Superannuation and the Age Pension are not the same thing, but most Australians end up using both in retirement. Super is your own money, built up through employer contributions and invested over your working life. The Age Pension is a government payment from Services Australia, available from age 67 if you meet the income and assets tests. There is also a third thing the system confusingly calls a “pension”: an account-based pension, which is an income stream you set up from your own super once you retire.
These three terms get tangled constantly, and the confusion is not your fault. Australia uses the word “pension” for two completely different things. This guide clears that up, explains how each one works, and shows how super and the Age Pension fit together once you stop working.
What Is a Pension in Australia? (Three Different Meanings)
When Australians say “pension,” they could mean any of three things, and they’re not interchangeable.
1. The Age Pension. A government payment from Services Australia for people aged 67 and over who pass the income and assets tests. Taxpayer-funded. Means-tested. Has nothing to do with your super, except that your super counts as an asset.
2. An account-based pension. Sometimes called a “super pension” or “retirement income stream.” It’s your own super money, switched from accumulation phase into pension phase so it can pay you a regular income. Not a government payment. The benefit is the tax treatment, which we cover below.
3. A defined benefit pension. A guaranteed income from older (mostly public-sector) super schemes, paid for life based on your years of service and final salary. Closed to new members in most cases, but still relevant for plenty of Australians approaching retirement.
When someone says “I’m thinking about going on the pension,” they usually mean the Age Pension. When they say “I’ve moved my super to pension phase,” they mean an account-based pension. Same word, very different things.
Superannuation: Your Own Money
Superannuation is Australia’s compulsory savings system. While you’re working, your employer contributes 12% of your ordinary time earnings into your super fund (ATO). You can also make extra voluntary contributions on top.
Your super fund invests that money in shares, property, bonds and cash. Over a working lifetime, those investments grow and by the time you retire you have a pool of savings to live on.
You can generally access your super once you reach your preservation age (60 for anyone born after 30 June 1964) and have retired or left an employer. From age 65, you can access it whether you’re still working or not.
The key point: super is your money. You built it, your fund invested it, and how much you have at retirement depends on how much went in, how it performed, and what you paid in fees. For more on how super works at different stages, see our superannuation page.
The Age Pension: Government Support
The Age Pension is a payment from the Australian Government, delivered through Services Australia (Centrelink). It’s available from age 67 for both men and women.
As of 20 March 2026, the full Age Pension pays (Services Australia):
- Singles: $1,200.90 per fortnight (about $31,223 a year)
- Couples combined: $1,810.40 per fortnight (about $47,070 a year)
These amounts include the base rate, pension supplement and energy supplement. Rates are adjusted every March and September based on inflation and wage growth.
The Age Pension is means-tested. The amount you receive depends on your income and assets. If you have substantial super, investments or other assets, you may get a reduced (part) pension or nothing at all.
For a single homeowner, the full pension is available if your assessable assets are below $321,500. A part pension is available up to around $722,000. For homeowner couples, the full pension threshold is $481,500, with a part pension available up to about $1,085,000.
The Age Pension isn’t something you earn through contributions. It’s a safety net funded by taxpayers, designed to provide a basic standard of living for older Australians who need it. For a deeper walkthrough of the assets test, income test and real case studies, our pension and Centrelink page has more.
The Account-Based Pension: Your Super, Paying You
This is where the terminology gets messy. When you retire and want to start drawing a regular income from your super, you can convert your super balance into what’s called an account-based pension (also known as a “super pension” or “retirement income stream”).
An account-based pension is not a government payment. It’s your own super money, moved from accumulation phase (where you were building it up) into pension phase (where you draw it down as income).
The benefits of moving to pension phase are significant:
Tax-free earnings. While your super is in accumulation, investment earnings are taxed at up to 15%. In pension phase, earnings on balances up to the transfer balance cap ($1.9 million as of 2025-26) are taxed at 0%. Over a 20-year retirement, that tax saving can be worth tens of thousands of dollars.
Tax-free income. If you’re 60 or older and drawing from a taxed super fund (which most are), your pension payments are completely tax-free.
Regular payments. You choose how much you want to receive and how often (monthly, quarterly, or annually), subject to minimum drawdown amounts set by the government. Those minimums range from 4% of your balance under age 65, up to 14% at age 95 and over.
Flexibility. You can still take lump sum withdrawals on top of your regular payments if you need extra for a big expense.
The catch: once your money is in pension phase, you can’t add more to it. You can only draw from it. If you want to keep contributing, you need a separate accumulation account.
How Super and the Age Pension Work Together in Australia
Most Australians don’t choose between super and the Age Pension. They use both, just at different stages.
The typical pattern goes like this. You retire somewhere between 60 and 67. You convert your super into an account-based pension and start drawing a tax-free income. For the years between 60 and 67, your super is your only income source (aside from any savings or investments outside super). At 67, you apply for the Age Pension. Depending on your remaining super balance and other assets, you may receive a full pension, a part pension or nothing.
As your super balance gradually decreases through drawdowns, your Age Pension entitlement often increases. In our practice we generally see clients who start retirement on a part pension move to a full pension by their late 70s or 80s as their super balance reduces.
This interplay between super drawdown and Age Pension entitlement is where good planning makes the biggest difference. Draw too much from super early on and you can leave yourself short later. Draw too little and you miss out on years of comfortable spending while you’re healthy and active.
Please note: The figures and scenarios below are approximate and for illustrative purposes only. Individual outcomes vary based on personal circumstances, investment returns, fees and government policy. This is general information, not personal advice.
In Episode 10 of the Wealthlab Podcast, “How the Age Pension Really Works (With Real Case Studies),” Phil walked through how the timing of one decision changed a client’s outcome by tens of thousands. A couple selling an investment property in their last working year faced a $98,000 capital gains tax bill. Delaying the sale to the first retirement year dropped it to $73,000. Using catch-up concessional contributions on top brought it down to $11,000. Same property, same couple, same Centrelink rules. A $87,000 difference from getting the sequence right. Watch on YouTube.
Can I Get the Age Pension if I Have Superannuation?
Yes. Having super does not disqualify you from the Age Pension. Many Australians with $300,000 to $800,000 in super still receive at least a part pension.
Once you reach Age Pension age (67), your super is counted in the Centrelink means test. While you’re under 67, super in accumulation phase is generally not counted. From 67, both your accumulation balance and any account-based pension balance are assessable.
For a single homeowner in March 2026, the assets test thresholds are:
- Full Age Pension: assessable assets below $321,500
- Part pension: assessable assets up to around $722,000
- No pension: assessable assets above $722,000
For homeowner couples, the full pension cuts off at $481,500 and the part pension at around $1,085,000.
The income test runs in parallel. Centrelink doesn’t look at what your super investments actually earn. Instead, it applies “deeming rates” to your financial assets. As of March 2026, the lower deeming rate is 1.25% on the first $64,200 for singles ($106,200 for couples), and the upper rate is 3.25% on anything above (Services Australia).
Centrelink runs both tests and pays you under whichever one gives the lower result. For most retirees with meaningful super balances, the assets test is the binding one.
If you want to see how your numbers might shape up, run them through our free super calculator to get a quick snapshot of where you stand.
What About Defined Benefit Pensions?
Defined benefit pensions are the fourth piece worth mentioning. These are offered by some older super schemes, mostly in the public sector (the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme, state-government equivalents). Unlike regular super, a defined benefit pension pays a guaranteed income based on your years of service and final salary.
They’re closed to new members in almost all cases, but plenty of Australians approaching retirement still hold them. They’re assessed differently by Centrelink for the Age Pension income test, which can significantly change your overall retirement picture. If you have a defined benefit entitlement, it’s worth getting specific advice on how it interacts with the Age Pension.
FAQ
Is superannuation the same as the pension?
No. Superannuation is your own retirement savings, built through employer and voluntary contributions and invested by your fund. The Age Pension is a separate government payment available from age 67, subject to income and assets tests. Most Australians use a combination of both in retirement.
What is a pension in Australia?
The word “pension” is used for three different things in Australia. The Age Pension is a government payment for people aged 67 and over who meet the means test. An account-based pension is a retirement income stream you create from your own super. A defined benefit pension is a guaranteed income from older, mostly public-sector super schemes.
What is a super pension?
“Super pension” usually means an account-based pension: a retirement income stream you set up from your own super balance once you retire. Earnings are tax-free in pension phase (up to the $1.9 million transfer balance cap), and if you’re 60 or older payments to you are also tax-free.
Can I get the Age Pension and draw super at the same time?
Yes. Many Australians do. You can draw an income from your super (as an account-based pension) and receive a full or part Age Pension simultaneously, depending on your total assets and income. Your super balance is counted in the Age Pension means test from age 67.
How much Age Pension will I get if I have super?
It depends on your total assets and income. As a rough guide, a single homeowner with less than $321,500 in assessable assets (including super in pension phase) can receive the full Age Pension. Above that, the pension reduces by $3 per fortnight for every $1,000 in extra assets, until it cuts out around $722,000.
Is my super taxed in pension phase?
If you’re 60 or older and your super is in a taxed fund (which most are), both the investment earnings and your pension payments are tax-free in pension phase. This is one of the biggest advantages of moving super into pension phase at retirement.
Should I spend my super down to get the full Age Pension?
Generally no. The full Age Pension is worth about $31,223 a year for singles in March 2026. Spending down $100,000 in super to gain an extra few thousand a year in pension is usually a poor trade overall. How you structure your withdrawals can make a real difference to your total income, though, which is where tailored advice helps.
When should I move my super into pension phase?
For most people, once you’ve retired and are 60 or older, moving at least a portion of super into pension phase makes sense because of the tax-free treatment. But the timing and amount depend on your total balance, your other assets and your Age Pension eligibility. It’s worth getting this right because the decision affects your tax, your income and your pension entitlements for the rest of retirement.
Still Confused About Super and the Age Pension?
You wouldn’t be the first person to sit in front of a financial planner and say “I thought they were the same thing.” The system is genuinely confusing, and the difference matters. Getting the interplay between super, the Age Pension and your account-based pension right can mean thousands of dollars a year in extra retirement income.
If you’d like to talk through how this works in your situation, book a free chat with the Wealthlab team. No jargon, no sales pitch. Or if you’d rather start with a quick self-check, take our free retirement quiz for a general snapshot of where you stand.
