Age pension increase: are you getting everything you’re allowed?

Seniors are being urged to move fast to maximise their pension payments and other concessions as the cost of living bites.

More than 4.7 million Australians are being handed a welcome increase in their pension and allowance payments from this week, but some do not receive everything they are entitled to.

The 3.7 per cent rise, part of the government’s twice-yearly indexation of pensions, lifts the full fortnightly age pension payment to $1064 for singles and $1604 for couples combined.

Australia’s pension age is 67 – or earlier if you were born before 1957 – and there are 1.8 million people on a full pension, with another 782,000 receiving a part pension because Centrelink’s asset test or income test drives down their payments.

Seniors can access a wide range of extra benefits and discounts if they qualify for just one dollar of age pension.

Later Life Advice founder Brendan Ryan says “pension concessional entitlements are worth thousands of dollars” so it can be worthwhile qualifying for if you are near the thresholds.

He suggests checking with your state government, local council and utilities to understand the range of benefits and discounts that come on top of the age pension.

“Get a clear picture of what you are entitled to,” he says.

“Some people are put off applying because it’s complex.”

Retirees are urged to focus on whether they are maximising pension payments. Picture:iStock

There are several ways to get a bigger pension, including financial products, gifting, funeral bonds, renovations or simply spending more money.

Ryan says some people indulged in “revenge travel spending” after the pandemic, taking expensive holidays that also reduced their assets assessable by Centrelink.

CONTROL SPENDING

Financial strategist Theo Marinis says spending unnecessarily to lower your assets to get some extra pension is “cutting off your nose to spite your face”.

“Don’t do anything just to get extra Centrelink,” he says.

“You are better off getting a little less Centrelink and have more investment assets and income.”

Marinis says people whose assets are just above Centrelink thresholds can consider gifting money to their children as an early inheritance. Gifting is limited to $10,000 in a financial year and $30,000 over five financial years.

Funeral bonds can be “a good idea”, Marinis says. They are money set aside to cover your funeral costs, and are offered by life insurance companies and friendly societies.

Up to $14,000 invested in a funeral bond is Centrelink exempt, but locked away until you die. “Your estate will get that money, whatever it has grown to,” Marinis says.

He says some annuities and income streams are partially exempt from Centrelink testing, following changes in recent years. “Most life insurance companies have them,” he says.

CENTRELINK CHECK

Also check that your financial records with Centrelink are accurate, especially if you have used up some assets in recent years.

“Make sure what they are assessing now is where you are at,” Marinis says.

“Sometimes, when they change systems, they double up, so make sure it’s correct.”

Renovating your home can deliver a double-benefit – a nicer lifestyle and a bigger pension.

“Any improvements to your home are Centrelink exempt and capital gains tax exempt,” Marinis says.

Pensioners received a 3.7 per cent increase from March 20. Picture: iStock

“Then down the track you can downsize and put the money back into super,” he says.

Moneysmart.gov.au says people reaching pension age may also be eligible for government benefits such tax offsets, health care benefits and other concessions.

“For questions about government benefits, call Centrelink’s older Australians line on 132 300,” it says.

“Ask to speak to a Financial Information Service (FIS) officer for free.” The helpline is open from 8am to 5pm Monday to Friday.

HEALTH CARD BOOST

Ryan says some people who do not qualify for any age pension because of their assets can still get Commonwealth Seniors Health Card, delivering cheap medicines.

“Last year there was an increase, with 50,000 more people now eligible for the CHSC,” he says.

The card is income tested only, and in November 2022 the income thresholds jumped from $57,761 to $90,000 for singles, and from $92,416 to $144,000 for couples.

CENTRELINK ASSETS TEST THRESHOLDS

To get a full pension, your assets must be below these thresholds:

Single homeowner $280,000

Single non-homeowner $504,500

Couple (combined) homeowner $419,000

Couple (combined) non-homeowner $643,500

For a part pension, your assets must be below these thresholds:

Single homeowner $634,750

Single non-homeowner $859,250

Couple (combined) homeowner $954,000

Couple (combined) non-homeowner $1,178,500

Source: servicesaustralia.gov.au

Originally published as Age pension increase: are you getting everything you’re allowed?