Age pension eligibility criteria will change tomorrow, potentially enabling more Australians to access this social support.
Seniors will be able to earn a bit more income, and hold a higher value of assets, while still qualifying for the age pension.
The Department of Social Services announced indexation changes to the pension's means testing last week.
That means the thresholds for the pension's assets test and income test are going up.
Indexation occurs twice per year to mitigate the effect of inflation.
Australians born on or after 1 January 1957 can apply for the pension at age 67, whether retired or not.
Here are the details of the changes, effective tomorrow, 1 July.
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Pension means testing on assets
Assessable items for the pension assets test include ASX shares, superannuation, bonds, managed funds, rental properties, and cash.
The only exception is your personal residence.
Under the changes, single homeowners will be able to own up to $333,000 in assets and still qualify for a full pension.
If you own assets worth between $333,001 and $733,500, you will qualify for a part-payment.
Single seniors who rent their homes will be able to own up to $600,000 in assets and still qualify for the full pension.
If you own assets worth between $600,001 and $1,000,500, you will be eligible for a part-pension.
Couples who own their residence will be able to have up to $499,000 in other assets while still being eligible for the full age pension.
If you have assets worth between $499,001 and $1,102,50, you will qualify for a part-payment.
Senior couples who rent their homes will be able to own up to $766,000 in assets and still be eligible for the full age pension.
Renters with assets worth between $766,001 and $1,369,500 can apply for a part-payment.
The full age pension is $1,200.90 per fortnight for singles, and $905.20 per person, per fortnight, for couples.
Means testing on income
Under the changes, senior Australians will be able to earn a bit more from tomorrow while still being eligible for the age pension.
Single seniors will be able to earn up to $226 per fortnight and still qualify for the full age pension.
If you earn between $227 and $2,627.80 per fortnight, you can apply for a part-pension.
Couples will be able to earn up to $396 per fortnight and still qualify for the full age pension.
If you earn between $397 and $4,016.80 per fortnight, you will be eligible for a part-pension.
Assessable income includes wages and investment income.
In order to calculate investment income, Centrelink relies on generous set deeming rates.
The lower deeming rate is 1.25% and the upper deeming rate is 3.25%.
The asset value threshold is increasing to $66,800 for singles and $110,600 for couples.
This means the first $66,800 of your financial assets, or $110,600 for couples, will have a 1.25% deemed rate of interest.
Everything above that will be deemed to have earned 3.25% interest.
Investment properties are the only exception to deeming rules.
Instead, actual net rental income is used in the pension income test.
As we reported last week, Australians overestimate how much they need for a comfortable retirement by 40%.
