An Age Pension is more valuable than cash in the bank
Being eligible for a full or part age pension in Australia means much, much more than a top up of cash each fortnight. The Pensioner Concession Card benefits delivered to Age Pension recipients are often more widely valued than the fortnightly cash payment from Centrelink.
How did entitlements to an Age Pension change on 1 January 2017?
With recent changes impacting eligibility for the age pension, many Australians retirement plans are being revised.
The good news is that more Australians are now entitled to an Age Pension and the benefits that brings. The bad news is, while some part Age Pension recipients may have had their fortnightly rate increased, many Australians have had their fortnightly part Age Pension rate reduced due to new taper rates. We’ll explain taper rates shortly.
Apart from the year you were born and your Australian residency status, entitlement to an Age Pension is based on the Centrelink Income and Assets Test Thresholds. As of 1 January 2017, the assets test free thresholds increased.
An increase in the assets test free limits sounds positive, right? Yes, if you’re assessed as holding assets below the new thresholds. However, many Australians hold assets above the threshold, but nowhere near enough to be a fully self-funded retiree for the rest of their longer, healthier lives.
While the assets test free thresholds increased, for every $1,000 worth of assets held above the new Assets Test Thresholds, your pension rate reduction just doubled from what it was before – for every $1,000 you’ve lost $3 per fortnight – this is referred to as the taper rate.
For homeowners, your home continues to be exempt from the Age Pension assets test.
Why is eligibility for an age pension so important for so many Australian seniors?
While a reduction in fortnightly Age Pension rates for many Australian seniors is tough, the other benefits being eligible for an Age Pension bring, remain. Age Pension recipients are automatically granted a Pensioner Concessions Card.
Here is a list of the benefits Concession Card holders are entitled to, that self-funded retirees are not. You’ll be entitled to:
- Cheaper medicines: provided your medications are covered under the Pharmaceutical Benefits Scheme, you’ll pay a discounted cost. For people suffering from chronic conditions, this benefit can be worth hundreds or thousands of dollars year on year.
- Bulk billed doctor visits: this option is at the discretion of your medical practitioner.
- More of your medical costs refunded: if you reach the Medicare Safety Net thresholds.
- Help toward hearing services: via the Hearing Services Program.
- Various discounts from Australia Post: this changes over the years but may include reduced mail redirection costs. This is handy when you make the decision to move into accommodation that will age in place with you through your later years.
In Victoria via the Department of Human Services > Financial Support > Concessions, you may also be entitled to additional concessions such as:
- An Annual Electricity Concession or a Controlled Load Electricity Concession: 17.5% discount plus on energy bills is a fantastic bonus to your annual budget.
- An Electricity Transfer Fee Waiver: having the full electricity transfer fee waived is a great cost saver if you’ve decided to move to somewhere that suits your retirement lifestyle priorities.
- A Medical Cooling Concession: this applies over and above the Annual Electricity Concession and is available to assist with cooling bills for households where a member has a condition that affects their body’s ability to regulate temperature.
- A Utility Relief Grant: available on application for hardship in a temporary financial crisis where a Concession Card holder can’t pay for essential services.
- A Municipal Rates Concession: a 50% discount on council rates is a very welcome concession for homeowners. The amount discounted is capped annually.
- A Water and Sewerage Concession: this is another significant discount on essential services available to Pensioner Concession Card holders.
On top of these benefits, keep in mind that all Australians over retirement age are entitled to the benefits of a Commonwealth Seniors Health Card. If your Age Pension payment was cancelled on 1 January 2017 as a result of the changes introduced, you can apply for a non-income tested Commonwealth Seniors Health Card.
For more information on Health and Concession Cards that you may be entitled to, visit the Department of Human Services > Customer > Subjects > Concession and health care cards