Couples with an age gap: when one partner reaches Age Pension age before the other, and the planning window the under-age partner's super creates

For Australian couples where one partner has reached Age Pension age (currently 67 for everyone born on or after 1 January 1957) and the other has not, the social security framework produces a specific planning window that can materially affect the over-age partner's Age Pension entitlement during the gap years. Under section 4 of the Social Security Act 1991, the couple is assessed as a "member of a couple", with combined assets and income tested against the couple thresholds — meaning the under-age partner's resources count against the over-age partner's pension entitlement, even though only the over-age partner is eligible to claim Age Pension. However, a critical exemption rule preserves planning value: super in accumulation phase belonging to a person under Age Pension age is disregarded from the assets test under section 1118 of the SSA 1991, and the underlying balance is also not subject to deeming for the income test. For couples with substantial under-age partner super, this exemption can mean the difference between full Age Pension and significantly reduced or zero Age Pension during the gap years. The structural feature creates a finite planning window — opening when the over-age partner reaches Age Pension age, closing when the under-age partner does likewise — during which careful asset structuring can preserve material Age Pension entitlement.

The "member of a couple" assessment under s.4(2)–(6) of the SSA 1991 is the foundational rule. Two people who are partners — married, de facto, or living together as a couple on a permanent or genuine domestic basis — are assessed jointly for Centrelink purposes regardless of which partner owns particular assets or earns particular income. Combined assets are tested against the couple thresholds: from 20 March 2026, full pension for a homeowner couple applies up to $481,500 of assessable assets, with the partial-pension taper of $3 per fortnight per $1,000 above the threshold (since 1 January 2017) cutting the payment to zero at around $1,085,000. Combined income is similarly tested against couple income thresholds. The over-age partner receives the partnered Age Pension rate (lower than the single rate) reflecting the joint nature of the household. Critically, couples cannot avoid joint assessment by having only the over-age partner claim — the under-age partner's resources count regardless of who claims.

The under-age partner's super accumulation phase exemption is the single most important planning rule for age-gap couples. Section 1118 of the SSA 1991 lists assets to be disregarded in the assets test, and DSS Social Security Guide 4.9 describes how super investments are assessed: where one partner is under Age Pension age and has super held in accumulation phase (not yet commenced as an income stream), the entire accumulation balance is disregarded from the assets test, and the underlying earnings are not subject to deeming for the income test. The exemption applies regardless of the size of the balance. For a couple where the under-age partner has $500,000 in super accumulation, this exemption removes $500,000 from assessable assets — potentially shifting the over-age partner from a partial pension to full pension, or from zero pension to substantial pension. The exemption ends when (a) the under-age partner reaches Age Pension age, or (b) the under-age partner commences a pension from the super (account-based pension, transition-to-retirement pension, or otherwise). Either event triggers inclusion of the balance in the assets test going forward.

The planning window is the period from when the over-age partner becomes eligible for Age Pension to when the under-age partner reaches Age Pension age. For couples with a small age gap (1–3 years), the window is short and the planning opportunity modest. For couples with larger gaps (5–10 years or more), the window is substantial and the cumulative exemption value can be significant. For very large gaps (10+ years), the exemption can preserve material Age Pension entitlement for a decade or more. The planning value depends on three factors: the size of the under-age partner's super (the exemption only matters if there's significant balance), the duration of the window (longer gaps produce more cumulative benefit), and the couple's overall asset position (the exemption only matters if the couple is otherwise in or near the asset test taper zone).

The strategies during the window centre on maximising the under-age partner's accumulation phase balance and avoiding premature pension commencement. Maintain accumulation phase. Don't commence a pension for the under-age partner during the window. Even if the over-age partner has commenced an account-based pension, the under-age partner should remain in accumulation. Consolidate assets into under-age partner's super. Within contribution caps (concessional $30,000 and non-concessional $120,000 with bring-forward up to $360,000 for FY25-26, subject to the under-age partner's TSB) and Total Super Balance limits, shifting personal cash, shares, or term deposits from joint or over-age-partner-named accounts into under-age-partner super reduces assessable assets. Spouse contribution. The over-age partner can contribute to the under-age partner's super (subject to NCC cap and TSB restrictions) — useful for couples with disparate balances. Recontribution strategy. Over-age partner withdraws from their super (now post-preservation, can withdraw freely) and recontributes to under-age partner's super as NCC — shifting the asset base from over-age to under-age within the cap framework. Drawdown over-age partner's pension first. Use the over-age partner's account-based pension or assessable income as the primary income source, preserving the under-age partner's accumulation balance.

The income test interaction runs parallel to the assets test. Combined financial assets are deemed at the FY25-26 rates of 1.25% on the first $106,200 of financial assets for a couple combined and 3.25% on the balance from 20 March 2026, but accumulation phase super for the under-age partner is also exempt from deeming — the income test exemption mirrors the assets test exemption. For couples where the under-age partner is still working, employment income counts and may be the binding constraint. For couples where neither partner is working, the deeming exemption combined with the assets exemption means the under-age partner's super doesn't affect either test. The interaction can produce surprisingly favourable Age Pension outcomes for the over-age partner where most of the couple's wealth is in the under-age partner's super.

The JobSeeker option for the under-age partner is sometimes available. If the under-age partner is not working and not yet pension age, JobSeeker payment may be claimable subject to mutual obligations. For older recipients (60+), some mutual obligation requirements are softened, recognising the difficulty of finding work near retirement age. Carer Payment is available if providing constant care for a person with severe disability or medical condition. Disability Support Pension is available if permanently incapacitated. For some couples, JobSeeker for the under-age partner during the gap years provides modest additional income while preserving the accumulation phase super exemption — though combined-couple means testing applies and may reduce the payment if Age Pension is also being claimed by the over-age partner.

The transition when the under-age partner reaches Age Pension age is the principal risk and planning event. Both partners now eligible for Age Pension. Couple now both claiming, both at the partnered rate. Under-age partner's super now assessable — whether kept in accumulation or commenced as a pension, the balance is now in the assets test and underlying earnings are deemed. Centrelink reassessment is triggered, with the couple required to update their financial position. For couples who relied heavily on the accumulation exemption, the transition can produce material Age Pension reduction overnight. For couples whose combined assets are well within thresholds even after the transition, the change is minor. The transition is when many couples consider downsizing the family home (creating after-sale liquidity that requires structuring), gifting strategies (subject to deprivation rules), or lifetime annuity products (with their 60% asset test treatment under the post-1-July-2019 means test rules).

The practical advice work for age-gap couples has a specific shape. Identify the planning window by confirming each partner's date of birth and Age Pension age. Map combined assets by partner, by structure, and by phase (accumulation versus pension versus non-super). Calculate Age Pension entitlement with and without the under-age partner's super accumulation exemption — the comparison shows the exemption value. Plan asset structuring within contribution caps and Total Super Balance limits. Avoid premature pension commencement for the under-age partner — this is the most common mistake. Project the transition when the under-age partner reaches Age Pension age — what will the assessable position look like? What's the projected Age Pension at that point? Consider transition strategies — downsizing, lifetime annuities, gifting — that may need to be implemented before or at the transition. Communicate the time-limited nature of the planning value clearly — couples need to understand the exemption ends and prepare for the post-transition position.

What do worked planning examples show?

These two cases show how the age-gap framework plays out for typical couples. Illustrative only — not personal advice — using FY25-26 figures.

Case 1 — Robert, 67, and Helen, 60. Combined assets $750,000: Helen's super $400,000 (accumulation), joint home $400k (already exempt as principal home), other assets $350,000. On these facts, with Helen's super in accumulation phase and disregarded under s.1118: assessable assets $350,000. Within the homeowner couple full pension threshold ($481,500). Robert receives the full partnered Age Pension. If Helen instead commenced a pension, her balance would become assessable: combined $750,000, well into the asset test taper zone, with Robert's pension reduced by roughly $3 a fortnight per $1,000 above $481,500. The reduction at that asset level would be roughly $20,000–$25,000 a year. Strategy: keep Helen in accumulation phase for the next seven years until she reaches 67. Drawdown plan: Robert uses his Age Pension and his own super to fund living expenses; Helen's super stays untouched until 67. Cumulative benefit of the strategy: approximately $140,000–$175,000 over the seven-year window. The trap to avoid is Helen commencing a pension at preservation age (60) for accessibility reasons — the access is unnecessary if Robert's Age Pension and own super are adequate, and the cost is the loss of the exemption.

Case 2 — Margaret, 68, and David, 64. Combined assets $1.4m: David's super $800k (accumulation), joint home $500k (exempt), other assets $600k. On these facts, with David's super disregarded under s.1118: assessable assets $600,000. Within homeowner couple thresholds for a partial Age Pension. Margaret receives a partial pension. Without the exemption: assessable $1.4 million, above the $1,085,000 cut-off — no Age Pension. Strategy: keep David in accumulation for three years until 67. Use Margaret's Age Pension and other assets to fund expenses. At David's 67th birthday, prepare for transition — likely downsizing or a lifetime annuity product (the 60% assets-test concession for compliant post-1-July-2019 lifetime income streams) to manage the post-transition assets position. The trap to avoid is failing to plan for the transition — couples in this position often face a sudden Age Pension reduction or loss when the gap closes, and pre-emptive structuring (within caps and rules) preserves more value than reactive responses.

For Australian couples with age gaps where one partner reaches Age Pension age before the other, the social security framework produces a specific planning window during the gap years. The under-age partner's super accumulation phase exemption from the assets test (and deeming income test) under SSA 1991 s.1118 is the principal lever — preserving accumulation phase status until the under-age partner reaches Age Pension age can preserve material Age Pension entitlement for the over-age partner. The window is finite, ending when the under-age partner crosses the age threshold and the exemption disappears. The planning work is to identify the window early, structure assets to maximise the exemption value within contribution and TSB limits, avoid premature pension commencement, and prepare for the post-transition position before it arrives. For couples with substantial under-age partner super and meaningful age gaps, the exemption can be worth tens or hundreds of thousands of dollars in cumulative Age Pension entitlement.

Sources

• classic.austlii.edu.au — S4
• classic.austlii.edu.au — S1118
• Services Australia — Superannuation
• DSS Social Security Guide
• Services Australia — Who can get age pension