In 2025, Australian pensioners can unlock an annual boost of up to $780 to their Age Pension payments through a strategic financial move involving prepaid funeral arrangements.
While it may sound unusual, this legally compliant Centrelink strategy helps reduce assessable assets, making pensioners eligible for higher fortnightly payments.
Unlike government bonuses or one-time payments, this method is based on existing Centrelink asset test exemptions, offering a permanent improvement to retirement income for those near the eligibility threshold.
What Is the $780 Centrelink Boost?
The $780 boost refers to the potential increase in Age Pension payments annually—around $30 per fortnight—achieved by prepaying funeral expenses to reduce your assessable assets.
| Aspect | Details |
|---|---|
| Boost Amount | Up to $780 per year ($30 per fortnight) |
| Effective Date | From July 1, 2025 |
| Eligibility | Age Pension recipients near Centrelink’s asset threshold |
| Strategy | Prepay funeral expenses to reduce assessable assets |
| Calculation | $1,000 prepaid funeral = approx. $78/year pension boost |
| Implementation Required | Must notify Centrelink and submit proof of compliant prepayment |
Understanding the Centrelink Asset Test
The Centrelink asset test determines your Age Pension entitlements based on the value of assets excluding your main home. This includes savings, shares, vehicles, and personal belongings.
Here are the current thresholds (as of March 2025):
| Status | Full Pension If Assets Below | Part Pension If Assets Up To |
|---|---|---|
| Single Homeowner | $314,000 | $697,000 |
| Single Non-Homeowner | $566,000 | $949,000 |
| Couple Homeowner | $470,000 | $1,047,500 |
| Couple Non-Homeowner | $722,000 | $1,299,500 |
Being slightly over these limits can reduce your payments, making legal asset reduction strategies vital.
Why Prepaid Funerals Help Boost Your Pension
Funeral costs in Australia range from $4,000 to $15,000. By prepaying for these expenses, pensioners can reduce their Centrelink-assessable assets, increasing their pension eligibility.
Key Benefits:
- Exempt from asset test: Prepaid funeral funds aren’t counted in Centrelink’s calculations.
- No deeming rules: Unlike investments, funeral funds aren’t subject to deemed income assumptions.
- Peace of mind: Costs are covered in advance, reducing stress for loved ones.
- Can combine with funeral bonds: Up to $14,000 exempt under current rules.
Who Can Use This Strategy?
To benefit from this boost, you must meet the following eligibility criteria:
- Age: At least 67 years old.
- Residency: Must be an Australian resident for at least 10 years, with 5 consecutive years.
- Assets: Must be near or above pension threshold.
- Valid Prepaid Contract: Must be fully prepaid and comply with Centrelink guidelines.
Step-by-Step Guide to Claim Your Boost
- Review Assets: Check your current assessable assets against Centrelink thresholds.
- Contact Centrelink: Seek guidance on current entitlements.
- Consult Financial Advisor: Ensure the prepaid funeral plan fits your situation.
- Select Provider: Choose a licensed, compliant provider.
- Prepay Funeral: Ensure funds are held in a compliant trust.
- Notify Centrelink: Submit documentation for reassessment.
Real-Life Example
John, aged 68, is a single homeowner with $320,000 in assets—$6,000 over the full pension threshold. He prepays $10,000 for his funeral, reducing assets to $310,000.
As a result, he becomes eligible for full pension and gains $780 extra annually.
Tax and Legal Considerations
- GST-Free: Most prepaid funerals are GST-exempt if arranged with a licensed provider.
- Non-refundable: Funds are generally not recoverable; choose a trusted provider.
- Compliance: Ensure contracts follow state laws and funds are held in a secure trust.
The $780 Centrelink boost through prepaid funerals is a clever, legal strategy for pensioners seeking to maximise their income in 2025.
With rising living costs, every dollar counts—and this approach offers both financial gain and peace of mind. Pensioners close to the asset threshold should consider this strategy as part of their retirement planning toolkit.
FAQs
Is the $780 boost a government bonus or one-time payment?
No, it is a strategy to increase your Age Pension by lowering assessable assets using prepaid funeral arrangements.
What if I’m already receiving the full Age Pension?
This strategy benefits those near or just above the asset threshold. If you’re well below, it may not increase your payments.
Can I combine a prepaid funeral with funeral bonds?
Yes. Centrelink allows up to $14,000 in exempt funeral bonds, offering further asset test advantages.