Q: Can you explain how Centrelink assess my income and assets in determining my entitlement to the Aged Pension?
A: You are typically eligible to apply for the Age Pension if you were age 66 or older at 1 July 2019. Men or women born on or after 1 July 1955 will have an older qualifying age. If you were born 1 January 1957 onwards, you will not qualify for the Age Pension until age 67.
Your Age Pension entitlement is subject to means-testing. There are two components of the means-testing; an Asset Test and an Income Test. Centrelink uses the test that generates the lowest eligible pension amount to determine the rate of Age Pension you receive.
Under the Asset test, if you are Age Pension age, generally all of your assets are counted at current market value, including Superannuation. Your family home that you reside in, as well as certain other assets, are exempt under this test.
The Asset test reduces your Age Pension by $3 per fortnight for each $1,000 that the assessed value of your assets exceeds the threshold. A single homeowner may have assets valued at $263,250 before the Asset Test reduction commences. A single non-homeowner may have assets valued at $473,750. For a homeowner couple, the threshold is $394,500 before the Asset Test reduction commences. Non-homeowner couples may have Assets valued at $605,000.
Under the Income test, rental income and wages earned from work are included in the calculation of your Centrelink assessed income. Although the actual amount counted may be reduced due to certain rental property expenses or the Work Bonus.
In addition, financial investments you own such as cash, term deposits, shares and pensions will be deemed to earn a set rate of return, regardless of what the actual amount received is. If you are single, the first $51,800 of investment assets is deemed to earn 1% and thereafter 3%. For a couple, the threshold is $86,200. This deemed amount is added to any other income you earn to calculate your Centrelink assessed income.
For a single person, the Income Test reduces the Age Pension by 50 cents per fortnight for each dollar of assessed income over $174 per fortnight. Couples can have $308 per fortnight of assessed income, then the Income Test reduces each person’s Age Pension by 25 cents per fortnight for each additional dollar of combined assessed income of the couple.
Currently, the Full age Pension including pension supplement and energy supplement is $933.40 per fortnight for a single person or $1,407 for a couple combined.