As of 31 July 2018, retrospective payment of the age pension is limited to the date when the application is accepted as complete, rather than lodged for the first time.
“It's quite a harsh measure in a number of ways,” Retirement Essentials and SuperEd CEO Paul Rogan told Nest Egg.
“It means you've got people who are faced with a very complicated process, struggle to fill in the forms, struggle to understand what's being asked of them, they try to get to Centrelink, either physically getting into the branches or calling into the call centre and there are very long wait times … only to find out the information is not correct or not to Centrelink's standard and therefore they're missing out on potentially months of age pension payments.”
Mr Rogan said this can be a significant impost on those who have recently transitioned into retirement and are relying on the income.
“If you take today's rates, somebody deferred for five months – which is not unusual – a single person would lose more than $9,000 and a couple would lose between them nearly $14,000,” he said.
According to Mr Rogan, it’s the “absolute complexity” of the system that is tripping most people up. Pointing to a recent Retirement Essentials and National Seniors report, he said 42 per cent of age pensioners have felt dissatisfied with the process due to the complexity, processes and wait times.
Given there are usually at least 160 questions, often phrased in complicated ways, Centrelink is also fielding constant calls asking for clarification.
“I can see why Centrelink is trying to do it – to make things more efficient – but unfortunately the poor customer in the process is faced with this complexity that's really hard to deal with,” Mr Rogan said.
What can I do?
1. Check your eligibility
A retiree seeking the age pension needs to be an Australian citizen, or have been a resident for at least 10 years with five of those consecutive.
“Most people aren't aware of those rules. So, if somebody has been in the country for a few years and thinks they're eligible, turns up to Centrelink and has filled in all the forms the best they can only to find out actually they’ve just wasted all that time because they were never eligible in the first place,” Mr Rogan said.
2. Begin building your application early
Currently, pre-retirees can start to apply 13 weeks before they turn 65.5, which means pensioners can receive their payments from the closest point to eligibility, even factoring in Centrelink’s processing time.
3. You don’t need to wait for your partner
“A lot of people, particularly people in couples, think falsely that they need to both be of age pension age and that's not right; if one person is already at 65.5 they can apply now, they don't have to wait for their junior partner to turn 65.5 as well,” Mr Rogan said.
4. Consider asking for help
Mr Rogan said services like Retirement Essentials pre-vet applicants within a few hours, significantly shortening the “to-ing and fro-ing” endemic in the age pension application process.
“Last year there was 174,000 applications approved by Centrelink and that's up 12 per cent on the year before, so this financial year is probably looking like being around 200,000,” he said.
It can take between four and eight weeks for an application to be assessed by Centrelink and longer if the application is missing information or is filled out incorrectly.
“You can see it getting to four, five, six months and in fact sometimes longer than six months that you could be waiting for approval,” he continued.
“Centrelink is trying to improve things … but they're potentially a long way off.”