10 September 2024
Retiring doesn’t need to be a daunting experience. With the right tools and information, you can transition with confidence. Knowing how to manage your finances is important. One option that could be right for you is an account based pension.
During your working life, you’ve probably received a regular salary from an employer or steady payments from your business. In retirement that routine may disappear.
An account based pension could help you keep a routine in place. Rather than taking your super as lump sum, an account based pension lets you set up regular payments over the course of your retirement. This money is paid from your super savings, straight into your bank account for easy access. These regular payments give you control and can help you manage your finances.
Below are 3 ways an account based pension could help you feel more in control of your retirement.
1. You’re in control of your income
When you open an account based pension, you choose how often and how much your payments will be. If your job paid you fortnightly, you could opt for the same. If you prefer a monthly income, you could select monthly. You’re in control. The only condition is you must withdraw a minimum amount each financial year, depending on your age.
AustralianSuper’s account based pension, Choice Income, gives you the option to be paid every two weeks, monthly, quarterly, twice a year, or annually.
Minimum drawdown rates
Every financial year you’ll need to withdraw a minimum amount. The amount is set by the government, age-based and increases as you get older. Your minimum amount is calculated as a percentage of your account balance on 1 July each year. There is no maximum withdrawal limit.
FIND OUT MORE ABOUT: MINIMUM DRAWDOWN RATESAccount based pension minimum drawdown rates
| Age at 1 july each year | Default minimum drawdown rates (% of account balance) |
|---|---|
| Preservation age to 64 |
4% |
| 65 to 74 | 5% |
| 75 to 79 | 6% |
| 80 to 84 | 7% |
| 85 to 89 | 9% |
| 90 to 94 | 11% |
| 95 and over | 14% |
2. You have flexibility with your super savings
Regular payments offer stability, but account based pensions such as AustralianSuper’s Choice Income also offers financial flexibility. This can give you the confidence you need to enjoy your retirement, without worrying you’re going over budget. You can access extra money from your Choice Income account when you need it. For example, you may decide to buy a new car, renovate your home or tick off some bucket list travel plans. If you’re 60 or over, both your regular income payments and additional withdrawals are tax-free.
Choice Income offers a range of features designed to help you make the most of your super, including:
- Smart Default, which provides a specially designed investment option
- Balance Booster, which is a tax saving credited to eligible members when they transfer from an AustralianSuper or TTR Income account to a Choice Income account.
3. You continue to benefit from any investment returns
Many people aren’t aware there are income options to explore in retirement apart from taking their super as a lump sum.
When you open an account based pension, your super balance stays invested with your super fund . This gives your savings the chance to keep growing and last a little longer, thanks to compound investment returns. Additionally, investment returns are tax free with an account based pension to help boost your savings, whereas they could be taxed up to 15% if you remain invested with your super account.
COMPARE AUSTRALIANSUPER WITH OTHER SUPER FUNDS
AustralianSuper members
AustralianSuper members can access a registered financial adviser1 for guidance about their options in retirement. The adviser can help you decide on your payment amounts and frequency, so you’re making the most of your super savings.
EXPLORE ADVICE OPTIONS
Are you eligible for Choice Income?
You need a minimum balance of $50,000 in your super account to commence a Choice Income account. You can’t add money to the account once you’ve opened it. So, any other additional funds need to be added to your AustralianSuper super fund or other super fund first. You also have to meet a condition of release.
For full information: Download the Choice Income PDS – pdf
Staying focused on what matters in retirement
The best part about knowing how much you’ll be paid, and how often, is you’ll be free from worrying about where your money comes from. You can change how your payments are set up at any time.
That means you have more time to celebrate special occasions, pursue the hobbies you love, and enjoy the retirement lifestyle you worked so hard to achieve.
LEARN MORE: AUSTRALIANSUPER'S ACCOUNT BASED PENSIONInvestment returns are not guaranteed. Past performance is not a reliable indicator of future returns.
1. Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. Fees may apply.
This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/PDS or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.