Australia’s age pension system is again under the spotlight, with new revelations that wealthy homeowners are claiming pensions despite holding millions in property assets.
A Department of Social Services briefing, published in the Financial Review, to new social services minister Tanya Plibersek highlighted that seniors with homes worth $5 million or more can still receive the same pension as someone living in a modest $500,000 unit.
The reason: the family home is largely exempt from the age pension asset test.
Is this the first sign that the Government is considering applying a means test to the family home for access to the Age Pension?
The implied message from the Financial Review story is that it’s not equitable (or sustainable) for the government to continue paying full Age Pension to retirees who own valuable homes.
[ RELATED POST: Record House Prices Drives Reverse Mortgage Popularity In Australia ]
The Hidden Struggle of Being “Asset-Rich, Cash-Poor”
While this has sparked debate about fairness and reform, it also shines a light on a growing reality for many older Australians: being asset-rich but cash-poor.
For retirees who have most of their wealth tied up in their homes, day-to-day living expenses can still be a struggle. Even those living in million-dollar properties often rely on the age pension because they lack sufficient superannuation or other income sources.
The report notes that under current rules, couples can have assets of up to $1.05 million—plus a home of unlimited value—and still receive a partial pension.
Brendan Coates of the Grattan Institute argues this creates “perverse incentives,” encouraging retirees to maximise pension eligibility rather than use their home equity.
Why the System Encourages This Behaviour
The family home has long been treated as sacrosanct in Australia’s tax and welfare system. Its value beyond a certain threshold doesn’t count toward the pension asset test, which effectively allows homeowners to remain eligible for benefits even with multimillion-dollar properties.
Coates estimates that including part of the home’s value in the asset test could save upwards of $4 billion annually and encourage retirees to downsize or release equity to fund their retirement.
While the government has ruled out any immediate changes, it’s clear that the current system often rewards homeowners for holding onto property wealth while still drawing on taxpayer-funded pensions.
The Cash Flow Gap in Retirement
This debate underscores a key issue: many retirees have wealth on paper but lack the liquid cash they need for a comfortable retirement.
With rising living costs, medical expenses, and the desire to maintain a decent standard of living, retirees can find themselves asset-rich but struggling to pay the bills.
Superannuation balances for many Australians, especially women and those with interrupted work histories, are still too low to support a long retirement.
Reverse Mortgages: Unlocking Home Equity Without Selling
For homeowners aged 60 and above, a Reverse Mortgage offers a practical solution. It allows you to tap into your home’s value to supplement your retirement income—without having to sell your home or move out.
Key features of a Reverse Mortgage:
✅ Access your home equity as a lump sum, regular income, or line of credit.
✅ No monthly repayments required. The loan plus interest is repaid when you sell your home, move into aged care, or pass away.
✅ Stay in your home as long as you like. You retain ownership and continue living in your property.
Instead of relying solely on the age pension—or being forced to downsize before you’re ready—a Reverse Mortgage gives you control over your financial future.
Why It Makes Sense for Asset-Rich, Cash-Poor Seniors
For retirees in million-dollar homes, the property value is effectively locked away unless they sell. But selling often means losing the family home, moving away from friends and community, or paying significant downsizing costs.
A Reverse Mortgage solves this problem by providing cash flow from the wealth you’ve already built—without the emotional or financial upheaval of selling.
Brendan Coates himself notes that seniors who may lose pension entitlements under a reformed asset test could always “use the home equity release scheme to borrow against their home to top up their income.”
[ RELATED POST: ‘I Love My Home’: Why over 55’s are reluctant downsizers ]
Why Get Expert Advice?
Reverse Mortgages are complex, with over 150 points of difference between lenders—such as interest rates, borrowing limits, and credit policies.
At Seniors First, we’ve specialised in helping Australians navigate Reverse Mortgages since 2006. Our experts can guide you to a solution that matches your needs, helping you unlock the equity in your home safely and responsibly.
The Bottom Line
Whether or not the government reforms the pension asset test, the reality remains: many retirees are sitting on property wealth they can’t easily access.
Want to learn more about Reverse Mortgage? Find out more about how to use a Reverse Mortgage or download your FREE REVERSE MORTGAGE GUIDE.
Ready to Apply? You can now check your eligibility online or call Seniors First on 1300 745 745.