Many people rely on Centrelink’s age pension when they retire. However, sometimes the rules around getting the pension aren’t clear. There are many people out there who might be eligible to receive the pension but, due to their belief in some of the common ‘myths’ below, they haven’t even applied.
Myth 1: My home is worth too much. It will stop me from getting the pension
Your home (and up to 2 hectares of land around it) isn’t counted as an asset for Centrelink purposes. Whether you own a mansion at Bondi or a granny flat out the back of your kid’s house, your home is classified as an ‘exempt’ asset.
Myth 2: I won’t get the age pension because I have super
While the assets test for Centrelink pensions was reduced in January 2017, it is still quite generous. If you own your own home, to receive the full age pension, you will need to have less than:
- Single person – $285,000
- Member of a couple – $387,500 (combined assets)
If you are considered a non-homeowner by Centrelink, to receive the full age pension, you will need to have less than:
- Single person – $465,500
- Member of a couple – $594,500 (combined assets)
If you have more than this level of assets, you can still receive the age pension however, it will be a lower benefit. The age pension will cut out at the following amount of assets:
- Single person – $561,250
- Member of a couple – $844,000 (combined assets)
- Single person – $768,250
- Member of a couple – $1,051,000 (combined assets)
As you can see, having assets, either in your super or in your personal name, won’t stop you from receiving the age pension. If you have a high level of assets, your age pension benefit might start to reduce, however, you might still be eligible for some Centrelink income.
Myth 3: I should get rid of assets to increase my pension
As you can see, the assets test is quite generous so getting rid of assets is rarely required. If you were to give your assets away Centrelink will enforce their ‘gifting’ rules. You are allowed to gift $10,000 per year up to a total of $30,000 over a five year period. If you give away more than this, these assets will continue to be assessed for another five years. This is a strategy that needs to be carefully considered before being completed.
Myth 4: I can’t get the age pension because I’m still working part-time
If you have reached age pension age and you’re still working, you are potentially eligible for a small benefit from Centrelink. Centrelink has both the assets test (mentioned above) and the income test. As a single person, you are allowed to earn up to $1,987.20 per fortnight (or $51,667.20 per year) before you lose the pension entirely. If you are a member of a couple, combined, you can earn up to $3,040.40 per fortnight ($79,050.40 per year) before the pension cuts out.
It is important to recognise that you might be able to pass both in the income and assets tests even if you are still working.
Myth 5: I’ll never even get the Health Card
If you aren’t eligible for the age pension because you hold assets above the current limits, or you earn too much income, there is another option available. The Commonwealth Seniors Health Card (CSHC) specifically provides self-funded retirees with benefits such as cheaper medication under the Pharmaceutical Benefits Scheme and bulk-billed doctor visits.
The CSHC has only an income test associated with it. To pass the income test you must earn no more than:
- $53,799 per year if you’re single
- $86,076 per year for a couple
This makes the card accessible for many self-funded retirees, providing them with a range of discounts. It is important to note that the above income ranges are not related to the amount you may be drawing from your Superannuation. The income is determined from the ‘deeming rate’ Centrelink applies to the actual balance of your Super account.
Overall, there are many myths surrounding Centrelink and their eligibility requirements. The information above provides you with some general information regarding these concepts. However, if you’re unsure as to whether you’re eligible for the age pension or any other Centrelink benefit, please don’t hesitate to contact us.
This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.