In this guide
When you move super into a retirement pension with your current provider, money that was set aside to pay future taxes can be refunded to you and added to your pension account. It could mean thousands more in your account if your fund offers the payment.
Eligibility criteria and calculation methods vary substantially between providers so if you’re planning to start a retirement income stream in future making a wise choice now may set you on a profitable path.
If your current fund is not offering a bonus, it could be worth considering a move to one that does, provided the new fund meets all your other requirements.
What is a retirement bonus?
The bonus is a refund of money that has been set aside to pay tax on capital gains that are expected to occur in the future – when assets that have increased in value are sold.
In the accumulation phase super funds need to pay tax on their capital gains at a rate of 10–15%. Estimated tax is withheld from investment returns, and the ‘after-tax’ return is credited to members’ accounts. This ensures that when assets are later sold, the tax can be paid without dipping into members’ balances or significantly reducing that year’s investment returns.
When you move your money into the retirement phase from an accumulation account or a transition-to-retirement pension and keep the same investment option (or options), the obligation to pay this tax is removed. The underlying assets are moved into the tax-free retirement phase, and when they are sold later to fund your pension payments or to switch to another investment there is no tax on the gain.
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