Super and seniors groups have welcomed a budget initiative allowing seniors who downsize their family home to have up to $200,000 of the sale proceeds quarantined from the Centrelink means test for the age pension.

The budget papers show the government will trial a measure costing $112.4 million to help seniors downsize to a home that is better suited to their needs, without reducing the age pension.

From July 1, 2014, seniors who have owned their home for at least 25 years and decide to sell will be able to have up to $200,000 of the proceeds exempt from Centrelink means testing. The money that is invested and the interest it earns will be exempt from the age pension means test for up to 10 years.

Some seniors may be staying in their family home despite being unable to undertake or afford the upkeep and maintenance on the home. They do not downsize for fear of losing some of their age pension, or losing the age pension altogether.