What Every Extra $1,000 of Assets Costs You in Pension
Above the assets test threshold, the Age Pension reduces by $3 a fortnight for every $1,000 of assessable assets you hold. That is $78 a year of lost pension per $1,000, which is a 7.8% annual charge on the asset — higher than the return most of those assets produce, and the reason the assets test binds so much harder than the income test for people just above the threshold.
- The answer: Assessable assets above the threshold reduce the fortnightly payment by $3 per $1,000, and the threshold depends on whether you are single or a couple and whether you own your home.
- The trap: The taper is a charge on the asset, not on its income. An extra $100,000 costs $7,800 of pension a year regardless of whether that money earns 1% or 8%.
- The recommendation: Work out where you sit relative to the threshold before optimising anything else. Below it the taper is irrelevant; just above it, it dominates every other consideration.
Where the AI summary above gets this wrong
"The Age Pension reduces by $3 per fortnight for every $1,000 of assets above the threshold."
That's surface-true. Here's what it misses:
- The fortnightly figure hides how severe the rate is — $3 a fortnight is $78 a year on $1,000 of assets — an effective 7.8% charge. Stated that way it is obvious why a conservative portfolio cannot outrun it, and stated as $3 it is not.
- The threshold is not one number — It differs for singles and couples and again for homeowners and non-homeowners, and non-homeowners get a substantially higher one because the home is exempt for everyone else.
01 What the taper actually charges
The assets test reduces the Age Pension by $3 per fortnight for every $1,000 of assessable assets above the threshold for your situation. The reduction applies to the combined couple payment where you are partnered, and it is applied to the total rate including the pension supplement.
Converting the rate is what makes it legible. $3 a fortnight is $78 a year, so each $1,000 of assets above the threshold costs 7.8% of itself annually in forgone pension. A term deposit paying 4% held above the threshold has a negative combined return once the pension loss is counted.
That arithmetic is why the assets test, not the income test, is the binding constraint for most part-pensioners. The income test reduces the payment by a proportion of income; the assets test reduces it by a proportion of capital, and capital is the larger number. Which test binds in your case is worked out in the means testing guide.
02 Which assets are counted, and which are not
Assessable assets are almost everything you own other than your principal home: bank accounts, shares, super in accumulation once you are Age Pension age, account-based pension balances, investment property, business assets, cars, boats, caravans and the market value of household contents.
Household contents are assessed at what they would sell for second-hand, not at replacement cost, and the figures people declare are routinely too high because they think in insurance terms. The principal home is exempt along with up to two hectares of the land it sits on, which is the single largest exemption in the system and the reason non-homeowners get a higher threshold.
Assets held in a trust or a company can still be assessed if you control them, and gifts made in the last five years may still be counted under the deprivation rules. The worked example below applies the taper to a total you supply; getting that total right is the part that takes the effort.
Shows: the fortnightly and annual Age Pension reduction the assets test applies to assessable assets above your threshold. Ignores: the income test, which is assessed separately and may reduce the payment further, the maximum payment rate that caps the reduction, and any concession card consequences.
Source: Services Australia — Asset types
03 Where the taper stops
The reduction runs until the payment reaches zero, at which point you are outside the pension system entirely. That cut-off point is the threshold plus the full pension rate divided by the taper, so it moves whenever either the rates or the thresholds are indexed — which happens in March, July and September.
Falling just outside is worse than it looks, because the Pensioner Concession Card goes with the payment. A household losing the last $20 a fortnight of pension also loses the concessions attached to it, which is a step rather than a taper. The Commonwealth Seniors Health Card is the partial replacement, and it is means tested on income alone.
The practical response to sitting a little above the cut-off is not to spend assets down to qualify. It is to know where the line is, because ordinary events — a market fall, a car replacement, a renovation to an exempt home — can move you across it without any deliberate restructuring at all.
Source: Services Australia — How much Age Pension you can get
I would resist the instinct to spend assets down to the threshold. The taper takes 7.8% a year, and spending takes 100% once — the arithmetic only favours the spending if you were going to make the purchase anyway. What is worth doing is knowing where the line sits, because people cross it by accident far more often than by plan.
FAQ
How does the $3 per $1,000 assets test taper reduce my Age Pension?
Every $1,000 of assessable assets above your threshold reduces the fortnightly payment by $3, which is $78 a year. Expressed against the asset itself that is a 7.8% annual charge, which is why the assets test usually binds harder than the income test.
At what level of assets do I lose the Age Pension entirely?
At the point where the taper has consumed the full payment — the threshold plus the maximum rate divided by $3 per $1,000. The thresholds and rates are indexed in March, July and September, so the cut-off moves and the current figures are on the Services Australia assets test page.
Does my superannuation count in the assets test?
Yes, once you are Age Pension age. Both accumulation balances and account-based pension balances are assessable assets at that point. Before Age Pension age, a younger partner's super in accumulation is not assessed.
Sources
Regulator references
- Services Australia — Assets test for Age Pension · Services Australia · 2026The assets test: which assets count, the thresholds, and the taper that reduces the payment.Last verified: 2026-09-07
- Services Australia — Asset types · Services Australia · 2026Which assets are counted in the assets test, including real estate, and which are exempt.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.