Understand the latest indexed changes to the pension income and assets tests
Receiving the full government Age Pension, or even a partial pension payment, can provide eligible retirees with a significant amount of income over time that can supplement income earned from other assets.
Millions of Australians are eligible to receive Age Pension payments every fortnight once they turn 67.
But there are strict limits on how much individuals and couples can earn, and on the value of assets that can be held, which the government uses to determine eligibility.
While there were no changes to the fortnightly Age Pension payment rates themselves on 1 July, the start of the 2025-26 financial year saw some indexed increases to both the income and assets test limits used by the government to determine eligibility for the pension.
For example, individuals can now earn to $218 per fortnight (a $6 increase) and couples up to $380 per fortnight (an $8 increase) and still receive the full Age Pension.
Assets test limits have also increased for individuals and couples by between $7,500 and $17,500, depending on home ownership status.
For example, individual homeowners can now have up to $321,500 in assets in addition to the value of their home (an increase of $7,500) and still receive the full Age Pension. For couples who are homeowners, the total amount is now $481,500 (an increase of $11,500).
The asset test limits are higher for non-homeowners.
It’s important to know the Age Pension test limits. The following tables, sourced from the Department of Social Services, provide a detailed breakdown of the latest income test and assets test changes.
The income test
Individuals and couples can earn up to a set amount of income every fortnight in addition to the Age Pension to receive the maximum pension payment.
The pension amount received will then be reduced for every dollar of income earned above the maximum payment limit and will totally cut out at the government’s disqualifying income limit.
What the income test limits are for a full pension
Single person
|
Income per fortnight |
Amount your pension will reduce by |
|---|---|
|
Up to $218 (free area) |
$0 |
|
Over $218 |
50 cents for each dollar over $218 |
Couple living together or apart due to ill health
Different rates apply for partners getting a payment other than a pension.
|
Combined income per fortnight |
Amount each member of the couple’s pension will reduce by |
|---|---|
|
Up to $380 (free area) |
$0 |
|
Over $380 |
25 cents for each dollar over $380 |
What the cut-off points are
If your income in a fortnight goes over the cut-off point, the government will pay $0 for that fortnight.
Your cut-off point may be higher if you receive Rent Assistance or Work Bonus, or may be lower if you don’t live in Australia.
|
Your situation |
Fortnightly income cut off point |
|---|---|
|
Single |
$2,516.00 |
|
A couple living together |
$3,844.40 combined |
|
A couple living apart due to ill health |
$4,976.00 combined |
|
A transitional rate pensioner – single |
$2,580.00 |
|
Transitional rate pensioners – couple living together |
$4,191.50 combined |
|
Transitional rate pensioners – couple living apart due to ill health |
$5,104.00 combined |
The assets test
The government also applies the assets test (based on property or possessions owned in full, in part, and assets that an individual or couple have a financial interest in) to determine whether individuals and couples can qualify for full or part pension payments.
What the assets test limits are for a full pension
When your assets are more than the limit for your situation, your pension will reduce.
If you’re a member of a couple, the limit is for both you and your partner’s assets combined, not each of you.
|
Your situation |
Homeowner |
Non-homeowner |
|---|---|---|
|
Single |
$321,500 |
$579,500 |
|
A couple, combined |
$481,500 |
$739,500 |
|
A couple, separated due to illness, combined |
$481,500 |
$739,500 |
|
A couple, one partner eligible, combined |
$481,500 |
$739,500 |
What the limits are for a part pension
From 1 July 2025, part pensions cancel when your assets are over the cut off point for your situation.
If you’re a member of a couple, the limit is for both your and your partner’s assets combined, not each of you.
|
Your situation |
Homeowner |
Non-homeowner |
|---|---|---|
|
Single |
$704,500 |
$962,500 |
|
A couple, combined |
$1,059,000 |
$1,317,000 |
|
A couple, separated due to illness, combined |
$1,247,500 |
$1,505,500 |
|
A couple, one partner eligible, combined |
$1,059,000 |
$1,317,000 |
Conclusion
The Age Pension provides a fortnightly government payment that acts as a financial safety net. Even a part pension can help cover essential living costs like groceries, utilities, and healthcare, reducing the pressure on your superannuation or personal savings.
Many retirees draw income from superannuation, investments, or part-time work. The Age Pension can supplement these sources, helping to smooth out fluctuations in investment returns or market downturns.
The Age Pension is indexed and paid for life, offering protection against outliving your savings. This is especially valuable as people live longer and may need income support well into their 80s or 90s.
Combining the Age Pension with other income streams allows for greater flexibility in managing your finances.
You can draw less from your super during market downturns or use the pension to cover fixed costs, preserving your capital for discretionary spending or emergencies.
Source: Vanguard July 2025
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™
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