When Peter retired at 67 in Sydney, he believed his superannuation would finally become his safety net. After decades of work, he had built a modest balance and expected to rely on both his savings and the Age Pension. But when his payments were calculated, he received far less than expected.
The reason? His superannuation was now being fully counted — and it changed everything.
Across Australia in 2026, more retirees are discovering that their super savings can significantly reduce, or even eliminate, their Age Pension.
What’s Changing / What’s New
The rules around superannuation and the Age Pension have evolved over time, but their real-world impact is now hitting retirees harder due to rising balances and longer life expectancy.
Here’s what you need to know:
- Once you reach Age Pension age (67), your superannuation is counted in both tests
- Super in the accumulation phase is counted if you are over pension age
- Super in the retirement (income stream) phase is also assessed
- It affects both:
- Assets test (total value of your super)
- Income test (deemed earnings from your super)
- Higher super balances can reduce or cancel your pension entirely
In short: your super is no longer “protected” once you reach pension age.
Real Stories Behind the Policy
Peter’s case reflects a growing trend.
After retiring, he had $420,000 in super. He expected a part pension to supplement his income. Instead, his payments were significantly reduced.
“I thought super was separate,” he said. “No one told me it would count this much.”
In Perth, another retiree, Linda, delayed accessing her super to preserve her pension — only to discover it was still counted once she reached 67.
Government Statements
A spokesperson from Services Australia explained:
“Superannuation is treated like any other financial asset once a person reaches Age Pension age. This ensures consistency and fairness in the system.”
Officials emphasize that the pension is designed as a safety net, not a primary income for those with substantial savings.
Expert Analysis / Data Insight
Financial experts say this “shock” is more about awareness than new law.
- The average super balance for Australians approaching retirement has increased significantly in the past decade
- Many retirees underestimate how strongly the assets test reduces payments
According to retirement adviser Mark Ellison:
“For every $1,000 above the asset threshold, your pension can drop by $3 per fortnight. That adds up quickly.”
This means even moderate super balances can lead to meaningful pension reductions.
How Superannuation Affects Your Pension
There are two key tests:
1. Assets Test
- Your total super balance is included
- If your assets exceed thresholds, your pension is reduced
2. Income Test
- Centrelink applies deeming rates
- It assumes your super earns a set rate of income, regardless of actual returns
Comparison Table: Super Balance vs Pension Impact (Single Homeowner)
| Super Balance | Pension Outcome | Impact Level |
|---|---|---|
| $150,000 | Full pension likely | Minimal impact |
| $300,000 | Part pension | Moderate reduction |
| $450,000 | Reduced pension | Significant impact |
| $650,000+ | No pension | Fully cut off |
Figures are indicative and depend on total assets and thresholds.
The Biggest Misconception
Many Australians still believe:
- Super is separate from Centrelink assessments
- Only income drawn from super matters
- Leaving money untouched protects pension eligibility
None of these are true once you reach Age Pension age.
Even untouched super in accumulation phase is counted.
Strategic Planning: What Some Retirees Are Doing
Financial planners say timing and structure are critical.
Some strategies include:
- Spending down super before pension age on essentials
- Investing in exempt assets like the family home
- Keeping super in accumulation phase before reaching 67 (if eligible)
- Structuring withdrawals to manage income test impacts
However, experts warn against aggressive strategies.
“The goal should be financial security, not just maximising pension,” says Ellison.
What You Should Know Before Retiring
Here’s what Australians approaching retirement should keep in mind:
- Your super will count once you reach Age Pension age
- Both balance and deemed income matter
- Small differences in assets can significantly affect payments
- Planning early — even 5–10 years ahead — can make a major difference
- Professional advice is often crucial for complex situations
Understanding these rules early can help avoid costly surprises.
Q&A: Superannuation and the Age Pension
1. Does superannuation affect the Age Pension?
Yes, once you reach pension age, it is fully assessed.
2. Is super counted in the assets test?
Yes, your total balance is included.
3. Is super counted in the income test?
Yes, through deeming rules.
4. What is deeming?
A method where Centrelink assumes your assets earn a set rate of income.
5. Does it matter if I don’t withdraw my super?
No, it is still counted.
6. Is super treated differently before pension age?
Yes, in some cases it may not be counted.
7. Can high super cancel my pension?
Yes, if you exceed asset thresholds.
8. Does this apply to couples?
Yes, combined super is assessed.
9. Can I reduce my super to increase pension?
Spending or restructuring may affect eligibility, but must be done carefully.
10. Is my home counted?
No, your primary residence is exempt.
11. Are there thresholds for assets?
Yes, and they change periodically.
12. Should I withdraw super early?
Only with proper financial advice.
13. Can I still get part pension with super?
Yes, depending on your total assets.
14. Does super income affect payments?
Yes, via the income test.
15. Is financial advice recommended?
Strongly, especially before retirement.
