Brought to you by Aware Super
Cameron Bayley
It seems like a no-brainer: you want to receive as much age pension as possible. However, because people find the process intimidating or aren’t aware of what’s available, many are missing out on their full entitlement.
“The age pension is rarely all or nothing,” says Kate Rolfe, retirement experience lead at Aware Super. “For many Australians, it works alongside super and savings – and timing matters,” she says.
“Starting early, using reliable information, and getting help when needed can make the difference between receiving what you’re entitled to and missing out – sometimes by tens of thousands of dollars.”
Here are six steps to work through when the age pension is on the horizon.
Don’t sit on that application
One of the biggest must-dos when it comes to the age pension is straightforward: get stuck into the application. And do it early.
“You can apply up to 13 weeks before you turn 67,” says Corey Irlam, acting CEO of the Council on the Ageing (COTA). “Getting in early matters; it reduces delays and protects your payment from the earliest date you’re eligible.”
Don’t fear the tests
There’s a widespread reason people feel hesitant to undertake the required means and asset testing for the age pension, says Rolfe.
“A common misunderstanding is thinking your family home is included – it isn’t,” she says. “That single point often relieves a lot of anxiety.”
Having a clear view of your financial position will give you peace of mind when receiving the age pension and make the process much smoother.
“The tests aren’t designed to catch people out,” she adds. “They’re simply how Centrelink works out eligibility and payment levels.”
The good news on this front is that last year the Federal Government raised the thresholds for these tests, which means that more Australians may be eligible for the full pension or a higher rate of part pension.
Know the rules if you’re a couple
We’re long past the days when Facebook was interested in your relationship status, but Centrelink is still very keen to know, even if only one person gets the pension. “Getting this right upfront helps avoid corrections later,” says Rolfe.
“Couples’ income and assets are assessed differently to singles,” adds Irlam. “And some people [who are] separated but still living together aren’t considered a couple at all under Centrelink rules, which can make a real difference to what they receive.”
Understand your income
To avoid any nasty surprises, it’s good to make sure you have proper clarity over your tax situation when it comes to the age pension.
“The age pension counts as taxable income, but many recipients don’t actually pay tax due to offsets like the Seniors and Pensioners Tax Offset,” says Rolfe.
“This is a tax rebate provided by the Australian Government to eligible older Australians. Put simply, it allows those eligible to earn more income before they start paying income tax.”
Take advantage of available help
You don’t have to work through all of this alone. “Many people don’t realise how much help is available,” says Rolfe. “The primary source is Services Australia, which provides information, calculators and direct support.”
Irlam recommends Centrelink as another good port of call. “Navigating this all can be quite complex, but Centrelink’s Financial Information Service is free and often underused, as they can help explain rules and direct people to the right resources.”
And many super funds, like Aware, offer online calculators and tools that can be very handy as well. “These tools are designed to support people alongside official government services, not replace them,” Rolfe says.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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