Amanda Hardy Lai, Author at Retirement Essentials

Age Pension means tests: What counts, and why it pays to check again

by Amanda Hardy Lai | Centrelink Age Pension

Understanding your Age Pension eligibility and what you’re entitled to can feel like a big puzzle, but it’s a really important piece of planning for a secure retirement. At Retirement Essentials, we truly believe every Australian deserves clear, easy-to-understand information to help them make the best decisions. So, let’s consider the key factors that determine your Age Pension and help you see what might be waiting for you.

Understanding the Age Pension:
More than just an age requirement

Many people assume receiving an Age Pension is simply a matter of reaching a certain birthday. While age is the starting point, it’s only one part of the picture. There are so many factors and rules that apply to Age Pension eligibility, but at their core are the means tests.

Centrelink looks at your eligibility through two main tests: the income test and the assets test. They’ll apply both, and whichever one results in the lower Age Pension amount is the one that applies to your situation. These tests are there to make sure the Age Pension goes to those who need it most.

Even if you don’t qualify initially, changes in your income, assets or personal circumstances could mean you become eligible later on – sometimes for a part Age Pension or valuable concession cards.

The income test: What counts as income?

The income test takes almost all your income into account. This includes earnings such as:

Employment income: Your wages, salaries, and earnings if you’re self-employed.

Deemed income from financial investments: This is an assumed rate of return on your financial assets, no matter what your actual return is. This covers bank accounts, shares, and managed investments.

Superannuation in Accumulation: If you are under age 67, this is generally not counted. Once you turn 67, the balance is deemed to earn income.

Account-Based Pensions (ABPs): Centrelink uses deemed income based on your account balance, not your actual drawdowns.

Rental income: Any income you receive from property you rent out.

Overseas pensions: Any pension or benefit you receive from another country.

Indexed and guaranteed income streams:

Defined Benefit Pensions and other guaranteed income have specific rules. Usually, up to 10% of the income can be deductible, but older products may be treated differently.

Lifetime Income Streams have only 60% of their income assessed under the income test

How to confirm your retirement income

by Amanda Hardy Lai | Retirement Income

Even after retirement, it’s normal to feel uncertain about whether your money will last and whether you’re making the most of what you’ve worked for. Many Australians in their late 60s and 70s share the same concerns:

Am I getting all the Age Pension I’m entitled to?

Am I using my super in the most effective way?

Will my savings stretch as long as I need them to?

If you’ve ever wondered the same, you’re not alone. At this stage of life, finances are only part of the picture – there’s also lifestyle, health, and planning for future needs which may include aged care. With so much to think about, it can feel overwhelming.

The easiest way to start making sense of it all is with a free Retirement Essentials 10-minute phone discussion. In this short conversation, our experienced team members will listen to your situation, help you identify priorities, and clarify which of our services are most relevant to your particular

Deeming explained: Three things you didn’t know

by Amanda Hardy Lai | Centrelink Age Pension

Deeming is central to how Centrelink calculates Age Pension entitlements, but it’s often misunderstood. Whether your investments earn less (or more) than expected, deeming assumes a standard rate of return – which can affect your pension. Here are three things many retirees don’t know.

1. Centrelink looks at your total balance, not actual earnings
Many think Age Pension assessment will be based on what their bank or super actually pays, or what they are drawing down from their Account-Based Pension (ABP). Instead, Centrelink applies ‘deeming’ rates to financial assets, regardless of real returns.

From 20 September 2025, the lower deeming rate will be 0.75% (on up to $64,200 for singles or $106,200 for couples combined). Anything above that will be deemed to earn 2.75%. (Centrelink announcement). If your assessed income is already affecting your entitlement, this change could reduce your fortnightly payments.

2. Cash for a new home isn’t immune
If you’ve sold your principal home and are holding the proceeds for your next one, those funds are exempt from the assets test for up to 24 months (or 36 with valid delays). But what’s less known is that all that money is still counted under the income test and deemed at the lower rate.

With the deeming rate rising in September, this could now reduce your Age Pension. For example:

$800,000 from a home sale was previously deemed at 0.25%, generating about $2,000 a year in deemed income.
From 20 September 2025, the lower rate rises to 0.75%, increasing deemed income to roughly $6,000 a year.
Under the income test, this could reduce fortnightly Age Pension payments by around $76 while the money sits in the bank until the purchase of a new home is settled.
Whether the income test affects you depends upon which test – assets or income – produces the lower payment. This matters especially for retirees who are still working or have a spouse under Age Pension age earning income.

3. You can be under the asset limit and still get less than the full Age Pension
Even below the Age Pension asset limit, the income test can reduce payments. Take Greg, a single homeowner with $300,000 in financial assets and $20,000 of personal assets. He qualifies for the full rate under the asset test, but deeming changes the picture. Under the previous rates, his deemed income was $5,466 per year, keeping him below the income test threshold for a full Age Pension.

From 20 September 2025, deeming rates rose to:

0.75% on the first $64,200
2.75% on the remainder
Greg’s total deemed income under the new rates will be about $6,966 per year, or $268 per fortnight. The ‘free area’ is $5,668 per year, or $218 per fortnight; then $50 above it reduces the pension by 50 cents per dollar.

With previous deeming rates: Greg gets the full single Age Pension – $1,179 per fortnight, or $30,646.20 per year.

With increased deeming rates: The income test reduces his pension by $25 per fortnight ($650 per year), bringing it down to $1,154 per fortnight, or about $29,997 per year.

So even though Greg is comfortably under the current asset threshold, the change in deeming rates could see his Age Pension trimmed.