Assets Test for Pension in Australia Explained

The assets test for pension in Australia can be a bit complex, but it's essential to understand how it works. The test is used to determine whether you're eligible for a pension, and it's based on your net assets.

Your net assets include the value of your home, investments, and other assets, minus any debts you have. The threshold for the assets test varies depending on your situation, but in general, you'll need to have less than a certain amount of assets to qualify for a pension.

For example, if you're single, the threshold is around $283,500. If you're in a couple, the threshold is higher, around $448,500. These amounts are subject to change, so it's essential to check the latest figures.

If you're unsure about your eligibility or have questions about the assets test, it's always best to consult with a financial advisor or the Department of Human Services.

Here's an interesting read: Net Operating Assets

To be eligible for the Age Pension in Australia, you must meet the income and asset tests. The assets test applies different limits depending on whether you're a homeowner or non-homeowner, and whether you're applying as a single person or as a couple.

Single homeowners can have up to $314,000 in assets, while single non-homeowners can have up to $566,000.

If you're a couple, the combined asset limit is $470,000 for homeowners and $722,000 for non-homeowners.

These limits are reviewed and adjusted every March, July, and September to keep up with inflation and changes in the cost of living.

Here are the specific asset limits for different scenarios:

If your assets exceed these limits, your Age Pension will gradually decrease. For example, if you're a single homeowner with more than $314,000 in assets, your pension will be reduced. If your assets reach $695,500, your pension will be reduced to $0.

If this caught your attention, see: How to Calculate Total Debt to Total Assets Ratio

All superannuation savings are included in the assets test once you reach Age Pension age, including superannuation that has been converted to an Account-Based pension, as well as defined benefit pensions and annuities.

Any additional properties you own, such as rental properties or holiday homes, are included in the assets test.

The value of an asset is determined by its market value, minus any debt secured against it. For example, if you own an investment property with a market value of $500,000 and a mortgage of $300,000, Centrelink would deduct the mortgage from the market value, leaving $200,000 as the value of the asset.

Here are the assets that are included in the test:

Note that the house you own and currently live in is NOT considered in the assets test, unless you primarily use it for business purposes.

What Is the Assets Test?

The assets test is used to determine how much you can own before it affects your age pension rate.

All superannuation savings are included in the assets test once you reach Age Pension age.

Any additional properties you own, such as rental properties or holiday homes, are included in the assets test.

A fresh viewpoint: What Accounts Are Current Assets

Jewellery, collectibles, and antiques will also be assessed for their current market value.

The family home is exempt, provided it's your principal residence.

Funeral bonds and expenses (up to certain limits) are excluded from the assets test.

Some financial products that meet specific Centrelink criteria are exempt from the assets test.

Here are the cut-offs for assets for part pension:

If you own more assets than the limits, every $1000 in assets over the limit will reduce your age pension rate by $3 per fortnight for both single and couples combined.

The limits for assets are $263,250 for homeowners and $473,750 for non-homeowners.

All superannuation savings are included in the assets test once you reach Age Pension age, including superannuation that has been converted to an Account-Based pension, defined benefit pensions, and annuities.

Any additional properties you own, such as rental properties or holiday homes, are included in the assets test.

The value of your car, boat, or caravan is counted, based on their current market value.

Financial investments, including bank accounts, shares, term deposits, and bonds, are also included in your asset total.

Jewellery, collectibles, and antiques will be assessed for their current market value.

Here's a list of assets that are included in the Age Pension assets test:

The value of an asset is determined by its current market value, minus any debt secured against it.

For example, if you own an investment property worth $500,000 with a mortgage of $300,000, Centrelink would deduct the mortgage from the market value and only consider the $200,000 as the value of your house as an asset.

The family home is exempt from the assets test, provided it's your principal residence. This means you don't have to worry about the value of your home affecting your pension allowance.

Some financial products are also exempt, but only if they meet specific Centrelink criteria. This can be a bit tricky, so it's essential to check with Centrelink to see if you qualify.

Jewellery, collectibles, and antiques are included in the assets test, but only if they have a current market value. If you have these types of items, you'll need to get them appraised to determine their value.

The assets test threshold starts at around $314,000 for a single person who owns their own home and receives the full pension. If the value of your assets exceeds this amount, your pension allowance will be reduced.

Here are some examples of excluded assets:

It's worth noting that these exclusions can make a big difference in your assets test, especially if you're planning the last chapter of your life.

The Australian government uses the assets test to determine how much of the age pension you're eligible for. This test looks at the value of your assets, such as your home, savings, and investments.

The full pension cut-off varies depending on whether you're a homeowner or non-homeowner. For single homeowners, the cut-off is $268,000, while for non-homeowners, it's $482,500.

The transitional rate cut-off is slightly higher, at $531,250 for single homeowners and $745,750 for non-homeowners. The part pension cut-off is even higher, at $583,000 for single homeowners and $797,500 for non-homeowners.

Here's a summary of the full pension cut-offs:

Keep in mind that these cut-offs are subject to change, so it's essential to check the government's website for the most up-to-date information.

Income and work can have a significant impact on your pension eligibility. Centrelink will consider all income streams you receive, including from sources outside Australia.

Employment income is taken into account, so if you're still working, you'll need to factor that into your pension application. Pensions, including account-based pensions, are also considered as income.

You can earn up to a certain amount of income before it affects your pension, but exceeding that threshold can reduce or even eliminate your entitlement. Here's a breakdown of the types of income that are considered:

On the other hand, certain types of income are exempt from the income test, such as rental assistance payments and payments through an NDIS package.