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Improving government entitlements and benefits

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Australians often apply for the Age Pension well after the time they become eligible, on average about 2.3 years after.¹ It is estimated that single retirees are losing an average of $37,000 in Age Pension entitlements due to delays in applying for the Age Pension while couples are estimated to lose close to $60,000.ᵃ

Improving your government entitlements and benefits

Many retirees look for ways to make their money last longer or improve their government entitlements and benefits. Eligibility for various Government related benefits, income and pension support payments and the level of residential aged care fees, often involve  assets and income tests, also commonly referred to as the ‘means test’.

The ability to qualify for government benefit payments, such as the Age Pension for example, also provides ancillary benefits including reductions in local council rate fees, reduced vehicle registration costs and access to cheaper medicines under the pharmaceutical benefits scheme. These benefits have the potential to represent significant savings for you every year in retirement.

Assets test

Under the assets test, generally the net market value of your assets is used (i.e. the amount the assets can be sold for less any debts that are secured against the assets).

All assets owned by you and your spouse are assessed, including most investment assets (such as, shares, managed funds, superannuation and investment properties) plus personal assets such as, motor vehicles and home contents.

Interests you have in trusts or private companies may also be included. Importantly, the assets test does however, exclude your principal place of residence and some other assets are also excluded.

Income test

All income attributable to both you and your spouse/partner is considered. How income is determined will depend on the nature of the income or your investments.

Under the ‘deemed’ income test, prescribed deeming rates are applied to the value of a financial asset to determine its ‘deemed’ income, instead of its ‘actual’ income. This applies to most financial investments such as, cash, shares and account-based superannuation pensions purchased on or after 1 January 2015.

Pension payments

Payments made either by Centrelink or the Department of Veterans’ Affairs are generally subject to income and assets testing. For example, you may be entitled to a part pension if your assets and income (including deemed income on financial assets) don’t exceed the upper thresholds for both tests, as well as meeting other eligibility requirements.

If your assets and income don’t exceed the lower thresholds for both tests you may be entitled to a full pension. Both the income and assets test are used to determine the amount of payments you receive. Your actual entitlement will be the lower of the amounts calculated under both tests.

Aged care & home care

The Australian government subsidises aged care homes and home care packages to provide affordable and accessible care.

The amount of government assistance will be based on an assessment of your ongoing care needs. For residential aged care, an assessment of your capacity to pay is undertaken based on your assets and income, while for home care, only your income is assessed.

Improving pension entitlements

Working with your financial adviser to help qualify or part qualify for government entitlements and benefits is an important step in securing your financial future. There are several strategies and solutions that may help you achieve your financial goals and help you qualify for a part pension or increase the current level you receive.

When considering any potential strategies or solutions it is important to consider whether your savings can support any shortfall in your retirement income needs. Your personal circumstances may also change and increase your need or reliance on your future savings.

With that in mind, there are a number of financial solutions to help you achieve your financial goals and may also boost your Age Pension or other government entitlements.


How investment bonds and lifetime annuities can help with government benefits

There are a number of government payments, tax offsets and levies that use Adjusted Taxable Income or a variation of it, as criteria to determine eligibility and the level of benefit available or amount of levy incurred.

Adjusted Taxable Income is based on your level of taxable income, i.e. assessable income less allowable deductions, with a number of adjustments applied. The Adjusted Taxable Income calculation may vary depending on the government benefit it relates to.

The annual investment earnings of an investment bond are excluded from Adjusted Taxable Income calculations, provided no withdrawals are made before the first 10 years of commencing the investment. If a withdrawal is made, then the tax assessable component of the withdrawal would be included as part of your Adjusted Taxable Income calculation.

As withdrawals from a funeral bond only occur on the passing of the life insured, there are no assessable income amounts included as Adjusted Taxable Income.

The income from a qualifying investment-linked lifetime annuity commenced with superannuation money is excluded from the Adjusted Taxable Income where the recipient of the annuity is aged 60 or over. In all other cases, only a portion of the income is included in the Adjusted Taxable Income calculation.

Commonwealth Seniors Health Card

The Commonwealth Seniors Health Card provides low-income retirees who do not qualify for the Age Pension access to similar Commonwealth concessions as holders of the Pensioner Concession Card.

Some of the benefits that the Commonwealth Seniors Health Card can provide include:

  • Cheaper prescription medicine and other benefits under the Pharmaceutical Benefits Scheme
  • Larger refunds on medical costs under the Medicare Safety Net
  • Free or reduced rates on health care costs which can include ambulance, dental care, hearing and eye checkups
  • Discounts on water and council rates (which will vary by state)
  • Discounts on electricity and gas bills – Seniors’ energy rebates can apply depending on your state to help reduce the cost of electricity and gas
  • Discounts for other services such as, public transport and education are often available

The level of concessions and discounts vary depending on State.

Other government benefits

Excluding income from the Adjusted Taxable Income calculation positively impacts the following :

  • Child support
  • Carer Allowance and Carer Allowance Health Care Card
  • Low Income Supplement and Low Income Family Supplement
  • Medicare Levy Surcharge thresholds
  • Private Health Insurance rebate
  • Higher Education Loan Program (HELP) repayments
  • Dependant (invalid and carer) tax offset


Our range of investment solutions

Generation Life offers a range of investment solutions that can provide concessional treatment to help you maximise your Government benefits and entitlements.


LifeIncome is an investment-linked lifetime annuity that provides a regular income that is guaranteed for life and offers the potential to access some or more of the Age Pension and ancillary benefits. With options to bring forward future income earlier, when you might need it the most, and the ability to provide a reversionary income on your passing, LifeIncome can provide you with a flexible income stream for life.


FuneralBond is a simple and tax-effective way to help meet your future funeral costs with the added benefit of being income and assets test exempt up to certain limits to help improve pension benefits. You can also arrange to transfer ownership to a funeral director as part of a pre-paid funeral arrangement.


LifeBuilder provides a tax-effective way to save for the future as well as provide the flexibility to pass on wealth to the next generation with confidence. LifeBuilder also comes with a trust ownership option at no extra cost, that can help you access some or more Age Pension and ancillary benefits, if you are looking to manage deemed income levels.

Need more information

For more information about how Generation Life’s investment solutions can help improve your government benefits, please speak to your financial adviser. 

ᵃ Source: The most expensive mistake retirees can make, SuperEd, published 2015

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