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Centrelink Age Pension changes

The eligibility test for the Centrelink Age Pension is changing. The Government has recently legislated two changes to the eligibility test for the Centrelink Age Pension that come into effect on different dates. To help you identify whether your eligibility to receive the payment may be impacted we have provided an overview of the changes below.

1. Changes to the Income Test for Defined Benefit pension income

What is the Income Test?

The income test is one of the tests used to assess eligibility for the Age Pension. Under the income test, the level of assessable income received is assessed against the income thresholds. Income assessed as under the Shade-out threshold^ results in no reduction, but once the Shade-out threshold is exceeded, a reduction applies until the applicant’s income exceeds the Cut-out threshold. At that point no eligibility exists.

What is changing?

From 1 January 2016, the proportion of income that can be excluded from the income test (known as a deductible amount) for Defined Benefit pension income will be capped at 10%.

This change will not impact the assessment of income received from a VicSuper Flexible Income, however those receiving  a defined benefit pension, including ESSSuper Revised Scheme Pension, CSS Pension or PSS Pension may see a change.

For those with current deductible amounts of greater than 10%, this change will increase the income used when assessing eligibility for the Age Pension and may reduce payments received.

To check your current deductible amount you should contact your Defined Benefit Income provider.

Income thresholds

  Shade-out threshold  Cut-out threshold 
 Single  $162.00 per fortnight $1,882.40 per fortnight
Couple  $288.00 per fortnight  $2,881.60 per fortnight 

^The Shade-out threshold is the maximum income from other sources where a pensioner remains entitled to the full pension. The pension reduces by 50c for each dollar of assessable income a single person earns and by 25c for each dollar of assessable income each person of a couple earns in excess of the shade out threshold.

2. Changes to the Asset Test

The second change will amend the Asset Test with effect from 1 January 2017. This change will affect two areas: thresholds and the taper rate.

What is the Asset Test?

The Asset Test is one of the tests used to assess eligibility for the Age Pension. Under the Asset Test, the level of assessable assets owned is assessed against the assets test threshold. Assets assessed as under the Shade-out threshold results in no reduction, but once the shade-out threshold is exceeded, a reduction applies until the applicant’s assets exceed the Cut-out threshold. At that point no eligibility exists.

What is changing?

a) Thresholds

Both the Shade-out and Cut-out thresholds will be amended and may result in some people receiving an increase in their Age Pension entitlement, and others a reduction.

Example: a tipping point of $451,500 has been identified for homeowner couples. Those with assets below $451,500 (but above $291,500) will most likely see an increase in their payment, whilst those over this amount will notice a reduction in Age Pension payments.

Pensioners who lose pension entitlements on 1 January 2017, as a result of these changes, will automatically be issued with a Commonwealth Seniors Health Card.

b) The taper rate

Under the change, the Age Pension will be reduced by $3.00 per fortnight (up from $1.50) for every $1,000 of assessable assets owned over the Shade-out threshold.

Asset Test thresholds

  Current shade-out threshold  As at 1 January 2017
Singles who own a home $205,500  $250,000
Singles with no home ownership $354,500 $450,000
Couples who own a home $291,500 $375,000
Couples with no home ownership $440,500 $575,000
  Current cut-out threshold  As at 1 January 2017
Singles who own a home $779,000  $547,000
Singles with no home ownership $928,000 $747,000
Couples who own a home $1,156,500 $823,000
Couples with no home ownership $1,305,500

$1,023,000

Note that your eligibility for the Age Pension is determined against both the Income and Asset tests. The test resulting in the lower pension amount is the amount you will be entitled to receive (which could be zero).

Centrelink Age Pension changes

The eligibility test for the Centrelink Age Pension is changing. The Government has recently legislated two changes to the eligibility test for the Centrelink Age Pension that come into effect on different dates. To help you identify whether your eligibility to receive the payment may be impacted we have provided an overview of the changes below.

1. Changes to the Income Test for Defined Benefit pension income

What is the Income Test?

The income test is one of the tests used to assess eligibility for the Age Pension. Under the income test, the level of assessable income received is assessed against the income thresholds. Income assessed as under the Shade-out threshold^ results in no reduction, but once the Shade-out threshold is exceeded, a reduction applies until the applicant’s income exceeds the Cut-out threshold. At that point no eligibility exists.

What is changing?

From 1 January 2016, the proportion of income that can be excluded from the income test (known as a deductible amount) for Defined Benefit pension income will be capped at 10%.

This change will not impact the assessment of income received from a VicSuper Flexible Income, however those receiving  a defined benefit pension, including ESSSuper Revised Scheme Pension, CSS Pension or PSS Pension may see a change.

For those with current deductible amounts of greater than 10%, this change will increase the income used when assessing eligibility for the Age Pension and may reduce payments received.

To check your current deductible amount you should contact your Defined Benefit Income provider.

Income thresholds

  Shade-out threshold  Cut-out threshold 
 Single  $162.00 per fortnight $1,882.40 per fortnight
Couple  $288.00 per fortnight  $2,881.60 per fortnight 

^The Shade-out threshold is the maximum income from other sources where a pensioner remains entitled to the full pension. The pension reduces by 50c for each dollar of assessable income a single person earns and by 25c for each dollar of assessable income each person of a couple earns in excess of the shade out threshold.

2. Changes to the Asset Test

The second change will amend the Asset Test with effect from 1 January 2017. This change will affect two areas: thresholds and the taper rate.

What is the Asset Test?

The Asset Test is one of the tests used to assess eligibility for the Age Pension. Under the Asset Test, the level of assessable assets owned is assessed against the assets test threshold. Assets assessed as under the Shade-out threshold results in no reduction, but once the shade-out threshold is exceeded, a reduction applies until the applicant’s assets exceed the Cut-out threshold. At that point no eligibility exists.

What is changing?

a) Thresholds

Both the Shade-out and Cut-out thresholds will be amended and may result in some people receiving an increase in their Age Pension entitlement, and others a reduction.

Example: a tipping point of $451,500 has been identified for homeowner couples. Those with assets below $451,500 (but above $291,500) will most likely see an increase in their payment, whilst those over this amount will notice a reduction in Age Pension payments.

Pensioners who lose pension entitlements on 1 January 2017, as a result of these changes, will automatically be issued with a Commonwealth Seniors Health Card.

b) The taper rate

Under the change, the Age Pension will be reduced by $3.00 per fortnight (up from $1.50) for every $1,000 of assessable assets owned over the Shade-out threshold.

Asset Test thresholds

  Current shade-out threshold  As at 1 January 2017
Singles who own a home $205,500  $250,000
Singles with no home ownership $354,500 $450,000
Couples who own a home $291,500 $375,000
Couples with no home ownership $440,500 $575,000
  Current cut-out threshold  As at 1 January 2017
Singles who own a home $779,000  $547,000
Singles with no home ownership $928,000 $747,000
Couples who own a home $1,156,500 $823,000
Couples with no home ownership $1,305,500

$1,023,000

Note that your eligibility for the Age Pension is determined against both the Income and Asset tests. The test resulting in the lower pension amount is the amount you will be entitled to receive (which could be zero).

Centrelink Age Pension changes

The eligibility test for the Centrelink Age Pension is changing. The Government has recently legislated two changes to the eligibility test for the Centrelink Age Pension that come into effect on different dates. To help you identify whether your eligibility to receive the payment may be impacted we have provided an overview of the changes below.

1. Changes to the Income Test for Defined Benefit pension income

What is the Income Test?

The income test is one of the tests used to assess eligibility for the Age Pension. Under the income test, the level of assessable income received is assessed against the income thresholds. Income assessed as under the Shade-out threshold^ results in no reduction, but once the Shade-out threshold is exceeded, a reduction applies until the applicant’s income exceeds the Cut-out threshold. At that point no eligibility exists.

What is changing?

From 1 January 2016, the proportion of income that can be excluded from the income test (known as a deductible amount) for Defined Benefit pension income will be capped at 10%.

This change will not impact the assessment of income received from a VicSuper Flexible Income, however those receiving  a defined benefit pension, including ESSSuper Revised Scheme Pension, CSS Pension or PSS Pension may see a change.

For those with current deductible amounts of greater than 10%, this change will increase the income used when assessing eligibility for the Age Pension and may reduce payments received.

To check your current deductible amount you should contact your Defined Benefit Income provider.

Income thresholds

  Shade-out threshold  Cut-out threshold 
 Single  $162.00 per fortnight $1,882.40 per fortnight
Couple  $288.00 per fortnight  $2,881.60 per fortnight 

^The Shade-out threshold is the maximum income from other sources where a pensioner remains entitled to the full pension. The pension reduces by 50c for each dollar of assessable income a single person earns and by 25c for each dollar of assessable income each person of a couple earns in excess of the shade out threshold.

2. Changes to the Asset Test

The second change will amend the Asset Test with effect from 1 January 2017. This change will affect two areas: thresholds and the taper rate.

What is the Asset Test?

The Asset Test is one of the tests used to assess eligibility for the Age Pension. Under the Asset Test, the level of assessable assets owned is assessed against the assets test threshold. Assets assessed as under the Shade-out threshold results in no reduction, but once the shade-out threshold is exceeded, a reduction applies until the applicant’s assets exceed the Cut-out threshold. At that point no eligibility exists.

What is changing?

a) Thresholds

Both the Shade-out and Cut-out thresholds will be amended and may result in some people receiving an increase in their Age Pension entitlement, and others a reduction.

Example: a tipping point of $451,500 has been identified for homeowner couples. Those with assets below $451,500 (but above $291,500) will most likely see an increase in their payment, whilst those over this amount will notice a reduction in Age Pension payments.

Pensioners who lose pension entitlements on 1 January 2017, as a result of these changes, will automatically be issued with a Commonwealth Seniors Health Card.

b) The taper rate

Under the change, the Age Pension will be reduced by $3.00 per fortnight (up from $1.50) for every $1,000 of assessable assets owned over the Shade-out threshold.

Asset Test thresholds

  Current shade-out threshold  As at 1 January 2017
Singles who own a home $205,500  $250,000
Singles with no home ownership $354,500 $450,000
Couples who own a home $291,500 $375,000
Couples with no home ownership $440,500 $575,000
  Current cut-out threshold  As at 1 January 2017
Singles who own a home $779,000  $547,000
Singles with no home ownership $928,000 $747,000
Couples who own a home $1,156,500 $823,000
Couples with no home ownership $1,305,500

$1,023,000

Note that your eligibility for the Age Pension is determined against both the Income and Asset tests. The test resulting in the lower pension amount is the amount you will be entitled to receive (which could be zero).

Centrelink Age Pension changes

The eligibility test for the Centrelink Age Pension is changing. The Government has recently legislated two changes to the eligibility test for the Centrelink Age Pension that come into effect on different dates. To help you identify whether your eligibility to receive the payment may be impacted we have provided an overview of the changes below.

1. Changes to the Income Test for Defined Benefit pension income

What is the Income Test?

The income test is one of the tests used to assess eligibility for the Age Pension. Under the income test, the level of assessable income received is assessed against the income thresholds. Income assessed as under the Shade-out threshold^ results in no reduction, but once the Shade-out threshold is exceeded, a reduction applies until the applicant’s income exceeds the Cut-out threshold. At that point no eligibility exists.

What is changing?

From 1 January 2016, the proportion of income that can be excluded from the income test (known as a deductible amount) for Defined Benefit pension income will be capped at 10%.

This change will not impact the assessment of income received from a VicSuper Flexible Income, however those receiving  a defined benefit pension, including ESSSuper Revised Scheme Pension, CSS Pension or PSS Pension may see a change.

For those with current deductible amounts of greater than 10%, this change will increase the income used when assessing eligibility for the Age Pension and may reduce payments received.

To check your current deductible amount you should contact your Defined Benefit Income provider.

Income thresholds

  Shade-out threshold  Cut-out threshold 
 Single  $162.00 per fortnight $1,882.40 per fortnight
Couple  $288.00 per fortnight  $2,881.60 per fortnight 

^The Shade-out threshold is the maximum income from other sources where a pensioner remains entitled to the full pension. The pension reduces by 50c for each dollar of assessable income a single person earns and by 25c for each dollar of assessable income each person of a couple earns in excess of the shade out threshold.

2. Changes to the Asset Test

The second change will amend the Asset Test with effect from 1 January 2017. This change will affect two areas: thresholds and the taper rate.

What is the Asset Test?

The Asset Test is one of the tests used to assess eligibility for the Age Pension. Under the Asset Test, the level of assessable assets owned is assessed against the assets test threshold. Assets assessed as under the Shade-out threshold results in no reduction, but once the shade-out threshold is exceeded, a reduction applies until the applicant’s assets exceed the Cut-out threshold. At that point no eligibility exists.

What is changing?

a) Thresholds

Both the Shade-out and Cut-out thresholds will be amended and may result in some people receiving an increase in their Age Pension entitlement, and others a reduction.

Example: a tipping point of $451,500 has been identified for homeowner couples. Those with assets below $451,500 (but above $291,500) will most likely see an increase in their payment, whilst those over this amount will notice a reduction in Age Pension payments.

Pensioners who lose pension entitlements on 1 January 2017, as a result of these changes, will automatically be issued with a Commonwealth Seniors Health Card.

b) The taper rate

Under the change, the Age Pension will be reduced by $3.00 per fortnight (up from $1.50) for every $1,000 of assessable assets owned over the Shade-out threshold.

Asset Test thresholds

  Current shade-out threshold  As at 1 January 2017
Singles who own a home $205,500  $250,000
Singles with no home ownership $354,500 $450,000
Couples who own a home $291,500 $375,000
Couples with no home ownership $440,500 $575,000
  Current cut-out threshold  As at 1 January 2017
Singles who own a home $779,000  $547,000
Singles with no home ownership $928,000 $747,000
Couples who own a home $1,156,500 $823,000
Couples with no home ownership $1,305,500

$1,023,000

Note that your eligibility for the Age Pension is determined against both the Income and Asset tests. The test resulting in the lower pension amount is the amount you will be entitled to receive (which could be zero).

Centrelink Age Pension changes

The eligibility test for the Centrelink Age Pension is changing. The Government has recently legislated two changes to the eligibility test for the Centrelink Age Pension that come into effect on different dates. To help you identify whether your eligibility to receive the payment may be impacted we have provided an overview of the changes below.

1. Changes to the Income Test for Defined Benefit pension income

What is the Income Test?

The income test is one of the tests used to assess eligibility for the Age Pension. Under the income test, the level of assessable income received is assessed against the income thresholds. Income assessed as under the Shade-out threshold^ results in no reduction, but once the Shade-out threshold is exceeded, a reduction applies until the applicant’s income exceeds the Cut-out threshold. At that point no eligibility exists.

What is changing?

From 1 January 2016, the proportion of income that can be excluded from the income test (known as a deductible amount) for Defined Benefit pension income will be capped at 10%.

This change will not impact the assessment of income received from a VicSuper Flexible Income, however those receiving  a defined benefit pension, including ESSSuper Revised Scheme Pension, CSS Pension or PSS Pension may see a change.

For those with current deductible amounts of greater than 10%, this change will increase the income used when assessing eligibility for the Age Pension and may reduce payments received.

To check your current deductible amount you should contact your Defined Benefit Income provider.

Income thresholds

  Shade-out threshold  Cut-out threshold 
 Single  $162.00 per fortnight $1,882.40 per fortnight
Couple  $288.00 per fortnight  $2,881.60 per fortnight 

^The Shade-out threshold is the maximum income from other sources where a pensioner remains entitled to the full pension. The pension reduces by 50c for each dollar of assessable income a single person earns and by 25c for each dollar of assessable income each person of a couple earns in excess of the shade out threshold.

2. Changes to the Asset Test

The second change will amend the Asset Test with effect from 1 January 2017. This change will affect two areas: thresholds and the taper rate.

What is the Asset Test?

The Asset Test is one of the tests used to assess eligibility for the Age Pension. Under the Asset Test, the level of assessable assets owned is assessed against the assets test threshold. Assets assessed as under the Shade-out threshold results in no reduction, but once the shade-out threshold is exceeded, a reduction applies until the applicant’s assets exceed the Cut-out threshold. At that point no eligibility exists.

What is changing?

a) Thresholds

Both the Shade-out and Cut-out thresholds will be amended and may result in some people receiving an increase in their Age Pension entitlement, and others a reduction.

Example: a tipping point of $451,500 has been identified for homeowner couples. Those with assets below $451,500 (but above $291,500) will most likely see an increase in their payment, whilst those over this amount will notice a reduction in Age Pension payments.

Pensioners who lose pension entitlements on 1 January 2017, as a result of these changes, will automatically be issued with a Commonwealth Seniors Health Card.

b) The taper rate

Under the change, the Age Pension will be reduced by $3.00 per fortnight (up from $1.50) for every $1,000 of assessable assets owned over the Shade-out threshold.

Asset Test thresholds

  Current shade-out threshold  As at 1 January 2017
Singles who own a home $205,500  $250,000
Singles with no home ownership $354,500 $450,000
Couples who own a home $291,500 $375,000
Couples with no home ownership $440,500 $575,000
  Current cut-out threshold  As at 1 January 2017
Singles who own a home $779,000  $547,000
Singles with no home ownership $928,000 $747,000
Couples who own a home $1,156,500 $823,000
Couples with no home ownership $1,305,500

$1,023,000

Note that your eligibility for the Age Pension is determined against both the Income and Asset tests. The test resulting in the lower pension amount is the amount you will be entitled to receive (which could be zero).

Centrelink Age Pension changes

The eligibility test for the Centrelink Age Pension is changing. The Government has recently legislated two changes to the eligibility test for the Centrelink Age Pension that come into effect on different dates. To help you identify whether your eligibility to receive the payment may be impacted we have provided an overview of the changes below.

1. Changes to the Income Test for Defined Benefit pension income

What is the Income Test?

The income test is one of the tests used to assess eligibility for the Age Pension. Under the income test, the level of assessable income received is assessed against the income thresholds. Income assessed as under the Shade-out threshold^ results in no reduction, but once the Shade-out threshold is exceeded, a reduction applies until the applicant’s income exceeds the Cut-out threshold. At that point no eligibility exists.

What is changing?

From 1 January 2016, the proportion of income that can be excluded from the income test (known as a deductible amount) for Defined Benefit pension income will be capped at 10%.

This change will not impact the assessment of income received from a VicSuper Flexible Income, however those receiving  a defined benefit pension, including ESSSuper Revised Scheme Pension, CSS Pension or PSS Pension may see a change.

For those with current deductible amounts of greater than 10%, this change will increase the income used when assessing eligibility for the Age Pension and may reduce payments received.

To check your current deductible amount you should contact your Defined Benefit Income provider.

Income thresholds

  Shade-out threshold  Cut-out threshold 
 Single  $162.00 per fortnight $1,882.40 per fortnight
Couple  $288.00 per fortnight  $2,881.60 per fortnight 

^The Shade-out threshold is the maximum income from other sources where a pensioner remains entitled to the full pension. The pension reduces by 50c for each dollar of assessable income a single person earns and by 25c for each dollar of assessable income each person of a couple earns in excess of the shade out threshold.

2. Changes to the Asset Test

The second change will amend the Asset Test with effect from 1 January 2017. This change will affect two areas: thresholds and the taper rate.

What is the Asset Test?

The Asset Test is one of the tests used to assess eligibility for the Age Pension. Under the Asset Test, the level of assessable assets owned is assessed against the assets test threshold. Assets assessed as under the Shade-out threshold results in no reduction, but once the shade-out threshold is exceeded, a reduction applies until the applicant’s assets exceed the Cut-out threshold. At that point no eligibility exists.

What is changing?

a) Thresholds

Both the Shade-out and Cut-out thresholds will be amended and may result in some people receiving an increase in their Age Pension entitlement, and others a reduction.

Example: a tipping point of $451,500 has been identified for homeowner couples. Those with assets below $451,500 (but above $291,500) will most likely see an increase in their payment, whilst those over this amount will notice a reduction in Age Pension payments.

Pensioners who lose pension entitlements on 1 January 2017, as a result of these changes, will automatically be issued with a Commonwealth Seniors Health Card.

b) The taper rate

Under the change, the Age Pension will be reduced by $3.00 per fortnight (up from $1.50) for every $1,000 of assessable assets owned over the Shade-out threshold.

Asset Test thresholds

  Current shade-out threshold  As at 1 January 2017
Singles who own a home $205,500  $250,000
Singles with no home ownership $354,500 $450,000
Couples who own a home $291,500 $375,000
Couples with no home ownership $440,500 $575,000
  Current cut-out threshold  As at 1 January 2017
Singles who own a home $779,000  $547,000
Singles with no home ownership $928,000 $747,000
Couples who own a home $1,156,500 $823,000
Couples with no home ownership $1,305,500

$1,023,000

Note that your eligibility for the Age Pension is determined against both the Income and Asset tests. The test resulting in the lower pension amount is the amount you will be entitled to receive (which could be zero).

Centrelink Age Pension changes

The eligibility test for the Centrelink Age Pension is changing. The Government has recently legislated two changes to the eligibility test for the Centrelink Age Pension that come into effect on different dates. To help you identify whether your eligibility to receive the payment may be impacted we have provided an overview of the changes below.

1. Changes to the Income Test for Defined Benefit pension income

What is the Income Test?

The income test is one of the tests used to assess eligibility for the Age Pension. Under the income test, the level of assessable income received is assessed against the income thresholds. Income assessed as under the Shade-out threshold^ results in no reduction, but once the Shade-out threshold is exceeded, a reduction applies until the applicant’s income exceeds the Cut-out threshold. At that point no eligibility exists.

What is changing?

From 1 January 2016, the proportion of income that can be excluded from the income test (known as a deductible amount) for Defined Benefit pension income will be capped at 10%.

This change will not impact the assessment of income received from a VicSuper Flexible Income, however those receiving  a defined benefit pension, including ESSSuper Revised Scheme Pension, CSS Pension or PSS Pension may see a change.

For those with current deductible amounts of greater than 10%, this change will increase the income used when assessing eligibility for the Age Pension and may reduce payments received.

To check your current deductible amount you should contact your Defined Benefit Income provider.

Income thresholds

  Shade-out threshold  Cut-out threshold 
 Single  $162.00 per fortnight $1,882.40 per fortnight
Couple  $288.00 per fortnight  $2,881.60 per fortnight 

^The Shade-out threshold is the maximum income from other sources where a pensioner remains entitled to the full pension. The pension reduces by 50c for each dollar of assessable income a single person earns and by 25c for each dollar of assessable income each person of a couple earns in excess of the shade out threshold.

2. Changes to the Asset Test

The second change will amend the Asset Test with effect from 1 January 2017. This change will affect two areas: thresholds and the taper rate.

What is the Asset Test?

The Asset Test is one of the tests used to assess eligibility for the Age Pension. Under the Asset Test, the level of assessable assets owned is assessed against the assets test threshold. Assets assessed as under the Shade-out threshold results in no reduction, but once the shade-out threshold is exceeded, a reduction applies until the applicant’s assets exceed the Cut-out threshold. At that point no eligibility exists.

What is changing?

a) Thresholds

Both the Shade-out and Cut-out thresholds will be amended and may result in some people receiving an increase in their Age Pension entitlement, and others a reduction.

Example: a tipping point of $451,500 has been identified for homeowner couples. Those with assets below $451,500 (but above $291,500) will most likely see an increase in their payment, whilst those over this amount will notice a reduction in Age Pension payments.

Pensioners who lose pension entitlements on 1 January 2017, as a result of these changes, will automatically be issued with a Commonwealth Seniors Health Card.

b) The taper rate

Under the change, the Age Pension will be reduced by $3.00 per fortnight (up from $1.50) for every $1,000 of assessable assets owned over the Shade-out threshold.

Asset Test thresholds

  Current shade-out threshold  As at 1 January 2017
Singles who own a home $205,500  $250,000
Singles with no home ownership $354,500 $450,000
Couples who own a home $291,500 $375,000
Couples with no home ownership $440,500 $575,000
  Current cut-out threshold  As at 1 January 2017
Singles who own a home $779,000  $547,000
Singles with no home ownership $928,000 $747,000
Couples who own a home $1,156,500 $823,000
Couples with no home ownership $1,305,500

$1,023,000

Note that your eligibility for the Age Pension is determined against both the Income and Asset tests. The test resulting in the lower pension amount is the amount you will be entitled to receive (which could be zero).

Centrelink Age Pension changes

The eligibility test for the Centrelink Age Pension is changing. The Government has recently legislated two changes to the eligibility test for the Centrelink Age Pension that come into effect on different dates. To help you identify whether your eligibility to receive the payment may be impacted we have provided an overview of the changes below.

1. Changes to the Income Test for Defined Benefit pension income

What is the Income Test?

The income test is one of the tests used to assess eligibility for the Age Pension. Under the income test, the level of assessable income received is assessed against the income thresholds. Income assessed as under the Shade-out threshold^ results in no reduction, but once the Shade-out threshold is exceeded, a reduction applies until the applicant’s income exceeds the Cut-out threshold. At that point no eligibility exists.

What is changing?

From 1 January 2016, the proportion of income that can be excluded from the income test (known as a deductible amount) for Defined Benefit pension income will be capped at 10%.

This change will not impact the assessment of income received from a VicSuper Flexible Income, however those receiving  a defined benefit pension, including ESSSuper Revised Scheme Pension, CSS Pension or PSS Pension may see a change.

For those with current deductible amounts of greater than 10%, this change will increase the income used when assessing eligibility for the Age Pension and may reduce payments received.

To check your current deductible amount you should contact your Defined Benefit Income provider.

Income thresholds

  Shade-out threshold  Cut-out threshold 
 Single  $162.00 per fortnight $1,882.40 per fortnight
Couple  $288.00 per fortnight  $2,881.60 per fortnight 

^The Shade-out threshold is the maximum income from other sources where a pensioner remains entitled to the full pension. The pension reduces by 50c for each dollar of assessable income a single person earns and by 25c for each dollar of assessable income each person of a couple earns in excess of the shade out threshold.

2. Changes to the Asset Test

The second change will amend the Asset Test with effect from 1 January 2017. This change will affect two areas: thresholds and the taper rate.

What is the Asset Test?

The Asset Test is one of the tests used to assess eligibility for the Age Pension. Under the Asset Test, the level of assessable assets owned is assessed against the assets test threshold. Assets assessed as under the Shade-out threshold results in no reduction, but once the shade-out threshold is exceeded, a reduction applies until the applicant’s assets exceed the Cut-out threshold. At that point no eligibility exists.

What is changing?

a) Thresholds

Both the Shade-out and Cut-out thresholds will be amended and may result in some people receiving an increase in their Age Pension entitlement, and others a reduction.

Example: a tipping point of $451,500 has been identified for homeowner couples. Those with assets below $451,500 (but above $291,500) will most likely see an increase in their payment, whilst those over this amount will notice a reduction in Age Pension payments.

Pensioners who lose pension entitlements on 1 January 2017, as a result of these changes, will automatically be issued with a Commonwealth Seniors Health Card.

b) The taper rate

Under the change, the Age Pension will be reduced by $3.00 per fortnight (up from $1.50) for every $1,000 of assessable assets owned over the Shade-out threshold.

Asset Test thresholds

  Current shade-out threshold  As at 1 January 2017
Singles who own a home $205,500  $250,000
Singles with no home ownership $354,500 $450,000
Couples who own a home $291,500 $375,000
Couples with no home ownership $440,500 $575,000
  Current cut-out threshold  As at 1 January 2017
Singles who own a home $779,000  $547,000
Singles with no home ownership $928,000 $747,000
Couples who own a home $1,156,500 $823,000
Couples with no home ownership $1,305,500

$1,023,000

Note that your eligibility for the Age Pension is determined against both the Income and Asset tests. The test resulting in the lower pension amount is the amount you will be entitled to receive (which could be zero).