Understanding how the Age Pension and superannuation are related

As long as your super isn’t paying you a superannuation pension, it is not considered in the income and assets tests. Once your super enters the pension phase and you set up an income stream from it, or take money out in a lump sum, then it will be considered for the income and asset tests to decide eligibility for the Age Pension.

The Government considers all your financial assets such as superannuation, savings accounts, term deposits, managed investments, loans, debentures, listed shares and securities to estimate your income. Deeming rules are used to estimate the income from these assets. If you earn more than the deemed rates, the extra amount is not counted for the income test. 

The limits for your deemed income for the Age Pension income test change if you’re a single person or a couple. As a single person, if your income is deemed to be less than $180 per fortnight, you can draw your full pension. As a couple, you can get your full combined pension if your deemed income is below $320 per fortnight. This is subject to fulfilling other conditions such as the asset test. Your pension reduces by 50 cents for each dollar over these limits of deemed income.

As your superannuation pension is counted in this income test, a higher income from your super will mean that you receive a lower Age Pension. If your super income stream takes you above a higher limit, you may not be eligible for the Age Pension at all.

Is your super an asset for the Age Pension test? Superannuation pensions or annuities purchased from your super money are counted for the Age Pension asset test. Other assets that are considered include financial investments, vehicles, personal effects, real estate, managed investments, shares, gifting, company ownerships and deceased estates. 

Single persons who own a home are eligible for the Age Pension if their total assets are valued between $270,500 - $593,000, while for non-homeowners, the range is $487,000 - $809,500. Couples who own a home and have assets between $405,000 - $891,500 are eligible, while for non-homeowner couples, the range is $621,500 - $1,108,000. Couples who are separated due to illness can own combined assets worth $405,000 - $1,050,000 if they’re homeowners, and $621,500 - $1,266,500 if they’re non-homeowners. Couples in which one partner is eligible for the pension can own combined assets worth $405,000 - $891,500 if they own a home, and $621,500 - $1,108,000 if they don’t own a home. 

Substantial superannuation savings may take you over the asset test limit and make you ineligible to receive the Age Pension.