What is the difference between super and the Age Pension?

These are often confused. They are two different retirement-income systems with different rules.

Superannuation

• Your money, held in trust by a super fund
• Employers pay 12% of your ordinary wages into it (Superannuation Guarantee)
• You can add voluntary contributions (concessional or non-concessional)
• Preserved until preservation age (60 for anyone born after 1 July 1964)
• Withdrawn tax-free after 60 once retired
• Amount you have depends entirely on your own balance

The Age Pension

• A Centrelink income-support payment, funded by general taxation
• Eligibility age: 67 (for anyone born on or after 1 January 1957)
• Must be an Australian resident for 10+ years
• Means-tested: your Age Pension is reduced based on your assets and income, including super in pension phase
• Maximum single rate is around $30,000/year; couple combined around $45,000/year (indexed each March and September)

How they interact

Most Australian retirees receive both — a part Age Pension plus their own super drawn down as an account-based pension. Super typically tops up lifestyle above the Age Pension base.

Once you draw super as an income stream, the balance is counted as a financial asset under the Centrelink assets test. This is why running down super doesn't always hurt your pension — as the balance drops, your Age Pension rises.

Why this matters for planning

Having some super plus some Age Pension is often more efficient than having enough super to self-fund entirely, because the Age Pension indexes with inflation and provides a life annuity no super balance can replicate. Use the Age Pension calculator to see what you'd qualify for at different super balances.