By Paul Feeney, Founder and Chief Executive Officer, Otivo
A lot of people treat the Age Pension as the thing that happens if super does not work out. That is not how the system was designed. Australia's retirement income system was built on the assumption that most people would draw both — a private balance doing the heavy lifting early, a government payment growing into the gap as the balance falls. The two are stitched together by the means tests, and understanding how those tests read your super is what makes the combined picture make sense. Here's how it fits together.
The Age Pension is a means-tested government payment available from age 67. Your super counts towards both the income test and the assets test once you reach Age Pension age, so a larger balance generally means a smaller payment. As a super balance is drawn down, Age Pension entitlement typically increases.
Who is eligible for the Age Pension?
Three conditions have to be met.
- Age. You must be 67 or older. Age Pension age finished its increase at 67 and does not vary by birth year for anyone claiming today.
- Residence. You must be an Australian resident and generally have lived in Australia for at least 10 years, with at least five of those in one continuous period. International social security agreements can affect this.
- Means. You must pass both the income test and the assets test.
Note that Age Pension age is 67 while preservation age for super is 60. Those seven years are why the two parts of the system are often planned separately.
What does the Age Pension pay?
From 20 March 2026, the maximum rates are:
- Single: $1,200.90 per fortnight / approximately $31,223 per year.
- Couple, combined: $1,810.40 per fortnight / approximately $47,070 per year.
Both amounts include the maximum basic rate, the pension supplement and the energy supplement — there is nothing separate to apply for. A couple receives $905.20 each per fortnight. Couples separated by illness can each be paid the single rate.
Rates are indexed on 20 March and 20 September each year, benchmarked to the higher of CPI, the Pensioner and Beneficiary Living Cost Index or male total average weekly earnings. The published maximum is not an entitlement — most recipients are paid less once the means tests are applied.
How do the two tests work?
This is the part that is rarely explained properly. Services Australia applies both tests and pays whichever produces the lower result. You are not assessed under one or the other — you are assessed under both, and the less generous answer governs.
The income test. Assessable income includes employment income, business income, rent, some income streams and deemed income from financial assets. A single person can have up to $226 a fortnight in income before the payment reduces, or $396 a fortnight combined for a couple. Above that, a single pension reduces by 50 cents in the dollar, and a couple's combined payment reduces by 50 cents across the two payments. The Work Bonus allows a further amount of employment income before the test bites.
The assets test. Your assets, excluding the family home, are counted. From 1 July 2026, the full rate is payable up to $333,000 for a single homeowner and $499,000 combined for a homeowner couple. Above those points the payment reduces by $3 a fortnight for every $1,000 of assets. Non-homeowners have higher thresholds. The cut-off points, above which no payment is made, are indexed and published by Services Australia — worth checking there directly rather than relying on figures quoted elsewhere.
How is your super counted?
It depends on your age and on whether the money is still in accumulation.
Before Age Pension age, super in accumulation phase is generally not counted under either test. This is why someone aged 63 with a substantial balance and a partner already receiving the pension can find the household position changes when they turn 67.
From Age Pension age, super counts. A balance in accumulation is assessed as an asset, and it is also deemed to earn income under the income test. An account-based pension is assessed on the account balance as an asset, and deemed under the income test in the same way for pensions commenced from 1 January 2015.
Deeming matters more than it did. Services Australia assumes financial assets earn a set rate regardless of what they actually earn. The deeming freeze ended on 20 March 2026 and both rates rose a full percentage point: the lower rate is now 1.25%, applying to the first $66,800 of financial assets for a single person or $110,600 combined for a couple where at least one partner receives a pension, and 3.25% above those amounts. For retirees with meaningful financial assets, that increase reduced assessed entitlement.
Why does entitlement usually rise over time?
Because the tests respond to the balance, and the balance falls as it is drawn on.
Someone retiring at 67 with a super balance above the assets threshold may receive a part pension or none at all. As they draw an income from that balance over the following decade, the assessed asset value falls, deemed income falls with it, and the payment increases. By their late seventies, many retirees who received nothing at 67 are receiving a part pension, and some eventually reach the maximum rate.
This is a description of how the mechanism operates, not a strategy. What it means practically is that a projection built on today's entitlement will understate the government contribution over a full retirement, which is one reason single-point calculations of "how much do I need" tend to overshoot.
How much of a comfortable retirement does the Age Pension cover?
Set against ASFA's benchmarks for the March quarter 2026, the maximum Age Pension covers a majority of a modest lifestyle and roughly half to three-fifths of a comfortable one.
A comfortable retirement is estimated at $55,923 a year for a single homeowner and $78,566 for a couple. The maximum Age Pension provides around $31,223 and $47,070 respectively. The remainder is what super and other savings are for.
That relationship is also why ASFA's lump sum estimates are lower than people expect. The $630,000 single and $730,000 couple figures assume a part Age Pension is received throughout and that capital is drawn down. Our companion article works through what sits inside those numbers.
How do you apply?
Claims can be lodged with Services Australia up to 13 weeks before you reach Age Pension age, online through myGov, by phone or in person.
You will generally need proof of identity, your tax file number, and details of your income, assets, bank accounts, super and any partner's finances. Services Australia also has Financial Information Service officers who provide free, independent information sessions about the tests — that service belongs to them, not to us.
Otivo does not provide Centrelink advice. What our retirement planning module does is estimate where your super lands and what could improve that position, taking Age Pension eligibility into account alongside age, salary, balance, other investments, downsizer contributions, lifestyle goals and super access age.
Frequently asked questions
Does super affect the Age Pension?
Yes, from Age Pension age. Super is assessed as an asset under the assets test and deemed to earn income under the income test, whether it sits in accumulation or in an account-based pension. Before Age Pension age, super in accumulation is generally not assessed.
Can you get the Age Pension and still have super?
Yes, and most recipients do. The two are designed to work together, with the Age Pension providing an indexed base and super providing the income above it. Around two-thirds of Australians over 67 receive a full or part Age Pension.
At what super balance do you stop qualifying for the Age Pension?
There is no single figure, because the assets test counts all assessable assets, not just super, and the income test is applied alongside it with the lower result paid. The relevant thresholds and cut-off points are published by Services Australia and are indexed.
Is the Age Pension taxable?
The Age Pension is taxable income, though most recipients pay no tax because of the tax-free threshold and the seniors and pensioners tax offset. Super drawn from a taxed fund after 60 is tax-free and does not add to taxable income.
Two income sources, one set of tests, and a relationship that shifts across a retirement rather than being settled at the start of one. Otivo is a licensed digital advice provider holding AFSL and Australian Credit Licence No. 485665, and our retirement planning module accounts for Age Pension eligibility when it estimates where you land.
Sources
- Services Australia, Age Pension eligibility, rates and income and assets tests.
- Department of Social Services, payment rates effective 20 March 2026.
- Services Australia, deeming rates effective 20 March 2026.
- ASFA Retirement Standard, March quarter 2026.
Disclaimer
The information in this communication is current as at August 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.