Using the $300,000 Downsizer Contribution Without Losing Your Pension
What Is the Downsizer Contribution?
If you’re over 55 and selling your long-term family home, the downsizer contribution allows you to move up to $300,000 per person (or $600,000 per couple) from the sale proceeds into your superannuation fund.
It’s a powerful way to boost your retirement savings — without counting toward your normal contribution caps.
However, many retirees worry: “Will this affect my Age Pension?”
The short answer is it can — but with the right planning, you can minimise or even avoid the impact.
💡 How Centrelink Assesses Downsizer Contributions
Centrelink looks at where your money sits after the home sale, not just how much you contribute to super.
Before you contribute:
The money from the home sale is exempt from the assets test for up to 12 months if you’re planning to buy or build a new home.After you contribute to super:
Once the money is in your super and you’re over Age Pension age, it becomes assessable under both the assets test and deeming rules (as part of your account-based pension or super balance).
So while your home itself is exempt from the assets test, the cash proceeds or super balance aren’t.
⚖️ Example: The Impact on Your Pension
Let’s say:
John and Mary (both 68) sell their long-term family home for $1.2 million.
They buy a smaller unit for $700,000.
Each contributes $300,000 to super using the downsizer rule.
Their total super now increases by $600,000, which will be counted as an asset under Centrelink’s test.
If they were close to the asset test threshold, this could reduce or even eliminate their Age Pension.
However — there are strategies to soften the impact.
🧭 Strategies to Avoid Losing Your Age Pension
1. Use Timing to Your Advantage
The sale proceeds are temporarily exempt from the assets test for 12 months if you’re buying, building, or renovating a new home.
This gives you flexibility to plan when and how to contribute the money to super.
💡 Tip: Staggering contributions across financial years can also help manage your income test outcomes.
2. Keep Some Proceeds in an Exempt Asset
Not all the proceeds need to go into super.
Using part of the funds for home improvements, travel, or debt reduction can be beneficial — these are legitimate uses that don’t automatically reduce your pension rate.
3. Consider Which Super Account to Use
If you’re under Age Pension age, super in the accumulation phase is exempt from the assets test until you reach pension age.
This can be used strategically for early retirees aged 55–66 who plan ahead.
4. Review Your Investment Mix
Once funds are inside super, the deeming rates apply to your account-based pension.
Choosing lower-risk or lower-return investments doesn’t reduce your deemed income directly — but maintaining liquidity and stability can make income planning easier.
👥 Work With an Age Pension Specialist
The downsizer contribution can be a fantastic opportunity to:
Reduce mortgage debt
Increase super savings
Simplify your retirement living arrangements
…but Centrelink rules are complex, and one wrong move can cut your payments for months or even years.
A qualified financial adviser experienced in Age Pension strategies can:
Model how the contribution will affect your entitlements
Time your home sale and super contribution
Suggest the right ownership structure (single vs couple super)
🧾 Final Thought
The downsizer contribution is one of the most flexible retirement tools available — but it needs to be managed carefully to protect your Age Pension eligibility.
Before making a move, talk to a retirement advice specialist who understands both superannuation law and Centrelink’s assessment process.