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When retiring, many First Super members use a combination of their super savings together with the Age Pension to give them a regular income during their retirement. It’s important to make the most of any government benefits as well as maximise your super savings.
You work hard to grow your super throughout your career. However sometimes super savings are not enough to cover everything in retirement. The Government provides the Age Pension to supplement (top-up) income from your super.
The Age Pension is generally paid on a fortnightly basis from Centrelink and, in some cases, can be tax free.
There are certain eligibility conditions that must be met to receive Age Pension payments, not everyone is automatically entitled to receive them.
A Retirement Income account provides you with a regular, tax-free payments.
Set up with money transferred from your super, it provides you with regular, flexible income payments in retirement.
The First Super Retirement Income account can be used together with the Government’s Age Pension (if eligible) to fund your retirement.
Depending on your circumstances, you may be eligible for the full Age Pension or a part Age Pension.
The following table outlines the fortnightly amounts of a full Age Pension (maximum basic rate).
There are a number of criteria you need to meet to be eligible for the Age Pension. Your age, income from investments, assets you own, and the amount of super you have, all determine whether you may be eligible. Here are the basics of Age Pension eligibility…
You need to be a certain age to qualify for the Age Pension.
You must be an Australian resident (for at least 10 years), be living in and physically present in Australia on the day you claim the Age Pension.
Finally, you must meet the requirements of an Assets test and an Income test. This is where it starts to get complex, so speaking with a First Super Financial Planner could really benefit you. Check out the videos we’ve prepared which outline these tests in more detail.
Generally, you can earn up to $204 per fortnight ($360 for a couple) from super, shares, investments etc. without reducing the Age Pension amount.
Any income over this amount would reduce your Age Pension payment until your eligibility disappears if you are earning $2,501 or more per fortnight ($3,823 for a couple). Don’t forget, you also need to meet the requirements of the Asset test.
There are different amounts of assets you can have, depending on whether you are a couple or a home-owner, before it affects your eligibility to receive the Age Pension.
A Retirement Health Check is a great way of determining whether you may be eligible for the Age Pension, and how this could work with your super. We can even include your partner regardless of which super fund they belong to.
It doesn’t cost anything extra, (it’s already included in your membership) and could significantly change the way you spend your retirement.
It’s a 30–45-minute consultation with a qualified financial planner. It’s been developed exclusively for First Super members and should be the first step in planning your retirement.
Book a Retirement Health Check
There is no tax payable on withdrawals you make from super, whether it is regular retirement income payments or lump sums, provided you are aged 60 or over. However, what about Age Pension payments?
Age Pension payments are generally tax free, provided they are your only source of income.
If you do receive other sources of income such as share dividends, rental income or other investment income, then these will be combined with your Age Pension payments for income tax purposes, and declared on your tax return each financial year.
If you are earning income from the Age Pension and other sources, then the standard Australian tax-free threshold and tax brackets will apply to you; meaning the tax you pay will depend on how much you earn.
Tax is not automatically deducted from the fortnightly Age Pension payments, so you may need to pay tax at the end of the financial year. You can request that Centrelink deducts tax from your Age Pension payments helping you to reduce how much tax you owe at the end of each financial year.
Australian tax brackets applicable to Age-pensioners and non-pensioners in 2024/25:
The above rates do not include the Medicare levy of 2%.
If you do receive Age Pension payments, then you’ll also receive health benefits as well as discounts on council rates, public transport, gas, electricity, telephone and car registration.
Many First Super members choose to transfer their super to a First Super Retirement Income account when they retire. This allows them to continue earning tax-free investment returns through their chosen investment option, while drawing down their balance through regular retirement income payments.
Many members also receive either full or part Age Pension payments at the same time, it’s a way to top-up their super income to cover basic living expenses in retirement.
Applications for the Age Pension are best done online, through Centrelink. You will need to set up a Centrelink account and link this to your myGov account.
You will need to provide a number of documents to support your claim, including:
For more information about applying for the Age pension visit the Services Australia website.
A Transition to Retirement (TTR) strategy offers many benefits before you retire. It can help you boost your super, or even wind down your work hours and maintain your income.
> More on Transition to Retirement
A First Super Retirement Income Account gives you the freedom to choose how your money is invested, as well as how often and how much you get paid in retirement.
> More on Retirement Income
The financial situation of every First Super member is different. This is why it’s important to get good advice when planning your retirement.
To find out if you’re eligible for the Age Pension and how it could work together with your super savings, call us on 1300 360 988, or request an online appointment with one of our Financial planners.
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