Moving from Disability Pension to the Age Pension

There are a number of factors to consider if you are currently on the disability support pension and are coming to the point of turning age pension age (67) and have to decide whether you would like to retain your disability pension or move to the age pension. I have tried to summarise a few points below – this list is not exhaustive and please seek personalised advice specific to your situation before making any decisions. 

Does one pension pay more than the other?

Firstly, to determine your level of age pension or disability pension – Centrelink will run a “means test” which looks at the amount of assets you have and the amount of income to determine your eligibility for a payment and how much of a payment you receive. This test remains the same on disability support pension or on an aged pension. The amount Centrelink will pay for the disability and the age pension also remains the same. Please note prior to your age pension age of 67, your superannuation may not have been assessed as an asset if it was still in accumulation phase – it will now be assessed on each entitlement once you turn 67.

What are the potential tax implications?

The disability support pension prior to age pension age is tax exempt, once you reach age pension age it now becomes taxable. The age pension is always a taxable payment. If your only income source is a disability pension or age pension, you wouldn’t have to pay tax, however this can change if you do receive income from other sources potentially.

Other considerations

There are certain limitations with the disability support benefit in relation to work and study but there can also be certain benefits in the way of study assistance payments or a higher rate of a mobility allowance to travel to work.

If you do have in mind a sea change and plan to move overseas, the age pension eligibility is a lot more lenient for extended periods of time travelling overseas.

Moving to the age pension will also mean you don’t have to have Centrelink assess anymore your disablement (however if you have a carer who is on carers allowance or payment – they may still need to review your situation to assess whether they keep paying this also).