Age Pension Means Testing: How Much Will You Actually Get?

01 Two tests, lower result wins

Services Australia runs both the assets test and the income test, calculates a payment under each, and pays you the lower of the two. You do not choose which applies and you cannot elect into the friendlier one.

Which test binds depends on the shape of your wealth rather than its size. For most people with meaningful superannuation, the assets test is the one that reduces the payment, because super counts in full once you reach Age Pension age. For those with large defined-benefit income streams, substantial rental income, or continuing part-time work, the income test can bite first.

It is worth knowing which one is binding for you, because it determines what actually changes the outcome. If the assets test is binding, reducing assessable assets lifts the payment and earning a bit more income changes nothing. If the income test is binding, the reverse is true. Acting on the wrong one is common and does nothing at all.

Both tests also have a free area below which the full pension is paid, and both taper above it rather than cutting off. That means there is a wide middle band — hundreds of thousands of dollars wide — where you receive a part pension rather than nothing, and where each additional dollar of assets has a precise, knowable cost.

Source: Services Australia — Assets test for Age Pension

02 What counts — and what doesn't

Your superannuation counts as an assessable asset once you reach Age Pension age, and your principal home does not count at all. Those two facts drive most of what follows.

Assessable assets include super and account-based pensions, shares, bank accounts, investment property, business assets, and the market value — not the replacement cost — of your contents, cars and caravans. People routinely overstate contents at insurance value; Services Australia wants what you would get selling it second-hand, which is usually a fraction of that.

The family home is excluded regardless of value, which is why homeowners and non-homeowners face different thresholds: a non-homeowner is allowed a considerably higher assets figure, on the reasoning that they need capital to pay rent. The exemption applies to the home and a defined area of land around it, so a house on a large rural block may not be fully exempt.

On the income side, financial assets are not assessed on what they actually earn. They are "deemed" to earn a set rate, which is applied whether the money is in a term deposit at 4% or a transaction account at nil. That single rule removes most of the scope to manage the income test by choosing unproductive investments.

Source: Services Australia — Income test for Age Pension

03 Worked example: the assets taper

For a single homeowner (2024-25), the full pension applies up to about $314,000 in assessable assets, then reduces by $3 per fortnight for every $1,000 above that, reaching zero around $695,500. Put your assessable assets in and see the estimated payment under the assets test.

On the defaults above, the worked example shows: The full single rate (~$1,144/fn) applies up to $314,000 in assets, then tapers $3/fn per $1,000.

04 Why drawing down can lift your pension

Because each $1,000 of assessable assets reduces the pension by $3 a fortnight, and there are 26 fortnights in a year, every $1,000 of assessable assets costs $78 a year of pension. That is a 7.8% effective rate on assets in the taper zone — higher than any return you can reliably earn on them.

The consequence is genuinely counterintuitive: inside the taper band, spending assessable assets can leave you better off. Money spent on an exempt asset — most commonly the home, through renovations, repairs, or moving to a more expensive one — reduces the assessable base and lifts the pension by $78 a year for each $1,000 moved, permanently.

This is not an argument for wasting money to chase a payment, and treating it as one leads people to spend $50,000 to gain $3,900 a year they would have had anyway from the $50,000. The useful framing is narrower: when you were going to spend the money regardless — replacing a car, fixing the roof, funding a renovation you had planned — the timing and the source of that spending change the pension, and it is worth doing deliberately rather than accidentally.

It also means the pension is a moving target you can plan around rather than a fixed verdict handed down at 67. The assessment updates as your circumstances change, and so does the payment.

Source: Services Australia — Assets test for Age Pension

05 The income test and deeming

The income test runs in parallel with the assets test, and for retirees with large income streams or continuing part-time work it can be the binding one.

Most financial assets — bank accounts, shares, managed funds, account-based pensions — are not assessed on their actual earnings. They are deemed to earn a set rate, applied across the balance in two tiers. A retiree holding low-interest cash is therefore still treated as earning the deemed rate on it, which is the point: it stops people minimising assessed income by holding assets that produce nothing.

Employment income is treated differently and more generously. The Work Bonus exempts an amount of employment income each fortnight before the income test applies at all, and unused amounts accumulate in an income bank — so someone working occasionally can often earn a meaningful sum with no effect on their pension whatsoever.

Above the free area, the income test reduces the pension by 50 cents per dollar of assessed income for a single. As with the assets test, the result is compared against the assets test outcome and the lower payment is the one made — so improving your position under the test that is not binding achieves nothing at all.

Source: Services Australia — Income test for Age Pension

06 The part pension is worth more than the cash

People chasing or dismissing the Age Pension usually look only at the fortnightly dollars, and that undercounts it substantially.

A part pension of any amount unlocks the Pensioner Concession Card, which carries cheaper prescriptions under the PBS, and — depending on your state — discounts on council rates, water, electricity, car registration and public transport. For many households the card is worth thousands of dollars a year in its own right, and unlike the pension itself it does not taper: a $10-a-fortnight part pension carries the same card as a full one.

That changes the shape of the decision near the upper threshold. Crossing from a small part pension to no pension does not cost you the small payment; it costs the payment plus the entire value of the card, all at once. The effective cliff at the cut-off is therefore far steeper than the taper suggests, and it is the one point in the system where a few thousand dollars of assessable assets can genuinely be worth restructuring around.

Model the card's value alongside the payment whenever you are near a threshold, and be sceptical of any calculation — including your own — that treats the pension as purely a cash figure.

The broader timing question is worked through in When Can I Retire in Australia.

The full decision is in When Can I Retire in Australia.

Source: Services Australia — Pensioner Concession Card

07 Where you sit, and what it costs to move

The assets test creates four distinct positions, and the right action differs in each.

The two ends of the table are the easy cases: below the free area and well above the cut-off, the means test should not influence your decisions at all. Everything worth planning happens in the middle two rows, and the third one — sitting just above the cut-off — is where the largest single gain is available.

Source: Services Australia — Assets test for Age Pension