Navigating the Assets Test for the Age Pension

The Australian Age Pension is a lifeline for retirees, offering financial support during their golden years. To ensure fairness, Centrelink employs various criteria, including the Assets Test, to determine eligibility. This article aims to explain the Assets Test, shedding light on how it operates, and which assets are counted in the assessment process.

Which Assets Are Counted?

The following assets are typically considered for the Assets Test:

• Home contents, cars, boats and caravans
• Antiques, stamp, or coin collections
• Cash held in bank accounts or term deposits
• Managed investments and direct equity investments
• Investment bonds
• Superannuation if over age pension age
• Account Based Pensions including Transition to Retirement Pensions
• Investment properties, holiday homes, and vacant land
• Shares in private companies
• Discretionary trusts
• Long-term or Short-term Annuities
• Licenses, for example, fishing or taxi
• Surrender value of whole-of-life policies
• Collections for trading, investment, or hobby purposes
• Gifted or Deprived Assets: Assets that have been transferred or gifted to someone else can still be counted under certain circumstances.
• Debts Owed to You: If you’ve lent money to someone and expect repayment, this can be counted as an asset.
• Generally, any debt secured against an asset is deducted from the value of that asset.

The principal place of residence is usually exempt from the Assets Test with the surrounding land of up to 2 hectares (5 acres). Exemptions may apply to larger properties if certain requirements are met.

Homeowners and Non-Homeowners

Both homeowners and non-homeowners are subject to the Assets Test, with different considerations and different thresholds.

Assets Test Thresholds

The Assets Test has upper and lower thresholds that determine Age Pension eligibility.

1. Lower Thresholds: Assets below these thresholds generally qualify for the full Age Pension unless impacted by the Income test.
2. Upper Thresholds: These are the maximum asset values that allow for a part Age Pension. Assets exceeding these thresholds will result in not being eligible for any age pension payment. Assets that exceed that Lower Threshold will reduce a person’s entitlements by $3 for every $1,000 over the Lower Threshold.

Limits for a full pension^

Limits for a part pension^

^Current as at November 2023.

Navigating the Impact

Understanding which assets count is pivotal in navigating the Assets Test’s effect on your Age Pension entitlement. As your financial circumstances evolve, periodically reviewing your assets and seeking expert advice can help you make informed decisions to ensure your financial stability during retirement.

Conclusion

The Assets Test is a crucial element of the Age Pension assessment process. Regular reviews and staying updated on any changes to thresholds are essential steps to keeping your records with Services Australia up to date, so you continue to receive the maximum amount you are eligible for and so you will not need to pay back any amounts.