In this guide
Once you retire and reach your preservation age you can start to withdraw your super as an income stream, a lump sum or both. Most retirees choose to take at least part of their super as an income stream because it provides them with regular tax-free payments until their money runs out.
A super income stream, also called a super pension or annuity, simply refers to regular periodic payments you receive from your super fund once you retire or satisfy a condition of release.
To start a super income stream, you need to transfer money from your super accumulation account into a retirement account up to the transfer balance cap which rose from $1.7 million in 2022โ23 to $1.9 million from 1 July 2023 due to indexation.
Once you start a retirement income stream, minimum annual payments are calculated on your account balance on 1 July each year, multiplied by a percentage factor that increases as you age. This is often referred to as the minimum pension drawdown.
Minimum pension payment rates
Note
The federal government temporarily halved the minimum pension drawdown rates for the 2019โ20 to 2022โ23 financial years. This was in response to the financial impacts of the pandemic, so retirees would not be forced to sell superannuation assets to meet the minimum annual payment at a time when markets were volatile.
From 1 July 2023 the minimum annual drawdown reverted to the normal rates. That means retirees who withdraw the minimum amount will need to double their recent level of payments in the 2023โ24 financial year. For those who will be celebrating a milestone birthday, such as 65, 75, 80, 85, 90 or 95, your minimum drawdown will increase even more.
The table below shows the temporary rates and the normal rates. For example, someone aged 65โ74 must withdraw 2.5% of their account balance in 2022โ23 under the temporary measure, but this amount doubles to 5% in the 2023โ24 financial year. The percentage factor is set according to your age on 1 July in the financial year the pension is to be paid.
Age of beneficiary | Normal percentage factor (From 1 July 2023) | Temporary percentage factor (2019โ20 to 2022โ23) |
---|---|---|
Under 65 | 4% | 2% |
65 to 74 | 5% | 2.5% |
75 to 79 | 6% | 3% |
80 to 84 | 7% | 3.5% |
85 to 89 | 9% | 4.5% |
90 to 94 | 11% | 5.5% |
95 or more | 14% | 7% |
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 monthly or quarterly payments. Annual 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.
Case study
Mike is a 66-year-old retiree with $200,000 in a super account-based pension onย 1 July 2022.
Following the temporary reduction in minimum drawdown rates, Mike isย only required to withdraw 2.5% of his account balance, thatโs $5,000, by 30 June 2023.
On 1 July 2023 the balance of Mikeโs super pension is still $200,000 after drawdowns and investment earnings. During 2023โ24, Mike is required to draw down 5% of his account balance, which is $10,000 instead of $5,000 the previous year.
Minimum pension payment calculator
Our calculator below estimates your minimum pension payment amount.