Age Pension Taper Rate Calculator

Calculate how the 7.8% taper rate affects your pension. See the breakeven point where extra assets cost more than they earn.

The 7.8% Taper Trap

The Age Pension taper rate is $3 per fortnight for every $1,000 of assets above the free threshold. This equals 7.8% annually.

The Problem: Unless your assets earn more than 7.8% annually, the pension taper takes away more than your investments earn.

How It Works

If you have $50,000 above the asset test threshold:

  • Pension reduces by $150/fortnight
  • Annual pension loss: $3,900
  • If assets earn 5%: $2,500
  • Net loss: $1,400 per year

The Breakeven Point

Your assets must earn more than 7.8% to breakeven with the pension loss. In today's environment:

  • Term deposits: ~4-5%
  • Dividend yields: ~4-5%
  • Total stock returns: Variable

Most conservative investments fall short of 7.8%, making the taper trap a forced drawdown of principal.

What This Means for You

The taper rate creates a difficult choice:

  • Spend down assets to increase pension
  • Keep assets and accept lower pension
  • Try to earn 7.8%+ (higher risk)

There's no perfect answer. The right strategy depends on your risk tolerance, health, and other income sources.

Calculate Taper Impact

⚠️ Simplified Calculation: This shows current-year impact only. For 30+ year projections showing how taper affects your entire retirement, use the full calculator.

Amount above the Age Pension asset test free threshold

What you expect these assets to earn per year

Want 30+ year analysis? The full calculator models taper impact across your entire retirement with historical backtesting and dynamic withdrawal strategies. Launch full calculator →

Model Your Retirement with Taper Rate Analysis

See how the Age Pension taper affects your income over 30+ years and find optimal withdrawal strategies.

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Frequently Asked Questions

What is the Age Pension taper rate?
The taper rate is $3 per fortnight for every $1,000 of assets above the free threshold. This equals 7.8% annually. It applies to both the asset test and income test, with the lower result determining your actual pension payment.
Why is the 7.8% taper rate a problem?
Unless your assets earn more than 7.8% annually, the pension taper takes away more than your investments earn. For example, if you have $50,000 above the threshold earning 5%, you earn $2,500 but lose $3,900 in pension - a net loss of $1,400 per year.
Does the taper rate apply to all assets?
The taper rate applies to assets above the free threshold. For homeowners (singles), this is $327,000. Every $1,000 above this reduces your pension by $3 per fortnight until you reach the cutoff point at $727,000.
How can I reduce the impact of the taper rate?
The taper trap forces a difficult choice: spend down assets to qualify for more pension, or keep assets and accept lower pension payments. Strategies include gifting (within limits), downsizer contributions, and timing asset sales. A financial adviser can help navigate these options.

Disclaimer: This calculator is for informational purposes only and does NOT constitute financial advice. SuperCalc Pro Pty Ltd does not hold an Australian Financial Services License (AFSL). Always consult Services Australia or a licensed financial adviser for advice specific to your circumstances.