Disability Support Pension vs. Aged Pension

Navigating the Australian pension system can be complex, especially when individuals reach Age Pension age when receiving the Disability Support Pension (DSP). This transition often prompts questions about whether to continue on the DSP or transfer to the Age Pension. Here we’ll explore the key considerations and benefits associated with this decision.

The Transfer Invitation

If you are currently on the Disability Support Pension and you reach the Age Pension age, the Australian government will invite you to apply for a transfer to the Age Pension. This invitation typically arrives 13 weeks before you become eligible for the Age Pension. It’s essential to pay close attention to this invitation and respond promptly.

Application Details

When you receive the invitation, you’ll need to inform the government whether you wish to transfer to the Age Pension or not. Additionally, if you have any superannuation, you must disclose this information. Failure to do so may result in the cessation of your Disability Support Pension once you reach Age Pension age.

Online Account or Postal Invitation

The government will send the transfer invitation to your online account if you have one. If you don’t have an online account, you will receive the invitation and necessary forms by post. In many cases, the government will already have filled in the transfer form with the details they have on record.

Benefits of Transferring to Age Pension

Opting for the Age Pension brings several advantages including:

• First, there are no medical rules or medical reviews to contend with, simplifying the process.
• Access to The Work Bonus, which allows you to earn additional income from employment or self employment before your pension is affected.
• If you reside on a single land title covering more than 2 hectares, more land may be exempt from the assets test. However, it’s crucial to remember that these benefits may vary based on individual circumstances.
• Those who love holidaying overseas can enjoy up to 26 weeks of travel time before their age pension payments start to decrease. This compares favourably to the DSP which only allows up to 28 days within a year for travel outside of Australia. This will result in your payment being stopped until returning to Australia once you have been outside Australia for 28 days in a year. Services Australia has the flexibility to allocate these 28 days for a single trip or spread them across multiple journeys.

Remaining on Disability Support Pension

If you decide to stay on the Disability Support Pension, you may still enjoy certain advantages including:

• if you pursue further education, you may be eligible for the Pensioner Education Supplement and Education Entry Payment.
• Retaining the higher rate of Mobility Allowance is another possibility.
• If you’re single and share privately rented accommodation, you may continue to receive a higher rate of Rent Assistance.
• Additionally, if you are engaged in supported employment and not receiving Rent Assistance, you can maintain your Incentive Allowance.

Conclusion

Deciding whether to transfer from the Disability Support Pension to the Age Pension is a significant financial choice. It’s essential to carefully assess your individual circumstances and goals, as well as the potential benefits and considerations associated with each pension type. Seek guidance from government resources or financial advisers to make an informed decision that best suits your needs as you transition into retirement.