Understanding how Centrelink assesses your superannuation and other assets is one of the most important parts of preparing for retirement. Your eligibility for a full or part Age Pension, and even your access to related concessions, depends heavily on how your finances are structured.
Yet for many retirees, the system can feel confusing and inconsistent. Super is treated differently before and after Age Pension age, certain assets are exempt, others are “deemed”, thresholds shift each year, and couples are assessed together.
This guide explains the essentials, simply and clearly, so you can understand how your Age Pension is calculated and how to position your finances for a comfortable, long-lasting retirement.
The Two Tests That Determine Your Age Pension
Centrelink uses two separate tests to work out your Age Pension entitlement. You are paid under whichever test gives the lower rate.
1. The Assets Test
Centrelink looks at the value of everything you own, including:
- Superannuation (once you reach Age Pension age)
- Account-based pensions
- Cash, bank accounts and term deposits
- Shares, managed funds and investments
- Investment properties
- Motor vehicles, caravans and boats
- Personal items (above a general threshold)
Your principal home is exempt, regardless of value.
If your assets sit below the lower threshold, you may receive the full Age Pension. If they sit between the lower and upper thresholds, you may receive a part pension. Above the upper threshold, you may be ineligible.
2. The Income Test
Centrelink also considers your income, including:
- Employment income
- Investment income
- Rent
- Account-based pension payments
- Deemed income on financial assets
Centrelink applies deeming rates, which assume your investments earn a set rate, regardless of actual performance. This simplifies administration but can affect your eligibility if your investment balances are high.
How Superannuation Is Assessed for the Age Pension
Super is treated differently depending on your age and circumstances:
Before Age Pension Age
If you are under Age Pension age, your super (in accumulation phase) is exempt from Centrelink assessment for both the assets and income tests.
This creates powerful planning opportunities, especially for couples.
After Age Pension Age
Once you reach Age Pension age:
- All your super becomes assessable, regardless of whether it is in accumulation or pension phase.
- Account-based pensions are subject to deeming rules, not based on actual earnings.
This is why timing your retirement income stream can have a meaningful impact on your eligibility.
Common Strategies to Improve Your Age Pension Eligibility (Legally)
Good retirement planning isn’t about “gaming the system” it’s about understanding the rules and structuring your finances in a way that works for you.
Here are several legitimate, commonly used strategies:
1. Using a Younger Spouse’s Super
If one spouse is below Age Pension age, their super is not counted by Centrelink. Redirecting surplus savings into the younger spouse’s super can reduce assessable assets and improve pension outcomes.
2. Timing When You Start Your Account-Based Pension
Starting an account-based pension too early can increase deemed income. In some cases, leaving super in accumulation for longer can improve overall Age Pension eligibility.
3. Making Gifts Within the Allowed Limits
Centrelink allows gifting of:
- $10,000 per financial year
- $30,000 over five years (maximum $10,000 per year)
Staying within these limits avoids triggering deprivation rules.
4. Renovating or Improving Your Home
Your principal residence is exempt, so using assessable cash to improve your home can legally reduce assets while enhancing your retirement lifestyle.
What This Means for Your Retirement
Understanding these rules, and using them correctly, can lead to:
- Higher Age Pension payments
- Longer-lasting superannuation savings
- Lower financial stress
- Greater certainty around income
- A smoother transition into later retirement
Most retirees benefit from a blend of superannuation income, personal savings, and Age Pension support. When these work together, your retirement becomes far more comfortable and predictable.
Need Help Navigating Centrelink?
The Centrelink system is complex, and the financial impact of getting it wrong can be significant. At Greybox Wealth, we help you:
- Understand your eligibility
- Structure your finances correctly
- Prepare and lodge your Age Pension application
- Respond to Centrelink reviews or requests (for ongoing clients)
- Integrate your Centrelink plan with your broader retirement strategy
If you want confidence that your finances support a long, secure retirement, we’re here to help.