Centrelink & Pension

Impact on Age Pension and Centrelink Benefits

The decision to keep or sell your home when entering aged care has significant implications for your Age Pension and overall financial position. If you move into an aged care facility without selling your home, it will generally be exempt from the Centrelink/DVA assets test for two years from the date of entry to permanent residential care. This exemption period is crucial because it allows you to maintain your full Age Pension entitlement during this time.

However, the situation becomes more complex for couples. You may still be considered a couple if you are living apart for health-related reasons, which means your spouse's continued residence in the home can provide ongoing protection under the "protected person rule." If your spouse remains living in the family home, it continues to be exempt from the assets test indefinitely, preserving your Age Pension entitlements.

Key Centrelink Considerations:

• Two-Year Rule: Once those two years have lapsed, the home will be assessed at its market value and counted as an asset, which commonly results in a reduction or cancellation of Age Pension payments

• Assets Test Thresholds: From 1 July 2025, the full pension is available, under the assets test, for homeowner singles whose assessable assets are under $321,500 – for homeowner couples, the number is $481,500 you can see more about asst test thresholds here.

• Protected Person Benefits: If certain family members or carers live in the home, additional exemptions may apply - a relative who is eligible for an Australian income support payment that has been living in the home for at least 5 years, or a carer who is eligible for an Australian income support payment and has been living in the home for at least 2 years

Strategic Planning Importance:

The financial impact of these rules can be substantial. A home valued above the assets test threshold could completely eliminate Age Pension entitlements after the two-year exemption period expires. This is why professional financial advice is essential to explore strategies such as downsizing, gifting within allowable limits, or structuring asset ownership to optimise both aged care costs and pension entitlements.

Whilst it is never too late to have this discussion, we strongly recommend having comprehensive financial planning conversations well before a facility is required. This provides time to consider all options, implement appropriate strategies, and avoid being caught out if a quick decision needs to be made during a health crisis.