How the Age Pension is worked out

Two tests, one answer

Services Australia works out the Age Pension using two separate tests: an assets test (what you own) and an income test (what you earn, plus income it assumes your savings earn). Each test produces a fortnightly rate. You are paid the lower of the two, up to the maximum rate for your situation.

That is the whole method. Everything else is detail about what counts, and where the free areas and cut-offs sit.

Step 1: the assets test

Add up everything you own except your principal home: bank accounts, term deposits, shares and managed funds, superannuation (once you have reached Age Pension age), account-based pensions, investment property, cars, caravans, boats, home contents and personal effects. Use what you would get if you sold each item today, not its insured or replacement value.

If the total is under the assets free area for your situation, the assets test allows the full pension. Above the free area, the pension reduces by $3.00 a fortnight for every $1,000 of extra assets until it cuts out.

1 July 2026	Free area	Cut-off
Single homeowner	$333,000	$733,500
Single non-homeowner	$600,000	$1,000,500
Couple homeowner (combined)	$499,000	$1,102,500
Couple non-homeowner (combined)	$766,000	$1,369,500

Step 2: the income test

The income test looks at your gross fortnightly income: wages, rental income, business income, defined benefit pensions, foreign pensions and similar. It also adds deemed income on your financial assets (see below). Interest and investment earnings are not counted directly; deeming covers them.

Below the income free area your pension is unaffected. Above it, the pension reduces by 50 cents for every extra dollar of income.

1 July 2026, per fortnight	Free area	Cut-off
Single	$226.00	$2,627.80
Couple (combined)	$396.00	$4,016.80

Deeming, in plain English

Rather than asking what your savings actually earned, Services Australia deems them to earn a set rate. On the first $66,800 for a single person ($110,600 for a couple) the rate is 1.25% a year; anything above that is deemed at 3.25%. The result is converted to a fortnightly amount and added to your other income.

Deeming applies to bank accounts, term deposits, shares, managed funds, bullion, loans you have made, and superannuation and account-based pensions once you have reached Age Pension age. It does not apply to your home, car, contents or investment property (those are assessed on their actual rent and value).

Step 3: the lower result is paid

With both fortnightly figures in hand, Services Australia pays the lower one. The estimators show both tests side by side and flag which one applies to you, so you can see what would change your rate.

Maximum rates

For 1 July to 19 September 2026 the maximum rate, including the Pension Supplement and Energy Supplement, is $1,200.90 a fortnight for a single person and $1,810.40 a fortnight for a couple combined. Rates are indexed on 20 March and 20 September, and the free areas and thresholds on 1 July.

What the estimators leave out

To keep the working transparent the estimators cover the standard tests only. They do not model the Work Bonus, Rent Assistance, transitional rates, overseas rates, blind pension provisions, defined benefit deductible amounts or lifetime income stream concessions, and they do not check whether you are eligible (Age Pension age is 67, and residence rules apply). If any of those touch your situation, the amount you receive may differ.

Where to get help

Services Australia's Financial Information Service is free and independent. A licensed financial adviser can look at your whole situation, including strategies that change how your assets and income are assessed.