In March, July and September of each year, the federal government changes the rules for claiming the Age usually for the better! Currently, the Age Pension income test thresholds and the Age Pension assets test thresholds are adjusted three times a year in line with increases in the Consumer Price Index.
Effective from 1 July 2018, the income test and assets test thresholds have been increased. The increase in the Age Pension income test thresholds mean eligible Australians can earn more income and can own more assets and still be eligible for a FULL or PART Age Pension.
Note: Age Pension rates increased, effective from 20 March 2018 (and applicable until 19 September 2018). A single person receiving a FULL Age Pension, can expect to receive $907.60 (including Pension Supplement and Energy Supplement) a fortnight, while a couple receiving a FULL Age Pension can expect to receive $1368.20 (combined) a fortnight, including Pension Supplement and Energy Supplement.
The investment markets have been volatile in recent times, which means the portfolios of retirees may have changed in value over the past few months (especially with the recent volatility on the Australian and international share markets). Volatile markets may also mean that previously ineligible Australians may now meet the income and assets tests, or that the level of entitlements for eligible Australians has changed.
How the Age Pension rules work:
An eligible individual must satisfy the Age Pension income test and the Age Pension assets test to receive a FULL, or PART, Age Pension. The amount of Age Pension will be based on the test that delivers the lowest amount on Age Pension entitlement. If an individual fails one of the tests, then he or she will not be eligible for the Age Pension. You must also satisfy a residency test.
A single person eligible for the FULL Age Pension can expect an annual Age Pension income (including Pension Supplement and Energy Supplement) of around $23,598.
A couple eligible for the FULL Age Pension can expect combined annual Age Pension entitlements (including Pension Supplement and Energy Supplement) of around $35,573.
FULL Age Pension and the assets test:
Subject to income test restrictions from 1 July 2018, a single home-owner can own up to $258,500 in assets (excluding the home) and still receive a FULL Age Pension. A home-owning couple can own up to $387,500 and receive a FULL Age Pension. The lower assets test threshold, for the FULL Age Pension, will be updated again from 1 July 2019. Since 1 July 2017 until 30 June 2018, a single home-owner can own up to $253,750 in assets (excluding the home) and still receive a FULL Age Pension. A home-owning couple can own up to $380,500 and receive a FULL Age Pension.
PART Age Pension and the assets test:
From 1 July 2018, a single home-owner can have $561,250 in assets (excluding their home) before they lose their small PART Age Pension entitlement. From 1 July 2018, a home-owning couple can have $844,000 in assets (excluding their home) before they lose their small PART Age Pension entitlement. Since 20 March 2018 until 30 June 2018, a single home-owner can have $556,500 in assets (excluding their home) before they lose their small PART Age Pension entitlement. Since 20 March 2018 until 30 June 2018, a home-owning couple can have $837,000 in assets (excluding their home) before they lose their small PART Age Pension entitlement.
AGE PENSION INCOME TEST
The LOWER threshold of the Age Pension income test, that is the income limit that entitles an individual to a FULL Age Pension, is adjusted in line with the Consumer Price Index on 1 July of each year.
FULL Age Pension and the Income test:
From 1 July 2018, a single person can earn $172 a fortnight (or the equivalent of $4,472 a year), before having the FULL Age Pension entitlement reduced, while a couple can earn $304 a fortnight (or the equivalent of $7,904 a year) before having the FULL Age Pension entitlement reduced. The lower income test threshold, for the FULL Age Pension, will be updated again from 1 July 2019. From 1 July 2017 until 30 June 2018, a single person can earn $168 a fortnight (or the equivalent of $4,368 a year), before having the FULL Age Pension entitlement reduced, while a couple can earn $300 a fortnight (or the equivalent of $7,800 a year) before having the FULL Age Pension entitlement reduced.
PART AGE PENSION INCOME TEST
From 1 July 2018, the income test UPPER threshold increases by $4.00 per fortnight (roughly $104 a year) for singles, and $4.00 per fortnight (roughly $104 a year), for couples. What this means is that a single person can earn $1,987.20 a fortnight (the equivalent of around $51,667 a year, although assessed fortnightly), while a couple (combined) can earn $3,040.40 a fortnight (the equivalent of roughly $79,050 a year), before they lose the entitlement to a PART Age Pension. From 20 March 2018 until 30 June 2018, a single person can earn $1,983.20 a fortnight (the equivalent of around $51,563 a year, although assessed fortnightly), while a couple (combined) can earn $3,036.40 a fortnight (the equivalent of roughly $78,946 a year), before they lose the entitlement to a PART Age Pension.