DSP or Age Pension? A Guide to Making the Right Choice After 67

If you're on the Disability Support Pension (DSP) and approaching Age Pension age, you might be wondering, "Should I stay on DSP or switch to the Age Pension?" It's a choice that can affect your payment, benefits, and future flexibility.

This guide will break down the key differences between the two payments so you can decide what works best for you.

Disclaimer: This information is for educational purposes only and is not financial advice. Your personal circumstances are unique. Please seek professional advice before making any decisions.

The Transition Process: What to Expect

Thirteen weeks before you reach Age Pension age (currently 67), Services Australia will invite you to apply to transfer to the Age Pension. This invitation will be sent to your Centrelink online account or posted to you.

This isn't a full application. Since you're already receiving the DSP, Services Australia has most of your details. They will typically ask you to:

• Confirm whether you want to transfer to the Age Pension.
• Declare whether you have any superannuation.

This second point is crucial. Before you reach Age Pension age, your super in an accumulation account is exempt from Centrelink's means testing. Once you hit that age, it becomes assessable under both the assets and income tests.

You might hear stories of people whose payments dropped after switching to the Age Pension. In most cases, this isn't because the Age Pension is worse; it's because their superannuation became assessable once they reached Age Pension age. Even if they had chosen to stay on the DSP, they would have experienced the same drop in payment. Be mindful of personal stories; they can be misleading without the full picture.

It's important that you respond to the invitation from Services Australia. If you don't, they may stop your DSP once you turn 67, and you generally cannot reapply for it after this age.

What Stays the Same?

Before we dive into the differences, it's helpful to know what stays the same regardless of which payment you choose.

• Residency Rules: If you are eligible now, you will still be eligible for either payment.
• Maximum Pension Rates: The maximum fortnightly payment is the same for both.
• Pensioner Concession Card: You will continue to receive this valuable card on either payment.
• Rent Assistance: The maximum amount of rent assistance available is generally the same (with one key exception noted below).
• Income & Assets Test Thresholds: The financial limits are identical.
• Carer Payments: If you have an eligible carer receiving Carer Payment or Carer Allowance, these will not be affected by your switch to the Age Pension.

The Advantages of Switching to the Age Pension

For many, switching to the Age Pension offers greater flexibility and financial benefits.

1. No More Medical Reviews

This is the most noticeable change. The Age Pension is based on age and financial circumstances, not your health status. Once you switch, you will no longer be subject to medical reviews.

2. Access to the Work Bonus

If you're still working, the Work Bonus is a major advantage. It allows you to earn up to $300 per fortnight from employment or self-employment without it affecting your Age Pension. Any unused amount accumulates in a "Work Bonus balance" (up to $11,800), creating a buffer for future earnings. The DSP does not have this feature, so income from paid work is assessed from the very first dollar. For those who are working, switching to the Age Pension can often result in a higher payment.

3. Better Portability for Overseas Travel

The Age Pension offers far more flexibility for travelling overseas.

• On the DSP: You can generally only be paid for up to 28 days in a rolling 12-month period while overseas.
• On the Age Pension: You can be away for up to 6 weeks at a time without your payment being affected at all. Even if you're overseas for longer, your pension generally continues, although some supplements may be reduced.

4. More Generous Treatment of Your Land

If you live on a single land title covering more than two hectares, the Age Pension may be more beneficial. While the DSP generally only exempts up to two hectares of land around your home from the assets test, the Age Pension applies an "extended land use test." This can allow more than two hectares to be exempt if certain conditions are met, potentially leading to a higher payment.

The Advantages of Staying on the Disability Support Pension

In certain circumstances, staying on the DSP can be the better choice.

1. A Higher Rate of Rent Assistance

If you are single and sharing a privately rented home, you may get a higher rate of rent assistance on the DSP. While Age Pension recipients in this situation usually receive a lower "sharer rate," those on the DSP may receive the full single rate, recognising the extra costs that can come with a disability.

2. Access to Education Payments

If you're planning to study, staying on the DSP means you might still be eligible for the Pensioner Education Supplement and the Education Entry Payment. These are not available to those on the Age Pension.

3. A Higher Rate of Mobility Allowance

You might keep the higher rate of Mobility Allowance ($168.20 per fortnight) if you stay on the DSP. While Age Pension recipients can potentially get the standard rate ($120 per fortnight), specific disability and activity requirements must be met.

4. Incentive Allowance

If you are continuing in supported employment and are not receiving rent assistance, you may be able to keep receiving the "Incentive Allowance." This is a grandfathered payment, so it is not available to new applicants.