As of July 1, 2024, significant updates to the Centrelink Age Pension aim to improve the financial stability of older Australians To qualify for the age pension.
individuals must be 67 years old and meet both income and asset tests These thresholds were adjusted to reflect inflation, allowing pensioners to keep more of their income and assets.
without losing access to their pension payments With these changes, more people may qualify for the pension or receive higher payments, enhancing their financial security in retirement.
Income Test Adjustments
The income test is designed to ensure that pension payments are targeted towards those who need them most As part of the recent changes, both the income-free area and the income limits have been adjusted for single and couple pensioners.
Single Pensioners
The income-free area has increased from $204 to $212 per fortnight, allowing pensioners to earn more without seeing their pension payments reduced.
If a single pensioner earns more than $212 per fortnight, their pension payment will reduce by 50 cents for each dollar of income beyond this threshold.
Couple Pensioners
The combined income-free area for couples has increased from $360 to $372 per fortnight For every dollar earned over this limit, the couple’s pension payments will decrease by 50 cents.
Additionally, the maximum income limits before pension payments stop have been updated to allow pensioners to earn more while still receiving support.
- Single Pensioners The income limit for full pension eligibility has risen from $2,436.60 to $2,444.60 per fortnight
- Couple Pensioners The combined income limit has increased from $3,725.60 to $3,737.60 per fortnight
These adjustments mean that pensioners can earn more before their pension is reduced or stopped altogether
Asset Test Changes
The asset test ensures that pension payments are reserved for individuals with limited assets With the updated thresholds, pensioners can now keep more of their savings and investments without impacting their pension eligibility.
For Homeowners
- Single Pensioners The asset limit for full pension eligibility has increased to $314,000 (from $301,750)
- Couple Pensioners The combined asset limit for the full pension has risen to $470,000 (from $451,500)
For Non-Homeowners
- Single Pensioners Non-homeowners can now have up to $566,000 in assets (up from $543,750) and still qualify for the full pension
- Couple Pensioners The combined asset limit for non-homeowners is now $722,000 (up from $693,500)
The asset limits for those receiving part pensions have also increased
- Single Homeowners Asset limit for part pension eligibility has increased to $686,250 (up from $674,000)
- Single Non-Homeowners The asset limit for part pensions is now $938,250 (up from $916,000)
- Couple Homeowners The combined asset limit for part pensions has increased to $1,031,000 (up from $1,012,500)
- Couple Non-Homeowners The combined asset limit for part pensions is now $1,283,000 (up from $1,254,500)
These changes are designed to help pensioners maintain more wealth while still receiving financial support from the government.
Deeming Rates and Thresholds
Deeming rates are used by the government to estimate income from financial assets, such as savings and investments.
Although the deeming rates remain frozen until June 30, 2025, the asset thresholds for deeming have been indexed, meaning pensioners can now have higher amounts of assets deemed at a lower rate.
For Single Pensioners
- The first $62,600 of financial assets will be deemed to earn 0.25%, up from $60,400
- Any assets above this amount will be deemed to earn 2.25%
For Couple Pensioners
- The first $103,800 of combined financial assets will be deemed to earn 0.25%, an increase from $100,200
- Assets above this threshold will continue to be deemed at the higher rate of 2.25%
These adjustments allow pensioners to earn a higher return on their financial assets before their pension payments are reduced
Additional Adjustments
In addition to the changes in income, asset, and deeming thresholds, several other adjustments have been made to provide further financial relief to pensioners.
- Retirement Village and Granny Flat Residents The additional allowable asset amount for non-homeowners in retirement villages or granny flats has increased to $252,000, up from $242,000 This helps pensioners who may have limited assets but live in these types of housing arrangements
- Special Disability Trusts The concessional asset value limit for these trusts has increased to $813,250, up from $781,250 These trusts are designed to help families care for individuals with severe disabilities, and the increase in the asset limit provides more flexibility in managing their financial affairs
- Exempt Funeral Investments The allowable amount for exempt funeral investments has been raised to $15,500, up from $15,000 This change ensures that individuals can set aside more funds for funeral expenses without affecting their pension eligibility.
Reviewing Your Pension Eligibility
It’s important for pensioners to review their financial situation in light of these recent changes For some individuals, these updated thresholds.
may mean they are eligible for higher payments, while others may find they now qualify for the pension when they did not before To understand how the changes affect their payments, pensioners should contact Centrelink directly or seek advice from a financial advisor.
These reforms are designed to provide greater financial flexibility, allowing older Australians to live more comfortably and with a higher quality of life.
By increasing the thresholds for income, assets, and deeming, the government has ensured that pensioners can keep more of their savings and continue to receive financial support as they age.
In conclusion, the changes to the Centrelink Age Pension are a positive step toward addressing the financial challenges faced by older Australians, offering them increased eligibility, more generous asset and income limits, and greater flexibility in managing their finances.
