If you have reached your Age Pension eligibility age and separate from your spouse or de facto partner, then it has implications for your Age Pension entitlements. Read on to find out everything you need to know if you’re receiving the Age Pension and you live separately in Australia.
How is separation determined?
In the Age Pension context, you are regarded as separated if you and your spouse, de facto or otherwise registered partner are living separately or apart either permanently or indefinitely. There must have also been a breakdown in their relationship. In summary, there must be both a physical and emotional separation.
You will generally not be classified as separated in the Age Pension context if you are living apart because of health, work or financial reasons. The only exception to this is if you or your partner are institutionalised due to a severe and debilitating illness. This illness must prevent you or your partner from providing each other with physical and emotional support.
For example, if you or your partner permanently enters a nursing home due to being in the advanced stages of Alzheimer’s disease or Huntington’s disease. Both institutional and medical evidence is required for this exemption.
In Australia, you must be separated for at least 12 months before you can legally apply for a divorce. However, you do not have to get a divorce unless you want to remarry. That means you and your partner can stay separated indefinitely or permanently.
How is the Age Pension affected by separation?
If you are considered to be separated in the Age Pension context, you and your partner will each be paid the Age Pension single rate provided you meet all of the eligibility requirements, rather than the couples rate. The maximum base rate of the Age Pension is higher for single people than it is for couples.
You will need to pass both the income and assets tests as individuals rather than as a couple. As you would expect, both the income and assets tests have lower minimum thresholds for singles compared to couples. In other words, the threshold amount of income or assets that you can have before your pension starts being reduced is lower for singles than it is for couples who live together.
Let’s look at a few examples.
Bill and Irene have separated and intend to initiate divorce proceedings and a financial settlement when they are legally able to do so (i.e. after 12 months of separation). Bill has moved out of the marital home until the divorce is finalised. Up until their separation, they were receiving a full Age Pension at the couples rate.
After the separation, Bill and Irene have been assessed as being single for the purposes of the Age Pension income and assets tests, and their Age Pension rates were adjusted accordingly.
Rod and Sandy were receiving a part Age Pension as a couple. They decided to separate due to a relationship breakdown and they worked out a financial settlement. Neither has plans to remarry, so they may not necessarily proceed with a divorce. Rod moved out of the marital home. He bought a small unit and both he and Sandy continue to live separately and alone. They no longer have a partner relationship.
Both Rod and Sandy were assessed as being single homeowners for the purposes of the Age Pension assets test. Their income is also now assessed separately. The assessments show that they each meet the eligibility requirements for a part Age Pension at single person rates.
Tom and Barbara were married for 50 years before Barbara developed Alzheimer’s disease. They were receiving the full Age Pension rate as a couple. However, Barbara’s illness progressed to the stage where she needed to permanently enter a nursing home due to her high care needs. She no longer recognized Tom or other members of her family. Tom and Barbara were reassessed as being eligible for the full Age Pension at the single person’s rate.
You must be both physically and emotionally separated from your partner to be regarded as separated in the Age Pension context. There must have been a relationship breakdown, unless one partner is permanently institutionalised for health reasons and is no longer capable of providing physical and emotional support in the relationship.
When you are separated, you and your partner will be eligible for the single rate of the Age Pension if you meet all of the eligibility requirements (including passing the income and assets tests). The maximum base rate for the Age Pension is higher for single people than it is for couples who live together.
The information in this article is general in nature.