Age pension rise nears – are you getting all your entitlements?

The September 20 age pension increase is a chance for seniors to check they receive all they should – because many do not.

Pensioners getting a handy pay rise next week, but many are missing out on all the money they are entitled to.

Others do not make the most of the incentives available for seniors, or adopt strategies to maximise their pension income, retirement specialists say.

The September 20 age pension increase is $38.90 a fortnight for singles and $58.80 for couples, part of its twice-yearly indexation to reflect inflation and other cost and income data.

It takes the total maximum annual pension to $26,689 for a single and $40,238 for a couple, but they’re not the only important numbers to know. Seniors should understand thresholds and limits for assets and income tests, and exempt assets such as the family home and some superannuation.

Later Life Advice founder Brendan Ryan says there are about 40 different rebates, entitlements and concessions available to people on a pension.

“Even if you are eligible for a small amount of pension, you do have access to programs that support age pensioners and that can have a massive impact,” he says.

“It’s a game of vigilance … the thresholds do change. I think a lot of people miss out.”

If not getting a pension, understand why.

CHECK YOUR FINANCES

“Make sure Centrelink has the right valuations,” Ryan says.

Some seniors mistakenly value their assets as if new, but should instead use market value or “garage sale” value, he says.

Those who previously did not qualify for a full or part pension may find that recent reductions in their superannuation and other assets make them eligible now.

Pride Advice CEO Brett Schatto says he has seen some retirees miss out on $15,000 a year of pension income because they were told a decade earlier they had too many assets and had not checked more recently

“You can’t get back-pay,” Schatto says. “A lot of people don’t keep Centrelink updated.”

Pride Advice CEO Brett Schatto says some retirees have missed out on thousands.

A YOUNGER SPOUSE?

“There are situations where one member of a couple retires and their partner is younger,” Schatto says.

“For anyone under age pension age the money in super is not assessed as an asset,” he says.

This means the older partner can withdraw their super and put it in their spouse’s super so it won’t be examined by Centrelink under the spouse reaches retirement age.

FUNERAL PREPAYMENT

It sounds morbid, but paying for your funeral years in advance can provide more pension now.

Services Australia says people can either prepay to a funeral director or take out a funeral bond, which has an allowable limit of $14,000, and neither will be assessed in the Centrelink assets test.

“You only need to tell us about prepaid funeral expenses if you own a funeral bond,” it says.

PLAN GIFTING EARLY

Gifting family members money or assets can reduce your assets for Centrelink purposes, but there are strict rules and limits – $10,000 in one financial year and $30,000 over five financial years.

An asset you gave away five years ago no longer counts towards Centrelink assessments, so parents wanting to hand a holiday home to their children should do it well before pension age if they don’t want their pension affected.

“It’s good to see people five years before retirement,” Schatto says.

“This is why people should get advice.”

Ryan says people close to pension thresholds and chasing concessions can also consider renovate their home or “take a big holiday”.

“It’s a weird proposition to try and reduce your assets, but if you are on the cusp that make sense, Ryan says.

Some seniors may discover they are eligible for more pension payments. Picture: iStock

PENSION THRESHOLDS

ASSETS TEST

• For a full pension, a single homeowner must have less than $280,000 of assets and a non-homeowner $504,500. A couple must have less than $419,000 and $643,500.

• Pension payments reduce when people’s assets are higher, cutting out completely for a single homeowner with $609,250 and a non-homeowner with $833,750. Couples can have up to $915,500, or $1.14 million if they don’t own a home.

INCOME TEST

• Pensions reduce by 50c for every dollar of income received above a certain level, from sources including employment, superannuation and financial assets.

• It usually starts reducing at income of $190 per fortnight and cuts off when income reaches $2165.20, but many seniors are eligible for the enlarged Work Bonus scheme that allows them to earn $454 a fortnight this financial year before their pension is reduced.

Source: Services Australia

Originally published as Age pension rise nears – are you getting all your entitlements?