Many seniors want to know, ‘Does moving into a retirement village affect my pension?’
Most of the time, moving into a retirement village doesn’t lower your Age Pension. But Centrelink might look at your assets a bit differently. If your entry contribution is $258,000 or less, you usually aren’t considered a homeowner for pension purposes. This may mean you’re entitled to a higher pension level. You might also receive Rent Assistance if you pay rent or service fees regularly.
Centrelink often treats retirement village arrangements differently from owning a standard home. In nearly all retirement villages, the amount you pay is not the same as buying a house outright. This is one reason why a retirement village home can affect the Age Pension in a different way compared to a regular property. Depending on the village contract, the payment might be considered a financial asset instead, changing how your pension eligibility is calculated.
For retirees thinking about this option, it’s essential to know that the type of agreement and the amount you pay to enter the village could indeed affect your pension.
Are You Considered a Homeowner or a Non-Homeowner in a Retirement Village?
One of the most important factors that will affect your Age Pension when moving into a retirement village in Australia is whether Centrelink classifies you as a homeowner. The classification determines how your assets are assessed under the pension means test, which ultimately impacts the pension amount you receive.
Why homeowner status matters
Understanding what affects your pension is important when considering retirement village living. Centrelink has different asset limits for people who own homes and people who don’t. Generally speaking:
- Homeowners have lower asset thresholds because their principal home is exempt from the assets test.
- Non-homeowners have higher asset thresholds because they are assumed to have housing costs and may not have property tied up in their assets.
This classification can change the Age Pension you receive.
What is considered your principal home?
When calculating pension eligibility in Australia, your principal home (also called your principal place of residence) is usually exempt from the assets test. This means that when Centrelink looks at your total assets, they don’t count the value of your home.
However, retirement villages operate under different legal arrangements. In many cases, you don’t technically ‘own’ the property in the same way as a traditional home purchase. Instead, you may pay an entry or an ongoing contribution to secure the right to live in the village.
Because of this structure, Centrelink uses the size of your entry contribution to determine whether you are treated as a homeowner or non-homeowner for pension purposes.
How entry contribution affects your pension status
Several factors influence pension eligibility, including your assets, income, housing arrangements and entry contribution. Together, these determine what affects your pension and how much Age Pension you may receive.
The following table shows how Centrelink generally determines your status:
| Entry Contribution (How much you paid to enter the retirement village) | Your Status Is | Impact on Assets |
| Above $258,000 | Homeowner | Entry payment is exempt (not counted as an asset). |
| $258,000 or less | Non-Homeowner | Entry payment is fully assessable as an asset. Rent Assistance may apply. |
How this affects your Pension
If your assessable assets exceed the relevant threshold, your pension begins to reduce. Currently, the pension generally reduces by $3 per fortnight for every $1,000 of assets above the asset limit. Some retirees may qualify for a higher pension than homeowners with the same financial assets because non-homeowners have higher asset limits.
Retirement Village Entry Contribution for Couples
When couples also move into a retirement village, how their entry contribution is evaluated determines if Centrelink treats them as homeowners or non-homeowners for Age Pension eligibility.
Couples still have to pay the $258,000 entry contribution threshold (used to determine homeowner status). However, how the payment is assessed depends on the couple’s living arrangements and how the retirement village contract is structured. Here are some common scenarios.
1. Standard Couple (Sharing One Unit)
If both partners move into the retirement village and share the same unit, the combined entry contribution for that unit is used to determine their homeowner status.
- Entry contribution above $258,000: The couple is treated as homeowners, and the entry contribution is exempt from the assets test because it is considered their principal home.
- Entry contribution of $258,000 or less: The couple is treated as non-homeowners, and the entry contribution becomes assessable as an asset.
For many couples, the combined cost of a retirement village unit is well above the threshold, meaning they are generally assessed as homeowners.
2. One Partner Moving In, One Staying Home
Sometimes one member of a couple moves into a retirement village while the other continues living in the family home. In this case:
- The family home may continue to be treated as the principal residence, meaning it remains exempt from the assets test.
- The entry contribution paid for the retirement village may also be assessed depending on the circumstances.
Centrelink looks at both partners – their living arrangements and assets – so it’s worth clarifying how both residences are treated.
3. Illness-Separated Couple (Sharing One Unit)
An illness-separated couple refers to partners who must live apart because one requires specialised care (for example, aged care or supported accommodation).
If both partners still share the same retirement village unit but qualify as illness-separated:
- Each partner may be assessed individually for pension purposes.
- However, the entry contribution is still assessed against the homeowner threshold for the shared residence.
This arrangement can sometimes increase pension eligibility because Centrelink applies different asset thresholds for illness-separated couples.
4. Illness-Separated Couple (Living in Separate Units)
In some cases, illness-separated couples may need to live in different accommodations. Maybe one person remains in a retirement village while the other moves into an aged care facility. Centrelink will then assess each person’s accommodation separately. This can mean:
- One partner may be assessed as a homeowner.
- The other may be treated differently depending on their accommodation arrangement.
These situations can be quite complex, so getting financial advice or talking directly with Centrelink really helps.
5. Couple with Only One Partner Eligible (Age Gap)
Where only one partner has hit the Age Pension and the other hasn’t, Centrelink will likely assess your combined assets and living arrangements.
Say you both move into a retirement village together:
- The entry contribution is still used to determine homeowner status for the couple as a whole.
- Pension eligibility for the older partner will still take into account the couple’s total financial situation.
This means the younger partner’s assets and income may still influence the pension outcome.
6. Rent Assistance for Non-Homeowner Couples
If a couple is classified as non-homeowners because their entry contribution is $258,000 or less, they may be eligible for Commonwealth Rent Assistance.
Rent Assistance is an additional payment available to Age Pension recipients who pay ongoing rent or accommodation charges. It is designed to help offset housing costs and is calculated based on:
- The amount of rent or accommodation fees paid
- The couple’s income and assets
- Their pension eligibility
For retirees in retirement villages who qualify as non-homeowners, Rent Assistance can provide a modest increase to pension income and help cover ongoing accommodation expenses.
Because retirement village contracts, pension rules and living arrangements can vary widely, it’s important for couples to understand how their entry contribution and accommodation choices may affect their pension status before making the move.
What Happens to the Money from Selling Your Old House?
For many people moving into a retirement village or downsizing from a family home, selling the property will unlock equity, meaning the proceeds from selling their house are converted into cash sitting in the bank. While this can provide financial flexibility for retirement, it can also affect how Centrelink assesses your Age Pension.
Normally, money held in bank accounts or investments is counted as an assessable asset for the pension assets test. However, if you sell your home with the intention of purchasing or building another principal residence, the government allows a temporary exemption on those sale proceeds. This is known as the sales proceeds exemption.
1. The 24-Month Exemption
Under the sales proceeds exemption, the money from selling your principal home can be exempt from the assets test for up to 24 months, provided the funds are intended to purchase or build another home. This means:
- The proceeds from the sale can remain in your bank account without being counted as an asset for up to two years.
- This allows retirees time to find suitable accommodation, including a retirement village or smaller property.
A. Can the exemption be extended?
Yes. In some circumstances, Centrelink may extend the exemption beyond 24 months, particularly if delays are outside the person’s control (e.g. construction delays or settlement issues). Extensions may allow the exemption period to continue for up to an additional 12 months in certain situations.
B. What happens if the money is not used for housing?
If the funds are not used to purchase or build a new home within the exemption period, the remaining balance will then become fully assessable under the assets test. This can reduce the amount of Age Pension you receive if your assets exceed the relevant thresholds.
2. Income Test and Deeming
Even if the proceeds from selling your home are exempt from the assets test, they may still be considered under the income test through a process called deeming. Deeming is a system used by Centrelink to estimate the income your financial assets are expected to earn, regardless of the actual interest or returns you receive. For example:
- Savings in bank accounts
- Shares or managed investments
- Cash from selling a home (in certain circumstances)
Instead of assessing your actual earnings, Centrelink applies deeming rates to determine your assumed income.
As of 2026, deeming rates remain capped at approximately:
- 0.25% on the first portion of financial assets
- 2.25% on balances above the threshold
Even if the sale proceeds are exempt from the assets test temporarily, the deemed income generated from those funds may still affect your pension through the income test.
3. Maintaining ‘Homeowner’ Status
Selling your home does not automatically change your pension classification.
During the sales proceeds exemption period, you may still be treated as a homeowner if the proceeds are intended to purchase another principal residence. This ensures your pension is assessed under the homeowner asset thresholds while you transition between homes.
However, this status may change if:
- You decide not to purchase another home, or
- The exemption period expires, and the funds remain in your bank account.
At that point, Centrelink may reassess your situation and treat the funds as assessable assets.
4. Obligation to Report the Sale
When you sell your home, you must notify Centrelink (or the Department of Veterans’ Affairs if applicable) as soon as possible.
The government requires pension recipients to report changes that may affect their payments, including:
- Selling a principal home
- Receiving sale proceeds
- Purchasing or building another property
- Changes to living arrangements
If you initially intend to use the funds to buy another home but later change your plans, you must also inform Centrelink. The funds may then become assessable under the pension means test.
Summary: How Retirement Living Affects Your Age Pension
Selling your home and moving into retirement accommodation can have a significant impact on your Age Pension, depending on how the proceeds are treated. For retirees wondering if moving into a retirement village affects their pension, the answer usually depends on homeowner status, entry contribution and how the assets are assessed by Centrelink.
The sales proceeds exemption can provide temporary protection from the assets test, but deeming rules and eventual asset assessments may still influence your pension over time.
If you’re thinking about downsizing and moving into a retirement community, understanding how these financial rules apply to your situation can make the transition much smoother. The TriCare team is here to help you look into your options and figure out how moving into a retirement village could affect your lifestyle and your finances.
Contact TriCare today to find out more about our retirement living communities or to book a tour. Take the next step towards a comfortable retirement with peace of mind.
Frequently Answered Questions – how does Retirement Living does affect my pension?
1. What happens to my pension if I move from a retirement unit to the aged care section in the same village?
If you move from an independent living unit in a retirement village to a residential aged care facility within the same community, Centrelink will review your situation again. Based on how the aged care place is paid for (through a Refundable Accommodation Deposit or Daily Accommodation Payment), will determine whether your accommodation payments, assets and income will stay the same. Your pension is then recalculated under the aged care means assessment rules, which differ from standard Age Pension asset testing.
2. Can I rent out my former home while living in a retirement village?
Yes, in many cases, you can rent out your former home. However, the property may no longer be considered your principal home, which means its value would become assessable under the Age Pension assets test. The rental income will also generally be counted under the income test, which may reduce your pension depending on the amount earned.
3. What happens to my pension if my partner leaves or passes away?
When a partner passes away or moves out, Centrelink will look at your payment based on your new relationship status and financial situation. A surviving partner may be eligible for the single rate of the Age Pension, which is higher than the partnered rate. Also, your income and assets will be evaluated, which could change the amount of your pension.
4. What happens to my pension if I leave a retirement village?
If you move from a retirement village, Centrelink will reassess your assets, living arrangements and financial resources. For instance, if you get a refund of your entry contribution, it may be an asset unless you buy another principal residence. Your pension payment may change depending on your updated assets and living arrangements.
5. How is the Age Pension calculated in Australia?
There are two tests that determine how much the Age Pension is in Australia: the assets test and the income test. Both tests are used by Centrelink, and the one with the lower pension amount is paid. The payment is also affected by your savings, investments, property (excluding your principal home) and income. You might also want to consider the retirement village fees and how they might affect your pension assessment.
6. How does Centrelink treat retirement villages?
Centrelink understands that retirement villages operate under different financial arrangements compared to traditional home ownership. Depending on the entry contribution and contract structure, residents may be classified as either homeowners or non-homeowners for pension purposes. This classification affects asset limits, eligibility for Rent Assistance and how your overall pension entitlement is calculated.
