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Month: February 2023

Understanding how your age pension entitlements are calculated.

Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au

The Age Pension is a social security benefit provided by the Australian government to eligible individuals who have reached retirement age and meet certain residency requirements, income and asset tests. The means testing rules for the Age Pension are designed to ensure that the benefit is targeted to those who need it the most. Here is how the means testing rules work:

Income test: The income test assesses your assessable income, which includes income from a range of sources, such as employment, investments, and superannuation. For singles, the maximum income you can earn before your pension is reduced is $190 per fortnight and for couples, it is $336 per fortnight. Once your income exceeds these thresholds, your pension will be reduced by 50 cents for every dollar you exceed the threshold.

Assets test: The assets test assesses your total net worth, including assets such as cash at bank, investments, and superannuation to name a few. For singles, the maximum asset limit you can have before your pension is reduced is $280,000, and for couples, it is $419,000. Once your assets exceed these thresholds, your pension will be reduced by $3 for every $1,000 you exceed the threshold.

Combined means test: The Age Pension is subject to both an income test and an assets test, and the test that results in a lower rate of pension will be used to calculate your pension entitlement. For example, if your income test results in a pension reduction of $200 per fortnight, and your assets test results in a pension reduction of $150 per fortnight, your pension will be reduced by $200 per fortnight.

It’s important to note that there are a range of other factors that can affect your Age Pension entitlement, including your living arrangements, whether you have a partner, and whether you have any dependents. The rules and thresholds for the Age Pension are subject to change, so it’s important to stay up to date on the latest regulations and seek advice from a financial advisor if you have any questions about your entitlement.

Note: Figures and thresholds effective as of January 2023.

General Advice Warning

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.


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