How the Age Pension is assessed

The Age Pension is a means-tested payment made by Services Australia to people who have reached Age Pension age — 67 — and who meet the residency rules. It is not a balance you accumulate. It is a fortnightly payment, and how much of it is paid depends on two separate tests applied to the same household: an income test and an assets test.

Both tests are always run. Each one produces a payment figure. The lower of the two figures is what gets paid. That single rule explains most of what confuses people about the pension. Someone can have almost no income coming in and still receive nothing, because the assets test has already reduced their entitlement to zero — and the reverse is equally possible.

Every figure below is the rate or threshold held in this site's data: Rates 20 March 2026 · thresholds 1 July 2026. The two dates are deliberate. The payment rates were set on 20 March 2026 and hold until 19 September 2026, while the test thresholds — the free areas and the deeming thresholds — were indexed separately on 1 July 2026. Both move again on their own schedules.

The maximum rate

The maximum rate is the starting point for both tests. Each test can only subtract from it; neither can add to it. The rates below combine the basic rate, the pension supplement and the energy supplement. The couple figures are combined across both members of the couple, not per person.

For scale, ASFA's Retirement Standard for the March 2026 quarter puts a modest retirement at $36,434 a year for a single person and $52,473 for a couple, and a comfortable retirement at $55,923 and $78,566 respectively. The maximum pension sits below both budgets in each case. Those ASFA budgets already assume a part Age Pension is being received alongside a drawn-down super balance, so the two sets of numbers are components of the same total rather than alternatives to each other.

The income test

The income test begins with a free area — an amount of fortnightly assessable income that is ignored completely. Above the free area, the payment is reduced by 50c for every extra $1 of income. For couples, the incomes of both members are added together, the combined free area applies, and the 50c reduction comes off the combined payment.

Because the taper is a flat rate, the point at which the payment reaches zero follows arithmetically from the two numbers above it: the free area plus the maximum rate divided by the taper.

Assessable income is broader than wages. It is the sum of the deemed income from financial assets — explained next — plus other income such as employment earnings and rent from an investment property.

Deeming: what savings are assumed to earn

The income test does not look at what savings actually earned. Financial assets — superannuation, savings and shares — are instead deemed to earn a set rate. The deemed figure is what the income test counts, whether the assets returned more than that, less than that, or nothing at all. A cash account paying no interest is still deemed to produce income.

Deeming is applied in two bands. The lower rate of 1.25% applies to the first $66,800 of financial assets for a single person, or the first $110,600 combined for a couple. Every dollar above that threshold is deemed at 3.25%. These deeming rates took effect on 20 March 2026.

Worked through: a single person with $450,000 in financial assets has the first $66,800 deemed at 1.25%, which is $835, and the remaining $383,200 deemed at 3.25%, which is $12,454. Total deemed income is $13,289 a year, or $511.12 a fortnight. That is the number the income test uses. The practical effect of deeming is that the income test result depends on the size of the financial-asset balance, not on how it happens to be invested.

The assets test

The assets test works the same way, but on capital rather than income. There is a free area, and above it the payment falls by $3 a fortnight for every $1,000 of assets over the line. Across a year that is $78 per $1,000, or 7.8% of the excess.

The free area depends on two things: whether you are single or a member of a couple, and whether you own your home. The family home is not counted as an assessable asset. Non-homeowners receive a higher free area in its place — a difference of exactly $267,000 for singles and $267,000 for couples. Assets other than the family home are counted at their market value — superannuation, savings, shares, vehicles and household contents among them.

The cut-off column is arithmetic, not a separately published figure: it is the free area plus the maximum rate divided by the $3-per-$1,000 taper, which gives a taper span of $400,300 for a single person and $603,467 for a couple.

Which test actually binds

Running both tests and taking the lower result means the binding test changes as a household's balance sheet changes. Three illustrative households, all homeowners, all with their assessable assets held entirely in financial assets and no other income, show how the switch happens. The results are produced by the same calculation the Age Pension calculator on this site uses.

In the first household the assets sit below the $333,000 free area, so the assets test takes nothing off at all and the small income-test reduction governs. In the second, the same person with $450,000 is $117,000 over the assets free area, and the assets test now removes more than the income test does. The annual payment falls from $30,767 to $22,097.

There is a structural reason the assets test tends to take over once both free areas are passed. An extra $1 of financial assets is deemed at 3.25% in the upper band, and the income test removes 50c of each of those cents — a reduction of 1.625% of the extra dollar per year. The assets test removes 7.8% of that same dollar per year. On purely financial assets, the assets test therefore reduces the payment about 4.8 times faster per dollar held. Which test binds in any individual case still depends on the mix of assets and income involved.

What these figures do not include

Two payments and one concession that exist in the real rules are not modelled in the calculations above, so a real assessment can produce a higher payment than these figures suggest.

• The Work Bonus. The first $300 a fortnight of employment income is exempt from the income test. It is excluded here, so a pensioner who is still working can be paid more than the income test above implies.
• Rent Assistance. An additional payment is available to pensioners who pay rent. It is not included in the maximum rates on this page, so non-homeowners paying rent may receive more than shown.
• Age and residency. Everything here assumes Age Pension age of 67 has been reached and the residency rules are met. Neither is tested by the arithmetic above.

Rates and thresholds are indexed on their own schedules, so the numbers on this page have a shelf life; the effective dates are stated at the top for that reason. Services Australia assesses eligibility and determines the actual rate paid — the tables here set out the published rules, not a decision about any particular person. If you want to see how the two tests interact for a given balance sheet, the Age Pension calculator runs both tests and shows which one binds, and the retirement projection shows a super balance alongside the pension it would be assessed against.