.png)
Video transcript - Centrelink Age Pension
Welcome back to BUSSQ's Retire Happy series.
The money you use to fund your retirement may come from various sources including the Centrelink age pension.
Let's talk about the age pension, how eligibility is assessed, and how it may interact with your super.
Your eligibility for the age pension will generally come down to three things.
The first is your age. Most people qualify at age 67. The second is your residency. You must be an Australian resident and physically present in the country on the day that you submit your claim.
You must have lived in Australia for at least 10 years and continuously for five of those years.
If you're the right age and you meet residency requirements, the third requirement is a means test made up of two tests, an income and an assets test. The age pension is means tested.
So to be eligible you must have income and assets under certain limits.
You're assessed under both tests and whichever test you do worse on is the one Centrelink applies to determine whether you get an age pension and if so the amount of your payments.
With the income test, Centrelink will consider all sources of income, including those you might receive outside of Australia as part of its assessment. While income from employment is counted as straight income, income from bank accounts, investments, super if you've reached age pension age, and retirement income accounts are assessed using a deeming method. This means the actual income you receive from investments is not assessed, but a deeming rate is applied to the investment balance.
For example, if you had $100,000 in an investment and the deeming rate was 2%, then you would be assessed as having $2,000 income for that year. The deeming rate varies depending if you are single or part of a couple and whether you receive pension from Centrelink.
Deeming rules can be found on the Centrelink website. So, varying the income you receive from your income account may not impact the income test for the Centrelink age pension.
The income test doesn't include some types of income such as rental assistant payments, payments through NDIS packages, emergency relief payments, and regular payments from a close relative.
As shown on the screen, you can see the threshold amount of what you can earn before it impacts the age pension. And the higher cut-out amount is the income where the age pension stops.
The asset test looks at all your assets excluding your home in most circumstances. It's important to know that your principal place of residence is an exempt asset in Centrelink's calculation.
For people living on acreage, the exemption applies to two hectares of land on the same title.
The asset limits change depending on whether you're a homeowner or non-homeowner.
The limits are shown on the screen. The asset test has a lower limit and if you are under that, you may be eligible for the full age pension.
There is an upper limit and if you exceed that you generally won't receive any age pension.
If you are somewhere in between you should receive a part pension.
If you meet eligibility for the full pension the slide shows the current fortnightly payments for a single and a couple.
Remember while funds are in super and you are underage pension age which is usually 67, Centrelink does not count them towards the means test, but once you start an income account they are counted.
Once you are over 67,the funds are counted regardless of if they are in super or an income account.
Join us in the next clip where we talk about the benefits of advice and fine-tuning your retirement plan.
