expenses before seeking social security support.

The value of assets above the assets free area reduces pension payments by $3 per fortnight for each $1,000 in assets.

The pension income test is designed to encourage people to supplement their income support payments with other income if they are able to. 

For every dollar of income over the income free area, single pension is reduced by 50 cents, and for couples, their combined pensions are reduced by 50 cents.

 

What is the difference between an aged pension and a disability pension?

If you are currently in receipt of the Disability Support Pension and have reached the age of eligibility for the Aged Care Pension, you will be asked whether or not you would prefer to transfer to the regular Aged Pension. So what are the differences?

Similarities:

• The rate of payment for both is the same
• The income and asset tests used to determine rate of payment are the same
• Both pensions are considered taxable payments
• Both pensions will allow the partner to receive both carer payment and carer allowance.

 

Differences:

• The Disability Pension has ongoing medical review requirements. Age Pension does not.
• Disability Pension recipients may be eligible for a Pensioner Education Supplement and Education Entry Payment whereas this is not available via Age Pension.
• Both Disability and Age Pension receipts may receive a Mobility Allowance.
• There are limits that apply on volunteering when receiving an Age Pension but not with a Disability Pension.
• Those receiving a Disability Pension may be eligible for a higher rate of rent assistance when sharing a house with someone who is not their partner.

 

What documents do I need to apply for the aged pension? And how do I apply?

There are several things to consider when you’re preparing to claim the aged pension. Firstly, you can submit your claim in the 13 weeks before you reach the correct age to claim the aged pension.

You will then then to prepare and provide your supporting documents. The documents you need to provide will provide will depend on your circumstances. If you claim online, a list of documents required will be given to you. Read more about which documents you must supply before you can submit your claim.

You typically need to be an Australian resident and in Australia to claim the Aged Care Pension. However, if you've lived and worked in certain countries, Social security agreements may help qualify for the pension.

 

This blog is intended as a guide only and not to be used as a definitive explanation on the Aged Care Pension. For further information, please visit the Department of Social Services or Services Australia.