Defined Benefit Pensions: Invisible to One Centrelink Test, 90% Counts in the Other

If your super pays you a set amount for life - CSS, PSS, State Super, QSuper's defined benefit account, UniSuper's Defined Benefit Division, or a military scheme - Centrelink's two tests treat it in completely opposite directions. Under the assets test, a defined benefit pension has no asset value. Under the income test, at least 90% of it counts. The number that catches people: however much of your pension is tax-free, Centrelink ignores at most 10% of it. Since 1 January 2016, the deductible amount has been capped at 10% of your gross pension, with no grandfathering - and only three military schemes are exempt. CHAPTERS 0:00 Two tests, opposite directions 1:18 What a defined benefit pension is 1:46 Not deemed 2:10 The assets test: no asset value at all 2:54 The income test and the deductible amount 3:32 The 10% cap (and why it's a ceiling, not a floor) 4:20 No grandfathering 4:48 Barbara - $52,000 DB pension, single 6:00 What the cap cost her 6:35 The shortcut (screenshot this) 7:04 The $78,000 cut-off 7:49 The three exempt military schemes 8:29 The Work Bonus can't reach it 8:45 The three-question check 9:16 DSP, Carer Payment and JobSeeker 9:49 Three things to do this week 10:25 Recap WHAT'S IN THIS ONE - What a defined benefit pension is, and which schemes pay one - Not deemed: Centrelink counts what it actually pays you, not an assumed rate of return - The assets test: no asset value is held in the assessment - The income test formula: gross annual pension minus the deductible amount - The deductible amount is your tax-free component - where to find it on your Centrelink schedule - The 10% cap, and why it's a ceiling, not a floor (3% tax-free gives you 3%) - No grandfathering: State Super's own 2015 briefing put some members' deductible amounts at 50% or more; on 1 January 2016 they became 10% - Barbara, single homeowner, $52,000 gross DB pension, $13,000 tax-free: assessable $46,800 a year = $1,800 a fortnight, $787 off, Age Pension $450.70 a fortnight - and $600.70 uncapped, so the cap costs $150 a fortnight - The shortcut: gross pension x 9, divide by 10, divide by 26 (screenshot it) - The single cut-off: about $78,000 of gross DB pension and the Age Pension is gone; under about $6,500 to hold the full rate - The only three exempt schemes: DFRDB, MilitarySuper, DFRB - Why the Work Bonus can't reach it - The three-question check, and where to look in myGov - DSP (21 and over) and Carer Payment use the same income test - Three things to do this week Every rule was checked against the Department of Social Services' Social Security Guide and the DSS 20 September 2026 rates list on 20 September 2026. Sources: DSS Social Security Guide 4.9.2.30 - Income test assessment of defined benefit income streams (the formula, the 10% cap, the three exempt schemes): https://guides.dss.gov.au/social-security-guide/4/9/2/30 DSS Guide to Social Security Law 1.1.D.44 - Deductible amount: https://guides.dss.gov.au/guide-social-security-law/1/1/d/44 DSS Social Security Guide 3.1.15.20 - Work Bonus income (superannuation payments excluded): https://guides.dss.gov.au/social-security-guide/3/1/15/20 DSS rates list, 20 September 2026 indexation: https://www.dss.gov.au/system/files/documents/2026-08/rates-list-20-september-2026.pdf Services Australia - Income test for pensions: https://www.servicesaustralia.gov.au/income-test-for-pensions Next: DB Income Plus an Account-Based Pension - running both at once, the two assessment methods side by side, which is the question most of you actually asked. Want the groundwork first? Watch: How Super Affects Your Age Pension in 2026 (It's Not the Assets Test) - https://www.youtube.com/watch?v=DHdfbRpC-PY GENERAL ADVICE DISCLAIMER This video is general information only. It does not take into account your objectives, financial situation or needs, and it is not personal financial advice. Rates and thresholds change - the figures quoted are those applying from 20 September 2026. Before acting on anything here, speak to Services Australia or a licensed financial adviser about your own circumstances. A note on how this is made: Every script starts with real research and is checked against current ATO and Services Australia figures - that part isn't automated. The narration and the visuals are produced with AI tools. I write, verify, and stand behind every word. Thanks for being here. 💛 #AussieWealth #Superannuation #RetirementAustralia #AgePension #Centrelink #DefinedBenefit #IncomeTest #CSS