Converting your super into steady income when you retire is easy with an account-based pension. This is a retirement account for your super. It's also known as a retirement income stream, and at Aware Super, ours is called Aware Super Retirement Income.
There’s lots of choice and flexibility and great tax benefits. Pay yourself a regular income from your account and make extra cash withdrawals whenever you need to.
Key points:
- Turn the super you’ve saved into a regular income in retirement with an account-based pension.
- With this account, you get to choose how much and how often you get paid each year.
- Income payments are 100% tax-free if you’re 60 or over.
- All investment earnings are 100% tax-free.
- Change how much and how often you get paid an income whenever you need.
- You’re not locked into the decisions you make when you set up your account.
Turn your super into regular tax-free income with an account-based pension
To start withdrawing regular income from your super, simply open an account-based pension and transfer some, or all, of your money from your super account.
Once your account is set up, you can choose how much your income payments will be (although government minimums apply), and how often you’ll be paid, to suit your needs. And you can make changes to your payments at any time.
It doesn’t matter how big or small your super balance is. An account-based pension keeps your savings invested based on your investment option selection. This can boost your retirement income.
Who is this account suitable for?
You can start an account-based pension if you:
- are 65 or over – even if you’re still working
- reach your preservation age and retire, or
- are 60 or over and have changed employers or temporarily stopped working, or
- have become permanently incapacitated, or terminally ill.
Benefits of an account-based pension
- all income payments are 100% tax-free if you’re 60 or over.
- investment earnings are 100% tax free1.
- it replaces the income you were getting from a salary while you were working.
- you decide how much and how often you receive income payments.
- you choose how your money stays invested and continue to earn investment returns.
1 From age 60 and over, generally no tax is payable on withdrawals from your super in retirement. Under age 60, tax may apply on withdrawals.
Around 30% of the income paid from your super comes from investment earnings you make in retirement. So it pays to keep your savings invested. You have the choice to change your mind at any time and withdraw your money or transfer it back into super.
Set up a regular income with an account-based pension
Follow these steps to set up your retirement account.
1. Consolidate any super accounts you have.
You can’t open an account-based pension (such as Aware's Retirement Income account) directly. You’ll need to transfer money from a super accumulation account first.
If you have more than one super accumulation account you will first need to transfer all funds into an Aware Future Saver account. When we receive all funds, your Retirement Income account can commence.
All it takes is about two minutes to combine any super you have into your Aware Super account. Consolidate your super now.
2. Decide how much you need in retirement.
We’ve made working this out easy for you with our simple target income tool. Find out more about how to work this out.
Once you know how much income you’ll need when you retire, you'll need to deduct any Government Age Pension you may be eligible for and any sources of income you get from other investments or savings.
The difference will give you the amount of super you’ll need as income payments each year.
3. Open your account-based pension account.
To open a Retirement Account with us, you can either join online, or complete fill out the ‘Open a retirement account’ form at the back of the Aware Super Retirement Income PDS, including selecting ‘Retirement Income’ under step 4.
You’ll need to give us information including:
- your personal details
- how much you want to transfer from your super
- how much you want to withdraw as regular income and how often it will be paid
- what you want to invest in and
- who you want to nominate as a beneficiary.
4. Move your money from your super account into the account-based pension.
It’s easy. Just join online or complete step 5 of the Retirement Income account opening form. We’ll then know what amount of super to transfer into your retirement account and where it's coming from.
5. Choose how often you pay yourself a regular income and how much it will be.
Complete as part of your online join or it's step 7 of form in the PDS. When your account is open, you can make changes to your income payments at any time. Change your income payments.
You can move money into your account-based pension from other sources, such as personal savings, it needs to go into your super account first.
Ready to open an account-based pension?
An account-based pension at Aware Super is called a Retirement Income account.
If you open an account with us, you’re not locked in. There’s plenty of flexibility.
You can change your mind at any time and make extra withdrawals, just like you would from a bank account.
Things to consider
- There are no maximum income payment limits. But the Government does set an annual minimum income payment percentage of your account balance that you must withdraw each year. This minimum withdrawal amount is based on your age.
- You can’t contribute extra money into an account-based pension once it is opened
- you can open another Retirement Income account with us and have multiple accounts (although fees apply to each account), or
- you can transfer all your money from your retirement account back into a super account to combine your savings,
- then, you can then start a new retirement account.
- From the age of 60 all income payments and cash withdrawals are 100% tax free.
- Before the age of 60, income payments and cash withdrawals can be taxed.
- You can open an Aware Super Retirement Income account with a minimum of $20,000.
- You can only transfer money up to a set limit into an account-based pension. It is called a transfer balalnce cap and the amount is $1.7 million for tax-free investment returns. From 1 July 2023 this will increase to $1.9m - however your set limit will depend on your personal transfer balance caps.
Where to next?
Find out more about the Government Age Pension
You may be eligible for the Government Age Pension when you to retire to help fund your life in retirement.
Attend a webinar or seminar
Join our experts as they break down super and finances into easy-to-understand topics through our live webinar education series.
Speak to a financial adviser at no extra cost*
Whether you are ready to retire now or in the next 12 months, our team of qualified financial advisers are here to help. They can provide personalised retirement advice and set up your retirement income account.