Three essential pension changes to know for
2024-25

Your eligibility for the government’s Age Pension depends on your age, residency, and whether you have income and assets below certain limits (also known as thresholds). 

On 1 July 2023, the Age Pension eligibility age became 67 if you were born on or after 1 January 1957. People born before this qualified sooner. On 1 July 2024, income and assets test thresholds were adjusted, which could mean more money for you, depending on your financial circumstances.  

Here are the new income and assets test thresholds that are now in effect, compared with what they were prior to 1 July 2024. 

These are reviewed by the government in March, July and September every year, and so may change again in the future.

Assets could include your investments, household contents, or other possessions. Assets that aren’t included in the assets test include your family home.

Income includes that which you might receive from your employer, as well as deemed income from investments, super (if over Age Pension age) or account-based pensions. It doesn’t include things like emergency relief payments.

When a single person earns more than $212 in a fortnight, their pension will reduce by 50 cents for each dollar over $212.

When a couple earns more than $372 in a fortnight, each member of the couple’s pension will reduce by 25 cents for each dollar over $372.

Tip: The Work Bonus may help you receive more income from working, without reducing your pension.

Under the Work Bonus, the first $300 of fortnightly income from work is not counted under the pension income test.

The Work Bonus operates in addition to the pension income free area. For example, this means a single person could have deemed income of $212 per fortnight as well as employment income of $300 per fortnight, and still receive the maximum age pension.

The maximum Work Bonus balance that can be accrued remains $11,800, and new pensioners of Age Pension age are allowed a $4,000 Work Bonus income starting balance.

Deeming is a shortcut method applied to assess the income from your investments, such as shares, super and interest from bank accounts, to see if you qualify for social security entitlements such as the Age Pension. 

Deeming rates assume your financial investments are earning a certain amount – no matter how much they’re actually earning.

One benefit is you could be earning more on your investments than is applied by the deeming rates due to higher interest rates.

The freeze on deeming rates that was in place during the 2023-24 financial year was extended until 30 June 2025, so deeming rates remain unchanged.

However, deeming thresholds are reviewed every year and these increased on 1 July 2024.

If you’re wondering what the Age Pension pays, the maximum amounts increased on 20 March 2024.

Age Pension payments are generally reviewed each year in March and September, so may change again in the future.

Tip: Age Pension payments can be received on top of any income you may get from your super savings, depending on how much super you have.

Check your Age Pension eligibility using this free Age Pension Eligibility Calculator from Retirement Essentials and CFS. 

For members who are receiving income from an account-based pension , the minimum annual payments may change on 1 July 2024, depending on your age and account balance. 

Where you have an existing account-based pension, the minimum annual payment you are required to receive each year is re-calculated on 1 July by multiplying your account balance by the minimum drawdown    rate that applies based on your age on that date. The rate for different age groups is set out in the table below and increases with age.

There is no maximum placed on pension payments from an account-based pension. You’re only limited by your account balance. However, if you are receiving a transition to retirement pension, a 10% maximum drawdown limit may apply where you are under age 65 and have not yet retired (or satisfied another specified condition of release).   

There is also a lifetime limit on how much super you can transfer into a tax-free retirement account like an account-based pension.

This is called the transfer balance cap and it’s reviewed each financial year. As of 1 July 2024, the general transfer balance cap is $1.9 million. However, depending on your circumstances, your personal transfer balance cap could be between $1.6m and $1.9m.