The Age Pension is Australia's retirement safety net — a regular payment from the government for older Australians who need it. But almost nobody receives a flat amount. What you get is worked out by two means tests, and understanding them is the difference between guessing at your retirement income and actually planning it.

This is a plain-English guide to how the assets test and the income test work, in real numbers, for both singles and couples, using the rates and thresholds current in 2026. If you're building your retirement savings, it pairs with our guides to salary sacrificing into super and how superannuation works.

The basics first

To qualify for the Age Pension you generally need to be 67 or older (the current Age Pension age) and an Australian resident for at least 10 years. If you clear those hurdles, Services Australia then runs your finances through both tests:

  • The assets test looks at what you own.
  • The income test looks at what you earn (including a "deemed" return on your savings).

Both tests are calculated, and — this is the key rule — you're paid whichever produces the lower pension. Here are the maximum rates you're working down from:

Maximum rate (from 20 Mar 2026)Per fortnightPer year (approx)
Single$1,200.90$31,223
Couple (each)$905.20$23,535
Couple (combined)$1,810.40$47,070

These maximums include the pension supplement and energy supplement. Rates are indexed twice a year (20 March and 20 September), so they change over time.

The assets test

The assets test counts most of what you own — super balances, bank accounts, shares, investment properties, a caravan, even the value of your home contents and car. The big exclusion: the home you live in doesn't count. That's why homeowners have lower asset thresholds than non-homeowners — they get the family home assessed at zero, but a smaller allowance for everything else.

You keep the full pension while your assessable assets stay under the lower threshold. Above it, your pension reduces by $3 per fortnight for every $1,000 of extra assets, until it cuts out entirely at the upper limit.

Situation (from 1 Jul 2026)Full pension up toCuts out at
Single, homeowner$333,000$733,500
Single, non-homeowner$600,000$1,000,500
Couple, homeowner (combined)$499,000$1,102,500
Couple, non-homeowner (combined)$766,000$1,369,500

Worked example. Margaret is single, owns her home, and has $450,000 in assessable assets (super, savings, a car and contents). She's $117,000 over the $333,000 full-pension threshold. Her pension reduces by $3 for every $1,000 over: $117,000 ÷ $1,000 × $3 = $351.00 a fortnight. So Margaret's assets-tested pension is $1,200.90 − $351.00 = $849.90 a fortnight (about $22,100 a year).

The cut-off point depends entirely on your situation. Here's where a part pension disappears for each group:

The income test

The income test looks at money coming in — earnings from work, rent, and a "deemed" return on your financial assets (see below). You keep the full pension while your income stays under the income-free area. Above it, your pension reduces by 50 cents for every extra dollar (for couples, that's the combined pension reducing by 50 cents per combined dollar — effectively 25 cents each).

Income test (from 1 Jul 2026)Full pension if income underCuts out at (approx)
Single$226 / ft$2,627.80 / ft
Couple (combined)$396 / ft$4,016.80 / ft

The cut-off is simply the free area plus the maximum pension divided by the 50-cent taper — so it moves whenever the rates change.

Worked example. Tom and Robyn are a couple with $1,000 a fortnight of assessable income (a mix of part-time work and deemed income). They're $604 over the $396 combined free area. Their pension reduces by 50 cents per dollar: $604 × $0.50 = $302 a fortnight. So their income-tested pension is $1,810.40 − $302 = $1,508.40 a fortnight combined (about $39,218 a year).

What is "deeming"?

You don't get to use the actual interest or dividends your savings earn. Instead, Centrelink deems your financial assets (bank accounts, shares, super in pension phase) to earn a set rate — currently 1.25% on the first $66,800 (single) or $110,600 (couple), and 3.25% above that. That deemed amount is the "income" counted, whether your money actually earns more or less. It keeps the test simple and rewards you for investing well above the deemed rate.

Putting the two tests together

Both tests always run — the lower result wins. Say Margaret from our assets example also has some income: if the assets test gives her $849.90 a fortnight and the income test would give her $950, she's paid the lower figure — $849.90. Most retirees are "assets tested" (the assets test bites first), but it's worth checking both, because a change to either your savings or your income can flip which test applies.

A few things that trip people up:

  • The family home is exempt from the assets test — but selling it and holding the cash isn't. Downsizing can reduce your pension.
  • Couples are assessed together. The thresholds above are combined, not per person.
  • Gifting has limits. You can only give away $10,000 a year (up to $30,000 over five years) before the excess is still counted as your asset.
  • Even a small part pension unlocks the Pensioner Concession Card, which can be worth thousands a year in discounts on health, utilities and transport.

Where advice fits

The Age Pension interacts with your super, your investments and your home in ways that reward planning — the timing of a downsize, how you draw an income stream, or whether topping up super changes your assessable assets. A licensed financial adviser can model your actual numbers against both tests and help you structure things so you're not leaving pension (or a concession card) on the table. Start with the plain-English basics on our superannuation and retirement page.

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