The Age Pension assets test
The Age Pension is an income support payment to help eligible older Australians afford their basic living expenses in retirement.
To qualify, you need to be of pension age (currently 66 years and 6 months), satisfy Australian residence rules and meet the income and assets tests.
The below is a brief overview of what the Age Pension assets test is, what’s included and limits. The rules can be complex, and we encourage you to seek personal advice from either our financial advisers or Centrelink.
What is the Age Pension assets test?
The Age Pension assets test assesses the worth of your assets to determine if you’re eligible for a full or part Age Pension, and how much you can get.
If the value of your assets exceeds a certain threshold, you may be ineligible for a full pension, part pension, or no pension at all. (See asset limits for the Age Pension assets test.)
Is the Age Pension assets test the same thing as the Age Pension income test?
No, they’re separate tests. Both are used to determine your eligibility for the Age Pension. The test that gives you the lower payment amount (which may be zero) is the one that is applied.
How is the Age Pension income test different to the assets test?
The Age Pension income test assesses your income from all sources, including financial assets such as your super, and factors these in when determining if you’re eligible for an Age Pension.
Income above a certain limit may leave you ineligible for a partial or full pension.
Are my partner’s assets counted in the Age Pension assets test?
Yes. If you’re part of a couple, assets held by your partner are included.
You’re considered ‘partners’ if you are any of the following:
- married
- in a registered relationship
- in a de-facto relationship.
You don’t have to be living together to be considered partners. See Your relationship status on the Services Australia website.
What are considered ‘assets’ in the Age Pension assets test?
Items or property you or your partner own in part, or in full. This includes items/property you have a financial interest in, whether that be in Australia or overseas. Debts owed to you are also considered assets.
Services Australia lists a number of asset types including:
- financial investments
- home contents, personal effects, vehicles and other assets
- real estate annuities, income streams and superannuation pensions
- sole traders, partnerships, private trusts and private companies.
For more detail on each category, see their website.
How are assets valued in the Age Pension asset test?
To determine the value of your asset, the government will look at the market value of the asset, then:
- deduct any debt owed that the asset is security for, from its market value
- and may also deduct any unsecured loan from the value of an asset, if the loan was borrowed to purchase the asset.
Is my house considered an asset under the Age Pension assets test?
Your principal home, and up to the first two hectares of land it sits on, are not included in the Age Pension assets test.
Any other real estate you own outright, or have a financial interest in, is included.
What if my principal home is on a rural property?
If your principal home is on a rural property, it may be assessed using the Extended Land Use Test.
This test takes into account that it’s common for those owning rural properties to have much more than two hectares on one title, and therefore the property will be assessed differently.
The test also considers where the land is, how it’s being used (for example, for commercial purposes), an applicant’s health, family situation, and other factors.
Asset limits for the Age Pension assets test
To receive the full pension, your assets must be less than the below as of 20 September 2021. If you’re part of a couple, the limit is for yourself, and your partner’s assets combined.
| Account balance | Homeowner | Non-homeowner | |
|---|---|---|---|
| Full pension | Single | $270,500 | $487,000 |
| A couple, combined | $405,000 | $621,500 | |
| A couple, separated due to illness | $405,000 | $405,000 | |
| A couple, one partner eligible, combined | $405,000 | $621,500 |
If your assets are over the limit for your situation, your pension will reduce. To receive a part pension, your assets must be less than:
| Account balance | Homeowner | Non-homeowner | |
|---|---|---|---|
| Part pension | Single | $593,000 | $809,500 |
| A couple, combined | $891,000 | $1,108,000 | |
| A couple, separated due to illness | $1,050,000 | $1,266,500 | |
| A couple, one partner eligible, combined | $891,500 | $1,108,000 |
If you’re receiving a transitional rate of pension, your assets must be less than:
| Account balance | Homeowner | Non-homeowner | |
|---|---|---|---|
| Transitional rate of pension | Single | $539,750 | $756,250 |
| A couple, combined | $839,500 | $1,056,000 | |
| A couple, separated due to illness | $943,000 | $1,160,000 | |
| A couple, one partner eligible, combined | $839,500 | $1,056,000 |
*The transitional rate of pension applies to those who were on a pension in September 2009 when the income test changed. Because they would have received a lower rate on the new income test, they were kept on a transitional rate of pension. The correct rate of pension for those on a transitional rate is regularly assessed to determine if the transitional or the current rate is better for them, and adjusted accordingly.
Note that if you receive Rent Assistance alongside your pension, your cut off point may be higher.
Superannuation and the Age Pension assets testWhy is super included in the assets test as well as the income test?
It’s included in both because it may be an asset or income, depending on your age and circumstances.
When super is considered an ‘asset’
If you are over the pension qualifying age, super investments are deemed to be an asset, as these are funds you now have access to.
When super is not considered an ‘asset’
If you are under pension age, and your superannuation fund is not paying you a pension, it’s not classed as an asset.
If you withdraw your super before pension age and put it in the bank or use it to start an income stream, it’s included in the income and assets tests at pension age, if those funds remain.
Note that pension age and preservation age (when you can withdraw your super), differ.
What happens if you’re declined for an Age Pension based on your assets?
If you’re declined for a pension, or your pension is reduced, based on your assets, and you’re under severe financial hardship, you may request to be reassessed using a different calculation to come to your pension eligibility and rate.
Services Australia states that asset hardship provisions may apply in these circumstances:
- you’re in severe financial hardship
- you’re on a reduced pension, or it’s not payable because of the assets test
- you own an asset which you can’t sell or we wouldn’t reasonably expect you to sell
- you can’t borrow against the asset or we wouldn’t reasonably expect you to borrow against it
- your pension would otherwise be payable under the income test
- the gifting rules don’t apply or we can disregard them
- you’re unable to qualify for any other Australian Government help.
In these scenarios, you’re best to contact Centrelink to discuss making a request.
In Summary…
If you wish to apply for an Age Pension in Australia, your eligibility will be assessed under both the assets test and the income test.
The assessment of your assets may result in your request for a pension being declined, or you only being eligible for a reduced pension, however in circumstances of severe financial hardship, Centrelink may be able to reassess your assets using Asset Hardship Provisions.