Tax in Retirement: How Super and Pensions Are Generally Treated in Australia
Last reviewed 26 May 2026 · FiftyPlus Finance
Tax is one of the most common questions Australians have as they approach retirement. This guide gives a general overview of how superannuation and pension income are commonly treated — but tax law is complex and changes regularly.
This page is general information only and not personal tax or financial advice. Always confirm current rules with the ATO and consider speaking with a registered tax agent or licensed financial adviser.
Two different systems
Money inside the super system is taxed differently from money you hold in your own name. Within super itself, the treatment is different again depending on whether the account is in accumulation phase or retirement (pension) phase.
Accumulation phase
Investment earnings inside super are generally taxed at a concessional rate (commonly 15%) — confirm the current rate with the ATO.
Retirement (pension) phase
Investment earnings on assets supporting a retirement-phase pension are generally tax-free up to the Transfer Balance Cap, which is indexed. Earnings on the remaining accumulation balance continue to be taxed at the concessional rate.
Outside super
Income from shares, term deposits, rental property and other investments held in your own name is taxed at your marginal tax rate (with offsets such as franking credits where applicable).
Pension payments and your age
For most people aged 60 and over, payments received from a taxed super fund — whether as income from an account-based pensions or as a lump sum — are generally tax-free in their own hands. Different rules can apply to untaxed funds (such as some public-sector schemes) and to those under 60.
Confirm your fund type and your specific situation with your fund and the ATO.
The Age Pension and tax
The Age Pension is generally taxable income, but most full pensioners pay no tax because of the low income tax offsets that apply. The interaction can be more complex if you have additional income. Information on offsets is published on the ATO.
How the Age Pension is calculated is a separate matter — see the Age Pension and your investments.
Contributions and tax
Contributions into super are also taxed in defined ways. Concessional (pre-tax) contributions are generally taxed at 15% on the way in (with additional tax for very high earners), while non-concessional (after-tax) contributions are generally not taxed on entry. Annual caps apply. Special rules cover downsizer contributions and 'bring-forward' provisions.
Estate and beneficiary tax
Super paid to a tax dependant (such as a spouse or minor child) on death is generally tax-free. Payments to non-dependants (such as adult independent children) can attract tax on the taxable component. The detail matters; consider professional advice on estate planning.
Where to verify
Tax rules are updated regularly. The authoritative sources are the ATO and registered tax agents. Moneysmart also publishes plain-English explanations. Before making major decisions, consider choosing a licensed financial adviser.
If you'd like a calm written overview that pulls the pieces together, you can request your free information pack.
Frequently asked questions
Are super pension payments tax-free?+
For most people aged 60+, payments from a taxed super fund are generally tax-free. Different rules can apply under 60 or for untaxed funds.
Is the Age Pension taxable?+
Technically yes, but most full pensioners pay no tax because of low-income offsets. The picture is more complex with extra income.
What is the Transfer Balance Cap?+
It is an indexed lifetime limit on the amount of super that can be moved into retirement-phase pension accounts. Earnings within that cap are generally tax-free.
Are super earnings tax-free?+
Earnings on retirement-phase pension assets are generally tax-free up to the cap. Earnings on accumulation balances are taxed at a concessional rate.
Do I need a tax agent?+
Many retirees use a registered tax agent or accountant, especially if they have multiple income sources. It's not compulsory if you can manage your own return.
Where can I check the current rules?+
ato.gov.au is the authoritative source. Moneysmart provides plain-English explanations.
Related guides
Important — please read
The information provided on this website is general information only. It does not take into account your personal objectives, financial situation or needs. Before acting on any information, you should consider its appropriateness having regard to your own circumstances and obtain advice from a qualified, licensed financial adviser.
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