Age Pension Australia – In A Nutshell

Here is a beginner’s guide to the Australian Age Pension system.

This article will examine age pension and explore who is entitled to what pension, what types of pensions there are and the price points of various pensions.

Video Guide

Overview Of Age Pension

Firstly, in understanding the age pension, it’s important to remember the Australian government has created this scheme in order to financially support people entering retirement who are without substantial superannuation.

Age pension refers to the basic financial support the government offers however there other financial supplements available depending on your eligibility.

The amount of age pension you are entitled to is dependent on the income test and the assets test.

There are several types of pensions available in Australia including the disability support, sickness and mobility allowance, bereavement allowance, wife pension, and widow pension among others. However, this article will focus on the age pension specifically.

Eligibility – When Were You Born?

In relation to the age pension, eligibility is determined by three factors. The first factor is your retirement age and this depends on when you were born. For example, if you were born before July 1952, your retirement age is 65 years.

However, if you were born between the 1st of July 1952 to the 31st December 1953, your retirement age is 65 years and six months. The table below illustrates this factor.

Eligibility – How Long Have You Lived in Australia?

The second factor determining your eligibility is called residency rule. In general, to be able to claim the age pension you must have been an Australian resident for at least 10 years. For five of these years, there must not be a break in your residence.

Eligibility – How Much Do Your Assets Worth?

The next factor is the income and assets tests. They determine if you are eligible and how much pension you are entitled to. It’s important to understand the test that results in the lower rate is the one applied so you will receive that lower rate.

It’s also key to know the house you own and currently live in is not considered an asset. In relation to the 2019 limits, the table below illustrates the limits for the assets test clearly (as of 8 July 2019).

Eligibility – How Much Income Do You Have?

In relation to the income test, income includes money from employment pension and annuities money earned from investments as well as money that you sacrifice in your salary. (as of 8 July 2019)

Singles

Couples living together or apart due to ill health

What Are The Age Pension Rates in 2019?

According to the Australian Department of Human Services, these are the current rates as of March 2019.

These are the basic rates but you can also access pension supplements which are a combined payment of the pharmaceutical allowance, utility allowance, GST supplement and telephone allowance. Once you’re eligible for your age pension, you will also be eligible to access the pension supplements.

In relation to rates for pension supplements, they are as follows.

There is also an energy supplement which will automatically be applied if you’re eligible for the age pension.

Is Age Pension Enough?

According to the standard retirement budget report published by the ASFA, Australian retirees’ expenses are expected to be greater than the age pension rates. This means that you will have severe difficulty in living after retirement if you solely rely on the Age Pension income.

The following table shows an overview of the retirement costs of living in Australia. You can find more information from another post: Retirement Costs In Australia – Can You Afford Them?