Can the pension cover your village costs? Does moving into a village affect your pension entitlement? And what does Centrelink actually count as an asset?
These are genuinely important questions, and at Ageing In Place we understand the answers depend on your specific circumstances. This article explains the key rules, flags the issues to watch out for, and points you toward the right professional advice.
Does your retirement village entry fee count as an asset under Centrelink rules?
This is the most important question for most prospective retirement village residents, because the answer directly affects your pension.
Under Centrelink's rules, whether your ingoing contribution (entry fee) is counted as an asset depends on the type of contract your retirement village uses.
Licence to occupy / loan contracts: In most retirement villages in Victoria, residents enter on a licence to occupy arrangement. Under Centrelink's rules, an amount up to the Extra Allowable Amount (EAA, which is periodically indexed and was approximately $206,000–$207,000 in recent years) is exempt from the assets test. The amount you paid above the EAA may count as an asset.
Strata title/leasehold: If you purchase a strata title property in a retirement village, it's treated more like a standard property purchase for Centrelink purposes. The rules differ from a licence to occupy arrangement.
Because the treatment depends on the specific contract and your individual financial situation, this is an area where professional advice is genuinely essential. What applies to your neighbour may not apply to you.
Does moving into a retirement village affect your home ownership status?
Your family home is currently exempt from the assets test: it doesn't count toward the threshold that affects your pension. When you sell it and move into a retirement village, the situation changes:
- The proceeds of your home sale, minus what you pay as the ingoing contribution, become assessable assets
- If those additional assets push you above the assets test threshold, your pension may reduce or cease.
Again, the specific impact depends on your individual circumstances like the size of your home sale, what you pay in entry fees, and what other assets and income you have.
Timing of your move matters: There can be a grace period (up to 12 months) during which the proceeds of a home sale are treated as an exempt asset if you intend to purchase or enter a new principal residence. Your financial adviser can help you structure the transition appropriately.
Can you receive Rent Assistance in a retirement village?
In some cases, yes. If you enter a retirement village on a licence to occupy or loan contract, and your ingoing contribution is below the Extra Allowable Amount, Centrelink may classify you as a renter for pension purposes, which means you may be eligible for Rent Assistance on top of your pension.
This can meaningfully improve the affordability of village living for pensioners with lower entry contributions. It's worth asking your financial adviser whether this applies to your situation.
Using your pension to cover monthly fees
The Age Pension in 2026 is approximately $1,200 per fortnight for a single person and around $900 per fortnight for each member of a couple (these figures change with indexation; check Services Australia for current rates).
Monthly recurrent charges at retirement villages in Victoria typically range from $250 to $800 per month. For many residents, the pension goes a significant way toward covering these ongoing costs, particularly when combined with other retirement income.
What to discuss with a financial adviser
Before making any decisions, we strongly recommend speaking with a financial adviser who specialises in aged care and retirement planning. In particular, discuss:
- How your ingoing contribution will be treated under the assets test for your specific contract type
- Whether you'll remain eligible for the Age Pension after the move, and at what rate
- Whether you're eligible for Rent Assistance
- How the proceeds of your home sale should be structured to minimise the pension impact
- How the Centrelink assessment will change over time (for example, as the deferred management fee accrues and reduces the "value" of your entry contribution)
A good financial adviser will be able to model different scenarios and show you clearly how the numbers work across different options.
We're here to help with the questions we can answer
Ageing in Place isn't a financial advisory service, and when it comes to pensions and Centrelink, we'll always point you toward the right professional rather than guess at your specific situation.
But we can answer every question about our villages: our fee structures, what our recurrent charges cover, how our contracts work, and what life is actually like at Mount Martha, Carrum Downs, or Berwick.
You can also check the Information statements for each of our retirement villages.
Useful resources
- Services Australia (Centrelink): servicesaustralia.gov.au, for current pension rates, assets test thresholds, and the retirement village rules
- ASIC MoneySmart: moneysmart.gov.au, practical guides to retirement income and planning
- Seniors Rights Victoria: 1300 368 821, free legal advice for older Victorians on retirement village contracts
- My Aged Care: myagedcare.gov.au, for information on government-funded aged care and in-home support
This article provides general information only and does not constitute financial or legal advice. Age Pension rates, assets test thresholds, and Centrelink rules are subject to change and vary based on individual circumstances. Always seek advice from a qualified financial adviser or contact Services Australia directly.
