Age pension eligibility myths debunked

Think you have to exhaust your assets to be eligible for the age pension? Think again. Here's what you need to know.

Are there investment strategies that can help retirees access the age pension sooner? Yes!

And it is worth talking to your financial adviser about these - even a part age pension can play an important role in a retirement income strategy.

And the good news is that you don't have to exhaust your own resources before you qualify for that 
first age pension dollar.

The thresholds for age pension eligibility increased on July 1, 2026.

A couple, who live together and own their home, can have up to $1,102,500 and still qualify for a part age pension.

For a single homeowner the limit is $733,500.

But here's the thing. A key misconception among retirees is that they must spend most of their savings to qualify for the age pension.

That's simply not the case. This is where a lifetime annuity, which pays an income guaranteed for life, can be worth investigating.

It's all about the assets test

For many Australians, account-based pensions (ABPs) are the go-to way to use super in retirement.

ABPs, however, are fully assessable under the age pension income and assets tests.

By contrast, only 60% of a lifetime annuity investment counts towards the annuitant's assets test.

After five years from the initial investment or when the annuitant later reaches 85, only 30% is assessed. Similarly, only 60% of income generated by a lifetime annuity is assessed under the annuitant's income test.

So for every $200,000 invested in a lifetime annuity, such as Generation Life's LifeIncome product, assessable assets reduce by $80,000.

Own $1 million in assets and still qualify for a part age pension 

The favourable treatment of lifetime annuities means that a homeowning couple who live together can have more than $1 million in retirement assets and still qualify for a part age pension.

Put simply, a lifetime annuity can reduce your assessable assets below the threshold separating self-funded retirees from those on a part age pension.

The benefits of a lifetime annuity can go a lot further.

Along with a regular income guaranteed for life, a lifetime annuity can bring forward the age at which you can qualify for the age pension depending on your other retirement assets.

With a regular income stream from a lifetime annuity, ABP and age pension, retirees can gain greater confidence and flexibility in managing their retirement income.

Talk to your financial adviser about how a lifetime annuity can help you access the age pension sooner than you expected.

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