How a Couple Is Assessed, and What That Changes

01 Combined assessment, separate payments

A couple's entitlement is worked out once, on combined income and combined assets, and then split into two payments at the partnered rate. Both members receive their own payment into their own account, and both are affected by anything that changes the combined figure.

This is why transferring assets between partners achieves nothing for the means test. An investment in one name and the same investment in the other name produce identical assessments, and the transfer itself may trigger capital gains tax for no corresponding benefit.

The partnered rate is lower per person than the single rate. Two pensioners living together therefore receive less between them than the same two people would as singles, and a couple who separate are reassessed as two singles from the date of separation.

Source: Services Australia — How much Age Pension you can get

02 When only one of you has reached Age Pension age

Only the older partner can claim, and the couple thresholds apply to the assessment even though only one payment is made. The younger partner's income and assets are counted, with one significant exception.

Superannuation held in accumulation phase by someone below Age Pension age is not an assessable asset and is not deemed. Once they reach Age Pension age it becomes both. That produces a step change in the household's assessment on a known date, which is the sort of thing worth modelling before it happens rather than after.

The exception ends if the younger partner starts drawing an income stream from that super. Commencing an account-based pension makes the balance assessable immediately regardless of age, so a younger partner starting a transition to retirement pension can reduce the older partner's Age Pension without intending to.

Source: Services Australia — Asset types

03 What the younger-partner exception is actually worth

The value is the assets test taper applied to whatever balance sits in the younger partner's accumulation account, for as long as they remain below Age Pension age. At $3 per $1,000 per fortnight, a $200,000 balance shelters around $15,600 of pension a year.

The worked example puts a figure on it for your own balances and the years remaining. What it cannot tell you is whether moving money there is possible: contributions are bounded by the caps described in the contribution caps reference, and by whether the money is currently inside super at all.

The strategy is legitimate and it is not aggressive — it uses a rule the system states plainly. What makes it go wrong is treating it as permanent. The shelter expires on the younger partner's Age Pension birthday, and a plan that depended on it needs to have already accounted for that.

Source: Services Australia — Assets test for Age Pension

04 Illness separation and what happens when one of you dies

A couple who cannot live together because of illness or frailty — one in residential aged care, for example — can be assessed as an illness separated couple. They keep the couple asset thresholds but are each paid at the single rate, which is a materially better outcome and is applied on request rather than automatically.

On the death of one partner, the survivor is reassessed as a single person. The single thresholds are lower than the couple thresholds, so a household that qualified for a part pension can find the survivor qualifies for less or for nothing, at exactly the moment their fixed costs have barely fallen.

The reassessment is mechanical rather than discretionary, and it happens at the point the relationship status changes in Centrelink's records. Households that have planned around a combined payment find the survivor's fixed costs — rates, insurance, energy, the car — barely move while the payment does, which is the shape of the problem rather than a detail of it.

A bereavement payment covers a short transition period after a partner's death, and superannuation death benefits arriving at the same time become assessable assets in the survivor's hands. How those benefits are taxed is a separate question, set out in the super death benefits reference.

Source: Services Australia — Age Pension

05 What to actually do

Establish the two ages first. Everything else about couple assessment follows from whether both members have reached Age Pension age, and a plan built without that fact is usually built on the single-person rules by accident.

If one partner is younger, model the step at their Age Pension birthday rather than the position today. The household's payment will fall on that date, and knowing by how much is the difference between a planned adjustment and a surprise.

If illness separates you, apply for the illness separated assessment. It is not granted automatically, the improvement is substantial, and the households that miss it are the ones dealing with the aged care admission described in the aged care costs reference and not thinking about Centrelink at all.

Source: Services Australia — Who can get Age Pension