Nick Bruining: New Centrelink upper cut-off limits open door for more seniors to get a part pension

Australia’s easing cost of living crisis has flowed through to a modest increase in Centrelink benefits. The increases, to take effect from Thursday, will also see thousands of wealthy seniors qualify for a part-pension for the first time. An increase in the upper cut-off thresholds for both the income and asset means test is a by-product of a hike in pension rates. A single age pensioner will get an extra $4.60 a fortnight to $1149. For couples an increase of $3.50 each lifts the total fortnightly payment to $866.10 — or a combined $1732.20. Age pension increases are tied to one of three variables. They must be at least 25 per cent of so-called male total average weekly earnings, this time as measured in November last year. That measure is compared after the value of the consumer price index and the pensioner and beneficiary living cost index is applied to the current pension rate. On this occasion, the six-month CPI increase to the end of December returned a figure of 0.4 per cent and that was the value used. Independent financial planner Sandra Carr said wealthy seniors should routinely check their eligibility for a part-pension against the upper cut-off levels. “An increase in the pension rate also increases the effective cut-off levels for eligibility for a part-pension,” Ms Carr said. Under a quirk in the system, people who qualify for even a tiny part-pension receive a full payment of the supplement payments, which form part of the total fortnightly payment. That means a single cannot receive anything less than $59.10 a fortnight. For couples it’s $44.50 each — or a combined $89 a fortnight. Similarly, part-pensioners are also entitled to receive the magic Pensioner Concession Card, which can be worth thousands of dollars in discounts on State and local government charges and services. “From March 20, the upper cut-off income level for a single pensioner increases to $2510 a fortnight,” Ms Carr said. “This income includes before-tax employment income, foreign income, certain superannuation pension income and the deemed income from financial investments.” For couples, the combined income cut-off limit will be $3836.40 a fortnight, and because Centrelink treats couples as a single entity it doesn’t matter in whose name the income comes from. “This figure also doesn’t include the work bonus scheme where seniors can earn up to $300 a fortnight from employment before their pension is effectively reduced at the rate of 50¢ per $1 over,” Ms Carr said. “If unused, the work bonus credit builds up each fortnight to maximum of $11,800 each. If you do some part-time work, you can use up your credit before it affects your pension payments.” But note that the unused working bonus credit cannot be transferred to your partner. The age pension increase also affects the upper cut-off threshold under the asset test. A home-owning single can now have assets of $697,000 and still receive a part-pension. Couples who own their own home can have assets of $1,047,500 and still qualify. Remember, the value of your home on land up to 2ha is completely ignored. Above this land area and Centrelink will attribute a value to the excess. For non-homeowners, the asset test thresholds increase by $252,000. If you think you might qualify after Thursday, you can lodge your application now because you are within 13 weeks of your eligibility date, which is the earliest date you can lodge a pending application. Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association