The income you can earn and the value of assets you can own in retirement, while still qualifying for the age pension, will rise next week.
The Department of Social Services has just announced the next lot of indexation changes to means testing for the pension.
These indexation changes are made twice per year to reflect the impact of inflation.
Pension amounts will remain as they are today. All that is changing next Wednesday, 1 July, is the parameters for means testing.
The full age pension is $1,200.90 per fortnight for singles, and $905.20 per person, per fortnight, for couples.
Let's review.
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When can I get the age pension?
Australians born on or after 1 January 1957 are eligible for the pension at age 67, whether retired or not.
The pension is subject to an assets test and an income test. You have to pass both to receive the full pension.
If you own too much in assets, or earn too much income, you may only qualify for a part-pension, or no support at all.
What are the new pension thresholds for asset values?
The first thing to know is that your home is excluded from the pension assets test if you own your residence.
If you rent your home, you are allowed to own more assets (and earn more income) while still qualifying for the pension.
Assessable assets include ASX shares, international shares, superannuation, bonds, managed funds, rental properties, and cash.
Single homeowners
Under next week's changes, single homeowners will be able to own up to $333,000 in assets and still qualify for the full age pension.
Single homeowners with assets worth between $333,001 and $733,500 will qualify for a part-payment.
Single non-homeowners
Single renters will be able to own up to $600,000 in assets and still qualify for the full age pension.
Single non-homeowners with assets worth between $600,001 and $1,000,500 will be eligible for a part-pension.
Couple homeowners
Couple homeowners will be able to own up to $499,000 in assets and still qualify for the full age pension.
Couple homeowners with assets worth between $499,001 and $1,102,500 will still be eligible for a part-payment.
Couples who are renting in retirement
Couple non-homeowners will be able to own up to $766,00 in assets and still be eligible for the full pension.
Renters who own assets worth between $766,001 and $1,369,500 will qualify for a part-payment.
How much income can you earn and still get the age pension?
Under next week's changes, singles will be able to earn up to $226 per fortnight and still qualify for the full pension.
If they earn between $227 and $2,627.80 per fortnight, they will qualify for a part-payment.
Couples will be able to earn up to $396 per fortnight and still receive the full age pension.
Couples who earn between $397 and $4,016.80 per fortnight will be eligible for a part-payment.
Assessable income includes wages and investment income.
To make things easier, Centrelink relies on deeming rates to determine a pensioner's investment income.
(The only exception is rent from investment properties. Pensioners must report actual net rental income each year.)
Deeming rates have been well below market average returns for many years.
The Albanese Government has been gradually increasing deeming rates and the asset value thresholds.
Under next week's changes, the lower deeming rate will remain at 1.25%, and the upper deeming rate will remain 3.25%.
However, the thresholds will lift.
The lower deeming rate will apply if a single pensioner's assets are worth less than $66,800. For couples, the new threshold is $110,600.
If your investments are worth more than that, then the first $66,800 of your personal financial assets or the first $110,600 of your shared assets will have a deemed rate of 1.25% interest, and everything above that will be deemed to have earned 3.25% interest.
