Pensions

Unless otherwise stated, the section numbers in this chapter refer to the Social Security Act 1991 (Cth) (“SSA”).

Social security law is also found in the:

• Social Security (Administration) Act 1999 (Cth) (“SSA Act”);
• Social Security (International Agreements) Act 1999 (Cth);
• A New Tax System (Family Assistance) Act 1999 (Cth) (“Family Assistance Act“); and
• A New Tax System (Family Assistance) (Administration) Act 1999 (Cth).

​Age Pension

Eligibility (ss7, 23, 43)

To be eligible for the Age Pension, a person must have reached pension age according to gender and date of birth (see: ss23(5A), (5B), (5C) & (5D)) for more details).

To be eligible a person must also be an “Australian resident” (in effect, having permanent residency or Australian citizenship, as well as establishing and maintaining ties with Australia) and in Australia when claiming the pension, unless claiming under an international agreement.

In addition, the person must have been an “Australian resident” for at least 10 years continuously at some time prior to claim, or 10 years in total with one period of at least five years continuous Australian residence. A person may be exempt from this if they arrived as a refugee or under a special program.

A person may be treated as residing in Australia even during extensive periods overseas. However, people can return to Australia after extensive periods and be found not to have Australian residence.

Residency requirements may also be modified by agreements with other countries (see: “International agreements”, below). This is a complex area and any specific queries should be taken to a community legal centre, Tasmanian Legal Aid or a private solicitor. For specific information regarding Age Pension eligibility, contact Centrelink.

Rate of Pension (ss55, 1064, 1065)

There are two basic rates of pension – one rate for single pensioners and another rate for partnered pensioners. Rates are adjusted every six months and may be reduced if the pensioner (or partner) has income or assets that bring them under the pension income or assets test, unless permanently blind (see: “Income and assets tests for pensions”, below).

A pensioner may also be eligible for Rent Assistance (see: “Rent Assistance”, below) and other supplements that increase the pension above the standard rate.

Pension Bonus Scheme

Eligibility (s92C)

The pension bonus scheme is closed to new entrants who did not qualify for Age Pension before 20 September 2009 (s92J). In its place is the Work Bonus Scheme (see “Rate of Pension”).

Disability Support Pension

Eligibility (ss7, 94, 95)
To be eligible for the Disability Support Pension, the person must be 16 or over and must:

• be permanently blind (s95(1)(a)); or
• have a permanent physical, intellectual or psychiatric impairment rated at 20 points or more under the Impairment Tables (in Schedule 1B of the SSA), and have a “continuing inability to work” (s94(2)).

To be eligible a person must be an “Australian resident” and be in Australia when claiming the pension, unless claiming under an international agreement. However a person can be absent from Australia if they are a terminally ill disability support pensioner (section 1218AA (1) (a) – (e)).There is no “qualifying residence” requirement if the person is an Australian resident when they become permanently blind or began to have a continuing inability to work, or if they are a dependent child of an Australian resident when one of these events occurs. If the blindness or impairment and inability to work occurred before the person became an Australian resident, or during a period of non-residence, they must have either 10 years qualifying residence or a qualifying residence exemption.

The Impairment Tables measure the functional effects of any “permanent” medical condition. The tables changed on 1 January 2012, and the previous Tables will apply to applications lodged before that date. Once a condition has been “fully diagnosed, treated and stabilised”, it is accepted as permanent if it is likely to persist for at least two years. Impairment ratings are allocated following a Job Capacity Assessment arranged by Centrelink.

A person is permanently blind if they are totally unsighted or so severely unsighted that the effect of the disability on day-to-day living is essentially the same as the effect of total lack of sight. A person’s loss of sight is measured on the basis of their corrected vision. A person who is permanently blind qualifies for Disability Support Pension without having to satisfy the “continuing inability to work” requirement.

A continuing inability to work means an inability to do any work or training activity for at least two years; or if they can undertake a training activity it won’t equip the person for such work within two years. “Work” is defined as work that is at least for 15 hours a week (since 1 July 2006) at award wages or above, being work that exists in Australia.

If the person does not have at least one impairment rated at 20 points under the impairment Tables, they must also have “actively participated in a program of support” to be considered to have a Continuing Ability to Work. A “program of support” is designed to assist persons to find, prepare for and maintain work, and is generally Commonwealth-funded. There are guidelines in place to assist Centrelink in determining whether a person has actively participated in such a program.

Rate of Pension (ss117, 1064, 1065, 1066A, 1066B)

Apart from single pensioners aged under 21 with no children, the basic rates of Disability Support Pension are to the same as for Age Pension. The rate of pension payable to those under 21 depends on the person’s age and living arrangements.

A pensioner may also be eligible for Rent Assistance and other supplements that increase the pension above the standard rate.

Disability Support Pension rates are subject to the pension income or assets test, unless the pensioner is permanently blind (see: “Income and assets tests for pensions”, below).

Carer Payment

Eligibility (ss7, 197–198)

A person may be paid a Carer Payment if they provide constant care, including supervision, in the carer’s own home to:

• a disabled adult (s198);
• a disabled adult and a dependent child (s198);
• a child with a “severe disability” or a “severe medical condition” (s197B);
• two or more children with a disability or medical condition (s197C);
• a disabled adult and one or more children each with a disability or medical condition (s197D);
• a child who has a terminal condition (s197E);
• a child with a severe disability or severe medical condition on a short-term or episodic basis (s197G); or
• a “profoundly disabled child”, or two or more “disabled children” (pre-1 July 2009 saved cases).

A person may also be paid a Carer Payment if they exchange care, under a parenting plan, of two or more children each with a disability or medical condition (s197F).

Carer Payment claims in respect of children with disabilities or medical conditions are assessed against the “Disability Care Load Assessment (Child) Determination“, which requires an assessment by a “treating health professional”, such as the child’s doctor, registered nurse or registered psychologist.

To receive a Carer Payment to care for a disabled adult the adult must be assessed under the Adult Disability Assessment Tool (ADAT), on the basis of the responses provided in the treating health professional report. This report may be completed by a doctor, nurse, occupational therapist or an Aged Care Assessment Service.

A person cannot receive Carer Payment as well as another income support payment. However, the person may be entitled to other payments such as Carer Allowance or Family Tax Benefit. A person who receives a Carer Payment for a child should also be entitled to Carer Allowance.

The person being cared for must meet the care receiver income and asset test. There is no obligation to live with the cared for person, only to provide constant care. A person receiving carer payment is entitled to receive payment for up to 63 days per year while taking respite from care.

Rate of Payment (ss210, 1064)

The basic rates of Carer Payment are to the same as for the Age Pension. The rate of the Carer Payment is subject to the pension income test or assets (see: “Income and assets tests for pensions”, below).

A pensioner may also be eligible for Rent Assistance and other supplements that increase the pension above the standard rate.

Income and assets tests for pensions

The rates of each of the above pensions are subject to either the income test or the assets test, unless the pensioner is permanently blind. Where a person has both income and assets, the test that produces the lower payment applies.

Income Test (ss8, 1064, 1065, 1066A, 1066B, Part 3.10)

The income test allows a pensioner to earn income to a point before the level of pension is reduced. The level depends on the person’s marital status. For each $1 of income in excess of the set level, the weekly pension is reduced by 50 cents (single pensioner) or 25 cents each (partnered pensioner).

Employment income is subject to a Work Bonus for pensioners over Age Pension age. The Work Bonus was introduced from 20 September 2009 to replace the Pension Bonus Scheme. The first $250 of income in a fortnight is disregarded from the income test. Also if a person does not earn money in a fortnight they may accrue the $250 to count alongside future earnings. A person can accrue up to $6,500. This is in addition to the normal allowable income threshold.

A permanently blind person can receive the Age or Disability Support Pension, regardless of income (s1065).

The income of a partnered pensioner is equal to half the combined income of the person and their partner.

Income is defined very broadly in the SSA. It is different to the definition for income tax law. It includes amounts that are “earned, derived or received for the person’s own use” and periodical payments or benefits by way of gifts or allowances. “Income amount” means valuable consideration, personal earnings, moneys or profits (whether of a capital nature or not) (s8). Among other things, income includes bank interest, regular superannuation payments and rent paid by tenants. (For workers compensation payments,see: “Compensation and damages payments”, below.)

Several types of income are not assessed under the income test, for example:

• loans that a person receives;
• payments under the SSA;
• emergency relief;
• insurance payments for loss of property; and
• refunds from Medicare or health insurance funds.

A complete list of exempt income appears in section 8(8) of the SSA.

Income is defined as gross income without any reduction (s1072) except where a person carries on a business when expenses involved in gaining that income may be deducted (ss1074 & 1075).

Offsetting a loss from one source against other income is not permitted.

Income from “financial investments” (s9), unless exempt by the Minister (s1084), is assessed in the following way (Part 3.10):

• the value of all the person’s investments are added together;
• investments under the threshold are deemed to earn 3% interest; and
• the amount over the threshold is deemed to earn 4.5%.

Note: The deeming rates and thresholds change periodically. Check with Centrelink for current rates.

This is a complex area and any specific queries should be taken to a community legal centre, Tasmania Legal Aid or a solicitor.

Assets Test (s11, Part 3.12)

A pension is reduced under the assets test if the total net value of the person’s property or assets (apart from their home) exceeds the relevant limit, which changes annually.

For each $1,000 of assets in excess of the limit, the fortnightly pension is reduced by $1.50 per fortnight (single and couple combined).

A permanently blind person will continue to receive Age or Disability Support Pension, regardless of assets.

The value of a person’s assets is the current market value, the amount the assets could be sold for less any debts owed on the assets, and is not the replacement value or the original cost.

There are many things excluded from the asset test including the “principal” home (as long as the person is living in it), and surrounding land of up to two hectares , special aids for disabled people, and pre-paid funeral expenses. A list of the assets exempt from the asset test appears in section 1118.

The value of an asset may be excluded under the “hardship provisions”, if the pensioner cannot sell or realise the asset or use it as security for borrowing (or if it would be unreasonable to expect the pensioner to sell, realise or use the asset as security) and if the pensioner would suffer severe financial hardship. For the hardship provisions to apply, a person must make a specific claim to Centrelink, consideration is not automatic.

If the hardship provisions apply, the level of pension might be reduced by the income which could be earned from the pensioner’s use of the asset (ss1129, 1130). This means that the value of the asset may still affect the rate of pension payable.

A person of age pension age who qualifies for Carer Payment or Age Pension or is the partner of such a person, may also be eligible for consideration under the “extended land use test”. They have to have a 20-year continuous attachment to the land and principal home. They also have to be making “effective use of the land”, meaning that if the land or part of it is productive, it is being used to generate an income. If successful, all land held on the same title as the principal home, or deemed to be on one title, is exempt from the assets test.