Retirement Income Optimiser: how it works to increase income in retirement

Retirement Income Optimiser is a new feature of FirstChoice super that may help eligible members optimise their income once they retire, if they choose to commence a CFS lifetime pension. 

It’s not a new investment option. It doesn’t change the way your money is invested. And it doesn’t affect your fees or insurance.

It simply operates in the background of your eligible FirstChoice super account. 

Then later, when you retire, the Retirement Income Optimiser may result in more favourable Age Pension entitlements from Centrelink, if you choose to commence a CFS lifetime pension, immediately or in the future, depending on your circumstances.

The Retirement Income Optimiser enables eligible members to access a potentially more favourable way of having a future CFS lifetime pension assessed by Centrelink for Age Pension entitlements.

Under the Centrelink assets test, instead of looking at your actual super balance (inclusive of actual investment earnings), Centrelink uses an alternative balance based on a ‘deemed’ rate of investment earnings. 

Depending on your personal circumstances, including the performance of your investments and the rules applying at the time, this treatment may result in a lower calculated balance, and potentially higher Age Pension payments, compared with not using the Retirement Income Optimiser and CFS lifetime pension. 

CFS is currently developing the CFS lifetime pension product, which is expected to be released as early as 2027.

The Retirement Income Optimiser is essentially an accounting feature. While it is active, an alternative balance is calculated, based on contributions and deemed investment earnings rather than your account balance.

If you later (once eligible) choose to commence a CFS lifetime pension either immediately or in the future, Centrelink will use this alternative balance to calculate your level of assessable assets for the Age Pension assets test instead of the amount invested in the lifetime pension.

Because the alternative balance may be lower than your actual account balance, this could improve your Age Pension outcome and increase your overall retirement income. This will depend on your circumstances and the rules at the time.

The longer the feature is active in your super before you choose (once eligible) to commence a CFS lifetime pension (immediately or in the future), the greater the potential benefit may be. 

Importantly, the Retirement Income Optimiser doesn’t carve out or lock away your money. You remain invested in your selected FirstChoice options.

When you reach retirement or satisfy another specified condition of release, you can choose whether to use a CFS lifetime pension or not.

In retirement, many Australians switch their super to an account-based pension, which provides flexible, tax-free access to your money.

A lifetime pension doesn’t have to replace your account-based pension. It can work alongside an account-based pension to provide an income stream that won’t run out.

Together, this can mean:

• income for life, from the lifetime pension
• flexible access and growth, from the account-based pension
• possible Age Pension support, if you’re eligible.

When determining your Age Pension eligibility under the assets test, Centrelink will look at the balance in an account-based pension. 

When Centrelink looks at an innovative retirement income stream (IRIS), such as the CFS lifetime pension, it will assess:

• 60% of the alternative balance when the lifetime pension starts, and
• 30% of the alternative balance later in life (typically from around age 85).

Because Centrelink uses the alternative balance and only assesses a proportion of this amount, it may help you qualify for a higher Age Pension under the assets test, compared with only having an account-based pension in retirement. Whether it does will depend on your personal situation, the performance of your investments, the product rules, and the government rules at the time.

Under the income test, 60% of any payments from a CFS lifetime pension is assessable income.  In contrast, most account-based pensions are treated like other financial investments and subject to deeming for income test purposes

Depending on a person's circumstances, commencing a CFS lifetime pension after meeting a Specified Condition of Release may result in the pension becoming assessable for Centrelink or DVA purposes earlier than if the benefit remained in accumulation, which may affect their or their partner's income support entitlements. 

FirstChoice Wholesale Personal Super and FirstChoice Employer Super members are eligible for the Retirement Income Optimiser feature to be applied to your account if:


• you are aged 17 or over;
• you are under age 58; and
• you have not already met a Specified Condition of Release.

Learn more

Eligible members in FirstChoice Wholesale Personal Super will have the feature automatically switched on, with the option to opt out at any time.

Eligible FirstChoice Employer Super members can choose to opt in through FirstNet. 

Not sure if the Retirement Income Optimiser has been turned on for your super? Login to FirstNet to check

The Retirement Income Optimiser allows eligible super balances to be treated differently for Age Pension calculations if you later choose to commence a CFS lifetime pension either immediately or in the future. However, depending on individual circumstances, the alternative calculations may not change your social security outcome if:

• you already qualify for the maximum Age Pension throughout retirement because of limited assets and income; or
• you would not qualify for the Age Pension at all throughout retirement due to significant assets or income; or 
• your Age Pension will be determined under the income test throughout retirement.

Consider speaking to a financial adviser to understand how this feature may apply to you. Explore your financial advice options