How Downsizing, Aged Care & the Home Equity Access Scheme Affect Your Age Pension Eligibility
Key Points
Almost 2.6 million Australians currently receive the Centrelink Age Pension — but eligibility isn’t set in stone. Your entitlements can change as your financial circumstances evolve or as government rules and thresholds are updated. Staying informed is essential to make sure you receive everything you’re entitled to.
The Age Pension also plays a critical role in planning for aged care and housing decisions later in life. Moving into a nursing home, transitioning to a retirement village, or downsizing your home can all impact how your pension is assessed. How you fund your care or accommodation — whether by paying a Refundable Accommodation Deposit (RAD) or unlocking home equity — can also change your eligibility and payment rates.
The rules surrounding Age Pension assessment can be complex. It’s worth taking the time to understand exactly what you’re entitled to before lodging forms or applying online. Centrelink can sometimes take months to process a claim or respond to eligibility queries, so getting the facts straight early can save time and give you the confidence to plan, even if government processing is slow.
To make things easier, we’ve organised the key rules into simple, easy-to-follow tables so you can work out your next steps with clarity.
Use our simple guide to work out where you stand and what you are entitled to.
Working Out the Asset and Income Tests
All Age Pension applicants fall into categories based on three factors:
Your assets and income
Your relationship status (single or part of a couple)
Whether you own your home
The main groupings are determined by home ownership and whether you’re single or partnered.
In the table below:
Green indicates you qualify for the full-rate pension.
Red means you’re not eligible for any Age Pension.
Amber (like a traffic light) indicates a part pension.
The Government applies two separate tests — an assets test and an income test. Your pension payment will be based on whichever test produces the lower rate.
It’s important to understand that:
Both tests are applied separately.
The outcome that results in the lower pension rate is what you’ll receive.
You can review the official thresholds for both the Centrelink Income Test and the Centrelink Assets Test. However, many people find our simplified tables much easier to follow.
Working out what counts as assessable assets and income can be complex. If you’d like help clarifying your situation, don’t hesitate to call us.
If you already have a good idea of your assessable assets and income, it’s worth reviewing the tables below to see if recent changes might affect your entitlements.
Important Notes About the Income Test
The income test does not consider whether you own your home — home ownership only affects the assets test thresholds.
Also, some assets are treated as earning income based on deeming rules, even if they aren’t producing actual income. Deeming can apply to things like bank accounts, shares, and managed funds.
Deeming calculations can be complex, but understanding them is important for working out your Age Pension eligibility — and for assessing eligibility for the Commonwealth Seniors Health Card as well.
If you’d like help navigating these calculations, don’t hesitate to get in touch.
Planning Ahead Pays Off
Your Age Pension eligibility can change over time — especially after big life moves like downsizing, entering a retirement village, or moving to aged care. Reviewing your situation regularly (and getting expert help when needed) gives you confidence and makes Centrelink applications much smoother.
What should you be doing now?
Whether you get a full or part pension, or are not eligible for an age pension payment, there are things you should keep in mind based on your circumstances.
Use your fortnightly payment to check if you are a full-rate pensioner
Check your fortnightly pension to make sure you are getting the maximum.
If you think you are a full-rate age pensioner, and you are not getting the full-rate in the table below, you may need to update information held with Services Australia.
Part-Pensioners: make sure your information is up to date to get the right amount
If your rate of pension is less than the rates in the table above, you are a "part-pensioner".
The assessable assets you have will reduce the amount of age pension you get by a formula.
The way the formula works is that for every $10,000 worth of assets you have over a set limit, your pension will be reduced by $780 per year.
It's worth checking that the correct value is on file for your car or caravan, and that any changes in the value of your savings and investments is known.
Get the Pensioner Concession Card and make it count
Even if you are only eligible for a small amount of Age Pension, you will have access to a whole range of benefit from holding a Pensioner Concession Card.
For some Age Pensioners, the value of holding the card may be greater than the rate of Age Pension itself.
Every age pensioner gets a Pensioner Concession Card
Borrowing with the Home Equity Access Scheme — Currently 3.95%
Homeowners can borrow against their property through the government-run Home Equity Access Scheme — a type of reverse mortgage.
The amount you can borrow is linked to the maximum Age Pension rate, so when the pension increases, the borrowing limit also rises.
The Home Equity Access Scheme can be a vital part of managing residential aged care cashflows. Even if you don’t draw on the loan immediately, setting it up in advance can provide a flexible, low-cost source of funding when income and assets are needed for optimal aged care planning.
Because it’s government-run, the current interest rate (3.95%) is much lower than most commercial reverse mortgage products — though this could change in the future.
Importantly, the loan is available even if your income and assets are too high for Age Pension eligibility. This can be especially helpful if you have assets that don’t generate much income but still need extra cashflow.
It’s well worth considering if you own property and are planning for aged care or retirement housing transitions.
Aged Care Costs Are Increasing — What It Means for Your Pension and Planning
As you may know, the rules around aged care and the Age Pension are complex. How any changes will affect you depends on both your financial situation and the aged care decisions you make.
With the rising cost of living and higher interest rates, the cost of aged care is increasing. This especially affects how much you’ll pay if you choose to cover your residential aged care accommodation through a daily payment (instead of a lump sum Refundable Accommodation Deposit). Daily payments have become more expensive as interest rates have risen.
In addition, the basic daily care fee that all aged care residents pay is directly linked to the Age Pension rate, which changes over time.
Navigating these moving parts can be difficult, but a specialist who understands both your financial situation and the aged care system can help you plan with confidence.
There’s no need to worry or panic — but it is important to clearly understand how changes may affect your situation, whether positively or negatively.
If you’d like assistance, we’re here to help. Call us on (02) 9173 8560.
*We have simplified, rounded and generally streamlined the rules to make our charts and tables work. We hope this helps you getting a better understanding how you sit in with the system. There are a few quirks we may have skimmed over for simplicity - as there always are with government rules and systems - the objective is to call you to action to get to the bottom of your story.