Age Pension Income Test

What is the income test?

The income test is one of two tests used by the Australian government to see if you’re eligible for the age pension, and if so, how much. You may be entitled to 100% of the pension or a part pension. The test predicts your income and, for superannuation and most investments, uses deeming estimates rather than actual figures.

The other test the government uses is the assets test, which looks at what you own.

What is deemed income?

Deemed income is a way of estimating how much you’ll earn from investments and super in the following 12 months. The deeming rate percentage is set by the government and applied to the value of your investments. The pre-set rate is used because often it’s impossible to tell how much you’ll earn from some investments.

If you end up earning more from these investments than the deemed rate, you get to keep the difference.

Try our Deeming CalculatorTo see what your deemed income could be

What is the income test threshold?

The income test threshold is the maximum amount you can earn each fortnight before age pension payments start to be reduced. The threshold is currently $212 per fortnight for most single people, and $372 per fortnight combined for couples. The more you earn over the threshold, the less age pension you’ll be paid.

The amount you can earn before it affects your age pension can vary depending on various circumstances, such as your living situation, whether you’re single or a couple, have dependents, receive other benefits etc. (See the table below)

What is the work bonus?

The Work Bonus allows people on the age pension to earn up to $300 per fortnight, on top of the income threshold, before their pension payments are affected. It’s designed to give those on the age pension the ability add to their pension income by working, without having their pensions reduced.

It’s important to remember though, the Work Bonus does not apply to passive income, such as super.

Does the work bonus renew each year?

The Work Bonus does not renew each year. Instead, any part of the fortnightly Work Bonus you don’t use, gets ‘banked’ so you can use it weeks, months or even years later. That can be up to $7,800 per year. What’s more, all new age pension recipients start with $4,000 in their Work Bonus ‘bank’.

Transitional pensioners

Transitional pensioners are those who were receiving an aged pension before September 2009 under the old rules, and would be worse off if the current income test rules were applied. The table shows the different rates of reduction for transitional pensioners. Transitional pensioners are not eligible for the Work Bonus.

Partner incomes

If only one partner is eligible for the age pension, the other partner's income is still counted in the income test by Centrelink.

Combining the pension and super

Because you can receive an income of at least $212 per fortnight without affecting your age pension, it’s possible to combine your super income with your pension income – as long as the amount you receive from super is below your income threshold.

Super and pension

How many hours can I work after retirement?

The hours you work is up to you. The age pension is not affected by how much you work, but by how much you earn. If you’re single, earning the minimum wage of around $24 per hour, and eligible for the Work Bonus, you could work approx. 20 hours each fortnight before your pension is affected.

• References
  • Services Australia
  • Department of Veterans Affairs