Jump to content
Andrew from Vista Financial

Australian Age Pension Information Thread

Recommended Posts

This thread has been written to provide an overview of the Australia Age Pension system.

 

 

 

Eligibility

Generally to be eligible to the Australian Age Pension you will need to be in Australia and a permanent resident/citizen at the time of applying and generally need to have been in Australia for a continuous period for at least 10 years or for a number of periods that total more than 10 years with one of the periods totally more than five years.

 

The age of eligibility is being equalised to age 65 for men and women and will gradually be phased back to age 67 (likely moving further to age 70).

 

 

Payment amounts

 

Currently the Age Pension is around $32,416 annually for couples and around $21,504 annually for a single person.

 

 

Means Testing

 

The Australian Age Pension unlike the UK Basic State Pension is ‘means tested’ based upon one’s assets and income streams.

 

 

The income and assets test is applied (described below) and the outcome that produces the lowest result is used to determine the payment amounts.

 

 

Income Test

 

A couple can effectively receive up to around $7,176 annually of Centrelink assessed income without reduction to the Age Pension amount under the income test.

 

If Centrelink assessed income is over around $72,020 annually then no Age Pension is payable at all.

 

(The thresholds are different for singles)

 

 

Assets Test

 

If a couple have over the Centrelink threshold in assets currently $279,000 generally excluding the family home then the Age Pension amount received starts to reduce gradually depending on the amount of assets held over the $273,000.

 

If Centrelink assessed assets are over $1,110,500 then no Age Pension is payable at all.

 

 

(The thresholds are different for singles and non-home owner couples)

 

 

For further information on the please see here Australian Age Pension information

 

 

Potential Strategies

 

There can be perfectly legitimate ways whereby it is possible to receive a higher amount of Australian Age Pension than first thought by structuring and rearranging assets and liabilities slightly differently.

 

A couple of examples of this are:

 

 

 

  • When Centrelink apply the ‘Income and Assets Test’ they ignore monies held in Superannuation if the person is under Age Pension age.

 

 

Therefore if a member of a couple is over Age Pension age and one is under Age Pension Age moving assets into Superannuation in the name of the person under Age Pension age could be a consideration which could then mean an increase Age Pension payments for the person over Age Pension age.

 

 

 

 

  • Another is that the Centrelink Income Test is more favourable if someone has money held in an Account Based Pension as opposed to in the Bank or in a Super Fund.

 

 

This strategy will no longer be viable from January 2015 and therefore anyone who is receiving age pension and has monies in superannuation now should seek advice on the merits of moving to an Account Based Pension prior to January 2015.

 

Therefore for people approaching retirement that may be over the ‘Income Test’ threshold in retirement then transitioning assets eventually into an Account Based Pension could be a way of reducing income under the ‘Income Test’ thus potentially increasing the Age Pension payment amount received.

 

 

 

I hope this helps with some basic understanding of how the Australain Age Pension operates, if you have any questions about this thread please ask below.

Edited by Andrew from Vista Financial
Updating Centrelink Info

Financial Adviser (FPA Member AFP ®) / Tax (Financial) Adviser (TPB)

SMSF Specialist Advisor™ (SSA™) / UK SIPP Authorised Adviser 

Specialising in UK Expat Retirement Planning Advice and Pension Transfers 

Director - Vista Financial Services – www.vistafs.com.au / 08 8381 7177

AR-322874 /AFSL-234951

 

Please note that my advice on this forum is general advice only and professional financial advice should be sought for your own personal situation.

Share this post


Link to post
Share on other sites

My husband and I are permanent resident visa holders and we both have Republic of Ireland pensions as we lived there for 14years. I was told that Australia has a reciprical agreement with R.O.I so we applied for Australian pension conssesion cards. We have been turned down which I find infuriating given the fact that it cost us so much for our visas just to come and live here. We only have very modest savings left now less than $8000 and are also renting a house, so don't really have any assets. Could you tell me how much money we are allowed combined, to have coming over from Ireland and the UK as I am very confused. Yours sincerely

Ann.

Share this post


Link to post
Share on other sites

Hi Ann

 

This isn't a question that I can answer for you easily but as a general guide for a couple income of up to around $276 a fortnight can be received to still be entitled to the full pension and income of less than around $2,770 a fortnight can be received to be eligible for part pension.

 

With regards to reciprocal agreements the UK no longer has one with Australia from a social security point of view and so generally state pension income from there is assessed and treated as income from inside Australia for means testing purposes.

 

My understanding of treatment of social security income from outside of Australia with countries who have social security reciprocal agreements with Australia is that the Australian Age Pension is reduced by a dollar for every dollar received.

 

Centrelink do have Financial Services Officers that you can sit down with to discuss these sort of things in depth, if you haven't already done so I would suggest that you book an appointment with one at your local branch so as to help you understand your entitlements based on your financial situation as they will be better placed to deal with your enquiry than I with only limited information.

 

 

Regards

 

Andy


Financial Adviser (FPA Member AFP ®) / Tax (Financial) Adviser (TPB)

SMSF Specialist Advisor™ (SSA™) / UK SIPP Authorised Adviser 

Specialising in UK Expat Retirement Planning Advice and Pension Transfers 

Director - Vista Financial Services – www.vistafs.com.au / 08 8381 7177

AR-322874 /AFSL-234951

 

Please note that my advice on this forum is general advice only and professional financial advice should be sought for your own personal situation.

Share this post


Link to post
Share on other sites
Guest peterevanson

Great post Andrew. The points you covered in australian age pension system were nice. Keep posting.:cool:

Share this post


Link to post
Share on other sites

Please excuse my ignorance but is an Age Pension the equivalent of the UK State Pension? So if you earn / have earned over $67k per couple, you won't get it? Presumably you would still get your super though...??

 

Thanks in advance for the clarification on this.

 

I-F

Share this post


Link to post
Share on other sites

Hi ItchyFeet76

 

Yes you are right, the Australian Age Pension is the equivalent of the UK State Pension however it is means tested here.

 

In your scenario and assuming a couple who are homeowners with no other income and assets under the asset test threshold and the annual income of $67k you mention (assumed to be outside of the superannuation environment) then this would still give around $2,500 annual Age Pension.

 

Where would this $67k be coming from, if it is employment income then generally it would be fully assessed however if it is investment income then there may be a way of reducing the amount of income that is tested?

 

Regards

 

Andy

Edited by Andrew from Vista Financial

Financial Adviser (FPA Member AFP ®) / Tax (Financial) Adviser (TPB)

SMSF Specialist Advisor™ (SSA™) / UK SIPP Authorised Adviser 

Specialising in UK Expat Retirement Planning Advice and Pension Transfers 

Director - Vista Financial Services – www.vistafs.com.au / 08 8381 7177

AR-322874 /AFSL-234951

 

Please note that my advice on this forum is general advice only and professional financial advice should be sought for your own personal situation.

Share this post


Link to post
Share on other sites

Thanks for clarifying that, Andrew. Our situation is this:- we're hoping to come out on a 457 but eventually convert it to PR. My husband will (hopefully) be earning around the $120k mark, and I'm a full-time mum. So, based on $120k (which would obviously go up over the years with inflation) we'd get just $2.5k p.a. between the two of us? And if / when I return to work, would we still get £2.5k between the two of us...?

 

Presumably the superannuation to which the employer contributes would come to us regardless of salary, but minus tax (at whatever rate he would pay on his usual salary, I guess)? And any UK employer pension would come to us minus UK tax or Oz tax? (and would not rise in line with inflation...?). Would we still get a UK state pension?

 

Sorry for adding more questions!

 

Thanks in advance of your reply,

 

I-F :-)

Share this post


Link to post
Share on other sites

Hi

 

IF76

 

Sorry for the delay.

 

No, the 2.5k was based on someone that has an income of $67k p.a as per your question in post 5, sorry I thought that this was a real situation and looking back now realise you were asking a hypothetical.

 

Basically when you get to retirement you will then have access to Superannuation monies that your Husband has accrued via employer and own (if applicable) contributions.

 

After the age of 60 generally Superannuation income is tax free so your income would be made up of:

 

 

  • Superannuation;
  • Any investments outside of superannuation i.e investment property rental income (UK Private Pensions not transferred to Australia);
  • Any UK State Pension you may be entitled to at your applicable age (not means tested);
  • Any Centrelink Australian Age Pension you may be entilted to at your applicable age (means tested based on income and assets).

 

 

Obviously the amounts of all of the above income sources will depend on your personal situation.

 

I hope this helps a bit?

 

Regards

 

Andy


Financial Adviser (FPA Member AFP ®) / Tax (Financial) Adviser (TPB)

SMSF Specialist Advisor™ (SSA™) / UK SIPP Authorised Adviser 

Specialising in UK Expat Retirement Planning Advice and Pension Transfers 

Director - Vista Financial Services – www.vistafs.com.au / 08 8381 7177

AR-322874 /AFSL-234951

 

Please note that my advice on this forum is general advice only and professional financial advice should be sought for your own personal situation.

Share this post


Link to post
Share on other sites

Hello again Andy, thanks for persevering with my question - sorry I didn't clarify my situation in the first post! So what would happen to our private pensions from the UK if we were to go to Oz, gain PR and stay out there until retirement...? Surely we'd still get them (minus inflation) as we've paid into them??!

 

Jolly pleased that the Aus super isn't taxed - do you think this is likely to change at some point...? (the UK state pension IS taxed, isn't it? And presumably would be taxed on UK rates or Aus rates?).

 

Thanks again and sorry to reply with more questions!

Share this post


Link to post
Share on other sites

Any chance of a pay rise, Andrew?? Coming up for 15 years as a retiree...:wink:

 

Cheers, Bobj.

Share this post


Link to post
Share on other sites

:biggrin:

Any chance of a pay rise, Andrew?? Coming up for 15 years as a retiree...

 

Cheers, Bobj.

 

I wouldn't have thought you needed one Bob http://www.pomsinoz.com/forum/money-finance/204481-does-anyone-follow-stock-market.html :biggrin:


Financial Adviser (FPA Member AFP ®) / Tax (Financial) Adviser (TPB)

SMSF Specialist Advisor™ (SSA™) / UK SIPP Authorised Adviser 

Specialising in UK Expat Retirement Planning Advice and Pension Transfers 

Director - Vista Financial Services – www.vistafs.com.au / 08 8381 7177

AR-322874 /AFSL-234951

 

Please note that my advice on this forum is general advice only and professional financial advice should be sought for your own personal situation.

Share this post


Link to post
Share on other sites
Any chance of a pay rise, Andrew?? Coming up for 15 years as a retiree...:wink:

 

Cheers, Bobj.

 

Don't worry Bob, that nice Mr Abbott will take care of you :biggrin:


Jeremy Corbyn on the EU  " A European bureaucracy totally unaccountable to anybody"

Share this post


Link to post
Share on other sites
Hello again Andy, thanks for persevering with my question - sorry I didn't clarify my situation in the first post! So what would happen to our private pensions from the UK if we were to go to Oz, gain PR and stay out there until retirement...? Surely we'd still get them (minus inflation) as we've paid into them??!

 

Jolly pleased that the Aus super isn't taxed - do you think this is likely to change at some point...? (the UK state pension IS taxed, isn't it? And presumably would be taxed on UK rates or Aus rates?).

 

Thanks again and sorry to reply with more questions!

 

 

 

No problem and don’t worry that is the point of this forum so ask away.

 

Regarding your UK Private Pensions, you have a few options: Options for UK Pensions Thread

 

Also read this thread regarding transferring UK Pensions to Oz: Transferring UK Pensions to Oz Thread

 

Your UK Pension if left will be payable depending upon the type of pension i.e final salary or market linked generally from when you reach the schemes normal retirement age (NRA).

 

Until that time if final salary then generally the benefits will keep pace with UK inflation and if market linked then the pot will be based upon the investment performance between now and retirement.

 

At retirement if final salary or an Annuity is purchased (if market linked) then the pension payments are generally index linked.

 

Pensions paid from the UK can generally be elected to have tax paid in Australia.

 

If a private UK pension is transferred to Australia then it becomes accessible generally at the same time as ones private superannuation pot and tax free if over age 60.

 

Eligibility for the UK State Pension is based upon your qualifying years and the amount will keep pace with UK inflation until State Pension Age, unfortunately if in Australia it is not index linked once payment is being made.

 

Hope this helps,

 

Kind regards

 

Andy


Financial Adviser (FPA Member AFP ®) / Tax (Financial) Adviser (TPB)

SMSF Specialist Advisor™ (SSA™) / UK SIPP Authorised Adviser 

Specialising in UK Expat Retirement Planning Advice and Pension Transfers 

Director - Vista Financial Services – www.vistafs.com.au / 08 8381 7177

AR-322874 /AFSL-234951

 

Please note that my advice on this forum is general advice only and professional financial advice should be sought for your own personal situation.

Share this post


Link to post
Share on other sites

More than 3.6 million pensioners will receive an increase to their payments from 20 March.

 

Minister for Social Services, Kevin Andrews, said the increases will help pensioners keep up with rises in cost of living expenses and are driven by the CPI increase of 1.9 per cent for the six months to December 2013.

 

Mr Andrews said single age pensioners will receive an increase of $15.70 a fortnight, while age pensioner couples will receive $23.80 extra a fortnight.

 

“This means total pension payments for people on the maximum rate will be $842.80 a fortnight for singles, and $1,270.60 a fortnight for couples,” Mr Andrews said.

 

http://kevinandrews.com.au/media/release/payment-increase-for-3-6-million-pensioners


Financial Adviser (FPA Member AFP ®) / Tax (Financial) Adviser (TPB)

SMSF Specialist Advisor™ (SSA™) / UK SIPP Authorised Adviser 

Specialising in UK Expat Retirement Planning Advice and Pension Transfers 

Director - Vista Financial Services – www.vistafs.com.au / 08 8381 7177

AR-322874 /AFSL-234951

 

Please note that my advice on this forum is general advice only and professional financial advice should be sought for your own personal situation.

Share this post


Link to post
Share on other sites

Eligibility

Generally to be eligible to the Australian Age Pension you will need to be in Australia and a permanent resident/citizen at the time of applying and generally need to have been in Australia for a continuous period for at least 10 years or for a number of periods that total more than 10 years with one of the periods totally more than five years.

 

The age of eligibility is being equalised to age 65 for men and women and will gradually be phased back to age 67 (likely moving further to age 70).

 

Hi

My question is about the reciprocal arrangements prior to year 2000. In the UK anyone who was living and working in Oz prior to this date can have those years taken into consideration for claiming the British pension e.g. if you were resident in Australia between 1980 and 1989 for example then those 9 years can be included in calculations for the British pension as long as you are resident in Britain when claiming the pension. Is this the same for Oz i.e. if you want to claim age pension in Oz and you were an Australian citizen living and working in the UK prior to 2000, are those years taken into consideration when seeking eligibility to claim the Australian age pension -- that is, if I, as an Australian citizen, was working in the UK between 1993 and 1998 would those 5 years count seeing as the reciprocal agreement was in force then ? Hope this makes sense. Thanks

:unsure:

Share this post


Link to post
Share on other sites

Hi

 

My question Is about the reciprocal arrangements prior to year 2000. In the UK anyone who was living and working in Oz prior to this date can have those years taken into consideration for claiming the British pension e.g. if you were resident in Australia between 1980 and 1989 for example then those 9 years can be included in calculations for the British pension as long as you are resident in Britain when claiming the pension. Is this the same for Oz i.e. if you want to claim age pension in Oz and you were an Australian citizen living and working in the UK prior to 2000, are those years taken into consideration when seeking eligibility to claim the Australian age pension -- that is, if I, as an Australian citizen, was working in the UK between 1993 and 1998 would those 5 years count seeing as the reciprocal agreement was in force then ? Hope this makes sense. Thanks

:unsure:

 

 

Hi miw54

 

Apologies for the delay, this slipped through the net.

 

As far as I am aware no, eligibility now is the 10 year permanent resident rule and I am not aware that years in the UK prior to the social security agreement being repealed is counted.

 

That said I could be wrong as I have not had a client in this situation applying for Centrelink, therefore I would advise checking with Centrelink directly.

 

 

Kind regards

 

 

Andy


Financial Adviser (FPA Member AFP ®) / Tax (Financial) Adviser (TPB)

SMSF Specialist Advisor™ (SSA™) / UK SIPP Authorised Adviser 

Specialising in UK Expat Retirement Planning Advice and Pension Transfers 

Director - Vista Financial Services – www.vistafs.com.au / 08 8381 7177

AR-322874 /AFSL-234951

 

Please note that my advice on this forum is general advice only and professional financial advice should be sought for your own personal situation.

Share this post


Link to post
Share on other sites

Thank you Andy. Just curious as a friend from Oz has just managed to get a fair amount of UK pension credited to him based on years in Australia for time he was there prior to 2000.

Share this post


Link to post
Share on other sites

Eligibility

 

Generally to be eligible to the Australian Age Pension you will need to be in Australia and a permanent resident/citizen at the time of applying and generally need to have been in Australia for a continuous period for at least 10 years or for a number of periods that total more than 10 years with one of the periods totally more than five years.

 

Hi, I am just wondering whether you could clarify the eligibility period, ie do they take into consideration time spent on a temporary/provisional visa in the ten years? For example we came over on a temporary 173 Contributory Parent visa (which I was told was actually a provisional visa as it did not exempt us from the Medicare levy payment or the necessity of paying tax on our pension transfer) and after a year were granted a permanent CPV. Would the first year spent in Australia count or do they only count permanent residency? The above seems to indicate that they would count temporary residency but it is not clear. And what about periods spent out of the country, eg for holidays etc - I know these are not included in the time to be eligible for citizenship.

Edited by Bridgeman

Share this post


Link to post
Share on other sites

Andrew,

 

Would you or one of your colleagues be able to make any comments on this thread please ?

 

http://www.pomsinoz.com/forum/moving-back-uk/174276-australian-super-taxed-uk-5.html#post1936673999

 

There are a number of us who have Australian Superannuation and are puzzled about how it could be taxed if we repatriate.

 

There seems to be lots of readily available information on the net for people coming out from Britain but relatively little for people going back with Aussie super funds.

 

Regards

 

Bill

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×