In this guide
When you’re aged 60 or more, you have the option to open an income stream (pension) with your super that provides you with regular periodic payments.
There are many types of retirement income streams but the most common is a simple account-based pension.
When you have an account-based pension, you are required to withdraw at least the minimum annual pension amount. The minimum is initially calculated on the start date of the pension using the opening balance and your age at the time. It is then recalculated on 1 July each year.
In the financial year you open your pension, the minimum payment is pro-rated to reflect the number of days remaining in that year.
Retirement phase account-based pensions have no maximum annual withdrawal.
If you’re under 65 and have not left a job after your 60th birthday or retired permanently, you can open a transition to retirement (TTR) pension. The minimum annual withdrawal for a TTR pension is the same as for a retirement phase pension but an annual maximum of 10% also applies. When you turn 65 or retire, your transition to retirement pension converts into a retirement phase pension with no maximum withdrawal.
Minimum pension payment rates
To calculate the annual minimum pension amount, your pension balance is multiplied by a percentage factor that increases as you age. The table below shows the minimum pension percentage factor for each age group.
| Age of beneficiary | Percentage factor |
|---|---|
| Under 65 | 4% |
| 65 to 74 | 5% |
| 75 to 79 | 6% |
| 80 to 84 | 7% |
| 85 to 89 | 9% |
| 90 to 94 | 11% |
| 95 or more | 14% |
Source: SIS Act
Payments must be received at least annually between 1 July and 30 June each financial year, although many retirees opt to receive fortnightly, monthly, or quarterly payments. Annual minimum payment amounts are rounded to the nearest ten whole dollars. If the amount ends in an exact five dollars, it is rounded up to the next whole ten dollars.
Calculating the first payment
If you start a simple account-based pension after 1 July, the minimum amount for the first year is calculated on a pro-rata basis according to the number of days remaining in the financial year, including the start day (see example below).
If your super pension commences on or after 1 June, no payment is required in that financial year.
Pension payment calculator
Use the calculator below to estimate the required minimum payment in the year your pension starts, or the minimum payment for a full year.
- The relevant date is the day your pension starts (for a first year pro-rata calculation), or 1 July (for a full year calculation).
- Insert your age and balance on that date.
- The calculator will display your annual minimum pension payment amount for the portion of the financial year between your start date and 30 June, or for a full year, based on your entries.
- If you’re starting a transition to retirement pension, the calculator will also display the maximum withdrawal.
Common questions about the minimum pension drawdown rules
The bottom line
Under the super rules, people with account-based super pensions are required to withdraw a minimum amount each financial year. The minimum amount is expressed as a percentage of your pension account balance, beginning at 4% when you’re aged under 65 and gradually increasing to a rate of 14% from age 95.
Failure to withdraw the minimum amount could result in your super pension losing its tax-free status.
There is no maximum withdrawal amount unless you are under 65 and using a transition to retirement pension. If you are unsure about how much you could safely withdraw each year without running the risk of your savings not lasting the distance, we recommend you seek independent financial advice.
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