Factors that affect pensions

On this page

• Included pensions
• Are payment rates adjusted in line with the cost of living?
• How much income can I have before my pension payment is affected?
• How much can I have in assets before my pension payment is affected?
• What happens if my pension is paid under an agreement?
• What if I have assets over the limit and am in financial hardship?
• Can I get a payment under the Pension Loans Scheme?
• Maximum loan
• Concessions

Included pensions

The pensions referred to in this section include:

• Age Pension
• Carer Payment (adult)
• Carer Payment (child)
• Disability Support Pension
• Parenting Payment (Single)

The amount of pension you receive depends on your income and assets. Your pension rate is calculated under an income test and an assets test. Whichever test gives the lower rate of pension is the one which applies.

If you have a partner, your combined income is assessed under the income and assets test.

If you are blind, your pension is not subject to the income and assets tests but your income and assets can affect your eligibility for Rent Assistance and Family Tax Benefit.

For more information on these payments, choose the relevant link from the list above or contact your nearest Centrelink Customer Service Centre.

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Are payment rates adjusted in line with the cost of living?

Pension rates are normally indexed in March and September each year in line with increases in the Consumer Price Index (CPI). At this time the single rate is also checked, and if necessary increased, to ensure it does not fall below 25% of the Male Total Average Weekly Earnings (MTAWE) figure.

Please note: Pension rates can only increase as a result of CPI and MTAWE changes: they cannot decrease.

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How much income can I have before my pension payment is affected?

You can have income up to certain limits without having their pension payments reduced. These income limits are called 'allowable income limits'.

For every dollar each fortnight that your income rises above the allowable limits, your pension is reduced by 40 cents if you are single, and by 20 cents each if you are a couple. If your partner does not receive a pension, you receive the partnered rate of pension reduced by 20 cents for every dollar above the allowable income for a couple.

Please note: As of July 1 2009, changes to the definition of income mean that your assessable income for Centrelink and the Family Assistance Office will also include:

• reportable superannuation contributions, and
• total net losses from rental property or investment income.

You may need to provide additional information about your income to Centrelink or the Family Assistance Office.

For more information, phone Centrelink on 13 2300, refer to Retirement or contact your nearest Centrelink Customer Service Centre.

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How much can I have in assets before my pension payment is affected?

You can have assets up to certain limits without having your pension payments reduced. These assets limits are called 'allowable assets limits'.

The amount of allowable assets depends on whether you are a homeowner or a non-homeowner, single or a member of a couple. Assets limits are adjusted in line with the Consumer Price Index in July.

If you are single, every $1,000 of assets over the allowable asset limit reduces the pension by $1.50 a fortnight. If you are a member of a couple, every $1,000 of combined assets over the allowable assets limit reduces each pension by $0.75 a fortnight.

For more information, phone Centrelink on 13 2300, refer to Retirement or contact your nearest Centrelink Customer Service Centre.

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What happens if my pension is paid under an agreement?

If your pension is paid in Australia under a social security agreement with another country, you may have your foreign pension amounts deducted dollar for dollar from the Australian pension rate. If you are outside Australia, your rate may be reduced if you lived less than 25 years in Australia between the age of 16 years to Age Pension age.

For more information about social security agreements, phone Centrelink on 13 1673 or contact your nearest Centrelink Customer Service Centre.

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What if I have assets over the limit and am in financial hardship?

If you have substantial assets over the limit to qualify but you can’t rearrange your financial affairs and are in financial hardship, you may qualify for help under hardship provisions. You qualify under these provisions if:

• your pension is assessed under the assets test
• you own an asset which you cannot sell or be reasonably expected to sell
• you cannot borrow against the asset
• deprivation provisions do not apply or can be disregarded
• you are in severe financial hardship.

You are considered to be in severe financial hardship if your:

• total income (including any pension paid under the assets test) is less than the maximum rate of pension; and if
• readily available funds are less than the applicable limit. Note: The applicable limit varies based on your payment type.

The rate payable depends on each individual case and is calculated using a special formula. Payment starts from the date you put in the hardship claim. In special cases, payment can be made for up to 6 months before you put in the claim.

For more information, phone Centrelink on 13 2300, refer to Retirement or contact your nearest Centrelink Customer Service Centre.

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Can I get a payment under the Pension Loans Scheme?

If you are:

• of Age Pension age; and
• your pension has not been granted or has been reduced or cancelled because of either the income test or assets test.

you may be able to receive a loan up to the maximum fortnightly pension rate under the Pension Loans Scheme. To qualify for payment under the loans scheme, you must have real estate in Australia (this can be your principal residence) for the loan to be secured against.

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Maximum loan

The maximum loan is the difference between the amount you get now, or would get, under the income or assets test and the maximum rate of pension. You can also be paid a lesser amount of your choice. Interest is charged on the loan in compound terms at a rate to be fixed by the Minister for Family and Community Services by notice published in the Commonwealth Gazette.

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Concessions

If you would normally not receive a pension under the income and assets tests, but are receiving a payment under the Pension Loans Scheme only, you are not entitled to a Pensioner Concession Card.

For more information, phone Centrelink on 13 2300, refer to Retirement or contact your nearest Centrelink Customer Service Centre.

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