How does your super affect the Age Pension?

Your super can potentially affect how much, if any, Age Pension you receive in several ways.

As well as the amount you have in super, your partner’s age can have an impact, as can what you do with any money you withdraw from your super account.

How the Age Pension is assessed

For a detailed explanation of how the Age Pension is assessed, see SuperGuide article Am I eligible for the Age Pension? But here’s a quick overview.

You are not eligible for the Age Pension until you reach Age Pension age, which depends on your date of birth. The age of eligibility increased to 67 years from 1 July 2023.

You also need to satisfy Australian residency requirements and pass both the assets and income tests. The assets test includes your super and other savings, but not your home, while the income test looks at your income from all sources. There are quirks with each of these tests and you can learn more about them at the links below.

The results of both tests are used to decide how much Age Pension you are eligible for. The more assets or income you have, the less Age Pension you receive.

You need to pass both tests but the test that results in the lower Age Pension payment is the one that is used. For example, if the assets test says you are eligible for $500 per fortnight, and the income test says you are eligible for $400 per fortnight, the rate from the income test ($400 per fortnight) will apply.

Super and the Age Pension

It’s important to note that when you apply for the Age Pension, your super will count towards both the assets and income tests. 

Centrelink will use the  balance of your latest super statement to determine your eligibility under the Age Pension assets test.

In addition, deemed income from your super balance is included in your income test calculations even if you have not started a pension or income stream. This means you’ll be assumed to be earning a certain rate of return on your super pension account balance (that is, the deeming rate), regardless of the actual return you are earn.

Deeming is also applied to your income from all other financial assets as part of the Age Pension income test.

From 1 July 2019 changes to the means test treatment of lifetime annuities for the purposes of determining Age Pension entitlements came into force. The changes are grandfathered so that the new means test rules will only apply to lifetime annuities bought from that date.

Accessing your super

You can access your super once you have reached your preservation age and satisfied a condition of release (such as retiring from the workforce or turning 65).

The super preservation age is currently 60. It shouldn’t be confused with your Age Pension eligibility age, now 67.

Couples with a partner below Age Pension age

For a couple where the older partner has reached Age Pension age but the younger partner has not, the younger person’s super won’t be counted in their partner’s assets and income tests unless they have started receiving a super pension, income stream or annuity. Super pension income streams are available tax free to anyone in Australia who is over the age of 60 and meets a super condition of release.