Trish’s response: Before I answer the main part of your question, please note that the Age Pension is only available to those who have reached Age Pension age (65 for men and currently 63.5 years for women, and moving to 64 years for women from January 2010).

Generally speaking, once you withdraw your super benefits from a super fund as a lump sum (assuming you have satisfied a condition of release – see article 12 legal ways to access your super benefit), what you do with that cash payment is your business.

If you choose to cash out all of your super benefits, spend all the cash, and then claim the Age Pension (known as ‘double dipping’), then the super rules don’t stop you. Repaying outstanding debts with your super benefits is probably a more legitimate version of the ‘double dipping’ strategy.

If you’re considering such a strategy, note that you must satisfy a Centrelink income test and assets test, although an individual’s home is exempt from the assets test.

Note: My understanding is that the PSS scheme offers several benefit payment options including an indexed lifetime pension. I suggest you thoroughly research all of your payment options, including the tax implications of different options, before making any decisions.

Related posts:

1. Age Pension: Is my super benefit counted towards the Centrelink Pension assets test?
2. No early super access for business debts or tax bills
3. Age Pension: I have moved states. Do I get the same amount of pension regardless of where I live?