Upcoming Centrelink pension increases may benefit more seniors than expected

Starts at 60 Fans receiving a full or part-pension from Centrelink, can look forward to a pay rise later this month.

And if you think, you’ve got too much money to qualify for anything from the government, read on.

You might be surprised!

An increase in Government pensions later this month, will have the added bonus of allowing thousands of currently ineligible seniors to claim an age pension for the first time.

Pensions for singles will be increased by $28.10 to $1,114.40 per fortnight from September 20 and couples will see an increase of $21.20 each to a combined $1,725.20 a fortnight when both members of the couple are eligible.

The increase translates to a sizeable lift in the cut-off limits. Slip in under the limits and you’ll be entitled to a part-pension and the all important Pension Concession Card.

Under the income test, the new cut-off limit for singles will be $2,500.80 a fortnight and for couples, a combined $3,822.40. In the case of a couple, Centrelink view you as a single entity, so it doesn’t matter who generates the income.

Income assessed for Centrelink means testing is not the same as taxable income or indeed, cash-flow. You could be generating more than $2,000 a week from an account based pension and still qualify for a full age pension under the income test.

The increase in payment rates also increases the upper cut-off threshold under the asset test.

While a home-owning single still has a lower asset test threshold of $314,000, the new upper cut-off limit increases by $9,250 to $695,500. For couples, the lower limit of $470,000 is complemented by a new upper cut-off limit of $1,045,500 which is an increase of $14,500 on the current level.

The value of the family home is still ignored no matter what it’s worth, provided it sits on less than 2 hectares and is used only for private purposes.

That’s why “Mrs Jessop” living in a harbour-side property in Sydney, can still receive a full pension form Centrelink.

Centrelink income support payments are indexed biannually in March and September each year and the specific payment you receive, determines what indexation method is used.

In the case of allowance payments such as jobseeker, parenting and youth allowance are indexed to the consumer price index or CPI.

Increases to pension benefits including Age, Disability, Blind and DVA war service pensions are tied to one of three measures.

Firstly, they are indexed to either the Consumer Price Index or a special Pensioner and Beneficiary Living cost index, whichever figure is the greatest over the preceding 6 month period is the figure latched onto.

Once the new rate has been established, the couple’s combined rate is compared to Male Total Average Weekly Earnings and tied to 41.76 percent of that number. If necessary, the pension is increased to match that calculation. The single pension rate is 66.33 percent of the couple’s rate using this method.

A quirk in the system means the minimum amount payable to anyone eligible will be nearly $1,200 for singles over the year and a combined payment of more than $2,300 for eligible couples.

The fortnightly pension payment is made up of a base pension plus supplements to cover a range of expenses including phone, internet and prescription medicines.

While means testing reduces the base pension, there’s no mechanism to reduce the supplements below minimum payment amounts. That means the least you can expect to receive is $58.90 a fortnight for singles and a combined $88.80 for couples. And that applies if you are just 1 dollar under the cut-off limits.

This amount is in addition to the federal and state government discounts that come with a Pension Concession Card which issued to anyone receiving a full or part pension.

The Association of Independent Retirees has previously calculated that depending on where you live in Australia, the value of the card could be as much as $7,000 per year in savings across commonly used government and private services.

For more age pension information, read here.