Changes to the Age Pension

As most people know the age pension is subject to quarterly reviews that index a number of key numbers used by Services Australia to calculate age pension and other entitlements.

This October there are several changes you should be mindful of. The first and most significant of these changes is the deeming rates used for the income means test, which has increased by 50 basis points.

This will increase the amount of income Centrelink estimates you should be earning on your savings even if you are not and they then use these estimates to determine whether you pass or fail the income test.

All things being equal, the increase in the deeming rate will mean more income is deemed to have been earned from the financial asset, which in turn should reduce your age pension entitlement.

The second major change is that the maximum rate of age pension will increase by $29.70 per fortnight for a single age pensioner and by $44.80 per fortnight for a pensioner couple who are both eligible for the age pension.

Thirdly, the part pension cut-off limit will now be $2,575.40 a fortnight for single age pensioners,  and $3,934.00 for couples,  which is an increase of $59.40 and $89.60 respectively.

As the part pension cut-off limit is tied to the maximum age pension amount, but due to the calculations, increases by twice the increase in the maximum age pension amount as the withdrawal rate is 50 per cent.

So if you were previously excluded from the age pension due to the application of the income means test by a small amount then you too should also consider reapplying for the age pension.

Finally, the taxable income limit for entitlement to the Commonwealth Seniors Health Card will increase by $2,080 a year to $101,105 a year for individuals and $161,768 for couples – an increase of $3,328.

So again if you have applied for a Health card in the past and missed out due to your income being slightly above the limit, then you should think about re-applying.