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 the income test affects your Age Pension
If your income exceeds the thresholds, your Age Pension fortnightly payment will be reduced. For every dollar over the limit:
- Singles lose 50 cents per dollar
- Couples lose 25 cents each per dollar
The assets test: What are your assessable assets?
The assets test assesses the value of your assets, but here’s a crucial point – it doesn’t include your primary residence. Assessable assets include:
- Financial investments: Such as shares, managed funds, and bank accounts.
- Investment properties: Any property you own that isn’t your main home.
- Vehicles: Your cars, caravans, and boats which are assessed at their second hand market value.
- Household contents and personal effects: Everyday items such as furniture, appliances and personal effects are generally valued at what they’d sell for at a garage sale, not their replacement cost
- Superannuation: If you’re over Age Pension age, your superannuation balances are generally counted as an asset – whether it’s still in the accumulation mode or providing a regular income as an Account-Based Pension.
- Indexed and guaranteed income streams:
- Most Defined Benefit Pensions are exempt from the asset test with some exceptions for older products.
- Lifetime Income streams enjoy a 60% reduction in their asset value of the purchase price until age 84, subject to a minimum of five years; and 30% of the purchase price thereafter.
Just like with the income test, there are asset thresholds. If your assessable assets go over these limits, your Age Pension payment will be reduced. For every $1,000 of assets above the threshold, your payment is reduced by $3.00 per fortnight.
For couples it’s combined
If you are a member of a couple, then your assets and income are assessed jointly, and the couples rates and thresholds apply.
There’s one key exception:
If one partner is under 67 and has super in accumulation, that balance isn’t counted in the means test until they reach Age Pension age, unless they move their super into an ABP to start drawing a regular income. This can be an important planning strategy for some couples.
Beyond the Age Pension: Other entitlements
Even if you’re not eligible for the full Age Pension, or even a part Age Pension, you could still be eligible for other valuable entitlements that really help with the cost of living in retirement. The first card is for those who are eligible, the second for those who do not qualify:
- Pensioner Concession Card (PCC): If you receive any Age Pension payment, you’ll automatically get a PCC. This card provides a wide range of benefits, including health, transport and utility concessions. It generally offers the most comprehensive concessions available.
- Commonwealth Seniors Health Card (CSHC): If you’re not eligible for the Age Pension, you still may qualify for a CSHC. This card provides access to cheaper prescription medicines and other concessions. Eligibility for the CSHC is based upon an income test only – there’s no assets test.
Taking the next step
Understanding your Age Pension eligibility and overall entitlements is a vital part of planning for your retirement. The rules can be complex, and everyone’s situation is unique. The Retirement Essentials Age Pension Consultations provide personalised assistance and support. The experienced team can help you navigate the system, understand your unique situation, and ensure you are receiving everything you are entitled to. We encourage you to explore our website for more information and to utilise our free Age Pension Entitlement Calculator to get an estimate of your potential entitlements.
Further Reading:
Age Pension eligibility rates, assets test and income tests in 2025: All you need to know about Age Pension eligibility. The Australian Government updates the Age Pension asset and income tests three times every year. So it’s important to keep up to date, check your eligibility and ensure you are getting all your entitlements.
What about you?
When you think about the Age Pension, what feels most confusing to you – and what kind of explanation would make it clearer?
