Australia’s Age Pension is designed to provide financial support for eligible retirees, but the amount you receive is not fixed. Your payment is regularly assessed based on your financial circumstances, meaning changes to your income or assets can increase, reduce, or even stop your pension.
Understanding how the income test and assets test work can help you avoid unexpected changes to your payments.
How the Age Pension Is Assessed
Eligibility and payment rates for the Age Pension are determined using two separate means tests:
• Income Test
• Assets Test
Services Australia applies the test that results in the lower pension payment. If your financial situation changes, your pension entitlement may also change.
What Can Affect Your Pension?
Several factors may influence your Age Pension payment, including:
• Changes in employment or investment income
• Interest earned on savings and bank accounts
• Superannuation income or withdrawals (depending on your circumstances)
• Buying or selling investments
• Changes in the value of assessable assets
• Updates to government payment thresholds and deeming rates
Even relatively small financial changes can affect your eligibility or payment amount.
Understanding the Income Test
The income test considers the income you receive or are deemed to receive from certain financial assets.
Income may include:
• Employment earnings
• Investment returns
• Rental income
• Income assessed under deeming rules
If your assessable income increases above the applicable limits, your pension payment may be reduced.
Understanding the Assets Test
The assets test measures the value of assets you own, excluding certain exempt assets such as your principal home (subject to eligibility rules).
Assessable assets may include:
• Bank savings
• Shares and managed investments
• Investment properties
• Vehicles and valuable possessions
• Some superannuation interests
If your assessable assets exceed the relevant thresholds, your pension payment may decrease or cease.
Illustrative Pension Outcomes
| Financial Situation | Possible Pension Outcome |
|---|---|
| Income and assets below thresholds | Full Age Pension |
| Close to the limits | Reduced Age Pension |
| Above the allowable limits | Pension may not be payable |
| Financial circumstances change | Payment may be reassessed |
Actual outcomes depend on your individual circumstances and current government rules.
Tips to Help Manage Your Pension
To reduce the risk of unexpected payment changes:
• Keep your financial information up to date with Services Australia.
• Report changes in income or assets promptly.
• Review your savings and investments regularly.
• Monitor official Age Pension eligibility thresholds.
• Seek professional financial advice if your circumstances become more complex.
Staying informed can help you better understand how financial decisions may affect your pension.
Important Things to Remember
• The Age Pension is not a fixed lifetime payment.
• Both the income test and assets test are used to determine eligibility.
• Payment amounts can change if your financial circumstances change.
• Reporting updates promptly can help prevent overpayments or payment delays.
• Official payment rules and thresholds are reviewed periodically by the Australian Government.
Frequently Asked Questions
Why did my Age Pension change?
Your payment may change if your income, assets, or personal circumstances have changed, or if government thresholds are updated.
What is the income test?
The income test assesses the income you earn or are deemed to earn to determine your Age Pension entitlement.
What is the assets test?
The assets test assesses the value of your assessable assets to determine whether your pension should be reduced or remain payable.
What are deeming rates?
Deeming rates are used to estimate income from certain financial investments, regardless of the actual income earned.
Can a small financial change affect my pension?
Yes. Depending on your circumstances, even modest changes in assessable income or assets may affect your payment.
Do I need to report financial changes?
Yes. Eligible recipients should report relevant changes to Services Australia as required.
Can my pension increase again?
Yes. If your assessable income or assets decrease and you remain eligible, your payment may be reassessed.
Does my family home count as an asset?
In many cases, your principal residence is exempt from the assets test, although other rules may apply.
How often are pension rules reviewed?
Payment rates, thresholds, and deeming rates may be updated periodically by the Australian Government.
Should I seek financial advice?
If you’re close to the Age Pension income or asset limits, professional financial advice may help you better understand your options and obligations.
