Retirement Wealth

Australian retirement rules and rates: a factual reference.

Worked examples

Each example shows the arithmetic of one published rule, using the current figures on this site and an illustrative amount.

The amounts in these examples are illustrative. They do not describe any person. Each example shows one rule on its own: a real assessment applies both the income test and the assets test, and other conditions and exceptions, and pays the lower rate. Services Australia works out actual payments. Its Payment and Service Finder gives an estimate.

Deeming on financial assets

Deeming treats financial assets as earning a set rate of income, whatever they actually earn. The lower rate applies up to the threshold and the upper rate to the amount above it.

Illustrative amount: a single person with $100,000 of financial assets.

  1. $66,800 at 1.75% is $1,169 a year.
  2. $33,200 above the threshold at 3.75% is $1,245 a year.
  3. Deemed income is $2,414 a year in total.

Age Pension income test taper

Under the income test, the pension reduces for each dollar of income over the free area.

Illustrative amount: a single person with assessable income of $500 a fortnight.

  1. Income over the free area: $500 less $226 is $274 a fortnight.
  2. Reduction under the income test: $274 at 50 cents for each dollar is $137 a fortnight.

Age Pension assets test taper

Under the assets test, the pension reduces for each $1,000 of assets above the full pension limit.

Illustrative amount: a single homeowner with assessable assets of $400,000.

  1. Assets above the limit: $400,000 less $333,000 is $67,000.
  2. Reduction under the assets test: 67 lots of $1,000 at $3 a fortnight each is $201 a fortnight.

Figures used