Social Security and Age Pension Interaction
Age pension basics
The Age Pension is means-tested by both an income test and an assets test; the lower result determines the payment. Candidates must know the deeming rules (financial assets deemed to earn a set rate), the free area thresholds, and the taper rates (income test reduces payment by 50 cents per dollar above the threshold; assets test by $3 per $1,000 above the threshold). The work bonus and pensioner concession rules also apply.
Superannuation and the means tests
Superannuation in accumulation phase is generally not counted as an asset until the member reaches age pension age, after which it is assessable. Account-based pensions are assessed under the assets test (and deemed income). The transition to retirement income stream is treated differently from an account-based pension.
Traps
Questions often test the interaction between the assets and income tests, the treatment of the family home (exempt), and whether superannuation is counted before or after age pension age. Deeming rates and the free area are frequent numeric traps.
Rule of thumb
Calculate both tests; the lower payment applies. Super in accumulation is invisible to the means test before age pension age, but becomes assessable at that age.