Andrew from Vista Financial

Australian Age Pension Information Thread

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    This thread has been written to provide an overview of the Australia Age Pension system.

     

     

     

    Eligibility

    Generally to be eligible to the Australian Age Pension you will need to be in Australia and a permanent resident/citizen at the time of applying and generally need to have been in Australia for a continuous period for at least 10 years or for a number of periods that total more than 10 years with one of the periods totally more than five years.

     

    The age of eligibility is being equalised to age 65 for men and women and will gradually be phased back to age 67.

     

    Payment amounts

     

    Currently the Age Pension is around $30,000 annually for couples and around $19,000 annually for a single person.

     

    Means Testing

     

    The Australian Age Pension unlike the UK Basic State Pension is ‘means tested’ based upon one’s assets and income streams.

     

     

    The income and assets test is applied (described below) and the outcome that produces the lowest result is used to determine the payment amounts.

     

     

    Income Test

     

    A couple can effectively receive up to around $7,000 annually of Centrelink assessed income without reduction to the Age Pension amount under the income test.

     

    If Centrelink assessed income is over around $67,500 annually then no Age Pension is payable at all.

     

    (The thresholds are different for singles)

     

    Assets Test

     

    If a couple have over the Centrelink threshold in assets currently $273,000 excluding the family home then the Age Pension amount received starts to reduce gradually depending on the amount of assets held over the $273,000.

     

    If Centrelink assessed assets are over $1,050,000 then no Age Pension is payable at all.

     

     

    (The thresholds are different for singles and non-home owner couples)

     

     

    For further information on the please see here Australian Age Pension information

     

     

    Potential Strategies

     

    There can be perfectly legitimate ways whereby it is possible to receive a higher amount of Australian Age Pension than first thought by structuring and rearranging assets and liabilities slightly differently.

     

    A couple of examples of this are:

     

    • When Centrelink apply the ‘Income and Assets Test’ they ignore monies held in Superannuation if the person is under Age Pension age.

    Therefore if a member of a couple is over Age Pension age and one is under Age Pension Age moving assets into Superannuation in the name of the person under Age Pension age could be a consideration which could then mean an increase Age Pension payments for the person over Age Pension age.

     

     

    • Another is that the Centrelink Income Test is more favourable if someone has money held in an Account Based Pension as opposed to in the Bank or in a Super Fund.

     

    Therefore for people approaching retirement that may be over the ‘Income Test’ threshold in retirement then transitioning assets eventually into an Account Based Pension could be a way of reducing income under the ‘Income Test’ thus potentially increasing the Age Pension payment amount received.

     

     

     

     

     

    I hope this helps with some basic understanding of how the Australain Age Pension operates, if you have any questions about this thread please ask below.

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    Guest Guest5035

    whats the age for accessing ones super and how much can one access, ie can you get it at 55 if born before a certain age?

     

    stevo

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    Hi Stevo

     

    The earliest age at which preserved Super can be accessed is currently age 55 if born before 1 July 1960 (this is called preservation age).

     

    As you were born in 1958 this would mean that preservation age for you is age 55 :)

     

    However to access it fully one has to be retired from the workforce or age 65 although if neither of these are applicable it may still be possible to access up to 10% annually.

     

     

    Andy

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    Guest Guest5035

     

     

     

    although if neither of these are applicable it may still be possible to access up to 10% annually.

     

     

     

    Andy

     

    Andy, this sounds interesting, how does it work

     

    stevo

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    Hi Stevo

     

    The earliest age at which preserved Super can be accessed is currently age 55 if born before 1 July 1960 (this is called preservation age).

     

    As you were born in 1958 this would mean that preservation age for you is age 55 :)

     

    However to access it fully one has to be retired from the workforce or age 65 although if neither of these are applicable it may still be possible to access up to 10% annually.

     

     

    Andy

     

    Looks like Mrs Cooler will be funding my playboy lifestyle when I retire at 65!

     

    Cooler

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    Hi Andy,

     

    Great info as usual.

     

    What would be the situation if someone worked in Oz for 13 years then went back to the UK.

     

    However, if they now want to return and are over retirement age would they be entitled to the state pension once they become a citizen?

     

    Not too sure if they paid any Super when working there in the late 60's and 70's.

     

    Cheers

     

    Misp

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    Hi Andy,

     

    Great info as usual.

     

    What would be the situation if someone worked in Oz for 13 years then went back to the UK.

     

    However, if they now want to return and are over retirement age would they be entitled to the state pension once they become a citizen?

     

    Not too sure if they paid any Super when working there in the late 60's and 70's.

     

    Cheers

     

    Misp

     

    HI Misp

     

    I wouldn't be able to say for sure without understanding their full situation but potentially yes.

     

    Firstly, they would need to be in Australia and a permanent resident/citizen at the time of applying.

     

    Secondly, have been in Australia for a continuous period for at least 10 years or for a number of periods that total more than 10 years with one of the periods totally more than five years.

     

    Thirdly, as the Australian Age Pension is means tested paying into Superannuation is not a requirement.

     

    HTH,

     

    Andy

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    This is a very helpful article. I would be interested to hear Andrews views on our situation. We have lived in Australia for 3 years, 2 of those as temporary residents, and 1 year as permanent residents, on a contributory Parent Visa. We are now back in the UK, and I have always said that I would not move to Australia to be poor, due to the exchange rate and living on UK pensions which are frozen if we move to Aus.

    From the information supplied by Andrew, it appears that if we come back to Aus. and live there for another 7 years we would be entitled to an Australian pension providing our income was below a certain threshold. Is this correct? as it could make a difference to our decision. I would add that I am now 69 so hopefully have a good few years left to enjoy life!.

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    This is a very helpful article. I would be interested to hear Andrews views on our situation. We have lived in Australia for 3 years, 2 of those as temporary residents, and 1 year as permanent residents, on a contributory Parent Visa. We are now back in the UK, and I have always said that I would not move to Australia to be poor, due to the exchange rate and living on UK pensions which are frozen if we move to Aus.

    From the information supplied by Andrew, it appears that if we come back to Aus. and live there for another 7 years we would be entitled to an Australian pension providing our income was below a certain threshold. Is this correct? as it could make a difference to our decision. I would add that I am now 69 so hopefully have a good few years left to enjoy life!.

     

     

    Hi Hayshake

     

     

    Have a look here http://www.humanservices.gov.au/customer/enablers/centrelink/age-pension/eligibility-for-age-pension unfortunately Australian resident for visa purposes is classed as a permanent resident or Citizen not temporary resident (certain expemptions apply for special category visas).

     

    I would suggest that this would mean only 1 of your 3 years would be taken into account and therefore a further 9 would be required. However with these things especially when residency is involved it can be complex and I would suggest that you also contact Centrelink to clarify http://www.humanservices.gov.au/customer/contact-us/international-phone-numbers

     

     

    Regards

     

    Andy

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    Guest bage4e

    i'd like to know the amount of age pension with 20 years of residency.

    thank you

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    i'd like to know the amount of age pension with 20 years of residency.

    thank you

     

     

    Hi

     

     

    In Australia the amount you receive if eligible is not based on years of residency it is based on the assets and income test.

     

    Have a look at my first post on this thread as it explains the 'Assets and Income Test' in a bit more detail.

     

    To understand how much you might be entitled to I would have to understand your full financial position i.e what you own (your assets) and what income streams you have and amounts as well as your personal details i.e date of birth, marrital status, employment situation etc etc

     

     

    Regards

     

    Andy

    Edited by Andrew from Vista Financial

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