Superannuation savings are part of your retirement nest egg. While you may have other savings, assets and investments to draw income from in retirement, your super is different.

What is superannuation?

Superannuation – or super – is money you save over your working life to live on when you retire. For most working Australians, the majority of their savings come from the Super Guarantee (SG). SG payments are mandatory contributions from your employer usually into a super fund of your choice and the amount paid into your super is a percentage of your salary. You can also choose to make your own voluntary contributions into your super fund to boost the savings and income you’ll have access to in retirement.

When can I access my super?

To access your superannuation, you generally need to have reached your preservation age (55-60 depending on your date of birth) and be retired, or when you reach age 65. You could also access your super under a transition to retirement (TTR) arrangement, where you could access up to 10% of your super in a financial year upon reaching your preservation age.

You may also be eligible to access your super early if you meet other conditions such as disability, severe financial hardship and compassionate grounds.

More information is available from this ATO webpage.

How is superannuation different to the Age Pension?

Superannuation savings are generally private funds held by you as an individual to provide you with income when you are no longer working.

The Age Pension is a payment from Centrelink you can access once you have reached Age Pension age. Eligibility for the Age Pension is based upon a number of factors and subject to both an assets and an income test. You may be eligible for a full or part Age Pension, depending on the outcome of these tests and it is the test resulting in the lowest rate that will apply.

Find out more about asset and income test thresholds and payment rates for the Age Pension.

Does superannuation count towards the assets or income tests for the Age Pension?

If you haven’t reached the age that you can access the Age Pension, then usually, your super is not counted under the assets or income tests.

If you have reached the qualifying age for Age Pension, then usually your super balance is counted under the assets test and subject to deeming under the income test.

If you convert your super to an income stream, it is assessed based on the type of income stream.

What are deeming rates?

For income you earn from superannuation and other investments you hold in retirement, there are rules applied to how this income is calculated for the purposes of the income test. Centrelink use deeming rates to assess income earned from your financial assets. They assume these assets earn a set rate of income, no matter what they actually earn. Even if your income from assets is actually higher than the deeming rate calculation, it won’t count towards the total for your income test.

Visit the Services Australia website to find out more about deeming rates.

How are account based pensions treated towards the assets or income tests for the Age Pension?

Account based pension balances are treated as an assessable asset. Under the income test, the balance is subject to deeming (different rules could apply if you started the account based pension prior to 1 January 2015 and were in continuous receipt of a social security payment since 1 January 2015).

How are lifetime income streams treated towards the assets or income tests for the Age Pension?

Lifetime income streams are different to many other investment assets, such as bank accounts, account-based pensions and investment properties, where generally 100% of the asset is assessable. Under the assets test for the Age Pension, 60% of the purchase price of certain lifetime annuities will count as an asset through to age 84, or for a minimum of five years. From then, only 30% of the purchase price counts as an asset.

Visit the Services Australia website for more information about which assets are assessed for the assets test.

When you transfer superannuation to a lifetime annuity or lifetime income stream, 60% of any payment you receive is assessable for the income test. 

Visit the Services Australia website for more information about assessable income.

Are withdrawals from super included in my taxable income? 

Generally, payments (lump sum or regular income) you receive from a taxed super fund (such as a retail, industry, corporate or a SMSF) are not included in your taxable income if you are 60 or over. 

However, payments you receive from an untaxed super fund (such as certain public sector super schemes) may be included in your taxable income.

Can I withdraw my super and keep working? 

Generally, you need to be retired to access super. There may be situations where you can access super but continue to work. Common situations where you can do this are:

• accessing super at age 65 and continuing to work
• terminating an employment arrangement on or after age 60 which meets the definition of retirement and continuing to work in a new arrangement
• retiring but then having a change of intention in the future where you start working.
   

Can I keep adding to my super once I’m retired?

There are age based restrictions on contributing to superannuation. Generally, you can contribute within allowable limits before you turn 67. Once you turn 67, you can usually contribute to superannuation up to age 75 as long as you satisfy the ‘work test’ which is defined as 40 hours of work, including self-employment, over a consecutive 30-day period.

Alternatively, you may be eligible to use a one-off work test exemption if your total super balance is less than $300,000 and you retired in the previous financial year.

Once you turn 75, generally you can’t make voluntary contributions to superannuation. However you can continue to receive the Superannuation Guarantee or other compulsory contributions from your employer.
 

You may also be eligible to contribute up to $300,000 upon selling your home after age 65 and meeting further conditions.

More information is available from this ATO webpage.

Frequently asked questions about superannuation

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