Age Pension Means Test – The Australian government has made a major change to the Age Pension Means Test in 2025 — and it’s good news for retirees with modest savings. In a significant policy shift, the eligibility thresholds for both assets and income have been raised, allowing thousands of older Australians who were previously disqualified to now access full or part Age Pension payments. For those who’ve been just above the limits, this could mean new financial relief after years of missing out by a small margin. The Age Pension system is one of Australia’s most important welfare safety nets, offering financial support to older citizens who meet the residency, age, and financial criteria. But for years, the means testing rules – especially asset thresholds – have been criticised for excluding those with relatively small nest eggs, such as downsized homeowners or those with moderate super balances. This 2025 update is designed to reflect rising living costs, housing prices, and inflation-adjusted asset values. By revising the asset and income limits upward, the government aims to make the pension system more inclusive and relevant to today’s economic realities. Importantly, this change will also ease the retirement burden for couples and single seniors living modestly. For anyone nearing retirement or already over the age threshold (currently 67 years), it’s essential to understand how these new rules work and whether you now qualify. Below, we break down the key updates, who benefits most, how to apply, and what you need to check to maximise your entitlements.
What Has Changed in the Age Pension Means Test?
The means test consists of both an assets test and an income test. These determine how much Age Pension you’re eligible for, if any. In 2025, both thresholds have been increased significantly.
- Asset limits for homeowners and non-homeowners raised
- Income thresholds adjusted upward to reflect wage growth
- New taper rates to calculate pension reduction from excess amounts
- Reforms benefit part-pensioners the most
- More leniency for modest superannuation holders
- Asset test now considers real estate equity differently
- Special rules introduced for downsizers
New Asset Age Pension Means Test Limits in 2025
The table below shows the updated asset thresholds that apply from July 2025 for full and part pensions:
| Status | Homeowner (Full) | Non-Homeowner (Full) | Homeowner (Part) | Non-Homeowner (Part) |
|---|---|---|---|---|
| Single | $314,000 | $567,000 | $674,000 | $927,000 |
| Couple (combined) | $470,000 | $723,000 | $1,012,500 | $1,265,500 |
| Illness-separated couple | $470,000 | $723,000 | $1,194,000 | $1,447,000 |
These changes are intended to reflect rising home prices and a growing number of retirees living with mid-sized assets but no significant cash flow.
Income Age Pension Means Test Thresholds Also Revised for 2025
Apart from assets, your income also affects pension payments. The 2025 updates increase how much you can earn before your pension starts reducing.
- Single pensioners can now earn up to $240 per fortnight
- Couples (combined) can earn up to $432 per fortnight
- Every dollar over the threshold reduces the pension by 50 cents
- Includes employment income, rental income, investments, and super drawdowns
Updated Income Test Limits in 2025
| Status | Income (Full Pension) | Income (Cut-Off for Part Pension) |
|---|---|---|
| Single | $240/fortnight | $2,444.60/fortnight |
| Couple (combined) | $432/fortnight | $3,737.60/fortnight |
These thresholds are indexed and may change annually, but the 2025 increase is seen as a major benefit for pensioners who work part-time or have investment income.
Who Will Benefit Most from These Changes?
This update is expected to bring relief to a wide section of the population nearing or already past the pension age. The biggest winners are:
- Retirees with modest super balances between $300K–$700K
- Couples who were just over the old asset limits
- Single seniors with downsized homes but limited liquid income
- Older Australians earning part-time income or investment returns
- Pensioners with small property holdings or shares
Groups Most Likely to Gain Access
- Around 90,000 older Australians will newly qualify for part pension
- Up to 15,000 full pensioners will see increased payments
- Over 45,000 previously disqualified by asset rules may now reapply
- Regional homeowners with higher land values also see benefits
How to Check If You Now Qualify for the Pension
If you were previously rejected or only received a partial pension, you should reassess your situation immediately.
- Use Centrelink’s online eligibility calculator
- Compare your total assets to the new 2025 asset limits
- Include all bank accounts, investments, vehicles, and property (excluding primary home for homeowners)
- Add up all income sources including rent, dividends, and part-time work
- Make sure your details are up to date with Services Australia
Steps to Reapply or Update Your Details
- Log in to MyGov linked with Centrelink
- Navigate to “Update Income & Assets”
- Upload any new financial documents
- If reapplying, complete the Age Pension claim form again
- Processing takes 4–6 weeks, but payments may be backdated
What About Superannuation and the Age Pension?
Superannuation balances play a big role in pension eligibility. However, under the current system:
- Super is not counted as an asset until you reach Age Pension age
- Once you reach pension age, the full balance is counted under the assets test
- Income from super drawdowns is also counted under the income test
- The 2025 changes reduce the harshness for mid-level super balances
Tips to Reduce the Impact of Super on Your Pension
- Consider moving part of your super into income streams
- Use the “Work Bonus” to exclude up to $300 per fortnight from employment income
- Make strategic withdrawals to remain under asset limits
Special Rules for Downsizers and Real Estate Equity
With housing being one of the largest assets, special rules exist to support retirees who sell their home and downsize.
- The home is exempt from the assets test
- But proceeds from a sale (even if parked in the bank) are counted
- From 2025, a 2-year asset exemption applies for downsizers
- This allows retirees to access the pension while transitioning homes
Downsizer Benefit Rule Summary
| Rule | Detail |
|---|---|
| Home Sale Exemption Duration | 2 years from settlement |
| Age Requirement | Must be over 55 at time of sale |
| Asset Exemption Amount | Up to $300,000 for singles, $600,000 for couples |
| Applicable To | Only principal residence sale |
| Effect on Pension | No asset impact for 2 years post-sale |
These updated pension rules could provide vital financial support to thousands of older Australians who were previously left out. It’s highly recommended that anyone nearing retirement, or their family members, take the time to reassess eligibility and claim what they’re entitled to. With living costs climbing, this change couldn’t have come at a better time. Always consult Centrelink or a financial advisor for your specific situation.
FAQs of Age Pension Means Test
Q1. What is the current Age Pension age in Australia?
A1. The current pension age is 67 years for anyone born on or after 1 January 1957.
Q2. Are the new limits fixed or will they change again?
A2. The limits are indexed and reviewed annually, so they may be adjusted again based on inflation and policy changes.
Q3. Does your home count in the assets test?
A3. No, your principal residence is exempt from the assets test, but other properties are included.
Q4. Can I reapply for the pension if I was denied earlier?
A4. Yes, if your financial situation now meets the new 2025 limits, you can reapply for the Age Pension.
Q5. How long does it take for pension payments to start after reapplying?
A5. Processing generally takes 4–6 weeks, and payments may be backdated to the application date.
