Introduction

The Australian Aged Pension scheme provides a wonderful safety net for those with limited assets in retirement, although many remain confused by how their age pension entitlements differ from so called superannuation income streams. 

The Federal Government provides an income for all Australians who reach pension paying age, currently set at age 67, who can prove they are an Australian resident and can also pass the income and asset tests or means test.

Introduction

One in six people will be over 65 years old by 2050. With the world's population ageing quickly, it is natural to think about how pension systems around the world will cope, particularly in Australia. Fortunately, Australia's three-component retirement income system means our age pension system is well-equipped to support older Australians now and well into the future.

Is Australia's age pension adequate for retirement?
Comparisons of age pensions around the world are generally made based on three key factors — adequacy, sustainability and integrity. The balancing act is tough, but essential for countries to get right. It is no use having an overly generous age pension if the current funding measures (typically tax revenue) aren't adequate to maintain the system long-term.

Introduction

With Australia’s age pension being subject to an assets and income test, a simple way for part-pensioners to increase their pension payments is to give away some assets.

Not surprisingly the government is on to such an obvious strategy. It’s called gifting, and while it is perfectly legal for you to give away whatever you want whenever you want, if you exceed the relevant limits, Centrelink will continue to assess, what it calls “deprived assets”, for five years.

The limits... 

Introduction

The basic rule for receiving an age or service pension is to ensure it goes to those people who need it. To determine how much each person is paid, pension recipients are subject to means testing on income and assets.

Two tests are applied and the one paying the lowest age pension is the one that is used. Many retirees pass the income test but fail the tougher assets test. This means they get a reduced pension or no pension at all.

Introduction