From mid next year, the pension age will rise to 67 years. If you are eligible for the age pension, there are a number of ways to maximise your entitlement. It’s important to receive what you are entitled to by understanding how assets are calculated and how you can reduce them to receive a higher pension.
To receive a full pension, assets (excluding the value of your primary residence) must be less than $280,000 for a single homeowner or $540,500 for a homeowner. The amounts for couples are $419,000 and $693,000. The amounts are greater for part pensions.
Finance writer Noel Whittaker explains that it’s possible to reduce your assets to qualify for a full or part pension by understanding the assets test and taking action. You can reduce your assets in a number of ways and therefore qualify for a higher pension. When you first apply for a pension you are asked to value your household contents and personal effects. Your assets are calculated on market value, that is what you would get at a garage sale rather than replacement value, usually a much higher amount. So it’s important that the value of your assets is realistic – for many people, the market value may be $5000 or less.
You can also gift money to reduce your assets up to $10,000 a year or $30,000 over a five-year period. You can renovate your home, contribute to a younger spouse’s super, pre-pay funeral expenses or repay debt.
There is also an income test for the age pension which includes earnings from work, investments or superannuation.