The Age Pension remains the foundation of retirement income for most Australians, but how much you actually receive depends on two separate tests — income and assets — with whichever test produces the lower rate applying to you. Here is exactly how both tests work for 2026-27, using the current rates.
Maximum Age Pension Rate
The maximum fortnightly Age Pension for a single person is $1,200.90, current from the 20 March 2026 indexation. This is the ceiling — most pensioners receive less once the income or assets test is applied, and the two tests are assessed separately, with the lower resulting rate being what you actually get paid.
The Income Test
| Fortnightly income | Effect on pension |
|---|---|
| Up to $226 (single) | No reduction — full rate payable |
| Above $226 | 50 cents reduction for every dollar over the threshold |
This income free area of $226 a fortnight covers income from work, most superannuation income streams, and financial investments assessed under deeming rules. If your only income is the Age Pension itself, the income test has no effect at all.
The Assets Test
Separately, your assets — excluding the home you live in — are assessed against a threshold. For a single homeowner, the threshold is $333,000; for a single non-homeowner, it is $600,000, reflecting the fact that non-homeowners need more assets set aside to cover housing costs. Above the relevant threshold, your pension reduces by $3.00 a fortnight for every $1,000 of assets over the limit.
The gap between the homeowner and non-homeowner thresholds is substantial — $267,000 — which is worth understanding if you are weighing up downsizing or are unsure whether your home counts towards the assets test (it generally does not, while an investment property does).
Why Two Tests Exist
Centrelink runs both tests and pays you the lower of the two results. This means a pensioner with modest income but substantial assets could be assessed under the assets test, while a pensioner with significant part-time income but few assets could be assessed under the income test instead. It is not a choice — both tests are calculated automatically, and the one that produces the smaller pension payment is the one that applies to you.
Deeming Rules for Financial Investments
Rather than assessing the actual interest or returns you earn on savings and investments, Centrelink uses "deeming" — assuming your financial assets earn a set rate of return regardless of what they actually earn. This simplifies reporting (you do not need to report actual investment income every time it changes) but can work against you if your investments are earning less than the deemed rate, or in your favour if they are earning more.
Couples Are Assessed Differently
Couples have their own combined thresholds and rates for both the income and assets tests, generally higher than the single thresholds but lower than double the single amount. If you are part of a couple approaching Age Pension age, it is worth checking the combined position for both of you together rather than assuming your individual circumstances alone determine your entitlement.
The Bottom Line
The Age Pension's dual income and assets tests mean your actual entitlement can be well below the maximum $1,200.90 rate, depending on your specific financial position. Because Centrelink applies whichever test results in the lower payment, understanding both — not just one — is essential to knowing where you actually stand. If you are approaching pension age, it is worth reviewing your assets and income position against both thresholds well before you apply, so there are no surprises.