Understanding the Age Pension means test rules

Navigating the  Age Pension means test can feel complex, but understanding how the assets test and income test work is key to potentially maximising your Age Pension benefits.

The Age Pension is determined by two key assessments:

1.    Assets test
2.    Income test

These tests evaluate your financial situation to determine your Age Pension eligibility and payment rate.

Assets test

The assets test assesses the value of your assets (and your partner’s, if applicable), including assets in Australia and overseas, such as:  

• Superannuation
• Property (generally excluding your primary residence)
• Savings
• Investments

The value of these assets can impact how much Age Pension you can receive. Below are the current assets test limits as of 20 September 2025:

Important notes: If you receive Rent Assistance, your cut-off point maybe  higher. Visit the Services Australia website for more details. For couples, the limits apply to your combined assets, not individually.

Income test

The Centrelink income test generally includes any income you (and your partner’s, if applicable) earn from any source, including from your assets in Australia and overseas, such as:

• Super
• Shares
• Account-based pensions
• Term deposits or managed funds

When assessing income from some investment assets, Centrelink will apply a deemed rate of income. For earnings from business activities or investment properties, Centrelink will generally assess the actual net income you earn.
 

For more details, visit the Services Australia website.

Effective 20 September 2025, the income thresholds and reduction rates are as follows:

Key notes:

• Your upper threshold may be higher if you’re eligible for Rent Assistance or the Work Bonus.
• If you’re permanently blind and receiving the Age Pension, the income test doesn’t apply to you.
• Different rules apply to eligibility for Rent Assistance.

  
For more details visit the Services Australia website.  

How the tests work together

Both the assets test and income test are applied, and the one that results in the lower payment determines your  Age Pension rate. If you or your partner have income or assets outside Australia, these may also impact your  payment amount. For a detailed explanation of the Age Pension assets test, income test, and how they work as part of the Age Pension means test, visit the income and assets test page. 

Lifetime income streams and Challenger lifetime annuities

Lifetime income streams and the Age Pension 

Certain financial products, such as Challenger’s lifetime annuities, may help improve your Age Pension eligibility. These products can receive favourable treatment under the assets test and income test, which could increase your payments while providing a reliable income stream for life. Learn more about Challenger’s lifetime annuities.

How a lifetime annuity can improve your Age Pension eligibility

Purchasing a lifetime annuity could immediately increase your Age Pension payments. Unlike many investments, which are 100% assessable under the means test, some life time annuities are partially exempt. Here’s how they are treated:

Assets test:

• Only 60% of the amount invested in a lifetime annuity counts towards the Age Pension assets test until age 85 (or until age 84 for lifetime income streams commenced from 1 July 2019 to 31 December 2024), subject to a minimum of 5 years.
• From then onwards, only 30% of the purchase price will count.

Income test:

• Only 60% of the income received from a lifetime annuity is assessable. For example, if a lifetime income stream pays an annual income of $5,000, only $3,000 will be assessed under the income test.

This favourable treatment can help retirees maximise their Age Pension payments while enjoying the security of a guaranteed regular income for life.
 

Why consider a Challenger lifetime annuity?

Challenger lifetime annuities are designed to provide a guaranteed regular income for life, helping you manage retirement income with confidence. They offer:

• Certainty of regular payments:  A regular income stream that lasts for life, with options to suit your individual needs.
• Favourable means test treatment: Potentially increasing your Age Pension payments.
• Flexibility: Options at set up to tailor your annuity to suit your needs, including inflation protection.

This is general information only, and we recommend seeking advice regarding your individual circumstances. Your local Centrelink office can help answer any questions you may have. A financial adviser can also help. It’s important you read the relevant PDS and TMD and ask any questions you may have before investing in any financial products.  

To learn more about Challenger lifetime annuities page, visit our Lifetime annuities page.

Additional financial assistance

Beyond the Age Pension, there are several programs designed to provide financial assistance for retirees, helping you manage expenses and enjoy greater financial flexibility.

• Home Equity Access Scheme: This program allows you to access the equity in your home (like a loan) to supplement your retirement income. Its flexible way to unlock funds by borrowing through Centrelink while continuing to live in your home.
• Advance payments: If you’re facing unexpected expenses, Advance Payments provide  lump-sum assistance by providing part of your future Age Pension payments upfront, with certain limits.
• Rent Assistance: For eligible retirees who rent their homes, Rent Assistance provides additional financial support to help cover housing costs.

These options are designed to complement the Age Pension, giving you more control over your finances and helping you manage the costs of retirement. For more information about these programs and other financial assistance for retirees, visit the Services Australia website.  

Explore related retirement resources

Planning for retirement involves more than just understanding the Age Pension. Take advantage of our tools and guides to help you:

• Manage your assets effectively.
• Plan your retirement income.
• Secure your financial future.

Explore resources like our:

• Retire with confidence tool - a tool to help you understand how to plan for a confident retirement.
• Guide to a confident retirement - practical steps and strategies when preparing for retirement.
• Guide to income in retirement - insights into managing your income during retirement.

All these resources, along with spending planners and more, can be found on our Tools and Calculators page, your one-stop hub for retirement planning tools.

Want to learn more about retirement planning? Check out our Learn section for articles, tips, videos and insights to help you make informed decisions about your financial future.