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5.2 Older Australians and carers

The department delivers the following payments to older Australians and their aged care providers and carers:

  • Age Pension for those aged 65.5 years and over who meet residence and income and assets requirements
  • subsidies and supplements to approved aged care providers to assist in providing care for older Australians
  • incentive payments to eligible aged care workers for specified education and training programs
  • Carer Payment for those providing significant care who meet care, residence and income and assets requirements
  • Carer Allowance for those providing some additional care and attention who meet care, residence and income requirements.

Age Pension

Age Pension is an income support payment for eligible older Australians. It also gives customers a Pension Concession Card and access to a range of concessions.

Age Pension is income and assets tested. Age Pension customers’ entitlements are assessed under the Social Security Income and Assets Tests.

In 2018–19, there were approximately 2.54 million Age Pension customers.

From 1 July 2017, the Age Pension age increased to 65.5 years for people born on or after 1 July 1952. The Age Pension age will progressively increase by six months every two years until it reaches 67 on 1 July 2023.

In 2018–19:

  • 62 per cent of age pensioners received the full‑rate pension and 38 per cent received a part‑rate pension based on their income and assets
  • the department paid over $46.5 billion in Age Pension payments.

Transfer to Age Pension

The department uses an online transfer system to make it easier for eligible people to transfer from some income support payments to Age Pension. The department uses existing information to pre‑populate fields. This means people only need to provide the information that the department does not already have. The department is also working to improve the customer experience by introducing the Age Pension combined partner online claim which will allow a couple to submit just one claim instead of two.

Age Pension income and assets testing

Automation of Income Stream Reviews measure

Age Pension recipients, concession cardholders and their partners must give the department information about their income streams so that the department can calculate their entitlements under the Social Security Income and Assets Tests.

From 1 January 2018, the Automation of Income Stream Reviews measure introduced electronic data transfer to allow the department to collect income stream information directly from income stream providers. The information received is used to review and update the income stream products held on customer records.

From 1 January 2019, electronic data transfer became mandatory for all income stream providers other than Self‑Managed Super Funds (SMSFs) and Small APRA Funds (SAFs).

Real estate valuations

When the department assesses whether a person qualifies for a pension, benefit or allowance, it takes into account the value of that person’s assets. The department analyses the individual circumstances of a customer and their real estate (excluding the family home and up to two hectares on one title) to determine whether a valuation is required.

When needed, the department arranges for a professional valuation or estimate verification of assets. To maintain the current value, an annual indexation percentage is applied to eligible assets.

Income and assets assessments for people entering aged care

The department undertakes means‑testing assessments for people entering aged care to determine the extent to which they are eligible for government‑subsidised care. The assessment is based on a combined assets and income assessment and calculation. The means test for those accessing a Home Care Package is based on income only. The means test for those accessing a Residential Care Package is based on both assets and income.

Changes to Age Pension

Work Bonus increase and extension

The Work Bonus allows customers of Age Pension age (other than those in receipt of Parenting Payment Single) to earn more from employment income before their payments are reduced under the income test.

In 2018–19, the Work Bonus was $250 per fortnight and could be accrued to a maximum of $6,500.

On 1 July 2019, the Work Bonus increased to $300 per fortnight and the maximum that can be accrued increased to $7,800. From that date the Work Bonus only applies to self‑employment income earned by the customer through personal exertion.

Expansion of the Pension Loans Scheme

Currently, people who are not entitled to receive the maximum rate of pension because of either the income test or the assets test can ‘top up’ their payments to the maximum amount of pension through the Pension Loans Scheme. The scheme is a voluntary arrangement that provides support in the form of a fortnightly loan payment, secured against Australian real estate owned by the scheme participant. To be eligible a person must be of Age Pension age, or partnered to someone who is, and receive or be qualified to receive a pension payment.

The loan is repayable to the Commonwealth and accrues compound interest fortnightly until the person pays it back in full.

From 1 July 2019, the Pension Loans Scheme expanded in the following ways:

  • The maximum loan a customer can get per fortnight increased from 100 per cent to 150 per cent of the maximum pension rate. This means people can participate even if they receive the maximum rate of pension
  • The requirement to have a pension rate above nil under the income or assets test was removed.

There were additional notification obligations that participants must comply with. Participants need to demonstrate that they have adequate insurance covering the secured real estate and that they are not bankrupt or subject to a personal insolvency agreement.

Lifetime Income Streams

As of 1 July 2019, product providers are able to pool the risk of providing Lifetime Income Streams. These new pooled income stream products are referred to as Pooled Lifetime Income Streams. They have been designed to be flexible and meet the needs of customers who are in or approaching retirement.

The department will amend the means test rules for lifetime retirement income products that will help retirees manage the risk of outliving their savings.

Any products purchased before 1 July 2019 will be grandfathered.

Carer Payment

Carer Payment is an income support payment for carers who are unable to work in substantial paid employment because they are providing care for another person who has high care needs. To be eligible for Carer Payment, a carer must be providing constant care for:

  • an adult or child with disability or a medical condition, or
  • an adult who is frail aged.

In 2018–19, nearly 50,000 new claims for Carer Payment were granted.

Carer Allowance

Carer Allowance is an income supplement for people who provide additional daily care and attention for:

  • an adult or child with disability or a medical condition, or
  • an adult who is frail aged.

Carer Allowance is not taxable or assets tested. On 20 September 2018, an income test was introduced for Carer Allowance.

In 2018–19, more than 86,000 new claims for Carer Allowance were granted.