Thresholds, Exemptions, the Taper Rate & How to Protect Your Entitlement in 2026
Ask most Australians approaching retirement whether they’ll receive the Age Pension, and many will say something like: “I think I have too much to qualify.” In many cases, they’re wrong — and that misunderstanding is costing them thousands of dollars a year.
The Age Pension assets test is one of the most consequential pieces of financial machinery in the Australian retirement system, yet it’s also one of the most misunderstood. Retirees confuse it with the income test. They don’t know which assets are exempt. They accidentally disqualify themselves through well-meaning gifts to children. And they overlook the part-pension — which can unlock not just a fortnightly payment, but a Pensioner Concession Card worth significant ongoing savings.
This guide explains exactly how the assets test works, what counts and what doesn’t, how your pension is calculated once your assets exceed the threshold, and what you can legitimately do to protect your entitlement. All figures reflect the current thresholds in effect from 20 March 2026.
Quick Summary
- The assets test is one of two means tests Centrelink uses to determine your Age Pension — the other is the income test
- Your pension is based on whichever test produces the lower payment
- Your family home is exempt from the assets test, no matter its value
- Superannuation becomes assessable the moment you reach Age Pension age (67)
- Above the full-pension threshold, your payment reduces by $3 per fortnight for every $1,000 in assets
- Gifting rules exist — and breaching them can count for up to five years
- Many Australians who think they don’t qualify actually receive a part pension
1. What Is the Age Pension Assets Test?
The assets test is a means test applied by Services Australia (Centrelink) to determine whether you qualify for the Age Pension and, if so, how much you receive. It looks at the total market value of everything you own — with some important exceptions — and compares that against set dollar thresholds.
There are three possible outcomes depending on where your assets sit:
- Below the lower threshold: you receive the full Age Pension (subject also to the income test)
- Between the lower and upper thresholds: you receive a reduced part Age Pension, which decreases progressively
- Above the upper threshold: your Age Pension payment under the assets test is nil
The assets test and the income test run in parallel. Centrelink assesses you under both and pays you the lower resulting amount. So even if you sail through the assets test comfortably, the income test can still reduce your pension — and vice versa. This article focuses on the assets test; the income test is covered separately.
2. Current 2026 Assets Test Thresholds
The thresholds shown below are in effect from 20 March 2026 to 19 September 2026. They are indexed to the Consumer Price Index (CPI) and updated in March and September each year for the part-pension cut-off figures, and in July for the full-pension thresholds.
Situation | Full pension below | Part pension cut-off |
Single — homeowner | $321,500 | $722,000 |
Single — non-homeowner | $579,500 | $980,000 |
Couple — homeowner (combined) | $481,500 | $1,085,000 |
Couple — non-homeowner (combined) | $739,500 | $1,343,000 |
Source: Services Australia. Thresholds current 20 March 2026 to 19 September 2026. Always verify the latest figures at servicesaustralia.gov.au before making financial decisions.
Because the family home is exempt from the assets test, non-homeowners need to hold more liquid assets to cover housing costs that homeowners avoid. Centrelink offsets this by giving non-homeowners a higher threshold — the gap is $258,000 across every category.
3. How the Taper Rate Works – The $3 Per $1,000 Rule
Once your assessable assets exceed the full-pension threshold, your fortnightly payment doesn’t stop immediately. Instead, it tapers down progressively at a rate of $3 per fortnight for every $1,000 of assets above that lower threshold.
This continues until your assets hit the cut-off point, at which point your pension under the assets test drops to zero.
A Worked Example
Scenario | Single homeowner |
Total assessable assets | $500,000 |
Full pension threshold | $321,500 |
Assets above threshold | $178,500 |
Fortnightly reduction (÷1,000 × $3) | $535.50 |
Maximum fortnightly pension (March 2026) | $1,200.90 |
Pension under assets test | $665.40 per fortnight |
Note: the actual pension paid is the lower of the assets test and income test result.
In this example, our single homeowner with $500,000 in assessable assets still receives a meaningful part pension – $665.40 per fortnight, or roughly $17,300 per year – rather than nothing. That’s money many people leave unclaimed simply because they assumed their assets were “too high.”
It’s also worth noting that as you draw down your superannuation and other assets through retirement, your assessable assets will typically reduce over time – meaning your Age Pension entitlement generally increases as the years pass.
4. What Assets Are Counted?
Centrelink assesses the current market value of assets – that is, what you would receive if you sold them today, not what you paid for them. If you have debts secured against an asset, the net value (asset value minus the debt) is what counts.
The following asset categories are all included in the assets test:
Financial Assets
- Bank accounts, savings accounts and cash on hand
- Term deposits
- Shares, exchange-traded funds and managed funds
- Bonds and debentures
- Account-based superannuation pensions (once you reach Age Pension age of 67)
- Defined benefit pensions and lifetime income streams (assessed differently)
- Loans you have made to other people or trusts
Property and Real Estate
- Investment properties and holiday homes (net of any debt)
- Commercial property
- Land held separately from your home
Physical and Personal Assets
- Motor vehicles, caravans, boats and motorbikes (at market value)
- Household contents and personal effects (usually valued at a conservative replacement cost)
- Jewellery, art, collectibles and antiques
- Business assets and equipment
- Overseas assets (converted to Australian dollars at current exchange rates)
If you are under Age Pension age, your superannuation balance is invisible to Centrelink — even if it is in pension phase. The moment you turn 67, your entire super balance is counted as an assessable asset. For couples, this sometimes catches people off guard: if the younger partner turns 67 and suddenly their super is included, a couple's combined assets can jump significantly, potentially reducing or eliminating the pension they were receiving on the older partner's record.
5. What Assets Are Exempt?
Not everything you own counts. Understanding the exemptions is often where the real retirement planning work happens.
Your Principal Home – The Major Exemption
Your primary residence is fully exempt from the assets test, regardless of its value. A modest Perth suburb home and a waterfront property worth $3 million are treated identically under the assets test – neither counts a cent.
This exemption extends to the land your home sits on (up to two hectares in most circumstances) and applies to a range of dwelling types including houses, apartments, granny flats (in some circumstances), retirement village units, houseboats and caravans used as a primary residence.
What it does not extend to: investment properties, holiday homes, or the cash you receive when you sell your home (unless that cash is earmarked and ring-fenced for buying another home – more on this below).
Selling Your Home – The Transition Exemption
If you sell your home to purchase another, the sale proceeds set aside for that purchase are exempt from the assets test for up to 24 months from settlement. In some circumstances, this can be extended by up to a further 12 months, giving a maximum exemption window of 36 months for homes sold on or after 1 January 2023. During this period, you are treated as a non-homeowner, which means you access the higher non-homeowner asset thresholds.
Aged Care – Refundable Accommodation Deposits
If you or your partner moves into residential aged care and pays a Refundable Accommodation Deposit (RAD), that deposit is exempt from the assets test. This is a significant planning consideration – RADs can run into hundreds of thousands of dollars, and their exemption means moving into aged care doesn’t automatically strip someone of their Age Pension.
Planning for aged care and the Age Pension together is a specialist area. Our retirement planning team can help you understand how an aged care transition might affect your current pension entitlement.
Funeral Bonds and Prepaid Funeral Expenses
Prepaid funeral expenses are fully exempt from the assets test. Funeral bonds are also exempt up to a capped allowable limit per person (this limit is periodically updated). Purchasing a funeral bond can be a legitimate way to reduce assessable assets while making practical end-of-life preparations.
Special Disability Trusts
Assets held in a Special Disability Trust for a family member with severe disability may be exempt up to a specified limit. This is a specialist area with specific eligibility criteria.
Asset Type | Assets Test Treatment |
Principal home (any value) | Fully exempt |
Home sale proceeds (reinvesting within 24 months) | Exempt (treated as non-homeowner) |
Superannuation (under age 67) | Exempt |
Superannuation (aged 67+) | Fully assessable |
Refundable Accommodation Deposit (aged care) | Exempt |
Prepaid funeral expenses | Exempt |
Funeral bonds (within allowable limit) | Exempt |
Investment properties | Assessable (net of debt) |
Shares, managed funds, bank accounts | Assessable |
Vehicles, caravan, boat | Assessable at market value |
Overseas assets | Assessable (converted to AUD) |
This is a general summary. Specific circumstances may produce different outcomes – always confirm with Services Australia or a licensed financial adviser.
6. The Gifting Rules – A Trap Many Retirees Fall Into
It might seem logical to reduce your assessable assets by giving money or property to children or grandchildren before applying for the pension. Centrelink anticipated this and has strict gifting rules to prevent it.
The Allowable Gifting Limits
- You can gift up to $10,000 in a single financial year without it affecting your Age Pension
- Over any rolling five-year period, the total you can gift without penalty is $30,000
- Both limits apply to you and your partner’s gifting combined – not individually
What Happens If You Exceed the Limits
Any amount gifted above these thresholds is treated as a ‘deprived asset’ – it continues to be counted as part of your assessable assets for five years from the date of the gift, even though you no longer own it. Centrelink also applies deeming rates to the excess amount under the income test.
The gifting rules also apply to transactions that aren’t straightforward gifts. Selling an asset to a family member at below market value is treated as a gift equal to the discount. Waiving a debt someone owes you is also a gift. Transferring assets into a family trust doesn’t remove them from the test – if you retain effective control as an appointor, trustee or beneficiary, Services Australia can still attribute those assets to you.
7. The Assets Test and the Income Test – How They Interact
As noted above, Centrelink applies both tests to every Age Pension recipient and pays the lower result. This interaction is important to understand because the two tests can produce very different outcomes depending on what you own and how it’s held.
For most retirees with significant superannuation or financial investments, the income test kicks in earlier than the assets test. Here’s why: Centrelink applies ‘deeming’ to financial assets – rather than counting your actual investment returns, it applies fixed assumed rates of return to your total financial asset pool. As of March 2026, the lower deeming rate is 1.25% per year (applied to the first $64,200 for singles / $106,200 for couples), with a higher rate of 3.25% above those levels.
This means a single retiree with $213,900 in financial assets – well below the $321,500 full-pension assets threshold – may already be losing some pension under the income test, because the deemed income from those assets exceeds the $218-per-fortnight income-free area.
For retirees with a mix of financial and non-financial assets (such as an investment property), understanding which test is actually biting – and by how much – is essential to retirement planning. A $10,000 decision about where to hold money can have a surprisingly large effect on the pension outcome.
8. Couples – How the Assets Test Works for Partners
When you are part of a couple, your assets and your partner’s assets are combined and assessed together. The thresholds above reflect this – the couple thresholds are the combined limit, not a per-person limit.
Several important nuances apply to couples:
- Only one partner needs to be 67: If only one partner has reached Age Pension age, the eligible partner is assessed at the couple rate but receives only their half of the couple rate. Critically, the other partner’s assets and income are still included in the combined assessment.
- The younger partner’s super: If the younger partner has not yet reached 67, their superannuation is not counted in the assets test. Once they turn 67, it is – potentially changing the couple’s pension entitlement significantly.
- Both must be 67 for the full couple rate: Only when both members of the couple have reached Age Pension age does the eligible partner receive the full couple rate from Services Australia.
- Illness separation: If one partner enters residential aged care, the couple may be assessed as ‘illness separated’, which can affect the thresholds and rates that apply.
9. Legitimate Strategies to Manage Your Assets Test Position
Managing your position relative to the assets test thresholds is a legitimate and important part of retirement financial planning. None of the strategies below involve hiding assets or breaching the rules – they involve making informed decisions about how you hold and use your wealth.
Invest in Your Home
Because the principal residence is fully exempt, money spent on home renovations, upgrades or improvements reduces your assessable assets while improving a non-assessable one. This doesn’t mean overspending on renovations – it means that if you were planning to renovate anyway, the timing relative to your pension assessment matters.
Gift Within the Allowable Limits
Gifting up to $10,000 per year (and $30,000 over five years) is a simple way to support family members while modestly reducing assessable assets. The key is staying within the limits and keeping records. Gifts beyond those amounts remain in your assessable assets for five years, making the exercise self-defeating if overdone.
Prepay Funeral Expenses
Prepaid funeral expenses are exempt. For couples, both partners can prepay separately. It’s a practical strategy that also addresses an important life administration task.
Review How Superannuation Is Structured
For couples where one partner is under 67, contributions to that partner’s superannuation reduce the couple’s assessable assets (since under-67 super is exempt). This strategy has a use-by date – it stops being relevant the moment the younger partner turns 67 – but for couples with an age gap, it can provide a meaningful window for asset management.
Seek Advice Before Making Major Decisions
This is the most important point. The interaction between the assets test, the income test, deeming, superannuation rules, and tax is complex. A strategy that makes sense from an assets test perspective might create an income test problem, or a capital gains tax event, or affect aged care means-testing down the track. The right decision depends on the full picture of your financial situation – not just one variable.
According to research from the Centre of Excellence in Population Ageing Research, roughly 39% of Australians over 67 receive the full Age Pension, and a further 24% receive a part pension. Many retirees who assume their super balance or property assets make them ineligible are actually entitled to something — and that 'something' may include a fortnightly payment plus the Pensioner Concession Card, which provides ongoing savings on medications, council rates, utilities, vehicle registration and more.
10. When Does the Assets Test Apply to You?
The assets test only applies once you have reached Age Pension age (currently 67) and have lodged a claim with Services Australia. You don’t need to apply automatically at 67 – some people choose to defer their claim, particularly if they are still working.
A few other timing points worth knowing:
- Centrelink reassesses your pension whenever your circumstances change. You are required to report changes in your assets within 14 days of them occurring.
- Centrelink also receives data from the ATO, financial institutions, and other government agencies, so underreporting assets carries real risk.
- If you are overpaid (because your assets increased and you didn’t report promptly), you will be required to repay the excess. If underpaid, you may be reimbursed.
- If you believe your assets are preventing you from receiving any Age Pension but you are in genuine financial hardship, you can apply to Centrelink under hardship provisions for a limited payment.
Ready to Understand Where You Stand?
The Age Pension assets test is not a barrier designed to exclude – it’s a system designed to direct support to those who need it most. But navigating it well requires knowing the rules, understanding your full asset picture, and making informed decisions about how you hold your wealth in retirement.
At LIFE Financial Planners in Perth, we work with pre-retirees and retirees across Western Australia to help them understand their Age Pension position, structure their assets effectively, and integrate their pension entitlement into a broader retirement income plan – including planning for aged care when the time comes.
To book an obligation-free conversation, call us on (08) 9322 1882 or email admin@lifefinancialplanners.com. We’re here Monday to Friday, 9am–4:30pm.
Frequently Asked Questions
Does owning a home disqualify me from the Age Pension?
No. Owning your home actually helps your position – it is fully exempt from the assets test, meaning none of its value counts against you. What changes is which threshold applies to you: homeowners face lower thresholds than non-homeowners, because the home itself is already a form of wealth that Centrelink considers accounted for.
My super is in an account-based pension - does it count?
Yes, once you have reached Age Pension age (67). Before 67, superannuation is invisible to Centrelink regardless of its phase. After 67, your entire account-based pension balance is an assessable asset. It is also subject to deeming under the income test.
Can I give money to my children to reduce my assessable assets?
Within limits. You can give up to $10,000 per financial year and $30,000 over any rolling five-year period without it affecting your pension. Anything above those amounts is treated as a deprived asset and continues to count in your assets test for five years – making excessive gifting counterproductive. Gifts of more than $2,000 per year must be reported to Centrelink within 14 days.
How often does Centrelink reassess my assets?
Centrelink can reassess at any time, and is required to do so when you report a change in your circumstances. You must report changes in your assets within 14 days. Centrelink also receives data from the ATO and financial institutions, so your super balance and financial asset values are updated regularly without you doing anything.
What if the assets test says I get nothing but I'm in financial difficulty?
If your assets exceed the cut-off but you are in genuine severe financial hardship, you can apply to Centrelink under hardship provisions. A limited maximum payment applies under this route, and eligibility criteria are strict. Speak with a financial adviser or contact Services Australia directly to understand your options.
This article contains general information only and does not take into account your personal financial situation, needs or objectives. The thresholds and figures cited are current as at June 2026 and are subject to change. You should always verify current figures with Services Australia (servicesaustralia.gov.au) or a licensed financial adviser before making financial decisions. LIFE Financial Planners holds Australian Financial Services Licence (AFSL) 296 182.
PHONE 08 9322 1882