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.
This article is part of a series exploring the Government Age Pension.
You may also like to read:
● Am I eligible for the Government Age Pension?
● What is the income test for the Government Age Pension?
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 that results 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 might own such as a car, business assets, properties (that you don’t live in), super and retirement income accounts (yours and your partner’s) and investments such as cash, shares, term deposits and bonds.
The test also considers assets that may not seem obvious. These include any deposits you might have paid to live in a ‘granny flat’ or retirement village for the rest of your life, prepaid funeral arrangements you might have made, plus any cash gifts or assets you may have given to family members or friends.
Assets considered include:
- Property (not including your primary residence)
- Granny flat interest (money paid to live in someone else’s property for life)
- Private trusts and private companies
- Funeral bonds and prepaid funerals
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 Department of Human Services website.
What’s the value of your assets used to determine?
How much your assets are worth (along with your level of income) will be used to 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 chart below indicates what the maximum value of your combined assets can be, before your pension may be reduced.
|If you're...||A homeowner||Not a homeowner|
|A couple, combined||$394,500||$605,000|
|A couple, 1 partner eligible, combined||$394,500||$605,000|
There’s also a cut-off point. If your assets exceed this value, you may not be entitled to the Government Age Pension at all. If your assets are valued under a certain limit you could be eligible to receive a Full Pension – the maximum amount anyone can receive.
READ MORE: AM I ELIGIBLE FOR THE GOVERNMENT AGE PENSION?
Will my home be 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 own home could still affect the rate of your fortnightly pension payment, because the asset limits set by the Government are different for homeowners and non-homeowners.
So, while the home you live in won’t be counted as an asset by the test, it can still be a factor in deciding how much your pension payment will be – depending on the value of the rest of your assets.
Here’s an example to help explain. It uses the asset limits for single homeowners ($263,250) and single non-homeowners ($473,750), and the difference in asset value between the homeowner and non-home owner is $210,500.
This means if you’re single and you own your own home, the amount of assets you’re allowed to have before your pension is reduced or cancelled is $210,500 less than if you didn’t own your own home.
Or looking at it the other way, if you’re single and you don’t own your own home you’re entitled to have an extra $210,500 in assets before your pension is reduced or cancelled.
What types of assets are exempt from the test?
There are a number of assets exempt from the test. These include:
- Your primary residence and surrounding land (up to two hectares on the same title);
- Some properties larger than two 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 Department of Human Services 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 is 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.
WebinarsAustralianSuper holds regular free webinars, designed to help you understand your retirement option.
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.