The Age Pension is the backbone of Australia’s retirement income system — a means-tested safety net that supports the majority of retirees, either in full or as a top-up to their own savings. Even people with healthy super balances are often surprised to learn they qualify for a part pension, along with valuable concession cards. Understanding the eligibility rules is therefore a core part of any retirement plan.
This guide explains who can claim the Age Pension and exactly how the income and assets tests work. It’s a cluster under our retirement planning pillar, and it pairs closely with our guide to being a self-funded retiree, where the goal is to fund retirement without relying on the pension.
Who can claim the Age Pension
Three things determine eligibility: your age, your residency, and your finances.
Age
The qualifying age for the Age Pension is 67 for everyone. There is no separate age for men and women, and no announced increase beyond 67. You can only claim once you reach that age.
Residency
You generally must be an Australian resident and have lived in Australia for at least 10 years in total, with at least five years in one continuous period. Some exceptions apply for people covered by international social security agreements.
Means testing
The Age Pension is means-tested through two separate tests — an income test and an assets test. Centrelink applies both and pays you the lower of the two results. Broadly, the less income and the fewer assessable assets you have, the higher your payment.
Rates and thresholds are indexed and reviewed twice a year (in March and September), so always confirm the current numbers at Services Australia or ato.gov.au before making decisions.
The assets test
The assets test measures the value of most things you own, excluding your principal home. That includes:
- Superannuation (once you’re of Age Pension age), including account-based pensions
- Bank accounts, term deposits and shares
- Investment property
- Contents, vehicles, and other valuables (at their second-hand value)
- Business assets
There are different asset thresholds for homeowners and non-homeowners, and for singles and couples. If your assessable assets are below the lower threshold you may receive the full pension; above it, your payment reduces on a sliding scale until it cuts out entirely at an upper limit. Because your family home is exempt, home ownership significantly affects where you sit.
An important dynamic for retirement planning: as you spend down your capital over the years, your assessable assets fall, so your Age Pension typically increases over time. The system is partly self-correcting.
The income test
The income test looks at money coming in from:
- Employment and self-employment
- Investments and financial assets (assessed using deeming — see below)
- Rental income
- Some income streams
As with assets, there’s a threshold below which your income doesn’t reduce your pension, and above which payments taper off. The Work Bonus lets pensioners earn a certain amount from employment before it counts under the income test — useful if you want to keep working part-time in retirement.
How deeming works
Rather than assessing the actual return on your financial assets (bank accounts, shares, super in pension phase and so on), Centrelink applies deeming: it assumes those assets earn a set rate of return, regardless of what they actually earn. This deemed income then counts under the income test.
Deeming uses a lower rate on the first slice of financial assets and a higher rate above a threshold, with different thresholds for singles and couples. Deeming rates and thresholds are indexed and adjusted by the government, so check the current rates at Services Australia or ato.gov.au. Deeming matters because it means chasing higher investment returns won’t necessarily reduce your pension — but it also means very safe, low-return holdings are still “deemed” to earn the set rate.
Strategies to make the most of your entitlement
Careful, legitimate planning can improve your position:
Use the Work Bonus
If you work part-time past 67, the Work Bonus shelters part of your employment income from the income test — a good way to supplement retirement income while staying engaged.
Structure your assets thoughtfully
Because your principal home is exempt from the assets test, some retirees direct money toward home improvements or use exempt structures. How and where you hold assets can affect both tests — this is worth reviewing with an adviser.
Choose your drawdown wisely
The way you draw super can influence your assessment. Some income streams — including certain annuities — receive favourable treatment under the means tests, which can lift your Age Pension entitlement. Coordinating your account-based pension drawdowns with Centrelink rules is a key planning lever.
Mind the gifting rules
If you help family financially, be aware there are limits on how much you can give away each year (and over a rolling five-year period) before the excess is still counted as your asset for a time.
Review after major events
Selling property, receiving an inheritance, or a change in relationship status can all change your entitlement. Keep Centrelink informed to avoid overpayments and debts.
A practical example
Consider a single homeowner with super in an account-based pension plus some cash savings. Their super and cash count under the assets test, and are deemed to earn income under the income test. As they draw down their balance across retirement, their assessable assets shrink — so a retiree who starts on a small part pension often moves onto a larger part pension, and eventually the full pension, later in life. Planning for this trajectory helps smooth income across a long retirement.
Common pitfalls
- Assuming you won’t qualify. Many self-funded retirees eventually receive a part pension as assets decline.
- Forgetting the two-test rule. Centrelink pays the lower result of the income and assets tests, not an average.
- Overlooking deeming. Your assessed income may differ from your actual return.
- Ignoring concession cards. Even a tiny part pension can bring valuable health and utility concessions.
Related reading
See how the pension fits your overall income in the retirement planning pillar and how much money you need to retire. If your aim is to fund retirement independently, read self-funded retiree: what it means, and to understand how your super income is structured, see account-based pensions.
This article is general information only and not financial or tax advice; consider your own circumstances and speak to a licensed adviser or the ATO before acting.