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# How couples can work out their service pension

Last updated:

20 September 2020

This page is to be used if you wish to work out your rate of service pension.

The rates quoted are current from 1 January 2021 to 19 March 2021.

### On this page

- When not to use this
- How is your pension worked out?
- Step 1 Calculate your financial assets
- Step 2 Calculate your deemed income from your financial assets
- Step 3 Calculate your total assessable income and assets
- Step 4 Calculate your daily rate of service pension using the income test and the assets test
- Step 4 Calculate your daily rate of service pension using the income test and the assets test, continued
- Step 5 Rate of pension payable

## When not to use this

This page will not be accurate if you:

- are paid under transitional arrangements; or
- are blind for service pension purposes; or
- are paying rent and are eligible to receive rent assistance; or
- are eligible to receive rent assistance or remote area allowance; or
- receive a war widow’s or widower’s pension or a wholly dependent partner’s pension under the Military Rehabilitation and Compensation Act 2004 (MRCA) and your service pension is more than $284.20.

## How is your pension worked out?

The rate of your service pension is based on:

- your income; and
- your assets.

Separate tests are applied to your income and your assets.

For the income test, your income is added up and compared to the income free area. If your income is below the income free area you will receive the maximum rate of pension under the income test. If your income is over the income free area, your pension will be reduced from the maximum rate. Your pension is reduced by 25 cents each for every $1 your combined income exceeds the ordinary income free area. A work bonus may apply if you are over qualifying age and have employment earnings.

A similar process is applied to your assets in the assets test. Your total combined assessable assets are compared to the assets value limit. If your total assets are less than this limit you will receive the maximum rate of pension. If your assets are over this limit, your pension will be reduced by 75 cents for every $250 they are in excess of the limit.

The test that results in the lower rate of pension is the one that is used to calculate your pension.

## Step 1 Calculate your financial assets

Use the table below to add up your combined financial assets.

*Note: - Financial assets do not include things such as vehicles, property etc. Refer to Deeming and Financial Assets.

Type of financial assets | Asset value |
---|---|

Financial Institutions (banks, building societies and credit union accounts)* | |

Asset-tested short term income streams and superannuation account-based income streams subject to deeming | |

Loans | |

Bonds and Debentures | |

Shares ** | |

Managed Investments ** | |

Gifts in excess of $10,000 in a financial year or in excess of $30,000 in a rolling five-year period *** | |

Cash on hand in excess of $500 | |

Bullion | |

Total financial assets |

* Proceeds from the sale of your home, even if they have been put aside for the purpose of purchasing a new home, should be included in this calculation.

** Calculate the value of shares and managed investments by multiplying the number of shares and units by the share or unit price. You can check the unit prices that are being used to calculate your pension by contacting DVA.

*** A rolling five-year period is the current financial year and the previous four financial years.

*Note: - If you are under pension age, do not include any superannuation products, such as roll over funds, in your calculation of financial assets. For more information on pension age refer to Managed Investments.

## Step 2 Calculate your deemed income from your financial assets

Use the table and the instructions below to calculate your deemed income from your total financial assets calculated in step 1.

- After you have worked out your total financial assets in step 1, write the total at (A).
- The low deeming rate applies up to the first $88,000 of your financial assets. Write the amount of your financial assets that attract this deeming rate at (B).
- If you have more than $88,000 in financial assets, write the amount that is in excess of $88,000 at (C).
- Multiply (B) by 0.0025 and write the result at (D).
- Multiply (C) by 0.0225 and write the result at (E).
- Work out your total deemed income per year by adding (D) and (E) together. Write this total at (F).
- Divide (F) by 26 and write this figure at (G). This is your deemed income per fortnight.

Total financial assets from step 1 | = (A) | ||

Amount up to $88,000 to be deemed at 0.25% | (B) | x 0.0025 | = (D) |

Balance to be deemed at 2.25% | (C) | x 0.0225 | = (E) |

Total deemed income per year (D + E) | = (F) | ||

Divide by 26 | ÷ 26 | ||

Deemed income per fortnight | = (G) |

## Step 3 Calculate your total assessable income and assets

Fill in the table below to work out the totals of your combined assets and income. The columns which have been blanked out show where a figure is not required.

Type of income or asset | Asset value | Income per fortnight * |
---|---|---|

Financial Assets (from Step 1) and Deemed Income (from Step 2) | ||

Gross Superannuation1* | ||

Gross Salary/Wages1* | ||

Gross Foreign Pensions2* | ||

Immediate Annuities, Allocated Annuities and Allocated Pensions | ||

Other Income | ||

Household Contents | ||

Vehicles | ||

Property | ||

Farm | ||

Business (including private trusts and private companies) | ||

Other Assets (e.g. collectibles, valuables, life insurance policies) | ||

Totals | ||

Less Work Bonus 3* | ||

Less Maintenance Paid to Ex Spouse 4* | ||

Less Deductible Assets (e.g. Proceeds from sale of home; mortgages on property) | ||

Total Assessable Income and Assets |

1* If you receive income but only know the annual amount, divide the annual amount by 26 to work out the income per fortnight. The amount of superannuation that has been applied to reduce a Special Rate Disability Pension (SRDP) under the Military Rehabilitation and Compensation Act 2004 (MRCA) is not counted as income.

2* Excluding foreign disability pension paid to a veteran for a war caused injury or disease, or an amount paid under the Compensation for Nationalist Socialist Republic Policy of Austria or Germany.

3* If you are over qualifying age, take the first $300.00 off your fortnightly income if earned through active participation in the workforce, rather than through passive activities such as managing your own investment portfolio. You may also have a work bonus bank balance that may be applied. For more details refer to Work Bonus.

4* Excludes child maintenance.

## Step 4 Calculate your daily rate of service pension using the income test and the assets test

To work out your rate of service pension you must calculate your rate under both the income test and the assets test. Complete part (a) and then go on to part (b). When you have calculated your rates under both tests, go to step 5.

a) Use the following instructions and the table below to calculate your service pension under the income test.

- Write your total income from step 3 in the box provided.
- Subtract the income free area ($316.00) from your total income.
- Multiply this figure by 0.25.
- Subtract this figure from the maximum rate of couples pension ($711.80 - includes pension supplement).
- Divide by 14 to establish daily entitlement rounded to 4 decimal places.

*Note: - The pension instalment paid each fortnight will be made up of an amount for each day for a period of 14 days. These daily amounts may be calculated using different rates of pension for different days. The total amount is rounded to the nearest cent.

1. Total income (from step 3) | ||

2. Less income free area | - | $316.00 |

Total excess | = | |

3. Multiply by 0.25 | x | 0.25 |

Total amount to be deducted | = | |

Maximum rate of pension | $711.80 | |

4. Less total amount to be deducted | - | |

= | * | |

5. Divide by 14 | ÷ | 14 |

Daily entitlement rounded to 4 decimal places | = |

* $38.80 is the minimum amount payable per fortnight. If your result for fortnightly pension is less than $38.80, but greater than zero, the amount on this line should be $38.80.

## Step 4 Calculate your daily rate of service pension using the income test and the assets test, continued

b) Now use the instructions and the table below to calculate your service pension under the assets test.

- Write your total assets from step 3 in the box provided.
- Divide your total assets by 2.
- Subtract from this figure, half the assets value limit. If you are a home owner the assets value limit is $401,500 and therefore you should subtract $200,750 from your halved total assets. If you are a non-home owner the asset value limit is $616,000 and therefore you should subtract $308,000 from half your total assets.
- Round down to the nearest multiple of $250.
- Divide the rounded amount of assets in excess of the limit by $250.
- Multiply this total by 0.75.
- Subtract this from the maximum rate of pension ($711.80 - includes pension supplement).
- Divide by 14 to establish daily entitlement rounded to 4 decimal places.

*Note: - The pension instalment paid each fortnight will be made up of an amount for each day for a period of 14 days. These daily amounts may be calculated using different rates of pension for different days. The total amount is rounded to the nearest cent.

1. Total value of your assets (from step 3) | $ | |

2. Divide your total assets by 2 | ÷ | 2 |

= | ||

3. Less half the assets value limit ($200,750 for home owners, $308,000 for non-home owners) | - | |

4. Total excess (rounded down to nearest multiple of $250) | = | |

5. Divide by | ÷ | $250 |

= | ||

6. Multiply by | x | 0.75 |

Total amount to be deducted | = | |

Maximum rate of pension | $711.80 | |

7. Less total amount to be deducted | - | |

= | * | |

8. Divide by 14 | ÷ | 14 |

Daily entitlement rounded to 4 decimal places< | = | $ |

* $38.80 is the minimum amount payable per fortnight. If your result for fortnightly pension is less than $38.80 but greater than zero, the amount on this line should be $38.80.

## Step 5 Rate of pension payable

Your rate of pension under the income test | $ |

Your rate of pension under the assets test | $ |

The test that pays the lower rate of pension will be the one that is applied.

Example: If the result is $100 from the income test and $110 from the assets test, then the lower of the two amounts ($100) is the rate of pension payable.

If you find there is a difference of at least $5 each between your result in step 5 and your actual pension, you should contact DVA.