What you need to know about Australia’s Age Pension

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Australia’s Age Pension, with pensioner discounts, is intended to finance a basic standard of living for people who have retired because of disability or old age.

Current Age Pension payment rates (at June 2018)

The single rate of Age Pension increased to $826.20 per fortnight as from March 20, 2018.

Each member of a ‘couple living together’ could receive a maximum of $622.80 per fortnight.

Pension supplements are paid in addition to the pension payment. The general pension supplement recently increased to $67.30 per fortnight for single pensioners and $50.70 per fortnight for each member of a couple living together.

The Clean Energy Supplement of $14.10 per fortnight for a single pensioner and $10.60 per fortnight for a pensioner member of a couple, is payable to long-standing age pensioners.

The maximum Age Pension payment and supplement rates are these:

 Single PensionerEach member of a Pensioner couple living togetherTotal combined amount for a couple living together
Total fortnightly payment$907.60$684.10$1,368.20
Age Pension full rate$826.20$622.80$1,245.60
Pension Supplement$67.30$50.70$101.40
Clean Energy Supplement$14.10$10.60$21.20

But there’s more. The pensioner concession card issued to pensioners also provides generous discounts, with pensioner discounts funded by the Commonwealth government.

For instance, the Commonwealth Pharmaceutical Benefits Scheme (often known as PBS) charges a much lower price per prescription to pensioners. Also, medical practices are encouraged to bulk-bill pensioners for doctors’ services.

The Commonwealth also subsidises pensioners for their vehicle registrations, council rates, water rates and parks levies on private homes. Even animal registration fees attract a pensioner discount from local councils.

Victoria also allows for pensioner discounts on Stamp Duty for buying modestly priced homes. Some other States offer their own versions of pensioner discounts on Stamp Duty for principal residences.

Pensioners also travel at about half fare on suburban public transport throughout Australia. Electricity and gas retailers allow some discounts for pensioners who quote a CRN (Customer Reference Number).

Pension supplements

Previously the PBS provided free prescription medications to pensioners. But to reduce waste, a modest charge was introduced together with a pharmacy supplement to the Age Pension. Back when there was only one phone provider, pensioners also received help to cover costs of the phone line into homes. Both these and a clean energy supplement are now covered by the general pension supplement.

Who sets the Age Pension rates?

The Commonwealth Social Security legislation provides for an Age Pension, but there’s no formula for setting the exact amount to cover the basic needs of retirees across Australia.

The maximum pension rates are set by the Commonwealth Government. The maximum full pension rates are usually adjusted in March and September each year and take into account changes in the Australia-wide consumer price index.

The Age Pension amounts could be considered the minimum cost for Australian pensioners to live with dignity in their own home. (Rental assistance for pensioners is the topic for another post.)

What type of expenses could pensioners expect to cover?

As a long-term income support, the Age Pension notionally allows for the costs of running a home. With careful budgeting, pensioners could expect to be able to replace such things as major home appliances and renew their bed linen.

Pensioners with only the pension as their income can expect to participate in seniors social events within their communities. They will probably be able to afford brief holidays within their own States, staying with friends or in ‘budget’ accommodation.

What type of expenses are generally beyond the pensioners’ budget?

The objective of the system is to provide a basic standard of living. It isn’t intended as a means of accruing wealth. In other words, the pension is not intended to give you enough income to pay off your home mortgage or buy a luxury vehicle.

Seniors with only the Age Pension as income could afford private health insurance, but only if they were frugal in their spending on other items.

In your planning, keep in mind that the maximum rate of the Age Pension is only available to seniors who have very few other resources. And the Age Pension means test reduces what is payable to seniors with significant assets and/or an alternative income.

Christine Hopper is the Director of Financial Care Services Pty Ltd, which she established in 2005. She provides a professional, independent service to families of aged-care entrants and mature people considering a change of residence into retirement villages, lifestyle communities or supportive assisted living and residential services.

Christine talks to Centrelink as both a customer and on behalf of her clients. She has experience with Centrelink, Health and Ageing, and the Department of Veteran Affairs. She understands the paperwork and charging system involved in Commonwealth regulated Residential Aged-Care means tested. She has experience with aged care asset and income assessments and ongoing Centrelink asset and income forms. She can be contacted through https://financialcareservices.com.au.

Christine welcomes contact from:

  • families seeking professional advice when considering aged care
  • individuals considering a lifestyle change (downsize or residential community)
  • seniors considering applying for Age Pensions or Commonwealth Seniors Health Card

Category: Finances

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