Sometimes government payments can come with some contradictory conditions that seem to go against everything the tax, income and benefits system should stand for. One that is becoming more perverse with every passing day is the exclusion of the family home when calculating the level of age pension payment somebody is entitled to. While there is no doubt that downsizing that produces a lot of excess cash will have the effect of diminishing or extinguishing eligibility for the age pension, using that cash in the right way can replace the lost pension payments. However, the end result could be well worth the trouble, with the income that can be drawn more flexible and potentially higher than the forgone age pension payments. Individuals really shouldn’t need to do the reform work for action-shy governments but in this case there is a way of making downsizing work, even if the exemption of the family home in the age pension assets test does represent a bizarre and growing roadblock.