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3 ways to lift your income in retirement

Retirement  |  10/07/2019  |   6 min read

Aussies are living 10 years longer than we did 50 years ago. We’re staying fit and active well into retirement, and our lifestyle expectations have changed accordingly. Whether it’s overseas travel, learning a new skill or spoiling the grandkids, there’s been a huge shift in how we approach life in later years.  
A number of government changes took effect on July 1 2019 to help retirees boost their income. Aimed primarily at people who derive some of their retirement income from the Age Pension, the rules can help fund a more active and independent life.   
Pension Work Bonus 

If you receive the age pension or a Veterans Affairs pension, you can now earn up to $300 a fortnight (up from $250) without impacting on your Centrelink payment.  This can be as high as $474 a fortnight per person when you factor in the income test threshold.  
The work bonus applies whether you are an employee or self-employed. And if you don’t earn the full $300 per fortnight you can accumulate and carry over the unused amounts (up to $7,800) for future income. 

For instance, if you haven’t worked for a year, you accumulate $7,800 of unused work bonus. If you then earn $4,000 for contract work over a six-week period, this won’t impact your Centrelink payments (and will leave you with another $3800 in income for the year before your payments are impacted). 
Pension Loans Scheme 

Changes to the Pensions Loans Scheme mean that more people can tap into the equity in their home.  
You can now borrow up to 150% (previously 100%) of your maximum fortnightly pension rate to provide you with a better standard of living in retirement. The payments are made to you each fortnight, not as a lump sum. The amount borrowed is secured by property you own in Australia.  
The loan can be repaid at any time you choose, although it is recovered when you sell the property or from a deceased estate. Retirees are currently charged a compounding variable interest rate of 5.25 per cent a year on the loan.   

In other words, it’s basically a reverse mortgage facilitated by the government. Of course, such a loan will reduce your home equity, but it will give you added cash flow in the meantime.  
New means testing of annuities 

Changes have also been made to the treatment of pooled lifetime retirement income streams, such as lifetime pensions or lifetime annuities.   
An annuity is a product where your money is pooled with other investors and a set amount is paid to you each year, usually for the rest of your life.  
Under the new rules, Centrelink will treat a fixed 60% of all annuity payments as income. And for the assets test, it will assess 60% of the nominal purchase price for the period until you are age 84 (and 30% after that). 
These changes do not apply to account-based pensions or to annuities purchased before 1 July 2019. And while the 60 per cent ruling may improve your circumstances, it won’t in all cases. 

These three changes are all aimed at giving you additional sources of stable income in retirement. If you would like to know how they may impact you please book an appointment with an Equip Financial Planner. 


Speak to an Equip financial planner about your retirement income. For more details please click here.


Equipsuper Pty Ltd (“Equip”) (ABN 64 006 964 049, AFSL 246383) is the Trustee of the Equipsuper Superannuation Fund (“the Fund”) (ABN 33 813 823 017, MySuper Authorisation 33813823017672). This document provides general information only. It does not take into account your personal objectives, financial situation or needs, so should not be taken as personal advice. Before making a decision to invest in the Fund, you should read the appropriate Equip Product Disclosure Statement (PDS). Past performance is not an indication of future performance. Equip is licensed to provide intrafund personal and general superannuation advice under its AFSL. Member Advisors are employees of Equip. For more information about the remuneration of Equip and its employees, please refer to the Equipsuper Financial Services Guide (FSG).

Equipsuper Financial Planning Pty Ltd (“EFP”) (ABN 84 124 491 078, AFSL 455010) is licensed to provide financial planning services to retail and wholesale clients. EFP is owned by Equipsuper Financial Holdings Pty Ltd (ABN 11 604 515 791). You can obtain the EFP Financial Services Guide and/or Privacy Statement by contacting our Helpline 1800 682 626.

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