How to make the most of your aged pension

Last updated: 
20 January 2020

This page provides information on the date of effect for pension variations and how to maximise your pension entitlement under the date of effect rules.

This information is for age pensioners paid by DVA. There is a separate page for service pensioners, and war widow/ers who receive income support supplement, Date of effect for pension variations.

Pensions are calculated on a daily basis

The age pension you receive every fortnight is calculated on a daily basis. For example, a change in your income or asset value mid-way through a pension fortnight may change your pension from that day. This means that the amount of pension paid will more accurately reflect your true entitlement. To get the most out of the arrangements, you must tell us:

  • about changes that affect your pension, within 14 days of the event (28 days if you live overseas); and
  • the date of the change.

A detailed explanation of the arrangements is below.

How can I maximise my pension?

For all changes, it is very important that you tell us the date the change occurred. This will assist DVA to respond to your changes as quickly as possible and ensure that you receive exactly what you are entitled to.

If a change you tell us about results in an increase to your pension, the increase will apply as soon as you let us know about it.

The following social security law rules apply if a change you tell us about results in a drop in your pension:

  • If you tell us about the change more than 14 days after it happens (28 days if you live overseas), the reduction will apply from the day that the change occurred;
  • If you tell us about the change within 14 days of it happening (28 days if you live overseas), the social security law allows for either one of three rules to apply, depending on when the change is processed. The reduction will apply on either:
    • the day of the change;
    • the day after the end of the ‘pension period’ in which the change occurs; or
    • the day after the 14 day (or 28 day) notification period has passed.

Any excess payment that is made from the day on which the pension reduction applies, would have to be paid back. DVA will advise you about the best way to repay any excess payments.

What is a pension period?

A 14 day period called a ‘pension period’ relates to the fortnightly payment. A pension period starts on a Tuesday and ends a fortnight later on the Monday before pension payday. All changes that have an effective date within the pension period, affect the amount paid on the pension payday. Here is a diagram to illustrate.

Sat

Sun Mon Tue Wed Thu Fri Sat
    Day 1 Day 2 Day 3 Day 4 Day 5
Day 6 Day 7 Day 8 Day 9 Day 10 Day 11 Day 12
Day 13 Day 14     PAYDAY    

KEY

pension period
PAYDAY

What is within 14 days?

A change to your circumstances must be notified within 14 days. This excludes the day of the change. For example, if a change occurs on the 1st of the month, you have to tell us on or by the 15th of the month, as shown in this diagram.

1st change occurs 2nd 3rd 4th 5th 6th 7th
8th 9th 10th 11th 12th 13th 14th
15th notify on or by here            

Exceptions to the 14 day rule

The general rule is that a change to your circumstances must be notified within 14 days. If you become aware that you have received or are to receive a compensation payment, you must tell us within 7 days. However, where a pensioner lives overseas the 14 (or 7) day period is extended to a maximum of 28 days. In cases of bereavement, it is very important that you contact us as soon as possible, even though you have up to 28 days to notify of the death. It is especially important to notify us of a death as soon as possible if your late partner also received a disability pension from DVA.

Pension calculated daily

Pension is calculated on a daily basis. This means that the pension paid each fortnight is made up of an amount for each day, for a period of 14 days. The daily amount is worked out depending on what changes to your circumstances affect your pension on that day. Whether or not a change in your circumstances affects your pension on a particular day depends on when you tell us about the change, as described in the ‘How can I maximise my pension’ section above.

Example: On the 1st of the month Frank Smith withdraws $5000 from his bank account and spends it on home renovations. He rings DVA and tells us about it that afternoon. The change results in an increase to Frank’s pension. Frank is entitled to the pension increase from the day he told us about the change.

Paydays don’t change

You may read in News for Seniors that paydays can vary for Centrelink customers. Age pensioners paid by DVA are paid on every second Thursday.

Obligations

Do tell us about changes to your circumstances within 14 days (or 7 or 28 as applicable).

Do tell us the date the change occurred.

Don’t tell us about changes that won’t affect your pension.

What is a change in circumstances?

When we talk about changes to circumstances we mean changes that are likely to affect your rate of pension. If you are unsure about the things that you should tell DVA, you may wish to read The things you have to tell us- Social Security Age Pension paid by DVA, or contact DVA for advice.

Effect on maximum rate pensioners

The notification arrangements have little impact on pensioners who have a small amount of income and few assets and who receive the maximum rate of age pension. Pensioners need only advise of changes that will affect their pension.