Age Pension calculator
What a means-tested state pension pays after both income and assets tests, and which test binds.
Age Pension per fortnight
Estimate$711.00
Reduced by the assets test, which is the binding one
- A year
- $18,537
- Income test result
- $1,106.41
- Assets test result
- $711.00
| Maximum rate | $1,149.00 |
|---|---|
| Deemed income from financial assets | $297.18 |
| Assessable income per fortnight | $297.18 |
| Under the income test | $1,106.41 |
| Under the assets test | $711.00 |
| Paid — the lower of the two | $711.00 |
- Financial assets are deemed to earn a set rate whatever they actually earn, so moving money between a term deposit and a cash account changes nothing for the income test.
- The assets taper of $3 per $1,000 a fortnight is 7.8% a year — above any safe withdrawal rate, so extra assets near the threshold can leave you worse off.
Both tests are run and the lower result is paid. On $460,000 of assets the assets test usually binds, at about $3 per $1,000 a fortnight.
Do you qualify
How this is calculated
Parallel means tests pay the lower result
Australia reduces the pension by 50c per dollar of income above a free area, and separately by $3 per $1,000 of assets above another. The smaller of the two results is what is actually paid.
pension = min(income test result, assets test result)Assets can be deemed rather than measured
Australia assumes financial assets earn 0.25% up to $62,600 and 2.25% above regardless of actual return, so chasing yield does not change the assessment.
An assets taper can exceed the return on the assets
The Australian taper of $3 per $1,000 a fortnight is 7.8% a year — above any sustainable withdrawal rate, so extra assets near the threshold can reduce total income.
Worked example: Single homeowner with $460,000 of assessable assets
| Financial assets | $400,000 |
|---|---|
| Other assets | $60,000 |
| Assets free area | $314,000 |
|---|---|
| Binding test | Usually assets |
State pension means testing differs by country. Pick a country above for the tests that apply to you.
What this assumes
- Both partners of pension age where a couple.
- The main home is exempt from assets testing.
- Maximum rate including supplements.
- No specially assessed income streams.
Where this commonly goes wrong
- Gifting rules commonly count given-away assets for several years, so transfers rarely improve an assessment quickly.
- Pension rates are usually indexed on fixed dates, so quoted figures go stale on a schedule.
- Couple rates are typically lower than two single rates combined, and apply from the date the relationship is recognised.
Questions
How is a means-tested pension calculated?
Australia runs an income test and an assets test separately and pays the lower result. The maximum is about $1,149 a fortnight for a single, tapering by 50c per dollar of income or $3 per $1,000 of assets.
What does deeming mean?
Assuming financial assets earn a set rate regardless of actual return. Australia deems 0.25% up to $62,600 and 2.25% above, so investment choice does not change the income assessment.
Why does the assets test matter so much?
Because the taper is steeper than any safe withdrawal rate. At $3 per $1,000 a fortnight — 7.8% a year — an extra dollar of assets near the threshold can reduce total retirement income.
Related tools
Sources
General estimate based on published ATO rates for the the current period. Not tax advice, and it does not consider your objectives, financial situation or needs. Confirm your position with the ATO or a registered tax agent.
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