From 1 July 2010, as part of the Secure and Sustainable Pension Reform package, pension advance payments were made more flexible.
Pension advance payments allow pensioners to receive a portion of their future pension entitlement as a lump sum.
The changes to advance payment rules improved pensioners’ capacity to budget and to meet large or unforeseen costs.
Which payments qualified for the change?
- Age Pension
- Disability Support Pension (including for those aged under 21 years, without children)
- Carer Payment
- Widow B Pension
- Wife Pension.
The Department of Veterans’ Affairs made similar changes for its income support payments.
What are the minimum and maximum pension advance payment amounts from March 2013?
- the minimum and maximum advance amounts increase to $381.05 and $1,143.15 for single pensioners
- the minimum and maximum advance amounts increase to $287.25 and $861.75 for each member of a couple.
Examples of the flexible pension advance rules
Single maximum rate pensioner
On 20 March 2013 Joan, a single age pensioner receiving the maximum rate of pension, applies for an advance for the first time. In the six months from 20 March 2013, Joan may access an advance payment lump sum ranging from $381.05 (the minimum amount) to $1,143.15 (the maximum amount).
There are a variety of advance payment options for Joan. Joan may choose to receive a single amount or any combination of amounts between $381.05 and $1,143.15 over 13 fortnights, providing the individual amounts do not total more than the maximum amount of $1,143.15).
Example: On 20 March 2013, Joan elects to be paid a single advance of the maximum amount of $1,143.15. Her advance would be recovered over 13 fortnights by deducting 12 repayments of $87.95 and a final, thirteenth one of $87.75. Joan would be able to apply for another advance from 20 September 2013 (assuming the previous advance has been fully recovered).
Partnered part-rate pensioners
On 20 March 2013, Bill and Mary, an age pensioner couple receiving part-rate pensions, each apply for an advance payment for the first time. Bill and Mary’s fortnightly pension payments are $374.70 each (base rate Age Pension plus Pension Supplement).
Each may access an advance payment lump sum between $287.25 (minimum amount for the partnered rate) and $682.50 (maximum amount for Bill and Mary’s part rate of fortnightly pension).
Bill and Mary have various advance payment options. They may each choose to receive a single amount or any combination of amounts between $287.25 and $682.50 over 13 fortnights, providing the individual amounts do not total more than the maximum amount of $682.50 each.
Example: On 20 March 2013, Bill and Mary elect to be paid maximum advances of $682.50 each. Their advances would be recovered over 13 fortnights by deducting 13 repayments of $52.50 each. They would be able to apply for another advance from 20 September 2013 (assuming the previous advance has been fully recovered).
Part-rate pensioners also have access to increased pension advance payments (different maximum advance amounts apply) and can request multiple advances.
Further information on pension advance payments can be obtained from the Department of Human Services website, by visiting the nearest Customer Service Centre, or by calling 13 2300.