What Happens to Your Pension If Your Super Drops in the Market?
For many retirees, superannuation is one of their largest assets. So when investment markets fall — due to interest rate changes, global events, or economic uncertainty — many pensioners worry:
“Will my Age Pension go up if my super balance drops?”
“Do I need to tell Centrelink?”
“Will this affect my payments immediately?”
The good news is that a drop in your superannuation balance can potentially increase your Age Pension entitlement — but it depends on how your super is structured and what phase it’s in.
This guide explains what actually happens under the Centrelink rules.
1. First, it depends on whether your super is in accumulation or pension phase
If you're under Age Pension age (under 67)
Your super is exempt from the means test while you’re under age pension age.
So if the market drops:
Your super balance changes
But it does not affect your future Age Pension until you turn 67
Once you reach Age Pension age, your super becomes assessable, and that’s when fluctuations start to matter.
If you're 67+ and your super is in pension phase
Most retirees convert their super to an account-based pension when they retire.
In this case:
Centrelink takes the current balance into account
The balance is updated periodically
A drop in value may improve your Age Pension entitlement
This is because your super is counted as an asset under the Assets Test, and as it decreases, you may move into a higher pension payment range.
If you're 67+ and your super is still in accumulation phase
Some people keep their super in accumulation after 67.
In this situation:
Centrelink still counts the current balance as part of your assessable assets
It is treated the same as super in pension phase
A drop in the market may benefit your Age Pension entitlement
Either way, the value of your super matters once you reach 67.
2. Will Centrelink automatically adjust your pension if the market drops?
Usually no — not immediately.
Centrelink does periodic updates, but these may occur:
annually, during the routine asset refresh
when you report changes
when super funds update balances automatically (some funds do this quarterly, some annually)
If your super balance drops significantly during a market downturn, Centrelink may not know unless:
your fund sends them updated information, or
you tell Centrelink
This means your Age Pension may temporarily be lower than you’re actually entitled to, simply because Centrelink still has your old (higher) balance on file.
3. Should you notify Centrelink when your super balance drops?
YES — if the drop is material.
A “material” drop usually means:
more than a few thousand dollars,
or any fall that may change your eligibility or increase your rate.
Examples of when to update:
Your super drops from $350,000 → $310,000
Your assets fall enough that you might now qualify for a part-pension
You’re close to the assets test threshold and a drop may push you below it
Updating Centrelink ensures:
your pension increases sooner
you avoid being paid the wrong rate
your records stay accurate
Reporting can be done online, over the phone, or through a retirement service provider like us.
4. How much could your Age Pension increase?
This depends on whether you're assessed under the Assets Test or the Income Test.
Most homeowners are assessed under the Assets Test.
Under the Assets Test:
Every $1,000 decrease in assessable assets increases your pension by $3 per fortnight (roughly).
So if your super drops by $40,000, the potential increase could be:
$40,000 ÷ $1,000 = 40 units
40 × $3 = $120 per fortnight increase
This is an estimate — actual results can vary.
5. Will a market drop reduce your Age Pension?
No. A drop in your super cannot reduce your pension.
A decline in assets can only:
✔ increase your Age Pension,
or
✔ leave it unchanged.
There is no downside with Centrelink when investments fall.
6. What if the market recovers later?
If your super balance rises again:
this may reduce your Age Pension
you must update Centrelink with the new (higher) value
This ensures you stay compliant and avoid potential Centrelink debts.
7. What if you’re not yet receiving the Age Pension?
If you're close to 67 and worried your assets are too high, a market downturn could actually make you eligible earlier.
For example:
If your super falls from $600,000 to $545,000 during a downturn, and you’re a homeowner couple, you may suddenly meet the threshold for a part-pension.
This is why timing your application around major financial changes can matter.
8. The bottom line: falling super can mean higher Age Pension
Here’s the simple truth:
If you’re 67+, your super is assessable.
If the market causes your super to fall, your Age Pension may go up.
Centrelink doesn’t always update balances automatically.
You may need to notify them to unlock the higher rate.
Once the market recovers, your payments may adjust again.
Need help dealing with Centrelink when markets fall?
Market drops can be stressful — but they don’t have to complicate your Age Pension.
At Age Pension Services, we:
✔ check whether a drop in your super makes you eligible for a higher Age Pension
✔ update Centrelink records for you
✔ calculate your expected new entitlement
✔ ensure you’re receiving the correct payment
✔ help with new claims if the drop brings you under the threshold
A quick consultation ($99) could mean you receive more pension — sooner — and avoid unnecessary stress.