Eligibility for Age Pension - has your situation changed?

About the author:

Terri Bradford
Author name:
By Terri Bradford
Job title:
National Manager Wealth Management
Date posted:
26 March 2020, 4:00 PM

Markets have fallen over 20% in the past two months. As a result, many retirees are experiencing a significant drop in the value of their superannuation retirement funds. Where previously a retiree may not have been eligible for Age Pension benefits, has their situation changed as a result of the falls?

Current Pension Thresholds as at 20 March 2020

Details Minimum Threshold Maximum Threshold
Pension Income Test:    
Single Up to $174 pf # Less than $2,062.60 pf
Couple (combined) Up to $308 pf # Less than $3,155.20 pf
Couple separated – ill health Up to $308 pf # Less than $4,085.20 pf
One partner eligible Up to $308 pf # Less than $3,155.20 pf
 Work Bonus  The first $300 pf employment income is exempt
 Pension Assets Test:    
 Single, Homeowner Up to $263,250 + Less than $578,250
 Couple, Homeowners Up to $394,500 + Less than $869,500
 Couple separated – ill health Up to $394,500+ Less than $1,024,500
 One partner eligible  Up to $394,500 + Less than $869,500
 Single, Non-Homeowner  Up to $473,750 + Less than $788,750
 Couple, Non-Homeowners  Up to $605,000 + Less than $1,080,000
 Couple separated – ill health  Up to $605,000 + Less than $1,235,000
 One partner eligible  Up to $605,000 + Less than $1,080,000

Case Studies

Let's consider three examples where the situation has changed significantly for retirees.

1. Charley and Olivia - age 70 and 68, respectively

Charley and Olivia are homeowners and have their own SMSF. The SMSF is the only financial asset they have.

  • As at 1 July 2019 the combined value of their SMSF was $920,000 approximately. 
  • As at 24 March 2020, the combined value of their SMSF was $705,000 due to market falls. This represents a 23% drop in the value of their assets since 1 July 2019.

Previously, Charley and Olivia were ineligible for any age pension benefits because their total assessable assets were over the maximum asset test threshold. Now, however, their assets are under the maximum threshold of $869,500 for "Couple: Homeowner" so they could be eligible for some benefits as well as access to the Pensioner Concession Card.

Based on our assessment, Charley and Olivia would be eligible for a fortnightly pension payment of $227 each, or $454 combined. How long they remain eligible for these benefits will depend on how long it takes for markets to recover from the current volatility, and how well their SMSF portfolio also recovers over the next six to twelve months.

2. Ewan and Eve - age 74 and 72, respectively

Ewan and Eve are homeowners and have their own SMSF. The SMSF is the only financial asset they have.

  • As at 1 July 2019 the combined value of their SMSF was $1.143 million approximately.
  • As at 24 March 2020, the combined value of their SMSF was $870,000 due to market falls. This represents a 24% drop in the value of their assets since 1 July 2019.

As with Charley and Olivia, Ewan and Eve were ineligible for any age pension benefits because their total assessable assets were over the maximum asset test threshold. At the moment, their combined assessable assets are borderline with the maximum threshold of $869,500 for "Couple: Homeowner".

If markets continue to fall as they have been, Ewan and Eve may find themselves in a position where they could become eligible for the Age Pension and subsequently the Low Income Health Care Card.

 3. Adam - age 71, Single

Adam is a homeowner and has an SMSF. He also owns shares in his personal name.

  • As at 1 July 2019 the value of his SMSF was $540,000 approximately, and the share portfolio was worth $100,000 approximately.
  • As at 24 March 2020, the SMSF's balance has reduced to $428,000, which is a 20% fall since 1 July 2019. The share portfolio is now worth $72,000, representing a 28% fall.

Combined, Adam's total assessable assets is currently $500,000. Where previously Adam was not eligible for any Centrelink benefits, he could consider applying as his total assets are now under the maximum threshold of $578,250 for "Single: Homeowner".

Based on our assessment, Adam would be eligible for a fortnightly pension payment of $209. While Adam's total assets remains under the maximum threshold, he would continue to receive some part Age Pension and access to the Low Income Health Care Card.

Applying for the Age Pension

If you think you may be eligible now for Centrelink benefits, following discussions with your Morgans adviser, consider the following steps which are available on the human services website.

Step 1: Prepare to claim

This involves checking that you are eligible to apply in the first instance - which your Morgans adviser can help you with.

Step 2: Get ready to claim

Nowadays application for the age pension is done online via www.my.gov.au. This is the new government portal for Centrelink, Tax, Superannuation, etc. If not already set up, we recommend clients set up their own myGov account as soon as possible. Click here to set up your account.

You will be asked what your preference is for security codes - email or SMS text. When you log in each time thereafter with your login and password, a security code will be sent via your preferred method.

Once you have set up your myGov account successfully you just need to link the Centrelink service to your myGov personal page. 

Step 3: Get supporting documents ready

Centrelink will request supporting documents and information to support your claim. This includes ID papers, bank account details, TFN, relationship status/living arrangements, and income & assets. You may need to present your ID papers in person at your local Centrelink service centre.

Full details of the types of documents that may be required can be found here.

Step 4: Make your claim

  • Sign in to myGov and go to Centrelink.
  • Select Payments and Claims from the menu, then Claims, then Make a claim.
  • Under Seniors, select Get started.
  • Answer all the questions. Each screen has information to help you complete the claim. This includes submitting your supporting documents and any other forms you need to complete.
  • Submit your claim.

Step 5: Track your claim

Once you have registered your claim you can track its progress online.

In Closing

Market valuations have fallen significantly since the beginning of this year. Such that many retirees who were previously self-funded now find themselves in a position where they may be eligible for Government benefits. If you are in this position contact your Morgans adviser or your local Morgans office to discuss eligibility.

Bear in mind, your position may again change once markets start to recover but it may be worthwhile to secure some additional benefits in the meantime, particularly in respect to accessing the Low Income Health Care Card which provides cardholders with a number of beneficial concessions.

More information

You can access more analysis by clicking on 'Wealth Management' in the popular topics list. Alternatively, contact your Morgans adviser or nearest Morgans branch.

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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