For many people approaching retirement, one of the biggest questions is: “how much can I have in assets before it affects my Age Pension?” The answer lies in the assets test – one of two means tests Centrelink uses to work out your Age Pension entitlement (the other being the income test).
Understanding how the assets test works, what it counts and what it ignores, can help you plan ahead and avoid surprises when you apply for, or review, your Age Pension.
How the Assets Test Works
Centrelink assesses the market value of the assets you (and your partner, if you have one) own, minus any debts owed on those assets. There are two key thresholds:
- A lower threshold, below which you may be eligible for the full Age Pension (subject also to passing the income test).
- An upper threshold (the ‘cut-off point’), above which no pension is payable.
Between these two points, your pension is reduced by $3 per fortnight for every $1,000 of assets above the lower threshold. Both thresholds are higher for non-homeowners, in recognition of the fact that renters and those without a home don’t benefit from an exempt principal residence.
Current Asset Limits
The thresholds are indexed and adjusted periodically in line with movements in the Consumer Price Index, so it’s worth checking the current figures each time you review your position. As a guide, the limits for a full Age Pension are currently:
| Situation | Homeowner | Non-homeowner |
| Single | $333,000 | $600,000 |
| Couple (combined) | $499,000 | $766,000 |
And the cut-off points for a part Age Pension are currently:
| Situation | Homeowner | Non-homeowner |
| Single | $733,500 | $1,000,500 |
| Couple (combined) | $1,102,500 | $1,369,500 |
Different (generally lower) limits apply where a couple is separated due to illness, and where a person lives outside Australia – an adviser can talk you through how these apply to your situation.
What Counts as an Assessable Asset
The assets test casts a wide net. Assets that are generally counted include:
- Real estate other than your principal home – for example, an investment property or a granny flat you own on someone else’s land
- Household contents and personal effects, valued at what you’d realistically get for them if sold, not what you paid
- Superannuation balances and account-based pensions, once you (and your partner) have reached Age Pension age
- Other financial investments, such as term deposits, managed funds and shares
- Business assets
- Motor vehicles, boats and caravans
- Jewellery and valuables, including cryptocurrency
- Retirement village entry contributions, in some circumstances
If you or your partner hold assets overseas, these are also assessed, converted to Australian dollars at the current exchange rate.
What’s Exempt
The most significant exemption is your principal home – the home you live in, along with adjacent land up to a certain size, is not counted under the assets test (though it can still affect which set of thresholds applies to you, since homeowners face lower limits than non-homeowners). Certain other assets, such as some funeral bonds and refundable accommodation deposits paid to aged care facilities, may also receive concessional treatment. Given the detail involved, it’s worth confirming how a specific asset will be treated before making any decisions.
Gifting Assets
Some people consider gifting assets to family members to reduce their assessable assets. This is allowed, but within limits: you can gift up to $10,000 in a single financial year, and up to $30,000 over a rolling five-year period, without those gifts affecting your pension. Anything given away above these limits continues to be counted as your asset for five years, and may also be subject to deeming under the income test. Gifting decisions can have long-term consequences, so it’s worth getting advice before acting.
Assets Test and Income Test Together
Because Centrelink applies both the assets test and the income test, your actual Age Pension rate is based on whichever test produces the lower payment. This means a strong result on one test doesn’t guarantee a higher pension if the other test is more restrictive – both need to be considered together as part of your overall retirement plan.
Getting the Right Advice
The assets test can be complex, particularly where superannuation, investment properties, business interests or gifting are involved. Small changes to how your assets are structured or held can sometimes make a meaningful difference to your Age Pension entitlement, without compromising your broader financial goals.
If you’d like to understand how the assets test applies to your own circumstances, or explore strategies that may improve your position, we encourage you to speak with an MLS Financial adviser. Our team can help you navigate the rules with confidence and build a retirement plan that works for you.
Written by:
Adrian Guy – BBus (Finance & Economics), MLS Financial
Disclaimer:
This article contains general information only and does not take into account your personal objectives, financial situation or needs. Before acting on this information, consider its appropriateness and seek advice from a licensed financial adviser.