Key pension changes to know for the 2025-26 financial year

Assets may include your investments, household contents, or other possessions. Your principal residence (family home) is excluded from the assets test.

Income includes that which you might receive from your employer, as well as deemed income from investments, super (if over Age Pension age) or account-based pensions. It excludes payments such as regular gifts from immediate family members or emergency relief payments. 

When a single person earns more than $218 in a fortnight, their pension will reduce by 50 cents for each dollar over $218.

When a couple earns more than $380 in a fortnight, each member of the couple’s pension will reduce by 25 cents for each dollar over $380.

Tip: The Work Bonus allows you to earn up to $300 per fortnight from employment without affecting your Age Pension.

If you do not work, or you earn less than $300 a fortnight from employment, any unused portion of the $300 fortnightly Work Bonus can be accrued in your Work Bonus balance of up to $11,800.  This balance can then be used to offset future employment income. 

The Work Bonus operates in addition to the pension income free area. For example, this means a single person could have deemed income of $218 per fortnight as well as employment income of $300 per fortnight and still receive the maximum Age Pension under the income test.

New pensioners of Age Pension age will receive a $4,000 Work Bonus income starting balance and the maximum Work Bonus balance that can be accrued remains at $11,800. 

Deeming is a simplified method used to estimate income from financial investments to see if you qualify for social security entitlements, such as the Age Pension.

Deeming rates assume your financial investments are earning a certain amount – no matter how much they’re actually earning.

A key advantage is that your actual investment returns may exceed the deemed rates, especially during periods of higher interest rates. The freeze on deeming rates that was in place during the 2023-24 financial year was extended until 30 June 2025. At the time of writing, these rates have not changed.

However, deeming thresholds are reviewed every year and these increased on 1 July 2025.

If you’re wondering what the Age Pension pays, the maximum amounts increased on 20 March 2025.

Age Pension payments are generally reviewed each year in March and September, so may change again in the future.

Tip: Age Pension payments can be received on top of any income you may get from your super savings, depending on how much super you have. Check your Age Pension eligibility using this free Age Pension Eligibility Calculator from Retirement Essentials and CFS.

Where you have an existing account-based pension, the minimum annual payments are re-calculated on 1 July by multiplying your account balance by the minimum drawdown rate that applies based on your age on that date. The rate for different age groups is set out in the table below and increases with age.

There is no maximum placed on pension payments from an account-based pension. You’re only limited by your account balance. However, if you are receiving a transition to retirement pension, a 10% maximum drawdown limit may apply where you are under age 65 and have not yet retired (or satisfied another specified condition of release).

There is also a lifetime limit on how much super you can transfer into a tax-free retirement account like an account-based pension.

This is called the transfer balance cap and it’s reviewed each year. As of 1 July 2025, the general transfer balance cap is $2 million. However, depending on your circumstances, your personal transfer balance cap could be between $1.6m and $2m.