What is the Age Pension?

Who's eligible

You need to meet three things at once. You must be 67 or older (the qualifying age for anyone born on or after 1 January 1957). You need to meet Australian residency rules, generally at least 10 years of residence, including one stretch of at least 5 continuous years. And you need to pass the means test, both the income test and the assets test are applied, and whichever produces the lower payment is the one that counts.

How much you can get

The maximum fortnightly rate is $1,200.90 for a single person and $1,810.40 combined for a couple. Rates are reviewed twice a year, in March and September, so always check Services Australia for the current figure. The Age Pension is taxable income, though most recipients pay little to no tax on it thanks to the tax-free threshold and the Seniors and Pensioners Tax Offset.

The income and assets tests

Under the income test, you can earn up to $226 a fortnight (single) or $396 combined (couple) before your pension starts reducing, by 50 cents for every dollar over that for a single person. Under the assets test, a single homeowner can hold up to $333,000 in assessable assets (outside the family home) before the pension starts tapering, or $600,000 as a non-homeowner. For couples, it's $499,000 (homeowner) or $766,000 (non-homeowner) combined. Above those thresholds, the pension reduces by $3 a fortnight for every $1,000 of assets over the limit, eventually cutting out altogether. Your own numbers depend on both tests together, our Retirement Income & Age Pension Calculator runs both and shows you which one binds.

What counts as an assessable asset

Your principal home is exempt from the assets test entirely, it doesn't matter how much it's worth. But whether you own a home changes which threshold applies to you, homeowners have lower limits than non-homeowners, on the assumption they aren't also carrying rent. Assessable assets include super (once you reach Age Pension age), savings, shares, investment properties, and most other things you own. Before you reach 67, your super generally isn't counted at all.

How deeming works

For the income test, Centrelink doesn't look at what your financial assets, like super, savings and term deposits, actually earn. Instead it assumes ("deems") they earn a set rate: 1.25% on the first $66,800 (single) or $110,600 (couple combined), and 3.25% on anything above that. A single pensioner with $100,000 in savings would be deemed to earn (1.25% × $66,800) + (3.25% × $33,200) = around $1,914 a year, roughly $73.60 a fortnight, regardless of the account's actual interest rate. If your assets genuinely earn more than the deeming rate, the extra doesn't count against you. If they earn less, you're still deemed at the set rate either way.

The Work Bonus

You can work and still receive the Age Pension. The Work Bonus lets you earn up to $300 a fortnight from employment without it counting toward the income test. Unused amounts build up in a Work Bonus balance, up to a cap of $11,800, and new claimants start with $4,000 already in the bank. That balance then offsets employment income in fortnights you earn more, useful if your work is seasonal or irregular.

Common misconceptions

"I own my home, so I won't qualify." The family home is exempt from the assets test entirely, its value doesn't count at all. Plenty of homeowners with substantial equity still receive a full or part pension based on their other assets.

"It's all or nothing." It isn't. A part pension applies across a wide range of asset and income levels, and even a small entitlement is often worth claiming, since it can come with a Pensioner Concession Card and access to cheaper healthcare, utilities and transport.

"Deeming rates reflect what I actually earn." They don't. Centrelink applies the set deeming rate regardless of your real return. If your term deposit pays more than the deeming rate, the difference works in your favour, it isn't counted as extra income.

Applying

You can lodge a claim through myGov (linked to Centrelink) up to 13 weeks before you turn 67. Applying early matters, your payment generally starts from the date you submit the claim, not the date it's approved, and processing can take several weeks.