If you’re approaching retirement, or have retired and are about to reach the qualifying age for the Government Age Pension, you may be considering applying for payments. When assessing your eligibility, the government performs what’s called an assets test.
The Government Age Pension assets test basics
When you reach retirement age, you may apply to Centrelink to receive the Government Age Pension. Your eligibility is determined by taking into account how much your assets are worth (the assets test) and how much income you get (the income test). The test resulting in the lower pension rate will be the one applied to your personal situation.
What is the assets test?
The assets test takes into account the value of assets you own. This could include:
- A car
- Business assets
- Property (not including your primary residence)
- Super and retirement income accounts (yours and your partner’s)
- Investments, such as cash, shares, term deposits and bonds
- Private trusts and private companies.
The test also considers assets that mightn’t seem obvious. These include:
- Any deposits you might’ve paid to live in a ‘granny flat’ or retirement village for the rest of your life
- Prepaid funeral arrangements you might’ve made
- Any cash gifts or assets you might’ve given to family members or friends.
For more details on each of these assets and their impact, as well as a complete list of all the assets considered under the test, visit the Services Australia website.
What’s the value of your assets used to determine?
How much your assets are worth (along with your level of income) will determine if you’re eligible for the Government Age Pension, as well as the payment rate of any pension you receive.
As a guide, the table below indicates what the greatest value your combined assets can be before your pension may be reduced.
Full Age Pension asset limits
|If you're:||A homeowner||Not a homeowner|
|A couple (combined)||$405,000||$621,500|
|A couple, with one partner eligible (combined)||$405,000||$621,500|
If the value of your assets is above the limit in the above table, you may still be eligible for a part Age Pension. For every $1,000 over the limit (for your situation), your pension payment will reduce by $3 a fortnight. This is called the ‘taper rate’. There’s also a cut-off point. If your assets exceed this value, you mightn’t get the Government Age Pension at all.READ MORE: AM I ELIGIBLE FOR THE GOVERNMENT AGE PENSION?
Is your home included in the assets test?
If you own the home you live in (providing it’s on less than 2 hectares of land), it won’t be counted as an asset in the assets test. However, owning your home could still affect the rate of your fortnightly pension payment. That’s because the asset limits set by the Government are different for homeowners and non-homeowners – as shown in the table above.
Here’s an example to help explain. It uses the asset limits for single homeowners ($270,500) and single non-homeowners ($487,000), and the difference in asset value between the homeowner and non-homeowner is $217,000. This means if you’re single and you own your home, the amount of assets you’re allowed to have before your pension is reduced or cancelled is $217,000 less than if you didn’t own your own home.
What types of assets are exempt from the test?
There are a few assets exempt from the test. These include:
- Your primary residence and surrounding land (up to 2 hectares on the same title);
- Some properties larger than 2 hectares (on the same title);
- Accommodation bonds paid if you move into a residential aged care facility;
- Any property or money left to you in an estate that you’re unable to access for up to 12 months from the date of the test, and;
- Money you’re paid from the National Disability Insurance Scheme.
For more details on each of these, as well as a complete list of all the assets exempt under the test, visit the Services Australia website.FIND OUT MORE: SUPER & THE AGE PENSION
Need some help?
If this is all new to you, you may find it tricky to stay across what's included and what’s not. Speaking to a financial advisor, or asking your super fund for general advice can be a good place to start.
For AustralianSuper members like Doug, seeking financial advice* when approaching retirement led to some life-changing decisions, which resulted in early retirement and the chance to spend more time with his wife.
For personal advice, connect with one of our team members who can put you in touch with an accredited financial adviser.
The government may change eligibility criteria and pension payment amounts. For the latest information on the Government Age Pension please see servicesaustralia.gov.au
This information is general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.
Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.
* The financial advice you receive will be provided under the Australian Financial Services Licence held by a third party and will be their responsibility. Personal product advice provided may attract a fee, which will be outlined before any work is completed and is subject to your agreement.