Revised assets and income test limits for age pension
Jul 15, 2021 20:59:24 GMT 7
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Post by bear on Jul 15, 2021 20:59:24 GMT 7
Revised assets and income test limits for age pension
The latest six-monthly age pension adjustments are out – effective from July 1.
The main changes are a slight increase in the levels at which both the asset test and the income test starts to taper.
The lower asset limits are now $270,500 for a single pensioner and, for a couple, $405,000.
The maximum pension for a single person remains unchanged at $952.70 a fortnight and, for a couple, $718.10 a fortnight each.
Up-to-date age pension calculators can be found here and detailed pension charts can be downloaded from there, too.
The lower asset limits are now $270,500 for a single pensioner and, for a couple, $405,000.
Once these levels are exceeded, the age pension tapers until it reaches the upper cut-off point, where no pension is payable.
The base income threshold is $320 a fortnight for a couple and $180 fortnight for a single.
The cut-off point for a homeowner couple has gone up to $884,000 and, for a single pensioner, $588,250. For non-homeowners, the numbers are $1,100,500 and $804,750, respectively.
The income test cut-off points are now $83,002.40 a year for a couple and $54,220.40 for a single.
If one partner is eligible for an age pension and the other is under pensionable age, the eligible partner receives half the couples pension. For example, a 67-year-old with a 57-year-old partner could qualify for 50 per cent of the couples pension.
You are tested under both an assets and an income test and Centrelink applies the test that gives you the least pension.
For example, consider a homeowner couple with assessable income of $800 a fortnight and assessable assets of $740,000. Their pension under the income test would be $598.10 fortnight each – under the assets test $215.60. Therefore, their pension would be $215.60 a fortnight each.
The value of your assets does not include the family home, while your possessions, such as furniture, car or boat, are valued at second-hand cost, rather than replacement cost. This puts a figure of about $5000 on most peoples’ furniture.
The income test is not relevant if you are asset tested. For example, a single person with assets of $540,000 and receiving a pension of $144.20 a fortnight could have assessable income of $45,000 a year, including deemed income and employment income, without affecting their pension because they would still be asset tested.
If you are at the higher end of the asset-test scale, you could seek financial advice about some of the new lifetime pension products now becoming available at the federal government’s urging.
For example, a 70-year-old couple may have $900,000 of assessable assets and accordingly be over the assets test cut-off point.
However, if they invested $300,000 of their superannuation into a lifetime pension, they may be able to receive a pension of just over $20,000 a year, indexed for both of their lives, plus an age pension of more than $8000 a year. This would boost their income by $28,000 a year – and still leave them with $600,000 of assessable assets.
If a member of a couple has not reached pensionable age it is prudent, if appropriate, to keep super in the younger person’s name because it is then except from assessment by Centrelink. However, the moment that fund is moved to pension mode, it is assessable, irrespective of the age of the member.
Furthermore, a debt against an investment asset is not deducted from the asset value – unless the mortgage is held against the investment asset.
It is not uncommon for people to have a large mortgage on an investment property secured by their home. In that case, Centrelink assesses the gross value of the property and does not deduct the loan.
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.
RELATED ARTICLE
The latest six-monthly age pension adjustments are out – effective from July 1.
The main changes are a slight increase in the levels at which both the asset test and the income test starts to taper.
The lower asset limits are now $270,500 for a single pensioner and, for a couple, $405,000.
The maximum pension for a single person remains unchanged at $952.70 a fortnight and, for a couple, $718.10 a fortnight each.
Up-to-date age pension calculators can be found here and detailed pension charts can be downloaded from there, too.
The lower asset limits are now $270,500 for a single pensioner and, for a couple, $405,000.
Once these levels are exceeded, the age pension tapers until it reaches the upper cut-off point, where no pension is payable.
The base income threshold is $320 a fortnight for a couple and $180 fortnight for a single.
The cut-off point for a homeowner couple has gone up to $884,000 and, for a single pensioner, $588,250. For non-homeowners, the numbers are $1,100,500 and $804,750, respectively.
The income test cut-off points are now $83,002.40 a year for a couple and $54,220.40 for a single.
If one partner is eligible for an age pension and the other is under pensionable age, the eligible partner receives half the couples pension. For example, a 67-year-old with a 57-year-old partner could qualify for 50 per cent of the couples pension.
You are tested under both an assets and an income test and Centrelink applies the test that gives you the least pension.
For example, consider a homeowner couple with assessable income of $800 a fortnight and assessable assets of $740,000. Their pension under the income test would be $598.10 fortnight each – under the assets test $215.60. Therefore, their pension would be $215.60 a fortnight each.
The value of your assets does not include the family home, while your possessions, such as furniture, car or boat, are valued at second-hand cost, rather than replacement cost. This puts a figure of about $5000 on most peoples’ furniture.
The income test is not relevant if you are asset tested. For example, a single person with assets of $540,000 and receiving a pension of $144.20 a fortnight could have assessable income of $45,000 a year, including deemed income and employment income, without affecting their pension because they would still be asset tested.
If you are at the higher end of the asset-test scale, you could seek financial advice about some of the new lifetime pension products now becoming available at the federal government’s urging.
For example, a 70-year-old couple may have $900,000 of assessable assets and accordingly be over the assets test cut-off point.
However, if they invested $300,000 of their superannuation into a lifetime pension, they may be able to receive a pension of just over $20,000 a year, indexed for both of their lives, plus an age pension of more than $8000 a year. This would boost their income by $28,000 a year – and still leave them with $600,000 of assessable assets.
If a member of a couple has not reached pensionable age it is prudent, if appropriate, to keep super in the younger person’s name because it is then except from assessment by Centrelink. However, the moment that fund is moved to pension mode, it is assessable, irrespective of the age of the member.
Furthermore, a debt against an investment asset is not deducted from the asset value – unless the mortgage is held against the investment asset.
It is not uncommon for people to have a large mortgage on an investment property secured by their home. In that case, Centrelink assesses the gross value of the property and does not deduct the loan.
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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