Superannuation and the pension are not the same thing, but most Australians will use both in retirement. Super is your own money, saved 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 called an account-based pension (sometimes called a “super pension”), which is an income stream you set up from your own super balance once you retire.
These three terms get tangled constantly, and the confusion is not your fault. The system uses the word “pension” for two completely different things. This post clears that up and explains how super and the Age Pension actually work together once you stop working.
Superannuation: Your Own Money
Superannuation is a compulsory savings system. While you are working, your employer contributes 12% of your ordinary time earnings into your super fund (ATO). You can also make extra voluntary contributions on top of that.
Your super fund invests that money in things like shares, property, bonds and cash. Over a working lifetime, those investments grow (hopefully), 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 most Australians born after 30 June 1964) and have retired or left an employer. From age 65, you can access it regardless of whether you are still working.
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 your investments performed, and how much you paid in fees along the way.
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 is available from age 67 for both men and women.
As of 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. The rates are adjusted every March and September based on inflation and wage growth.
The Age Pension is means-tested. That means the amount you receive depends on your income and assets. If you have substantial super, investments, or other assets, you may receive a reduced (part) pension or no pension 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 in assets. For homeowner couples, the full pension threshold is $481,500, with a part pension available up to about $1,085,000.
The Age Pension is not something you have earned through contributions. It is a safety net funded by taxpayers, designed to provide a basic standard of living for older Australians who need it.
We covered how the Age Pension really works, including the assets test, income test, and some surprising case studies, in Episode 10 of the podcast: “How the Age Pension Really Works (With Real Case Studies).” Phil and Dan walked through worked examples showing how small decisions around timing and structure can save thousands. Watch on YouTube or find it on Spotify.
The Account-Based Pension: Your Super, Paying You
This is where it gets confusing. When you retire and want to start drawing a regular income from your super, you can convert your super balance into what is 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 is your own super money, moved from the “accumulation phase” (where you were building it up) into the “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 $1.9 million 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 are 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 at age under 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 cannot add more to it. You can only draw from it. If you want to keep contributing, you need a separate accumulation account.
Quick Comparison: Super vs Age Pension vs Account-Based Pension
Superannuation (accumulation phase): Your own savings. Built through employer contributions and voluntary contributions. Invested by your fund. Accessible from age 60 (if retired). Earnings taxed at up to 15%. Cannot draw regular income without switching to pension phase or meeting a condition of release.
Age Pension: Government payment. Available from age 67 if you meet the income and assets tests. Not based on contributions. Rates set by the government and adjusted twice a year. Currently about $31,223 a year for singles or $47,070 for couples. Means-tested, so your super balance affects how much you receive.
Account-based pension (super pension): Your own super money, moved into pension phase. Pays you a regular income you control. Earnings and withdrawals are tax-free from age 60. Subject to minimum annual drawdown rules. Balance is counted in the Age Pension assets and income tests.
How They Work Together in Retirement
Most Australians do not choose between super and the Age Pension. They use both, just at different stages.
The typical pattern looks 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 personal 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. By your mid to late 70s or 80s, many Australians who started on a part pension end up on a full pension as their super balance reduces.
This interplay between super drawdown and Age Pension entitlement is where good planning makes the biggest difference. Drawing too much from super early on can leave you short later. Drawing too little can mean missing out on years of comfortable spending while you are healthy and active.
Phil talks about this balance regularly. In Episode 9, “When Super Fund Advice Can Cost You the Age Pension,” he walked through a real case where limited advice from inside a super fund led to a client losing thousands in Age Pension entitlements. Listen on YouTube or on Spotify.
The Deeming Rate Trap
One thing that catches people out is how Centrelink assesses income from your super once you are in pension phase. Centrelink does not look at what your investments actually earned. Instead, it uses “deeming rates” to assume a rate of return on your financial assets.
As of March 2026, the deeming rates are 1.25% on the first $64,200 of financial assets for singles ($106,200 for couples), and 3.25% on anything above that. If your investments actually earned less than the deemed amount, tough luck. Centrelink still counts the higher deemed income, which can reduce your pension.
This is one of the reasons the relationship between super and the Age Pension is more complicated than it looks on paper. The timing of when you move money into pension phase, how much you hold in different account types, and even how your investments are structured all affect your total retirement income.
If you want to see how your numbers stack up, run them through our free super calculator to get a quick picture of where you stand.
What About Defined Benefit Pensions?
There is a fourth type worth mentioning briefly: defined benefit pensions. These are offered by some older super schemes, mostly in the public sector (like the Commonwealth Superannuation Scheme or the Public Sector Superannuation Scheme). Unlike regular super, a defined benefit pension pays a guaranteed income based on your years of service and final salary.
Defined benefit pensions are closed to new members in almost all cases, but plenty of Australians approaching retirement still hold them. They are 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 is 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 contributions and invested by your fund. The Age Pension is a government payment available from age 67, subject to income and assets tests. Most Australians use a combination of both in retirement.
What is an account-based pension?
An account-based pension is a retirement income stream you create from your own super. Once you retire and reach age 60, you can move your super into pension phase and draw regular, tax-free payments while your remaining balance stays invested.
Can I get the Age Pension and draw super at the same time?
Yes. Many Australians do both. You can draw an income from your super pension and receive a full or part Age Pension at the same time, 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 assets until it cuts out entirely at around $722,000.
Is my super taxed in pension phase?
If you are 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. This is one of the biggest advantages of moving your super into pension phase at retirement.
Should I spend my super down to get the full Age Pension?
Generally, no. The Age Pension is worth about $31,000 a year for singles. Spending down $100,000 in super to gain an extra $3,000 a year in pension is usually a poor trade. However, how you structure your withdrawals can make a real difference to your total income over time. This is where tailored advice pays for itself.
When should I move my super into pension phase?
For most people, once you have retired and are 60 or older, moving at least a portion of your 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 is 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 Pension?
You would not 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 it matters because getting the interplay between super, the Age Pension, and your account-based pension right can mean thousands of dollars a year in extra income.
If you want clarity on how your super and pension fit together for your specific situation, book a free chat with the Wealthlab team. We will explain it in plain English, not jargon.