When Gold Coast retiree Brian Matthews picked up a few shifts at a local hardware store, he didn’t expect it to affect his Age Pension. But after reviewing his Centrelink statement, he noticed a slight reduction in his fortnightly payment.
“I only work two days a week,” he said. “I didn’t realise it would change my pension.”
In 2026, updates to income and asset test thresholds are reshaping how much retirees can earn or hold in assets before their Age Pension begins to reduce. With cost-of-living pressures still influencing retirement planning, understanding these shifts is critical.
Here’s what you need to know about earning income — or holding savings — without losing your pension.
Why the Asset and Income Tests Matter
The Age Pension in Australia is means-tested. That means eligibility and payment amounts depend on:
- How much income you earn
- The value of your assets
Even small changes in income or asset values can affect your fortnightly payment.
In 2026, indexed threshold increases aim to reflect inflation and wage growth, allowing retirees slightly more flexibility before payments are reduced.
A Services Australia representative explained:
“Income and asset thresholds are reviewed regularly to ensure fairness and reflect economic conditions.”
Income Test: How Much Can You Earn?
Under the income test, retirees can earn up to a certain amount before their pension begins to reduce.
For 2026 (estimated indexed figures):
Singles
- Free area: Approximately $200+ per fortnight
- Pension reduces by 50 cents for every dollar earned above the free area
Couples (Combined)
- Free area: Approximately $350+ per fortnight
- Reduction rate: 50 cents per dollar above the threshold
This means you can earn some income — from part-time work, investments or superannuation — without immediately losing your pension.
The Work Bonus Explained
The Work Bonus allows pensioners to earn employment income without affecting their payment up to a certain limit.
Key features include:
- Additional income concession for employment earnings
- Unused amounts can accumulate (up to a cap)
- Encourages part-time work among seniors
For retirees like Brian, understanding the Work Bonus can help minimise reductions.
Assets Test: What Counts?
The assets test assesses the value of assets you own, excluding your primary residence.
Counted assets typically include:
- Savings accounts
- Shares and managed funds
- Investment properties
- Superannuation (once over pension age)
- Vehicles (above basic value thresholds)
- Valuable personal items
If assets exceed certain limits, your pension reduces gradually — or may stop altogether.
Estimated 2026 Asset Thresholds
While final figures depend on indexation, approximate thresholds are:
Homeowners (Singles)
- Full pension up to around $300,000+ in assets
- Part pension up to around $650,000+
Homeowners (Couples Combined)
- Full pension up to around $450,000+
- Part pension up to around $950,000+
Non-homeowners have higher thresholds to account for housing costs.
Comparison Table: Income vs Asset Impact
| Test Type | Free Threshold | Reduction Rule |
|---|---|---|
| Income Test | ~$200 (single) | 50c per $1 above |
| Assets Test | ~$300k (single homeowner) | Gradual taper |
| Work Bonus | Extra employment concession | Offsets earned income |
The test that results in the lower pension payment applies.
Real Impact: Earning Without Losing Everything
Margaret Lee, 68, works casually at a community centre. She earns around $250 per fortnight.
“I was worried it would cancel my pension,” she said. “But with the Work Bonus, it hasn’t reduced much.”
Her situation reflects a common misconception — earning some income does not automatically eliminate pension eligibility.
Which Test Applies?
Centrelink applies both the income and assets tests and pays you the lower result.
For example:
- If your assets are low but income is high, the income test applies.
- If your income is low but assets are high, the assets test applies.
Understanding which test affects you most is essential for planning.
Why Threshold Changes Matter in 2026
As living costs rise, retirees may:
- Draw more from superannuation
- Seek part-time work
- Rely on investment income
Indexed threshold increases provide modest breathing room before pension reductions occur.
Financial planner Karen Doyle explains:
“Even small threshold adjustments can help retirees maintain part-time work without excessive penalty.”
Can You Lose the Pension Completely?
Yes — if your income or assets exceed upper limits.
However, many retirees qualify for a part pension, which still provides:
- Regular income support
- Access to the Pensioner Concession Card
- Discounted medicines
- Utility rebates
Even a small pension can unlock significant additional benefits.
What You Should Do in 2026
- Review your total income sources.
- Estimate asset values accurately.
- Check Work Bonus balances.
- Update Centrelink promptly with changes.
- Consider financial advice before major asset sales.
Strategic planning can prevent unexpected reductions.
Frequently Asked Questions (Q&A)
1. How much can I earn before losing my pension?
Around $200 per fortnight for singles before reductions begin.
2. Does part-time work cancel the pension?
No, it may reduce payments gradually.
3. What is the Work Bonus?
An employment income concession for pensioners.
4. Does super count as income?
It can, depending on how it is drawn.
5. Is my home counted?
No, your primary residence is exempt.
6. Can I receive a part pension?
Yes, many retirees do.
7. Which test applies first?
Both are assessed; the lower result applies.
8. What if my assets increase?
Your pension may reduce under the assets test.
9. Are thresholds rising in 2026?
Yes, modest indexation increases apply.
10. Can I gift assets to qualify?
Gifting rules apply and may still count toward limits.
11. Does investment income affect payments?
Yes, under deeming rules.
12. Are non-homeowners treated differently?
Yes, they have higher asset thresholds.
13. How often are thresholds updated?
Typically twice per year.
14. Can I check my status online?
Yes, through your Centrelink account.
15. Why is understanding this important?
To avoid unexpected payment reductions.
In 2026, asset and income test shifts offer modest flexibility for retirees balancing part-time earnings and savings. While the Age Pension remains means-tested, careful planning can help Australians earn additional income — or hold reasonable assets — without losing essential support.
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