Don’t leave pension money on the table – what every retiree needs to know

More Australians qualify for the pension than you’d think

Here’s a number that surprises most retirees: you don’t need to be asset-poor to receive the Age Pension. A single homeowner can hold up to $722,000 in assessable assets and still receive a part pension; for a homeowner couple, that threshold rises to $1,085,000¹. Even a modest part-pension unlocks access to the Pensioner Concession Card, worth thousands of dollars annually in healthcare, rates, and utility discounts alone. Understanding how the system works is the first step to ensuring you receive every dollar you’re entitled to.

The two tests: assets and income

Centrelink applies two means tests simultaneously, and your payment is determined by whichever produces the lower result.

• Assets test. To qualify for the full Age Pension, a single homeowner’s assessable assets must be below $321,500; for a homeowner couple, the threshold totals $481,500². The taper rate is steep: for every $1,000 in assessable assets above the lower threshold, your pension is reduced by $3 per fortnight. Your family home is usually exempt; however, your super (once you reach Age Pension age), investment accounts, vehicles, and even household contents are all assessed.
• Income test. Singles can earn up to $218 per fortnight before their pension reduces; for couples, the combined income is $380 per fortnight³. Above these thresholds, the pension reduces by 50 cents for every dollar earned by singles, and 25 cents per dollar for each member of a couple. Critically, Centrelink uses deeming to calculate income from financial assets, applying 1.25% on the first $64,200 for singles ($106,600 for couples) and 3.25% on amounts above that, regardless of what those assets actually earn⁴.
• Work Bonus — you can earn up to $300 per fortnight from employment or self-employment without it affecting your pension, with unused amounts accruing in a Work Bonus balance of up to $11,800.

Gifting rules: generous intentions, strict limits

Transferring assets to family is a natural retirement impulse; however, Centrelink has clear rules around this. You can gift up to $10,000 in a financial year and a maximum of $30,000 over a rolling five-year period without penalty⁵. Anything above these limits is treated as a “deprived asset” and counted as if you still own it for five years from the date of the gift, assessed under both the assets and income tests.

The planning opportunity here is real, but timing matters. Gifting can begin before you reach Age Pension age at 67, the five-year clock starts from the date of the gift, not the date you claim. A gift made at 64 will clear Centrelink’s books by the time you turn 69. Strategic, early gifting within the allowable limits is a legitimate and effective tool, but only if it’s planned, not improvised.

Restructuring assets for a better outcome

This is where real value is unlocked, and where the difference between a well-advised and an unadvised retiree can be measured in tens of thousands of dollars over a retirement:

• Invest in your home. Renovations, upgrades, or paying down a mortgage all convert assessable assets into an exempt one. Every dollar shifted into your principal residence reduces your assessable asset base.
• Funeral bonds and prepaid funerals. Funeral bonds are exempt from the assets test up to $15,750 per person⁶. Alternatively, a prepaid funeral plan with a valid contract is fully exempt with no upper cap, making it the more powerful option for many retirees.
• Correct asset valuations. Centrelink requires second-hand value, not replacement or insurance value. A fair estimate for home contents is typically $10,000 for couples and $5,000 for singles.
• Special Disability Trusts. Eligible family members can contribute up to $500,000 into a Special Disability Trust for a family member with severe disability without triggering gifting rules, with assets inside exempt from the assets test up to $832,750⁷.

Where a financial adviser adds value

The Age Pension system is simultaneously one of Australia’s most valuable retirement entitlements and one of its most complex. The rules interact in ways that reward careful planning and punish guesswork.

• Modelling both tests together. An adviser can model your numbers through both the assets and income tests simultaneously, identify which test is constraining your entitlement, and build a restructuring strategy that addresses the right lever. Most retirees have no idea which test is limiting them.
• Pre-retirement restructuring. The five-year gifting clock, asset restructuring, and super drawdown sequencing all need to be set in motion before you reach 67, not after. An adviser can assist in coordinating these timelines to ensure strategies are in place when they count.
• Deeming versus actual returns. With deeming rates currently set at 1.25% and 3.25%⁸ and quality defensive assets earning more, an adviser can help structure your investment portfolio to increase your actual income while reducing deemed income, keeping you on the right side of the income test.
• Ongoing review. Thresholds are indexed in March, July, and September each year, and your personal asset values change constantly. Careful restructuring of assets can provide a welcome boost to your Age Pension rate; however, it’s important to look at the bigger picture. The more work your pension does, the less you’ll need to draw from your retirement savings. An adviser monitors this continuously, not just at the point of claiming.

The Age Pension should not be an afterthought. For many Australians, it is a meaningful and growing component of retirement income. The question is whether you have a plan to claim your full entitlement or are simply hoping for the best.

These figures are current as at 21 March 2026.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

1 Assets test for Age Pension – Age Pension – Services Australia
2 Assets test for Age Pension – Age Pension – Services Australia
3 Income test for Age Pension – Age Pension – Services Australia
4 Deeming – Age Pension – Services Australia
5 Gifting – Age Pension – Services Australia
6 Funeral bonds and prepaid funerals – Age Pension – Services Australia7 Benefits of Special Disability Trusts – Special Disability Trusts – Services Australia
8 Deeming – Age Pension – Services Australia