Q: I have two super funds and being in my 60s and retired believe I’m eligible to change from accumulation to pension. If I do this, does this need to happen for both funds, or can I choose to have one fund with one account in pension/drawdown mode and have the second fund with one account remaining in accumulation mode? I’m well below the transfer balance cap. Thank you for your help and of course, the wonderful information offered to readers.
A: In most cases, you can choose how much of your current accumulation money, so how much of your super savings, that you then use to start a pension. You don’t have to use all your money. You can use a portion of it and leave some of your money in accumulation phase. If you had a million dollars, you could start a pension with half of it or all of it. It’s totally up to you. Of course, you can only start a pension with the amounts that are allowed under that transfer balance cap. You don’t need to start a pension with all your super. You can use part of it.
The same principle applies if you’ve got more than one fund, you could start a pension in one fund and leave the other fund in accumulation phase. You can commence a pension in one fund with some of your benefits and leave the rest in accumulation phase. There’s nothing that says that you need to start a pension with all of your super savings. That’s the general position. But keep in mind, if you are a member of larger funds or industry-style funds or retail funds, check the specific rules, the specific requirements of your fund. It is quite important that you check the rules of your fund to find out what it allows or what it requires. Now, I’m not saying that your fund will require you to use all your savings to start a pension, but as I say, check with them and find out what their rules are. If it’s a self-managed fund, of course, you refer to the trust deed and what it allows.
Basically, you can do what you want by starting a pension with whatever balance you like. Just check what your fund specific rules might be.
If you’re looking to do this, there’s a couple of really good articles that we have put out on the website. One is about explaining all of the conditions of release, when you can access your super and how you can access them. And we’ve also got a webinar on starting an account-based pension, both inside an SMSF, but also with other style funds. If you want more about this topic, jump on the website and have a look at those two resources.
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