Age Pension - Australia

Age Pension benefits are modelled automatically in the system and will appear in the Cash Flow if in payment that year. View the details of the chart to see the Age Pension

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The system will perform an Assets and Income test in each a year of the plan to determine the value of Age pension payments assumed in that year and whether it will be paid at all.

To see more information on these calculations click on Year View top right of the chart and go to the Pensions tab in a year when the client could be getting the Age Pension.

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Let's look in detail at the Age Pension information displayed:

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Things to Note

  • Married couples are calculated jointly. If an individual or non-legal partner the calculations are separate
  • The Age Pension Summary displays the assumed payment for that year. Also see the Cash Flow tab for the assumed Age Pension payment amount for that year
  • The Asset values used will correspond with the End of Year (EOY) values for the previous year.
  • Accumulation Superannuations that are owned by the spouse who is under Age pension age are not included in Financial Assets during those years.
  • A Main Residence in the plan will change the Assets' Thresholds. 
  • Click on the Title e.g. 'Income Test' to expand or contract that section

Assumptions

The following are all assumed to increase by the Centrelink COLA Rate in your Plan Settings

  • Lower and Upper Asset Thresholds
  • Lower and Upper Income Thresholds
  • Max Benefit Amount

Go to Dashboard - Plan Settings to find this rate. 

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Further Calculation Details

Deemed Income

To calculate the Deemed income the Financial Assets Value is used as well as the Deeming Threshold and Upper and Lower deeming rates.

Deemed income = (Amount up to Deeming Threshold * lower deeming rate) + (Amount above Deeming Threshold * upper deeming rate)


The Deeming Threshold is indexed with the Centrelink COLA Rate, the two deeming rates (upper and lower) are static

 

Tapering of Age pension amount between lower and upper thresholds

We use an approximation here and have found in testing that this part matches to within around  $10 dollars

Result = maxBenefit – (maxBenefit * (amountOverLowerThreshold/(upperThreshold – lowerThreshold))). 

 

Max Benefit and Lower and Upper Thresholds increase in line with the Centrelink COLA Rate. 

If the value is within the thresholds, regardless of the formula result the benefit is at least $1.

 

Superannuation Pensions and the Age Pension

Asset Test:  All super streams are calculated in the asset test using the beginning of the year account balance.

Income Test:  All Super streams are calculated as financial assets and the beginning of the year balance is used in the deeming calculation.  We do not use gross payment, less deduction.