Australia’s retirement income system rests on two pillars: superannuation and the Age Pension. Understanding how they interact — and how to structure your assets to optimise both — is one of the most important dimensions of retirement planning for most Australians.
How the Age Pension and Super Interact
The Age Pension is means-tested through two separate tests — the assets test and the income test (including deeming of financial assets). The test that results in the lower pension payment applies.
Assets test — how super is assessed:
- Super in accumulation phase for a person below Age Pension age is not assessed — it is exempt from the assets test until the holder reaches pension age
- Super in pension phase (account-based pension) is counted as an asset at its current balance
- This creates a strategy window: delaying super drawdown until needed may preserve Age Pension entitlements for people approaching pension age
Income test (deeming) — how super is assessed:
- Account-based pension balances opened after 1 January 2015 are subject to deeming — a deemed income calculated at standard rates regardless of actual earnings
- Current deeming rates (FY2025–26, approximate): 0.25% on the first $62,600 (singles) / $103,800 (couples) of financial assets; 2.25% on the balance
- The deemed income is included in assessable income for Age Pension income test purposes
Current Age Pension Rates (FY2025–26 Approximate)
| Single | Couple (combined) | |
|---|---|---|
| Maximum Age Pension | ~$29,754/year | ~$44,855/year |
The Age Pension eligibility age is 67 for those born after 1 January 1957.
Assets Test Thresholds (FY2025–26 Approximate)
| Full pension cut-off | Pension reduces to nil at | |
|---|---|---|
| Single homeowner | $314,000 | ~$686,000 |
| Single non-homeowner | $566,000 | ~$938,000 |
| Couple homeowner | $470,000 | ~$1,032,000 |
| Couple non-homeowner | $722,000 | ~$1,284,000 |
The pension reduces by $3 per fortnight for every $1,000 of assets above the threshold. Your own home is not counted.
Key Strategy: Super Accumulation Below Pension Age
If your partner is below Age Pension age, their super in accumulation phase is not assessed in the assets test. This creates a strategy for couples where one partner is under pension age:
- Keep as much wealth as possible in the younger partner’s super (accumulation phase) until they reach pension age
- The older partner claims the Age Pension while the younger’s super is exempt
This must be managed carefully — the younger partner’s super eventually reaches pension age and is assessed.
Gifting Rules
Gifting assets to reduce your assessable balance and qualify for more Age Pension is permitted within limits:
- You can gift up to $10,000 per financial year (or $30,000 over 5 years)
- Gifts above these limits are counted as a “deprived asset” for 5 years — Centrelink still assesses the excess as your asset
Aggressive gifting to access the Age Pension is specifically targeted by the deprived asset rules.
Home Ownership and the Age Pension
Your principal place of residence is not assessed in the Centrelink assets test. This is why home ownership is so important for Age Pension eligibility:
- A homeowner couple can have up to ~$1,032,000 in other assets and still receive a part pension
- A non-homeowner couple’s threshold is ~$1,284,000 — but they must also fund rent from their income
Strategies to Maximise Age Pension Entitlements
- Delay drawing down super — keep more in accumulation phase pre-pension-age (not assessed)
- Prepay funeral expenses — a prepaid funeral bond (up to $15,000) is exempt from assets test
- Home improvements — spending money on your non-assessed principal home reduces assessable assets
- Contribute to younger spouse’s super — shifts assessable assets to non-assessed accumulation phase
- Consider a home downsize and re-contribution — downsizer contributions (up to $300,000 each) in super may be more tax-effective than keeping funds outside super
Related Articles
- Age Pension Assets Test Australia
- Age Pension Income Test Australia
- Account-Based Pension Australia
- Retirement Planning Australia
- Retirement Investing hub
Frequently Asked Questions
Does super count toward the Age Pension assets test? Super in accumulation phase for a person below Age Pension age does not count. Super in pension phase (account-based pension) does count — at its current balance. Once you reach Age Pension age, all your super (whether in accumulation or pension phase) is assessed.
How much can I have in super and still get the Age Pension? For a homeowner couple, total assessable assets up to approximately $1,032,000 can still attract a part Age Pension. Above this, the pension reduces to nil. Your principal home is not counted. Exact thresholds are adjusted twice yearly by Centrelink.
Is the Age Pension means-tested separately for each partner in a couple? The assets test and income test are applied to the couple’s combined situation — combined assets and combined income. Both partners must meet the age and residency eligibility requirements.
This article provides general financial information only. Age Pension rules are complex and subject to change. For advice tailored to your situation, speak with a licensed financial adviser through the ASIC financial advisers register or MoneySmart.