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 1 July changes to advance payment rules improved pensioners’ capacity to budget and to meet large or unforeseen costs.
Which payments qualified for the change?
The changes apply to the following pension payments:
- 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 their income support payments.
Advance payment rules for allowances (such as Newstart Allowance) and for Parenting Payment (single) remain unchanged.
What are the minimum and maximum pension advance payment amounts from March 2012?
- the minimum and maximum advance amounts increase to $361.55 and $1,084.65 for single pensioners
- the minimum and maximum advance amounts increase to $272.55 and $817.65 for each member of a couple.
Examples of the flexible pension advance rules
Single maximum rate pensioner
On 20 March 2012, 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 2012, she can access an advance payment amount ranging from $361.55 (the minimum amount) to $1,084.65 (the maximum amount).
There is a variety of advance payment options for Joan. From 20 March 2012, Joan could be paid a single amount or any combination of amounts between $361.55 and $1,084.65 (providing they do not total more than the maximum amount of $1,084.65).
The following provides just one option that shows Joan applying for the maximum advance amount in March.
Example: Joan elects to be paid a single advance of the maximum amount of $1,084.65. The advance would be recovered over 13 fortnights by deducting 12 repayments of $83.50 and one of $82.65. Joan would be able to apply for another advance from 20 September 2012 (assuming the previous advance has been fully recovered).
Partnered part-rate pensioners
In September 2011, Bill and Mary are an age pensioner couple each receiving a part-rate pension. They apply for an advance payment and each have a rate of $350 per fortnight (which is the total of their base pension plus Pension Supplement, minus the Pension Supplement minimum amount). They are both applying for an advance for the first time and will each be able to access a minimum amount of $272.55 and a maximum amount of $682.50.
Bill and Mary have various options. They can each choose to receive a single amount or any combination of amounts between $272.55 and $682.50 over six months, providing the individual amounts do not total more than the maximum amount of $682.50 each. The following shows some of the options available to Bill and Mary:
- a minimum advance payment of $272.55 now and a further advance of the remaining balance of $409.95 each at any time in the 13 fortnights following payment of the first advance; or
- a maximum advance payment of $682.50 each with the amount of $52.50 each deducted over the next 13 fortnights.
What were the changes from 1 July 2010?
Before 1 July 2010, the maximum advance amount was $500 (and the minimum amount was $250) for singles and each member of a couple.
From 1 July 2010, the main changes were:
- an increase in the minimum and maximum advance amounts
- linking the maximum amount to fortnightly maximum basic pension rates, so that advance payment amounts increase when the pension increases each March and September
- allowing pensioners to take multiple advances, up to a maximum of six over a 12 month period.
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 by visiting their website or nearest Customer Service Centre, or by calling 13 2300.