Age Pension means test changes - What they mean for you
Starting 1 July 2025, Age Pension means test thresholds will increase, potentially boosting eligibility and payments for retirees. These changes, announced by the Department of Social Services, aim to keep pace with inflation and living costs. Here’s a quick overview of how these changes may impact you.
What are the Age Pension means tests?
The Age Pension, available to residents aged 67, uses income and assets tests to determine eligibility and payment amounts. The test that results in the lower pension payment applies. If your income or assets exceed certain thresholds, you may not qualify for a pension or only receive a part pension. From 1 July 2025, these thresholds are rising, meaning more people may qualify for a full or part pension, and current part-pensioners could see higher payments.
Income test changes
The income test assesses earnings from sources like wages, interest, dividends and rental income. Centrelink uses deeming rates (currently 0.25% for the first $62,600 for singles or $103,800 for couples, and 2.25% above these) to estimate income from financial assets like bank accounts, managed funds and shares. The deeming rate from 1 July 2025 had not been confirmed at the time of writing.
From 1 July 2025, the income test thresholds will increase slightly. The new figures are illustrated in the table below.
Table 1: Fortnightly income test thresholds
| Situation - 1 July 2025 | Maximum | Cut-off* |
|---|---|---|
| Single | $218 | $2,516 |
| Couple (combined) | $380 | $3,844 |
*rounded down to nearest dollar
From 1 July singles can now earn $218 per fortnight ($5,668 yearly) for a full pension, and up to $2,516 ($65,416 yearly) for a part pension.
Each dollar above the lower threshold reduces pension entitlements by 50 cents for singles and by 25 cents for partner for couples.
This does not consider the Work Bonus which lets pensioners earn up to $300 per fortnight from work without affecting their pension.
Assets test changes
The assets test evaluates your assets such as shares, bank accounts, investment properties, etc. However, it excludes your family home. The new thresholds from 1 July 2025 are illustrated in the table below.
Table 2: Asset test thresholds
| Situation | Homeowner - Full pension | Homeowner - No pension | Non-Homeowner - Full pension | Homeowner - No pension |
|---|---|---|---|---|
| Single | $321,500 | $704,500 | $579,500 | $962,500 |
| Couple (combined) | $481,500 | $1,059,000 | $739,500 | $1,317,000 |
From 1 July a single homeowner may receive the full age pension if their assets are below $321,500 and a part-pension if their assets are below $704,500. A couple who are homeowners may have up to $481,500 in assets (combined) to receive the full age pension and may receive a part-pension if their assets are below $1,059,000. Non-homeowners can have more assets before their pension is reduced.
What this means for you
The changes to the Age Pension means test thresholds could significantly impact your retirement income, depending on your financial situation. The increased income and asset thresholds mean more retirees may qualify for the Age Pension or receive a higher part pension.
Remember that your Age Pension entitlement is determined by the lower of the income and asset test. If either test results in zero, you’re ineligible.
If you would like to learn more about your Age Pension entitlements give us a call.
