You’d be surprised how much super you can have and still receive Centrelink Age Pension payments.
Let’s take a look at how much you can have and when you might be eligible.
Can I Get the Pension if I Have Super?
Having superannuation savings does not deny you from receiving Age Pension payments.
Eligibility for the Age Pension is based on an Assets Test and an Income Test. All of your assets (super and non-super), as well as your income sources, are assessed to determine how much, if any, Age Pension payments you are entitled to receive.
Some assets, such as your home, are exempt from Age Pension assessment. So too are certain types or parts of incomes.
How Much Super Can You Have and Still Get the Pension?
As a single person you can have up to $656,500 and still get the pension if you are a homeowner and $898,500 if you are a non-homeowner. As a member of a couple, you can have up to $986,500 (combined) and still get the pension if you are a homeowner and $1,228,500 (combined) if you are a non-homeowner.
Social security, such as the Age Pension, is a crucial pillar in Australia’s retirement system.
Age pension payments can stretch out your retirement savings for much longer, by supplementing your regular superannuation drawdowns.
Ultimately, your super will affect the amount of Age Pension you receive, yet no more so than how your bank account balances affect your Age Pension entitlements.
But, before you determine your eligibility for the Age Pension based on your income and assets levels, you first need to make sure you have reached Age Pension age.
What is the Age Pension Age?
In order to qualify for Age Pension payments, you need to have first reached Age Pension age.
Your Age Pension age is determined by when you were born, as follows:
|Date of Birth||Age Pension age|
|1 July 1955 – 31 December 1956 (inclusive)||66 years and 6 months|
|On or after 1 January 1957||67 years|
How is Super Assessed for the Pension?
Once you reach Age Pension age, your super balance is assessed under both the Income Test and the Assets Test.
Both tests are applied and whichever test results in you receiving the lowest Age Pension payments is the test that will apply to determine how much your Age Pension payments will be.
The same assessment applies whether your superannuation is in accumulation phase or pension phase.
Learn more: Superannuation Pensions
How is Super Assessed for the Assets Test?
Superannuation is counted as an asset for Age Pension purposes and will count towards the Assets Test limits. Superannuation will be added together with all of your other assessable assets and measured against the limits.
Full Age Pension – Assets Test
In order to receive full Age Pension payments, your assets will need to be below the following limits (assuming you are being assessed under the Assets Test and not the Income Test). If you are a member of a couple, your combined assets are assessed against the relevant limits:
|A couple, combined||$451,500||$693,500|
|A couple, separated by illness||$451,500||$693,500|
|A couple, one partner eligible, combined||$451,500||$693,500|
If your assets exceed the limits shown in the table above, you may still be eligible for a Part Pension until the complete cut-off point as shown in the table below.
Your Age Pension payments will reduce by $3.00 per fortnight (single or couple combined) for every $1,000 that your assessable assets exceed the limits in the table above.
Part Age Pension – Assets Test
In order to receive a part Age Pension, your assets will need to be below the following limits. If you are a member of a couple, your combined assets are assessed against the relevant limits:
|A couple, combined||$986,500||$1,228,500|
|A couple, separated by illness||$1,161,000||$1,403,000|
|A couple, one partner eligible, combined||$986,500||$1,228,500|
Check out this video I put together, showing you strategies you can use to get higher Age Pension payments if you have a younger spouse.
How is Super Assessed for the Income Test?
Superannuation, whether in pension phase or accumulation phase, is deemed to earn an income based on the Centrelink deeming rates. This income is then applied against the thresholds in the Income Test.
The only time super is not deemed is when it is an annuity income stream, or is a grandfathered pension.
The deemed income on your superannuation is added together with all of your other deemed income and assessable income to calculate your Age Pension entitlements.
Full Age Pension – Income Test
To receive the full Age Pension under the Income test, your assessable income needs to be below the following limits:
|Income Per Fortnight|
|Couple (combined) living together or apart due to ill health||$360|
Part Age Pension – Income Test
To receive a Part Age Pension under the Income test, your assessable income needs to be below the following limits:
|Income Per Fortnight|
|Couple living together||$3,568 combined|
|Couple living apart due to ill health||$4,616 combined|
Age Pension Assessment Example
Here is an example of how your superannuation is assessed for Age Pension purposes.
Bill, 68 and Sharon, 67, are both retired with the following assets:
|Home Contents (fire-sale value)||Joint||$20,000|
|Vehicles (fire sale value)||Joint||$20,000|
|Super – Account Based Pension||Bill||$300,000|
|Super – Account Based Pension||Sharon||$400,000|
The assets are assessed as follows:
|Asset Type||Assets Test||Income Test|
|Home Contents (fire-sale value)||Full Value||n/a|
|Vehicles (fire sale value)||Full Value||n/a|
|Bank Account||Full Value||Deemed|
|Super – Account Based Pension||Full Value||Deemed|
|Super – Account Based Pension||Full Value||Deemed|
|Australian Shares||Full Value||Deemed|
Assets Test Assessment – Example
Under the Assets Test, Bill and Sharon have $795,000 worth of assessable assets, which is below the homeowner couple upper-threshold for the part-pension of $986,500.
Their Age Pension payments will reduce by $1.50 (each) for every $1,000 it exceeds the lower threshold of $451,500.
Therefore, the maximum Age Pension, per couple, will reduce from $802.00 each per fortnight to $286.75 per fortnight.
Income Test Assessment – Example
Under the Income Test, Bill and Sharon have a total, combined deemed income of $15,116 p.a. ($581 per fortnight) which is below the upper threshold of $3,568 per fortnight (combined).
Their Age Pension payments will reduce by 25 cents (each) for every dollar it exceeds the lower threshold of $360 per fortnight.
Therefore, the maximum Age Pension, per couple, under the Income Test will reduce from $802 each per fortnight to $746.75 per fortnight.
Age Pension Entitlement
As you can see, Bill and Sharon’s financial situation is assessed under both the Assets Test and the Income Test. In this example, they are entitled to significantly greater Age Pension payments under the Income Test compared to under the Assets Test. Unfortunately for them, the test that provides them with the lowest entitlement is the one that applies. Therefore, they will be eligible to receive $286.75 each per fortnight – which is not bad considering they have investment assets of $795,000.
When Will the Age Pension Stop in Australia?
The intention of the Superannuation Guarantee (SG) system is that, over a 30-year working life, mandatory employer super contributions will provide enough retirement savings for a person to cover around 75% of their pre-retirement income. This would suggest no need for social security.
However, we need to keep in mind that there is no such mandatory retirement savings plan if you are self-employed, or have intermittent working arrangements, which may be interrupted as a result of raising a family (for example).
Therefore, while I do believe the eligibility thresholds as shown in the tables above will continue to increase – reducing the eligibility for the Age Pension of someone who once was; I still think that the Age Pension will be here for a while to come, due to its purpose of serving as a basic income need or supplement for a large number of Australians.
Our financial planning firm, Toro Wealth, specialises solely in helping 50 to 70 year-olds optimise their financial position in the lead up to retirement. If you’re interested in learning more about our service and cost, click here.
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