How much money can you have before your pension is threatened?

In terms of assets, the following are the primary limits as of the 1st of July 2022:

For an individual to be eligible for a full pension, their assets, minus the value of their primary residence, must be valued at less than:






The two of them together



1. indexed on the first of every July The Australian Government Services Australia website was our primary source.

In order to qualify for at least a portion of a pension, the following thresholds must be met:






The two of them together



A couple that had been apart due to illness has reunited.



1. Indexed on the 20th day of March, the 1st of July, and the 20th of September Higher minimums and maximums will apply to people who receive rent assistance. The Australian Government Services Australia website was our primary source.

In order to qualify for a pension at a transitional rate, your total assets must be less than:






The two of them together



A couple that had been apart due to illness has reunited.



It is essential that you are aware that if you get Rent Assistance, your maximum monthly income will be increased. You can determine where your cutoff point is by using the Payment and Service Finder.

Strategies for lowering the value of assets

There are a number of methods that can be implemented in order to bring down asset levels, which could result in becoming eligible for a partial pension or in an increase to the amount of pension already being received.

However, prior to reducing your assets, it is important to consider whether your remaining savings can cover any shortfall in your retirement income needs. This is because even with an increased pension amount, it is possible that this amount will not be sufficient for your needs. Alterations in one's personal circumstances can also lead to an increased reliance on one's diminished savings. For instance, if you have future health problems, you might need to move into an elderly care facility, which can result in increased costs.

Keeping this in mind, the following are six potential asset reduction strategies that can assist in enhancing your pension:

1. A gift, subject to certain parameters, made more than five years before the age of eligibility

Giving money or other assets to members of your family or close circle of friends can help reduce the amount of your wealth that is subject to taxation. The maximum amount of money that can be given as a gift by a single person or a married couple in a single fiscal year is $10,000, and the maximum amount that can be given in a rolling five-year period is $30,000. Any amounts that are in excess of what is required will continue to count toward the asset test (and will be deemed to count toward the income test) for a period of five years beginning on the date that the gift was given. This state is referred to as deprivation.

If you are more than five financial years away from reaching your age pension age or from receiving any other Centrelink payments, you are permitted to gift any amount without having that amount's eventual assessment changed once you do reach your age pension age.

Keep in mind that if you give away some of your assets or retirement savings, it may be able to help your family financially, but it may also have an effect on your age pension.

Your primary residence qualifies as an exempt asset, and any money you spend to maintain or enhance it will be included in its value and will not be counted as an asset for the purposes of the assets test.

3. Repay debt that is secured against assets that are exempt from taxation

Your total assessable assets will not decrease if you have debts that are secured against exempt assets. One example is a loan secured by the family home, which can be used for anything, despite the fact that the money was initially borrowed for something else. However, decreasing the overall assessed asset amount by using assessable assets to repay these debts can have this effect. Importantly, you must make actual payments toward the debt; depositing cash in an offset account or keeping it there will not achieve this result.

4. Funeral bonds within the prescribed limits or prepayment of funeral costs

There are a couple of ways that you can reduce the amount of your assets that are subject to taxation if you choose to make prepayments or savings for funeral expenses at this time.

A person is exempt from the assets test if they invest up to $14,000 (as of 1 July 2022) in a funeral bond, and this amount can be invested at any time. Each member of a couple is allowed to have up to the same maximum amount of their own individual bond. In contrast, the total amount that can be invested in a funeral bond by a couple cannot be more than $14,000 i. e it is not twice as much as the limit for individuals 2

On the other hand, the amount that can be spent on prepayment of funeral expenses is not capped at any point. In order for the costs to be considered acceptable, there must be a contract that details the services that have been paid for, states that the amount has been paid in full, and stipulates that the payment is non-refundable. It is important to note that the two methods of paying for funeral costs are designed specifically for this purpose and are intended to prevent assets from being accessed for any other reason.

5. Make a pension payment to the younger spouse and keep the money in the accumulation phase

If you have a younger spouse who has not yet reached their age pension age and is eligible to contribute to super, contributing an amount into their super account may reduce the amount of assessable assets you have. If you have a younger spouse who has not yet reached their age pension age and is eligible to contribute to super. To cover the cost of the contribution, the senior partner can even take money out of their own superannuation account in the form of a tax-free lump sum.  

If the owner of a superannuation account is under the age of pension eligibility, the investments that are held in the accumulation phase of the account are excluded from the person's assessable assets. Before employing this strategy, one must first take into account any additional costs that may be incurred. The maintenance of multiple superannuation accounts may result in duplicate fees. Putting money into an accumulation account could result in a tax rate as high as fifteen percent being applied to the income generated by these investments. Alternately, if the funds are invested in an account-based pension or possibly even personally, any earnings on those investments are exempt from taxation.  

These funds will be considered "preserved" if they are contributed to a younger spouse who is still working and is under the age of eligibility for the age pension. In addition to this, they need to make sure they do not go over their contribution limits3.

If your spouse has a low income, their capacity to build up their retirement savings is likely to be constrained. However, there are ways in which you can contribute while also potentially earning a tax rebate for yourself.

According to the Social Services and Other Legislation Amendment (Supporting Retirement Incomes) Bill 20184, lifetime income streams such as an annuity purchased after 1 July 2019 may be favorably assessed. This is something that could be beneficial for retirees. When applicable, an assessment of only sixty percent of the total purchase price is made. This falls to 30% once the later of reaching the age of 84 (considering the current life expectancy factors) or five years has occurred.  

In order for the lifetime annuity to be eligible for concessional treatment, it must conform to a "capital access schedule," which places restrictions on the amount of money that can be converted into cash either voluntarily or automatically upon the annuitant's passing. This is demonstrated in the examples below:

Graph titled “Capital access schedule”. Description provided below.

4. Information obtained from the Parliament of Australia  

The value of voluntary commutations has to decrease in a "straight line" fashion, reaching zero when the recipient reaches their life expectancy. The death benefit can be as high as one hundred percent until the investor reaches the midpoint of their expected lifespan, at which point it will follow the value of the investor's voluntary withdrawals.  


If you are currently above the upper asset test threshold, reducing your assessable assets to an amount that is below the relevant assets test threshold can provide you with a number of benefits, including an increase in your current pension or the opportunity to qualify for a part pension.  

It may be tempting to purposefully reduce your asset levels in order to qualify for these benefits; however, it is important to keep in mind that the payment rate for the Age Pension is figured out by applying a test to both your income and your assets. The amount owed is calculated based on the test that yields a lower entitlement. If the income test is the more stringent of the two, then decreasing the value of your assessable assets may not provide much of a benefit, if any.  

You should not lose sight of the fact that any reduction in your assets means that there are fewer assets for you to call upon in the event that you are required to do so if the assets test is made more stringent.

Next: how to determine the appropriate distribution of assets

Considering retirement but are unsure how to get started planning for it. Find useful advice and information in our guide to retirement planning, which can assist you in getting started right away.

Not sure if your super will last the distance in your retirement Our calculator for superannuation and retirement can give you an estimate of the amount of money you might have in superannuation when you retire as well as a rough estimate of how long it might last.

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