16 May 2023
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.
Planning financially for retirement can help you step into this stage of life with more confidence and less anxiety. That’s why it’s useful to know whether you are, or will be, eligible for the Government Age Pension in addition to your superannuation income. To qualify for the Age Pension, you’ll need to first meet residency and age requirements.
To work out if you’re eligible for full or part payments, the government will perform an age pension assets test.
Understanding the Government Age Pension assets test
What the assets test is
The age pension assets test is one of several ways the government assesses your eligibility for the Government Age Pension.
Just because you’re of retirement age doesn’t mean you’re automatically entitled to fortnightly payments. If you earn too much, or your assets are worth too much, you might not be able to get the Government Age Pension.
Types of assets assessed
The assets test considers the value of any assets you or your partner own, including:
- a car
- business assets
- property (not including your primary residence)
- super and income from retirement income streams (yours and your partner’s)1
- investments, such as cash, shares, term deposits and bonds
- private trusts and private companies.
The test may also consider assets that mightn’t seem as obvious, such as:
- any deposits you’ve paid to live in a ‘granny flat’ or retirement village for the rest of your life
- any cash gifts or assets you’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.
How your assets are valued
The government considers what you'd get for your assets if you sold them at current market value. You may need to provide up-to-date information about your assets in the process.
If you received an unsecured loan specifically to buy the asset, this may reduce the value of the asset.
How the assets test and income test work together
Once you apply for the pension through Centrelink, the government will review 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 you’re eligible for.
Age Pension asset limits – how your assets’ value determines your pension amount
How much your assets are worth (along with your level of income) will determine:
- if you’re eligible for the Government Age Pension
- the payment rate of any pension you receive.
Full Age Pension asset limits
The table below shows the maximum amount of asset value you can have before your pension may reduce.
|IF YOU'RE||A HOMEOWNER||NOT A HOMEOWNER|
|A couple (combined)||$419,000||$643,500|
|A couple, separated due to illness (combined)||$419,000||$643,500|
|A couple, with one partner eligible (combined)||$419,000||$643,500|
If the value of your assets is above the limit listed, 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.
Part Age Pension asset limits
The below table shows the maximum asset value you can have to keep receiving a part pension.
|IF YOU'RE||A HOMEOWNER||NOT A HOMEOWNER|
|A couple (combined)||$954,000||$1,178,500|
|A couple, separated due to illness (combined)||$1,128,500||$1,353,000|
|A couple, with one partner eligible (combined)||$954,000||$1,178,500|
If you get Rent Assistance from the government, your cut-off point will be higher. Find out more about Rent Assistance on the Services Australia website.READ MORE: AM I ELIGIBLE FOR THE GOVERNMENT AGE PENSION?
How home ownership impacts the assets test
If you own the home you live in (providing it’s on less than 2 hectares of land), it won’t count 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 tables above.
If you sell your home from 1 January 2023 with plans to buy another home within 24 months, sale proceeds to buy, build, repair or renovate your new primary residence aren’t included in your assets test. Find the latest information about the assets test on Services Australia’s website.
If you’re a homeowner, your asset value limit is lower than someone who doesn’t own their home. The current asset value limit for the full Age Pension for a single homeowner is $280,000 and for a single non-homeowner is $504,500.
For example, let’s say a single homeowner has $518,000 in non-financial assets. Their rate of age pension under the assets test as at 13 April 2023 would be approximately $350.50 a fortnight. If the same person was a non-homeowner, their rate of Age Pension would be approximately $1,023.50 a fortnight2.
Types of assets that 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 AND THE AGE PENSION
Personalised advice can help you
The Government Age Pension assets test can be complex, which is why it’s useful to speak to a financial adviser, or ask your super fund for general advice.
Seeking financial advice when approaching retirement can lead to some life-changing decisions. For example, AustralianSuper member Doug got advice that resulted in early retirement and the chance to spend more time with his wife.
If you'd like some help planning your retirement, register for a free webinar and explore these helpful articles and guides.
For personal advice, connect with one of our team members who can put you in touch with a financial adviser3.
- While you’re under the Age Pension age, your superannuation isn’t counted in the income and assets test, if your fund isn‘t paying you a superannuation pension. If your fund is paying you a superannuation pension, it is assessable as an income stream. How it’s assessed depends on the type of income stream. Information accurate as at 20 February 2023: Services Australia.
- Based on the maximum pension of $1,064.50 (including the maximum pension supplement and energy supplement) as at 13 April 2023. For the most up to date Age Pension rates, please visit the Services Australia website.
- Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. Fees may apply.
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 may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/pds or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.
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