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  • Writer's pictureOakmont Financial Group

Age Pension and entitlements: Do Australians rely on Age Pension?

As financial advisers, we assist our clients through many different life stages and help them make the most informed decisions around their finances. This includes the stage where they may be considering retirement or needing assistance with inheritance and/or Age Pension.

While it is prudent to consider consulting with a financial adviser when you are planning for your retirement, it may also be useful to think about and research this subject a little ahead of time. There are several considerations to be made and it pays to be organised and in the knowhow.

Generally speaking, Age Pension has been designed to provide income support to older Australians who need it. The pay-out rates are indexed to ensure they are current and meet the Australian price and wage standards. The pension is paid to those who meet the eligibility criteria of age, residency, and means. We will discuss these criteria in detail in the subsequent sections.

Now to answer the big question - Do Australians really rely on their Age Pension? As per ABS statistics, over 50% rely on a government pension or allowance to supplement their income. Research from the ASIC additionally suggests that, on average, eligible Australians receive the Age Pension later rather than before the cut off age. Over 40% of the retired population rely on Government sources to supplement more than half of their total household income.

Back in 1909 when Age Pension was first introduced, the country’s average life expectancy was just 55 years. Given this age, very few people were actually expected to reach the Age Pension age of 60 years for women and 65 years for men.

Today, in 2021, the average life expectancy is now 80 years of age for both men and women (according to the Australian Institute of Health and Welfare) and the qualifying Age Pension age is now 66 years for both genders.

It is therefore very likely that retirees will rely on their Age Pension as well as their super for several years. This likelihood makes it all the more important for us to act now and set ourselves up for a comfortable retirement.

The Age Pension age

On 1 July 2021, the eligibility age increased from 66 years to 66 years and 6 months for anyone born between 1 July 1955 and 31 December 1956.

This means that if you were born on the 30th of June 1955, you could be eligible from the 30th of June 2021, but if you were born one day later, on the 1st of July 1955, you wouldn’t be eligible until the 1st of January 2022.

The pension age will be gradually increased from 65 to 67 years. Here is the table that details this change.

Period within which a person was born

Pension age

Date pension age changes

From 1 July 1952 to

31 December 1953

65 years and 6 months

1 July 2017

From 1 January 1954 to

30 June 1955

66 years

1 July 2019

From 1 July 1955 to

31 December 1956

66 years and 6 months

1 July 2021

From 1 January 1957


67 years

1 July 2023

The residency requirement

To be eligible to receive Age Pension, you must be an Australian resident, you must be living in Australia on the day the claim is lodged, and you must also satisfy one of the following criteria:

  • be an Australian resident for a total of at least 10 years, with at least five of these years in one period; or

  • have a qualifying residence exemption; or

  • be a woman who is widowed in Australia when both she and her late partner were Australian residents, and who has 104 weeks residence immediately before the claim; or

  • be receiving Widow B Pension, Widow Allowance or Partner Allowance immediately before reaching pension age.

Please note that special rules apply to residents from countries with which Australia has an International Social Security Agreement.

The income and asset tests

The Age Pension pay-out is subject to the outcomes of the income and asset tests. Pensioners are paid under the test that indicates the lower rate of payment.

The social security system assesses income from financial investments. Under these rules, there is a simple and fair way to assess income from financial investments for social security and Department of Veterans’ Affairs (DVA) pension and allowance purposes. From 1 January 2015, these rules were extended to also include account-based income streams.

If you want to know how gifting and inheritance can affect your Age Pension, look out for our next blog coming shortly.

Working with Oakmont

Planning is key to maximising pension entitlements and Centrelink benefits. A vital part of any planning process is knowing what your available avenues are. This is where Oakmont Financial can help. We strategically assist you in maximizing your social security entitlements which can help make your own money last longer. To know more, contact us today.


General Advice Disclaimer

The information contained on this website and in this blog post is general in nature and does not take into account your personal situation or circumstance. It is recommended that you consider and use the information provided responsibly and, where appropriate, seek professional advice from a financial adviser.

Although every effort has been made to verify the accuracy and correctness of information, Oakmont Financial Group, together with our consultants, officers, agents, and employees, disclaim all liability for any loss or damage suffered by any persons directly or indirectly relying on this information.


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