Types of pension accounts

A retirement pension, or income stream, provides you with a regular income from your superannuation savings.

 

Account-based pension or income stream

Account-based pensions are the most common type of superannuation pensions. Many retirees choose an account-based income stream because it can offer flexibility and tax concessions.

An account-based pension works like this:

  1. You invest some or all of your super to open a pension account
  2. You receive regular pension payments from your account – you can generally choose the amount (subject to minimum percentage of your account balance each year) and payment frequency to suit your needs
  3. You will generally have investment choice for your account and returns (either positive or negative) will apply to your account balance
  4. You can withdraw additional amounts from your balance if needed
  5. When your account balance reaches zero, no further payments or benefits apply.

Transition to retirement pension

Generally you need to be permanently retired to access your super but a transition to retirement pension (sometimes known as a pre-retirement pension) is a specific type of account that allows you to begin receiving an income from your super even if you haven’t permanently retired.

A transition to retirement pension works in the same way as an account-based pension outline above, except that a maximum of 10% of your account balance can be taken in pension payments each year.

This type of strategy might be helpful if:

  • you want to reduce your work hours or semi-retire in the lead-up to retirement and supplement your working income with a pension from your super
  • you want to make extra concessional contributions to your super from your salary while receiving a pension from your super to supplement your income (this is sometimes known as re-contribution)

Find out more about transition to retirement, the Retirement Access pensions available in our fund, or download the Member Guide (PDS) for Retirement Access.

 

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Getting the right advice is important

When you take these choices and factors into account, together with the potential tax implications and possible effects on Age Pension or other government entitlements, it’s essential to get the right advice before finalising any decisions. There are different  advice options available to you as a member.

Find out more


Compare us

Want to see how our Retirement Access pension accounts compare with products from other super and pension funds in Australia? Find out more.

Other useful resources

    When is the right time to retire?

    The idea of retiring at a particular age is not something that will suit everyone. (Source: CommBank)

    Account-based pension calculator

    Try this handy calculator to help you determine how long you expect your pension to last and ways to make it last longer using different options. (Source: ASIC MoneySmart)

    Savvy retirees seek long-term incomes

    It's important to plan ahead for your retirement, as we all know, and research has shown that many retirees are using various retirement products to provide an income stream. (Source: Colonial First State)