Social Services Minister Scott Morrison is strongly indicating he will look at scaling back access to the pension for wealthy Australians as an alternative to the Government's current plan to change the rate of indexation.

On Tuesday Mr Morrison said he was "seriously considering" a proposal to tighten the assets test, as the Government searches for savings to the ballooning cost of the pension system.

At the moment, retired couples who own their home and have other assets up to $1.1 million would still qualify for a part pension.

But Mr Morrison has welcomed a plan put forward by the Australian Council of Social Service to reduce that cut-out point and other eligibility thresholds, saying savings must be made.

"The alternative is to run the pension of the edge of a cliff and to force a future government to have to introduce a short, sharp, shock measure that would be quite catastrophic for pensioners and that's not something I want to see happen which is why I believe we need to take action in a modest and incremental way and I think that is reflected in the various proposals that are now before us," he said.

The Senate has blocked a Coalition plan, announced in last year's budget, to lock pension increases to the rate of inflation instead of average male earnings, a drop that would save taxpayers $449 million over five years.

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Mr Morrison said he was willing to reconsider that plan if alternative proposals stacked up.

"The Government is building a coalition of ideas when it comes to a sustainable and fair pension," he said.

"My commitment is the same that I have given since coming into the portfolio, something only comes off if something goes on.

"If we are prepared to take on an alternative proposal then that would be the only condition under which any current proposal would be removed because the option of doing nothing is not an option."

He discussed ACOSS' assets plan with crossbench Senator Nick Xenophon last night.

"I think that is the way through to cut the Gordian knot in terms of this impasse on pensions," Senator Xenophon told ABC News.

"If you've got several hundred thousand dollars in the bank, it's not unreasonable to draw on some of that for the purpose of your retirement."

ACOSS recommends tightening the age pension assets test: Reduce the assets test-free area for home owners to $100,000 for singles and $150,000 for couples;

Reduce the assets test-free area for home owners to $100,000 for singles and $150,000 for couples; Increase the taper rate for both home owners and non-home owners from $1.50 per $1,000 of additional assets to $2 per $1,000, so that the cut-out point for the part pension for couples is reduced from $1.1 million in assets, besides the family home, to $794,250 in assets besides the family home;

Increase the taper rate for both home owners and non-home owners from $1.50 per $1,000 of additional assets to $2 per $1,000, so that the cut-out point for the part pension for couples is reduced from $1.1 million in assets, besides the family home, to $794,250 in assets besides the family home; Savings: $1,350 million ($1,450 million in 2016-17).

Senator Xenophon said the new proposal would deliver both budget savings and equity.

"This would be a breakthrough solution to sort this out," he said.

The Government would need to win over six of the eight crossbench senators if Labor and the Greens oppose the idea.

Mr Morrison said on Tuesday he wanted "modest, incremental change" to the pension system, though he is still standing by last year's budget measure and an attempt to raise the pension age to 70 — which has also stalled in the Senate.

Labor leader Bill Shorten described the assets plan as a "thought bubble" and would not say if the Opposition would back the idea.

"I'm not going to give this Government a blank cheque," he told AM.

Mr Shorten later said Labor wanted to wait and see what the Government put forward, but denied the pension was unsustainable.

"It is not an overly generous payment at all. In terms of the threshold Labor's always been willing to examine how all of the income policies that we have interact with each other, but let's be really clear, there is no proposal from the Abbott government on the table," he said.

The Council on the Ageing (COTA) said any decision would need to be made after a review of the entire retirement incomes system.

"To take that in isolation would be as dangerous to take any other element of retirement incomes in isolation, we have to look at pensions, superannuation, taxation, funding of age care services and so on — all in one review," COTA chief executive Ian Yates said.