Age Pension and Raising a Grandchild: How Pension Payments Interact with Carer Benefits

Taking on full-time care of a grandchild while living on the Age Pension or Disability Support Pension raises an immediate question: will claiming carer payments reduce my pension, and will my pension reduce my carer payments? The short answer is that most family payments stack alongside your pension without reducing either — but the interaction rules matter.

How the Age Pension Affects Family Tax Benefit

Receiving the Age Pension actually works in your favour for FTB eligibility. If your household income is below the $69,131 lower threshold — which it almost certainly is if the pension is your primary income — you automatically qualify for the maximum rate of Family Tax Benefit Part A.

For 2026–27, maximum FTB Part A rates are:

• $235.48 per fortnight for children aged 0–12
• $306.46 per fortnight for children aged 13–15, or 16–19 if in full-time secondary study

FTB Part B provides an additional $200.34 per fortnight when the youngest child is under 5, or $139.86 when the youngest is 5–18 (with 16–18-year-olds required to be in full-time secondary study). As a single grandparent on the pension, you automatically receive the maximum Part B rate if your income is $124,327 or less.

None of these FTB payments reduce your Age Pension. They are assessed separately by Services Australia.

Disability Support Pension and Kinship Care

The same rules apply if you receive the Disability Support Pension (DSP). Your DSP counts as income for the FTB household income test, but since DSP rates are below the $69,131 lower threshold, you will still qualify for maximum FTB.

If your caring responsibilities are substantial enough to prevent you from working, and you are also caring for a child with a disability or serious medical condition, you may additionally be eligible for:

• Carer Allowance — $162.60 per fortnight, non-means-tested, tax-free. This requires the child to have a verified disability or medical condition requiring daily care
• Carer Payment — an income support payment for carers who cannot work due to caring duties. However, you cannot receive Carer Payment and DSP simultaneously; Services Australia pays whichever is higher

Payments That Do Not Reduce Your Pension

Several carer-related payments are explicitly excluded from both the ATO's assessable income and Centrelink's income test:

This means a grandparent on the Age Pension caring for one grandchild informally could receive the full pension plus FTB Part A, FTB Part B, and (if applicable) Double Orphan Pension — all without any reduction.

The Additional Child Care Subsidy Advantage

Being on the Age Pension or another income support payment unlocks the Additional Child Care Subsidy (Grandparent) — one of the most valuable benefits available to pensioned grandparent carers. ACCS Grandparent provides up to 100 hours of fully subsidised childcare per fortnight, covering up to 100% of the actual fee charged (up to 120% of the CCS hourly rate cap). No activity test applies.

This subsidy can save thousands of dollars per year on before-school care, after-school care, or vacation care — costs that would otherwise eat into an already-stretched pension.

Reporting Obligations

You are required to report any change in circumstances to Services Australia within 14 days. For pensioned grandparent carers, the most common reporting triggers are:

• The child returning to live with a parent (even temporarily)
• Changes to the percentage of care you provide
• Any change to your income or assets
• Moving to a different address

Failing to report changes can result in overpayment debts that Services Australia will recover from future payments.

Maximising Your Entitlements

Many pensioned grandparents claim FTB but miss the Double Orphan Pension, the Child Dental Benefits Schedule ($1,158 over two years for eligible children whose two-year period starts in 2026), or the ACCS Grandparent subsidy. Our Queensland kinship carer support guide includes a full payment audit checklist so you can verify you are receiving everything the child is entitled to — without any reduction to your pension.

See more Queensland guides →