Including the family home in the pension assets test could be a political plus if handled properly, a new report suggests.

Calculations by the Centre for Independent Studies suggest that assets-testing the family home and encouraging retirees to borrow against it in order to get the pension could boost typical pension incomes by about $6000 per year while slashing the pension bill by $14.5 billion.

"It could be popular if it's explained carefully," said Matthew Taylor, one of the authors of the report to be released on Monday. "Pensioners would have to overcome their emotional attachment to their homes. They would need to see that they are not just places to live, but untapped assets."

The plan drawn up by the pro-free enterprise think tank would treat family homes the same as any other asset for the purpose of the test. Non-home owners with assets would no longer get lower pensions than homeowners whose assets were tied up in their houses.