If you’ve ever wondered “Is superannuation the same as pension?”, you’re not alone.
Many Australians use both terms interchangeably but they actually refer to different stages of your retirement income journey.
Superannuation is about building your retirement savings, while the pension is about using that money (or government support) once you retire.
Let’s break down how they differ and how both work together to fund your retirement in Australia.
Understanding Superannuation
Superannuation, often called super, is a long-term savings system designed to help Australians fund their own retirement.While you’re working, your employer contributes a percentage of your salary into your super account currently 11.5% in 2025, rising to 12% by 2026.
You can also make extra voluntary contributions to boost your balance faster.
Your super grows over time through investments chosen by your fund (in shares, property, or fixed interest), and you can’t usually access it until you reach your preservation age generally 60 years.
In short:
- Superannuation = your own money, invested for your retirement.
- It’s accumulated during your working life.
- You control which fund manages it and how it’s invested.
Understanding the Pension
The pension in Australia usually refers to the Age Pension, which is a government payment that supports people who don’t have enough super or savings to fully fund their retirement.
It’s managed by Services Australia (Centrelink) and is subject to eligibility tests based on your age, income, and assets.
As of 2025:
- The Age Pension age is 67.
- You must meet both an assets test and an income test to qualify.
- The maximum payment is roughly $28,500 per year for singles and $43,700 per year for couples.
In short:
- Pension = government financial support in retirement.
- It’s means-tested, not automatic.
- It’s designed to ensure a basic standard of living for retirees.
Key Differences Between Superannuation and Pension
| Feature | Superannuation | Pension (Age Pension) |
|---|---|---|
| Source | Funded by you and your employer | Funded by the government |
| Purpose | Build savings during working life | Provide income in retirement |
| Access Age | Generally from 60 (preservation age) | From 67 (Age Pension age) |
| Control | You choose how it’s invested and withdrawn | Fixed rules set by government |
| Tax Treatment | Tax-effective, often tax-free after 60 | Non-taxable, but affected by income tests |
Superannuation and pension aren’t the same but they complement each other.
Your super provides your main income early in retirement, and the Age Pension may later top up your income if your savings run low.
How Superannuation and Pension Work Together
For most Australians, the ideal retirement plan combines both.
Here’s a typical flow:
- You retire and start drawing from your super (through lump sums or an account-based pension).
- Over time, as your balance reduces, you may become eligible for the Age Pension.
- The Age Pension then acts as a safety net, supplementing your income for the rest of your life.
Example:
If you retire at 60 with $400,000 in super, that may last 10–15 years depending on spending and investment returns.
By the time you reach 67, if your assets have fallen below Centrelink thresholds, you could qualify for partial or full Age Pension payments.
What About a Superannuation Pension?
To make things a little confusing, your super fund can also pay you a “superannuation pension” sometimes called an account-based pension.
This isn’t the same as the government Age Pension.
It’s a retirement income stream you create from your super balance.
Once you’re 60 and retired, you can transfer your super into an account-based pension and receive regular, tax-free payments while keeping your money invested.
So in short:
- Superannuation pension (account-based pension) = from your own super fund.
- Age Pension = from the government.
Which One Will You Rely On More?
That depends on your super balance, lifestyle, and goals.
If you’ve built strong super savings, you may rely mostly on your own account-based pension.
If your savings are modest, you may depend more on the Age Pension or a mix of both.
For example:
- Someone retiring with $800K might not qualify for Age Pension right away.
- Someone retiring with $250K may get partial payments almost immediately.
Either way, the goal is to make your super last as long as possible while maximising your Age Pension entitlements later.
FAQs:
1. Is superannuation considered a pension?
Not exactly. Superannuation (or super) is your personal retirement savings money that’s been built up over your working life through employer contributions and investment growth. You usually can’t access it until you reach your preservation age (generally 60) and retire.
A pension, on the other hand, refers to the income you receive during retirement. This can come from two sources:
- An account-based pension that you create from your own super balance, or
- The Age Pension, which is a government payment designed to support Australians who don’t have enough savings to fully fund their retirement.
So, while your super can later be used to create a pension, they are not the same thing super is what you save, and a pension is what you live on.
2. Can my super become a pension?
Yes, absolutely. Once you reach 60 and retire, you can convert your super into an account-based pension. This allows you to receive regular, flexible payments while keeping the rest of your super invested.
This type of pension is popular because it:
- Provides a steady, tax-free income after age 60.
- Lets your remaining super continue to grow through investment returns.
- Offers flexibility, allowing you to adjust your income as your needs change.
Unlike the government Age Pension, an account-based pension is funded entirely from your own super savings, giving you greater control over how your money is managed.
3. Do I get both super and the Age Pension?
Yes, in many cases you can receive both but it depends on your income and assets.
Here’s how it usually works:
- You start by drawing income from your superannuation (either as a lump sum or regular payments).
- As your balance reduces over time, you may become eligible for the government Age Pension.
- The Age Pension then acts as a top-up income, helping to stretch your savings further.
The government uses income and assets tests to determine how much pension you can receive. If your savings are above certain limits, you might receive only a partial pension or none at all. But as your assets decrease, your Age Pension entitlement usually increases.
This combination using super first, then qualifying for Age Pension later is the most common structure for Australian retirees.
4. Is the pension taxable?
For most retirees, the Age Pension is tax-free. You don’t need to include it in your taxable income, and there’s no tax withheld from the payments.If you’re drawing an account-based pension from your super, it’s also generally tax-free after age 60, provided your super fund is a taxed fund (which applies to most Australians).
However, if you’re under 60 or your pension comes from certain untaxed sources (like government schemes), some tax may apply. It’s always best to check with your financial adviser or fund provider to understand your personal situation.
5. What’s better super or pension?
It’s not really about one being better than the other they serve different purposes and often work together.
- Superannuation is your personal savings built during your working life. It gives you financial independence and allows you to retire on your own terms.
- The Age Pension is a safety net provided by the government for those who need additional support later in life.
Ideally, you want to use your super first to maintain your preferred lifestyle, then transition to the Age Pension as your savings decline.In other words, super helps you start retirement strong, while the Age Pension ensures you can finish retirement securely. A smart plan will make both work together to give you lasting financial comfort.
Final Takeaway
So, is superannuation the same as pension?No they’re different but connected parts of your retirement journey.Your superannuation is your personal savings and investments, while the pension (either from your fund or the government) is how you draw income once you retire.
Together, they form the foundation of a secure, flexible retirement plan.
At Wealthlab, we help Australians understand how to make both systems work for them from building super efficiently to planning the right mix of income streams in retirement.
Book a free consultation today and start building your confident retirement plan.
Learn More About Retirement & Superannuation
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https://www.ato.gov.au/media-centre/supercharge-your-superannuation-knowledge?