Am I eligible?
If you have reached Age Pension age, you may be eligible for the Age Pension and other Government benefits in retirement. Your Age Pension age will depend on the year you were born. Since 1 July 2019, the minimum Age Pension age is 66 years, and we’ll see a six-month increase in the Age Pension age every two years until July 2023.
If you meet the age requirements, you’ll need to have been an Australian resident for at least 10 years. You’ll also need to share information about your finances for Centrelink’s income and assets tests. For couples, Centrelink will look at your combined income and assets.
The test that results in the lowest pension rate is the one Centrelink will use to determine your entitlements.
The Centrelink income test generally includes any income you earn from any source, including from your assets in Australia and overseas, including super, shares, account-based pensions, term deposits or managed funds. When assessing income from some investment assets, Centrelink will apply a deemed rate of income. When it comes to earnings from employment or investment properties, Centrelink will generally assess the actual income you earn.
The value of assets you own is also taken into account for your Age Pension claim. For the assets test, Centrelink will count any assets you own, in Australia and overseas.
This includes any physical assets, such as a car or caravan, your savings and investments such as shares, investment properties, term deposits, superannuation, part of some annuities and account-based pensions. If you own a property and use it as your place of residence it is not assessable under the assets test.
To determine how much some of your assets are worth, Centrelink will look at the current market value. From that figure, Centrelink will deduct any debt you hold
against each applicable asset.
How much will I get?
If you are eligible for the Age Pension, the amount you’re paid depends on your income or assets.
The maximum Age Pension payments you can receive
(as at 20 September 2019) are:
Single $933.40 $24,268.40 – Couple $1,407.00 $36,582.00
Figures include Pension Supplement and Energy Supplement.
Even if you don’t qualify for a full Age Pension, you may be entitled to a part Age Pension and/or access to other payments and benefits, such as the Commonwealth Seniors Health Card, Pensioner Concession Card, Pension Supplement and Rent Assistance. Visit the Department of Human Services website for more information about the Age Pension rules, eligibility and income and asset tests.
The Age Pension is just one potential source of income in retirement. In the section below, we cover two ways you can use your super or savings to generate regular payments and enjoy additional financial security in retirement.
With an account-based pension you invest your super and receive regular income payments. You can choose how your money is invested, how much to receive as payments (subject to minimum requirements) and your own schedule for receiving payments.
You generally have the opportunity to invest in a range of market-linked assets including growth assets such as shares and also a range of defensive or guaranteed investments. You can generally make lump sum withdrawals at any time.
This means your super and income may be affected by falls in the value of assets in your account-based pension. This can make a difference to how long your super will last, and the income you can access to fund your retirement.
Lifetime annuities provide a guaranteed income for your lifetime in return for a lump sum investment. They can be used as the foundation of your retirement plan.
You can use some of the money from your super or savings to invest in a lifetime annuity and receive regular payments for life, regardless of how long you live or how
share markets perform.
• Payments from lifetime annuities can be linked to yearly changes to inflation.
• Some will offer the flexibility to withdraw and be paid a lump sum if circumstances change within the withdrawal period.
• Some will provide known estate values via guaranteed death benefits.
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The information in this guide is current as at 20 September 2019 and is provided by Challenger Life Company Limited ABN 44 072 486 938, AFSL 234670 (Challenger, our). The information is general only and has been prepared without taking into account any person’s objectives, financial situation or needs. Because of that, each person should, before acting on any such information, consider its appropriateness, having regard to their objectives, financial situation and needs. Each person should obtain and consider the Product Disclosure Statement (PDS) for the relevant product offered by Challenger before making a decision about whether to acquire or continue to hold the relevant product. A copy of the PDS can be obtained from your financial adviser, our Investor Services team on 13 35 66, or at www.challenger.com.au The information in this document does not constitute, and is not intended to constitute, social security or tax advice. Neither Challenger, nor any of its officers or employees, are a registered tax agent or a registered tax (financial) adviser under the Tax Agent Service Act 2009 (Cth) and none of them is licensed or authorised to provide tax or social security advice. Before acting, we strongly recommend that you obtain financial product advice, as well as taxation and applicable social security advice, from qualified professional advisers who are able to take into account your investor’s individual circumstances. You may also wish to contact Centrelink or other government agencies regarding eligibility for relevant benefits. To the maximum extent permissible under law, neither Challenger nor its related entities, nor any of their directors, employees or agents, accept any liability for any loss or damage in connection with the use of or reliance on all or part of, or any omission inadequacy or inaccuracy in, the information in this guide.