The age pension is designed to provide older Australians with a minimum level of income support in retirement. It’s paid to those people who meet age and residency requirements, and whose income and assets are below specified thresholds.
You can read more about the eligibility criteria for the age pension on the Services Australia website.
How old do you have to be to qualify for the age pension?
In recent years, the age pension age has progressively increased. From 1 July 2023, those born prior to 1 January 1957 will already be age pension age while those born on or after this date must be age 67 to qualify.
Age pension means testing
Eligibility for the age pension (as well as other social security benefits) depends on whether you have income and assets below maximum levels. This is determined by applying two tests, collectively referred to as ‘means testing’. These tests are:
- an assets test, and
- an income test
Your age pension entitlement is calculated under both tests, and the test that produces the lowest result determines your entitlement.
How the asset test works
There are limits on the amount of assets you can have to be eligible for the age pension under the assets test. Assets include items such as your home contents and personal effects, vehicles, financial investments (eg bank accounts, shares and managed investments), real estate, superannuation and account based pensions (ABPs).1
You may be eligible for the full age pension if your assets are below the ‘assets test free area’, i.e. the amount of assets you can have without affecting your pension.
If your assets are above the assets test free area, you may still be entitled to a part pension until the level of your assets is above the cut-off limit.
Your asset test threshold will depend on your relationship status and whether you own your home. Generally, the combined value of a couple’s assets are assessed, rather than each member of the couple being assessed individually.
You can view the current asset limits for full and part pensions here.
How the income test works
Limits also apply to the amount of income you can earn to be eligible for the age pension under the income test. This includes salary or wages, rental income and ‘deemed income’ from financial investments.
'Deemed income’ is the level of income your financial assets are assumed to earn, regardless of the income they actually earn.
You may be eligible for the full age pension if your income is below the income free area.
Alternatively, if your income is above the income free area, but below the pension cut-off threshold, you may still be entitled to a part pension.
Your income test threshold and deeming rates depends on your relationship status. View the latest income thresholds and deeming rates here.
How means testing is applied to superannuation
Your superannuation savings may be included in the means test for the age pension. The treatment of your superannuation balance depends on your age and whether your superannuation is in the accumulation or retirement phase.
Means testing of super in the accumulation phase
If you’re in the accumulation phase of superannuation and are under the age pension age, your superannuation balance is exempt from assessment under the means test.
Once you reach age pension age, your superannuation balance that is in the accumulation phase will be assessed under the assets test. You’ll also be ‘deemed’ to generate a certain amount of investment income from your superannuation and this amount will count under the income test.
The tables below explain when your superannuation balance is included in the tests depending on if you’re single or in a relationship.
Age of single member | Income Test | Assets Test |
You’re under age pension age | Disregarded | Disregarded |
You’ve reached age pension | Deemed income included | Included |
For couples who are both over the age pension age, the means testing is effectively the same as the single member table above. The table below summarises the superannuation treatment for couples where one partner is over the age pension age but the other partner is not.
Age of members in relationship | Income Test for Partner A | Income Test for Partner B | Assets Test for Partner A | Assets Test for Partner B |
Partner A’s super where they are under age pension age and Partner B has reached age pension age | Disregarded | Disregarded | Disregarded | Disregarded |
Partner A’s super where they have reached age pension age and Partner B is under age pension age | Deemed income included | Deemed income included | Included | Included |
Means testing of account based pensions
If you have an account based pension (ABP), your ABP account balance is included as an asset for the purpose of the assets test.
Centrelink generally assesses ABP assets in February and August each year.
ABPs that started on or after 1 January 2015 are generally included in the income test as financial investments. This means that Centrelink use the deeming rules to calculate the amount of income that is assessable from your ABP.
If your actual pension payments are higher than the deemed rate, the extra amount won’t count under the income test. See more information on deeming and the latest deemed rates here.
If you have an ABP that started before 1 January 2015, your ABP may continue to be assessed under the previous rules that applied before 1 January 2015.
Speak to a financial adviser if you’re unsure of your situation.
