Age Pension asset test changes an opportunity for many to qualify

New Age Pension payment rates come into effect from tomorrow and in addition to higher fortnightly payments for those receiving a full pension, some part pensioners may qualify for higher payments.

An increase to the assets test thresholds for part pensioners may be welcome news for thousands of older Australians. Plus, there are ways to reduce your assets – or at least check to see if they are still worth what you think – to potentially increase your part pension.

From 20 September, the second of the twice-yearly Age Pension indexations kicks in and new rates come into effect.

Age Pension rate increases

The single rate of the Age Pension, with supplements, will increase by $32.70 per fortnight – from $1064 to $1096.70. The rate for each member of a couple, with supplements, will increase by $24.70 per fortnight – from $802 to $826.70.

Income test increases

The Age Pension disqualifying income limits have also increased. For a single, the limit has lifted from $2332 per fortnight to $2397.40 – an increase of $65.40. The new limit for couples combined is $3666.80 – an increase of $98.40. For illness-separated couples, the new limit is $4746.80 – an increase of $130.80.

Asset test increases

Since 1 July, to qualify for a full Age Pension, a single homeowner must have assets valued below $301,750. Singles who don’t own their home can have assets valued at up to $543,750.

Single homeowners may still be eligible for a part Age Pension if their assets are worth less than $667,500. The disqualifying threshold for singles who do not own their home is $909,500.

Couples who own their home and have combined assets below $451,500 may qualify for the full Age Pension. Couples who do not own their home can have assets valued at up to $693,500.

You can still be eligible for a part Age Pension if your assets are worth less than $1,003,000 if you own your home, or $1,245,000 if you don’t own your own home.

Make the two tests work for you

Centrelink applies both income test and assets tests to assess eligibility for the Age Pension, and then applies the one that gives you the least pension.

Finance guru Noel Whittaker says that the increased asset limits provide an opportunity for many more people to qualify for at least a part pension, if they are savvy and make the right tweaks to their financial situation.

He says the vast majority of people overvalue their personal possessions, often recording their full replacement value rather than what they would get if they sold the item second hand.

“Many pensioners deprive themselves of future income by overvaluing their personal positions,” Mr Whittaker says.

“The value of your furniture should be only what you would get for it if you sold it in a garage sale on a wet Saturday morning. This puts $5000 – tops – on most people’s furniture.”

He also says you should make sure you are updating the value of your possessions with Centrelink each year.

You may think depreciation applies automatically to items such as cars, but that is not the case. You need to contact Centrelink yourself to update any amounts recorded.

It is highly likely there are older Australians out there who could qualify for at least a part Age Pension if they only took the time to accurately assess the value of their belongings. Could you be one of them?

When was the last time you updated the value of your assets with Centrelink? How much could they have depreciated since then? Let us know in the comments section below.

Also read: Age Pensioners and low-income households forced to pay a ‘poverty premium’