Most common Age Pension mistakes (and misunderstandings) There’s no question that the Age Pension is complicated. Ben Hocking tells why you may be missing out on valuable retirement income.
T
he process of applying for the Age Pension can be confronting and difficult. Even updating your information when your situation changes can be difficult.
When the older partner becomes eligible for the pension, you may wish to transfer money to the ineligible younger partner while that money remains exempt from the Age Pension means tests.
The YourLifeChoices inbox is flooded every week with queries and questions relating to specific details in the Age Pension process – some that are trickier than others.
Working it out
When we make our way through these emails, we find mistakes and misunderstandings that have cost pensioners a considerable amount of retirement income. Addressing these key problems may prevent you from making or repeating these common pension mistakes.
As long as your income is below the disqualifying income threshold (currently $2085.40 per fortnight for singles and $3192.40 for a couple combined), you can still be working and claim an Age Pension payment if you have reached eligibility age.
Coupling up Because the Age Pension requires the details of both the person applying and their partner, many people believe that both members of the couple need to have reached pension age to apply. This common misconception can prove extremely costly, as the age gap in some relationships can often be significant.
Leaving it too late
According to Services Australia, the median time to process a pension application is 49 days. But it can be a complicated process, so you don’t want to leave it until one Another costly mistake week before you reach pension age. is assuming that you
have to be retired to apply for the Age Pension.
When you reach Age Pension age and your partner has not, you will still be assessed under the income and assets test as part of a couple, and will receive the couple’s rate of Age Pension, one member eligible. However, you’ll still need to provide your partner’s identity and details, even if he or she is not old enough to apply for an Age Pension.
Not taking advantage of one person being eligible When one member of a couple is not of pension age, the other person may actually be eligible for a higher rate of pension. This is because any superannuation held in the younger partner’s name is not counted as an asset until they reach Age Pension age. 12
Another costly mistake is assuming that you have to be retired to apply for the Age Pension.
Retrospective payment of the Age Pension is limited to the date when the application is accepted as complete, not on notification of ‘intent to apply’.
If you would like your application processed quickly, you can register your intent to apply for the Age Pension 13 weeks before you reach eligibility age. You don’t need all the required documentation to get the application process started. You can register your intent to apply just by providing some very basic details. If you are already receiving an income support payment, expect a letter from Centrelink nine weeks before you reach eligibility age, inviting you to transfer to the Age Pension. You can do this online.
Ignoring requests for more information Delays in processing an Age Pension claim can occur if Services Australia is waiting for applicants to provide more documents.
YourLifeChoices Retirement Affordability Index™ August 2021
