Income and Assets Test Requirements for the Age Pension

For millions of older Australians, the Age Pension remains a crucial part of financial security in retirement. However, eligibility for this government support depends on strict income and assets tests designed to target assistance to those most in need. Understanding these tests and their thresholds is essential for planning your retirement finances effectively.

What is the Age Pension Income Test?

The Income Test assesses how much income you earn from various sources, including employment, investments, and other government payments. The government reduces your pension payment if your income exceeds certain limits, reflecting a means-tested approach.

Current Income Thresholds (2025)

The income thresholds are different depending on whether you are single or part of a couple:

• Single: The cut-off income threshold is $11,440 per year before your pension reduces.
• Couple (combined): The threshold is $19,216 per year combined.

Above these limits, your pension reduces by 50 cents for every dollar of income.¹

Understanding the Assets Test

In addition to income, the Assets Test looks at the value of most of your assets, including property (other than your primary residence), savings, investments, and vehicles. The government uses this to determine your eligibility and payment rates.

2025 Asset Thresholds

The assets test thresholds also vary by living situation:

• Homeowners: Single homeowners can have assets up to $280,000 before their pension reduces; couples combined can have up to $419,000.
• Non-homeowners: Higher thresholds apply, up to $504,500 for singles and $643,500 for couples combined.

Beyond these limits, the pension decreases by $3 per fortnight for every $1,000 of assets over the threshold.²

“It’s important to note that the primary residence is exempt from the Assets Test, reflecting its role as a core part of retirement security.”

How the Tests Work Together

The Age Pension is paid based on the test that results in the lower pension amount. So, if your income test reduces your pension more than the assets test, the income test applies — and vice versa.

Example Scenario

Consider Jane, a single homeowner with assets worth $300,000 and an annual income of $12,000. The Assets Test would reduce her pension because her assets exceed the $280,000 threshold. Meanwhile, her income also exceeds the $11,440 threshold, triggering reductions. The government will apply the test that results in the lowest pension payment.

Special Considerations

• Gifts and Transfers: Large gifts or transfers of assets can affect your eligibility for up to five years under the "deeming" rules.
• Deeming Rules: Investments are “deemed” to earn a certain rate of income regardless of actual returns, impacting the Income Test.
• Medical and Carer Allowances: These may be excluded from income calculations under certain circumstances.

Planning Your Pension Strategy

Because the Age Pension eligibility depends on both income and assets, retirees are encouraged to plan their finances carefully. Seeking financial advice can help optimise pension entitlements, manage investments, and navigate complex rules.

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Where to Get Help

The Department of Human Services provides detailed calculators and guides to help Australians estimate their pension entitlements. Additionally, community legal centres and financial counsellors can offer assistance for complex cases.

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¹ Department of Human Services, Age Pension Income Test Limits, 2025.

² Department of Human Services, Age Pension Assets Test Limits, 2025.

³ Australian Bureau of Statistics, Retirement and Income Data, 2024.