Most Australians with super will also be eligible for at least a part Age Pension. Understanding how Centrelink assesses super — both accumulation accounts and pension accounts — is important for retirement planning, because the rules change at different ages.
The Age Pension — Eligibility Basics
The Age Pension is available to Australians who:
- Are aged 67 or over (for those born after 1 January 1957)
- Meet Australian residency requirements
- Pass both the assets test and the income test (Centrelink uses whichever test gives the lower payment)
The full Age Pension rate (FY2025–26, including all supplements) is approximately:
- Single: ~$29,000/year
- Couple combined: ~$43,700/year
Rates are indexed to CPI in March and September each year — check Services Australia for current rates.
How Super Is Treated Before Age Pension Age (Before 67)
Super in accumulation phase (not yet a pension) is generally NOT counted under the Centrelink assets or income tests for people below Age Pension age (67). This means:
- If you are 62 and have $500,000 in an accumulation super account, that $500,000 does not count in the assets test or income test for any Centrelink benefits you may receive
This creates a planning opportunity for those who retire before 67 — keeping money in accumulation super (rather than starting a pension account) can maximise Centrelink payments in the pre-Age Pension years.
Important caveat: Once you start an account-based pension (i.e. convert accumulation to a pension account), the balance is assessed under both the assets test and income test (via deeming) — regardless of your age.
How Super Is Treated at Age Pension Age and Beyond (67+)
At and beyond 67, all super balances (both accumulation accounts and account-based pensions) are assessed:
Assets Test
The balance of your super account (pension or accumulation) is counted as a financial asset for the assets test.
Assets test thresholds (FY2025–26 — approximate):
| Assets Below (Full Pension) | Assets Above (No Pension) | |
|---|---|---|
| Single homeowner | ~$314,000 | ~$686,000 |
| Couple homeowner | ~$470,000 | ~$1,031,000 |
| Single non-homeowner | ~$566,000 | ~$938,000 |
| Couple non-homeowner | ~$722,000 | ~$1,283,000 |
These thresholds are indexed and updated regularly. Check Services Australia for current figures.
Between the lower and upper thresholds, the Age Pension reduces by $3 for every $1,000 of assets above the lower threshold.
Income Test — Deeming on Super Accounts
For the income test, Centrelink does not count your actual drawdown or investment income from super. Instead, it applies deeming rates — it assumes the account is earning at a set rate, regardless of actual performance.
Current deeming rates (extended freeze in place — check current status with Services Australia):
| Portion of Financial Assets | Deemed Income Rate |
|---|---|
| First $62,600 (single) / $103,800 (couple combined) | 0.25% |
| Balance above those amounts | 2.25% |
The deeming rates have been frozen at historically low levels since 2020 to protect retirees with conservative investments.
Example:
- Single retiree with $400,000 in an account-based pension
- Deemed income: ($62,600 × 0.25%) + ($337,400 × 2.25%) = $157 + $7,592 = $7,749/year
- This $7,749 is counted in the income test — not the actual pension payments received
Account-Based Pension Started Before 1 January 2015 — Grandfathering
Account-based pensions that were in place before 1 January 2015 were “grandfathered” under the old income test rules — they used the deductible amount method rather than deeming. These grandfathered pensions are assessed on actual income received, which can result in lower assessed income than deeming.
Grandfathering is lost if:
- The pension is commuted (converted to a lump sum) and restarted
- The pension is rolled over to a new fund
- The account balance reaches zero and a new pension is started
If you have a grandfathered pre-2015 ABP, consult a financial adviser before making any changes that could trigger loss of grandfathering.
The Combined Effect on Age Pension
Because Centrelink uses whichever test (assets or income) gives the lower pension payment, you may find:
- If you have high assets, the assets test reduces your pension
- If you have lower assets but a higher-return investment mix, the income test (via deeming) may reduce it instead
As your account-based pension balance depletes with age and drawdown, you typically become eligible for an increasing Age Pension — the two income streams act as natural complements.
Super Strategies Around Age Pension Means Tests
Some strategies can legitimately improve Age Pension outcomes, though they involve trade-offs:
Keep accumulation super before 67: Postpone starting a pension account until after 67 if you don’t need the income — accumulation super is not assessed before Age Pension age.
Pay off the home: The family home is exempt from the assets test. Using super to pay off a mortgage reduces assessable assets (the super) and increases exempt assets (home equity). This can increase Age Pension entitlement. However, the total wealth position is the same — just structured differently.
Spouse contributions: Contributing to the lower-balance spouse’s super before Age Pension age can equalise balances, potentially reducing overall assets test impact.
Gifting rules: Centrelink has strict gifting rules. If you give away assets to reduce your assessable amount, gifts above $10,000 per year (or $30,000 over 5 years) are still counted in your assets test for 5 years.
Frequently Asked Questions
I’m 65 and have my super in an accumulation account — is it counted by Centrelink? Yes — at 65, you have reached Age Pension age (the test applies from 67 for most people, but check your specific pension age). From Age Pension age, all super balances are assessed, including accumulation. If you are 65 and below Age Pension age (which for those born before 1 January 1957 may be lower than 67), the rules depend on your specific pension age. Most people born after 1957 have an Age Pension age of 67.
My pension account earns 8% but I’m only deemed at 2.25% — is that a problem? No — deeming rates are applied by Centrelink regardless of actual returns. If your actual return exceeds the deeming rate, Centrelink only assesses the lower deemed amount. This is actually beneficial for those with well-performing funds.
If I take a lump sum from super, does it improve my Age Pension? Taking a lump sum from super and spending it (on non-assessable items like paying off the mortgage) can improve your assets test position. However, if the lump sum is sitting in a bank account, it is still a financial asset and is still deemed for the income test at the same or higher rate. Simply moving money from super to a bank account does not improve your means-test position.
See also: Retirement Income. For further guidance, see Services Australia Age Pension or speak with a licensed financial adviser about your specific situation. You can find one through the ASIC financial advisers register or MoneySmart.