SOCIAL SECURITY – AGE PENSION
| PENSION AGE ELIGIBILITY | ||
| Date of birth | Pension Age Eligibility | Date of Age Pension age change |
| 1 January 1954 to 30 June 1955 | 66 | 1-Jul-19 |
| 1 July 1955 to 31 December | 66 ½ | 1-Jul-21 |
| 1956 1 January 1957 and later |
67 | 1-Jul-23 |
| Assets Test (as of 30th Jan 2021) | |||
| Status | Lower Limit (Full Pension) |
Partial Pension | Upper Limit (No Pension) |
| If total assets: | up to | between | from |
| Single: | |||
| Homeowner | $268,000 | $268,000- $583,000 | $583,000 |
| Non-Homeowner | $482,500 | $482,500- $797,500 | $797,500 |
| Couple (combined), either partner eligible: | |||
| Homeowner | $401,500 | $401,500- $863,500 | $876,500 |
| Non-homeowner | $616,000 | $616,000- $1,091,000 | $1,091,000 |
Reduction factor: $3/fortnight for every $1,000 worth of assets above Lower Limit to Upper Limit
| Income Test (fortnightly) (as of 30th Jan 2021) | |||
| Status | Full Pension | Partial Pension | No Pension |
| If total Fortnightly | up to | between | from |
| income: Single |
$178 | $178- $2,066.60 | $2,066.60 |
| Couple (combined) | $316 | $316 – $3,163.20 | $3,163.20 |
Reduction factor: Single – 50 cents for each dollar above $178
Couple (combined) – 50 cents for each dollar above $316
| Deeming Rates (as of 30th Jan 2021) | ||||
| Status | Amount | Deemed Rate | Amount | Deemed Rate |
| Single | Up to $53,000 | .25% | Over $53,000 | 2.25% |
| Couple | Up to $88,000 | .25% | Over $88,000 | 2.25% |
| Basic Pension Rates (fortnightly) (as of 30th Jan 2021) | ||
| Single | $860.60 | |
| Couple | $648.70 each partner (or $1297.40 if both partners eligible) | |
| + Pension Supplement (fortnightly) (as of 30th Jan 2021) | ||
| Status | Full Pension | Partial Pension |
| Single | $69.60 | $37.40 |
| Couple | $52.50 each partner ($105 combined) | $28.20 each partner ($56.40 combined) |
| + Energy Supplement (fortnightly) (as of 30th Jan 2021) | ||
| Single: $14.10 | Couple (each partner): $10.60 | Couple (combined): $21.20 |
Question 1 – Please refer to the Centrelink Guide in Canvas and lecture notes.
Always refer to the following factors in order of preference:
1- Their Age- Can they receive an Age Pension or Newstart
2- Do they meet the residency test?
3- Asset their overall income and asset level
4- Determine if the income and asset levels are within the upper and lower thresholds.
a) Entitled to partial pension because assets and income above threshold.
b) No entitlement to age pension as below pensionable age of 66 years.
c) No entitlement to age pension as has not met residency requirements (Australian resident >10 years)
d) Entitled to a part pension (Assets above lower and below upper thresholds of asset test and income
above lower and below upper thresholds of income test)
Question 2
| (a) | Mr and Ms Moon -Couple are first homeowner and have total assets of $500,500 |
As assets are above the lower limit for a couple homeowner, they are entitled to a Part pension.
Reduction factor will be $500,500 – $401,500 = $99,000/1,000 x $3 = $297.00
| Pension | = $ 1,297.4- $297.00= $ 1,000.40 |
| Supplements: = $56.40 + $21.20 = $ 77.60 | |
| = $ 1,078.00 per fortnight | |
| (b) | Mr Travis |
– He is Single & non-homeowner with assets of $150,000
This is below assets lower limit for a non-homeowner so he is entitled to full pension.
i.e. $860.60+ $69.60+ $14.10= $933.4
(Lower limit is $482,500 at end of Jan 2021)
(c) Ms Cooney
– Ms Cooney is Single and a homeowner with other assets of $350,000
Reduction factor will be $350,000 –$268,000= $82,000/1,000 x $3 = $246.00
(Pension entitlement) – (Full pension less reduction factor:
(Pension = $860.6- $246.00= $614.6) + ($69.60+ 14.10) = $698.3 per fortnight
She is entitled to a part pension of $698.3 per fortnight
Question 3
Refer to Deeming rates. Rates will be provided in exam.
Deeming Rates
| Deeming Rates (as of 30th Jan 2021) | ||||
| Status | Amount | Deemed Rate | Amount | Deemed Rate |
| Single | Up to $53,000 | .25% | Over $53,000 | 2.25% |
| Couple | Up to $88,000 | .25% | Over $88,000 | 2.25% |
Ms Green
Financial investments:
-Credit union $25,000
-Bank account $30,000
-Shares $10,000
Total $65,000
(a) Deemed income: $53,000 x .25% = $132.5
Balance ($112,000) x 3% = $270.00
Total = $402.50 p.a.
| (b) | Actual income earned -Credit union $25,000 x 4%= -Bank account $30,000 x 1.5%= |
$1,000 $ 450 $1,500 $2,950 p.a. |
| -Shares | $10,000 x 15%= | |
| Total |
Centrelink will only count the $402.50 not the actual $2,950 earned with the investments. This
highlights the strategy that client are better of investing in higher returning assets. This will also be based
on client’s risk profile. Under current low interest rate environment low risk investor may find riskier assets
such as blue-chip shares more attractive as they may pay a good dividend yield.
——————————————————————————————————————————-
Question 4
| (a) | Age pension incomes test |
| Family home | Exempt asset |
| Cars | Exempt asset |
| House contents Shares in Telstra Term deposit Rental property Managed investments |
Exempt asset Financial investment Financial investment Non-financial investment Financial investment |
(b) Income for social security purposes
Actual income- Ignore actual income from dividends, interest and managed fund distributions.
Rental property income $ 14,000
Assets subject to deeming:
-shares in Telstra $25,000
-term deposit $20,000
-managed investment $50,000
Total $95,000
First $88,000 assessed at .25 % = $ 220.00
Excess over $88,000 assessed at 2.25 = $ 157.50
Deemed Total $377.5
Total Combined Income $14,377.50 p.a
(c) Eligibility to the age pension is based on an assessment to both the assets and income test
whichever gives the lower payment
Notes : Use the Home Owner rates
Assets test,
Assessable assets total $330,000 (excluding family home =$ 30,000 + 65,000 + $25,000 + $20,000 +
$140,000 + $50,000)
Pension equal to full pension because assets are below the $401,500.00.
Pension is $1297.40 + $105 + $21.20= $1423.6
Incomes test
| Total income as assessed in (b) above Fortnightly income is Pension equal to full pension ($1, 297.40) Reduction amount $552.98 – $316.00 = $236.98 x 0.5 Pension equals $1,297.40 less $118.49 |
$14,377.50 p.a |
| $552.98 p.f. | |
| = $118.49 = $1,178.91 |
|
| Pension supplement and Energy Supplement: 56.40 + $21.20 = | $77.60 $1,256.51 |
Will be entitled to Age pension as determined under the Income Test as it provides for the lowest
payment i.e. $1,251.51 per fortnight.
Question 5
Notes: Use the Home Owner rates
Entitlement under the Asset test
| Assets | Value $ |
| Saving account | $100,000.00 |
| Share Portfolio | $102,000.00 |
| Term deposit | $200,000.00 |
| Car | $22,000.00 |
| Content | $28,000.00 |
| Managed Investment | $103,000.00 |
| Total assessable assets | $555,000.00 |
| Lower Limit (Full Pension) | $401,500.00 |
| ($415,000 – $401,500) | $153,500.00 |
| Reduction factor ($13,000/1,000 x $3 ) | $460.50 |
| Basic Pension Rates | $1,297.40 |
| Basic Pension | $836.90 |
| Pension Supplement | $56.40 |
| Energy Supplement | $21.20 |
| Per Fortnight part pension | $914.50 |
Incomes test entitlements Financial investments
| Assets | Value $ |
| Deemed income | |
| Savings account | $100,000.00 |
| Share Portfolio | $102,000.00 |
| Term Deposit | $200,000.00 |
| Managed Fund | $103,000.00 |
| Total | $505,000.00 |
| First $88,000 @ .25% | $220.00 |
| Over $88,000 @ 2.25% | $9,382.50 |
| Total income p.a. | $9,602.50 |
| Income per fortnight $6,452.5/26 | $369.33 |
| Full Pension (couple) | |
| Pension equal to full pension | $316.00 |
| Reduction factor: (369.33 – 316)/.50 cents | $26.66 |
| Basic Pension Rates | $1,297.40 |
| Basic Pension ($1,297.40-$118.49) | $1,270.74 |
| Pension Supplement | 56.4 |
| Energy Supplement | $21.20 |
| Per Fortnight part pension | $1,348.34 |
They will be entitled to Age pension as determined under the Assets Test as it provides for the lowest
payment i.e. $914.50 per fortnight when compared to the income test entitlement of $1,348.34
Question 6
Strategies that could be put in place to minimise the assets and income of a person for Age Pension
entitlements:
1. funds from a deceased spouse to be left to children and/or grandchildren, if any, through a
testamentary trust arrangement: assets and income not counted if remaining spouse has no
control over trust assets
2. where spouse below pensionable age, transfer funds into spouse’s superannuation fund:
superannuation not counted where person is below pensionable age
3. gifting up to $10,000 per year
4. Spend money on personal lifestyle assets such as renovations and holidays
5. Invest in a Pre Paid Funeral Bond
6. Insure personal assets are valued correctly.
