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Home / In retirement / Super pensions

Super pensions

Super pensions

Converting your superannuation to a pension is an option if you have reached your preservation age and met a condition of release. Your preservation age is between 55 and 60, depending on your date of birth. Standard conditions of release for super pension withdrawals are:

  • retirement,
  • beginning a transition-to-retirement income stream,
  • ceasing an employment arrangement after the age of 60, even if you get a job with a new employer,
  • turning 65 years of age,
  • becoming permanently incapacitated,
  • being diagnosed with a terminal medical condition.

Your dependants can also be entitled to access your super as a pension when you die if you have arranged for this to happen, though there are likely to be tax implications.

There are six main types of super pension:

  • Account-based pension: This is the most common type of pension. The pension is paid from a super account held in your name.
  • Annuities: Annuity payments are purchased with a lump sum and enable fixed payments for the remainder of your life or for a defined period. The value of account-based pensions on the other hand can rise or fall depending on the market value of the underlying investments supporting them.
  • Transition-to-retirement pension (TTR or TRIS): This is a pension you can commence if you have reached your preservation age but are still working. The earnings on funds that support TTR pensions are still taxed at 15%, unlike the funds that support your super pension are when you have retired. You must start a TTR prior to turning 65.
  • Defined benefit fund: This type of pension pays a guaranteed income stream for life. However, they are not common and generally only held by long-term members of public sector or corporate funds.
  • Reversionary pension: This is a pension that reverts to your partner when you die.
  • Death benefit pension: Some funds allow your dependants to receive your death benefits as a pension when you die, such as your spouse.

If you start a super pension income stream, you need to transfer funds from your accumulation account to your retirement account to fund your pension. The earnings on these funds are tax-free. You can transfer up to the transfer balance cap (up to $1.7 million) into your retirement account. You need to withdraw a minimum percentage of your retirement account balance each year, ranging from 4 to 14% depending on your age.

Super pensions are tax-free after the age of 60 but may affect your eligibility for the Age Pension.

The alternative to withdrawing super as a pension is to take your super benefits as a lump sum.

Set out below are the latest articles that relate to super pensions.

PremiumAre pension withdrawal rates safe?

Are pension withdrawal rates safe?

May 24, 2022

Retirees often withdraw the minimum amount from their super pension for fear they will outlive their savings. But recent studies show many could safely spend more. So what is a ‘’safe” withdrawal rate?

PremiumSuper pensions: Trends in payment frequency, flexibility, fees and more

Super pensions: Trends in payment frequency, flexibility, fees and more

May 1, 2022

While super funds have been slow to innovate in the retirement space, recent improvements to their pension products have gone under the radar. Here’s what’s on offer.

PremiumWhat strategies can I consider to reduce tax on my super pension?

What strategies can I consider to reduce tax on my super pension?

April 7, 2022

When and how you withdraw income from your super in retirement can have significant tax benefits.

PremiumMinimum pension drawdown rates and calculator

Minimum pension drawdown rates and calculator

March 27, 2022

Once you start a retirement income stream, minimum annual payments are calculated on your account balance at 1 July each year, multiplied by a percentage factor that increases as you age.

PremiumAccount-based pensions Q&A special (January 2022)

Account-based pensions Q&A special (January 2022)

January 20, 2022

Aakash Mehta answers readers questions about account-based super pensions and when it’s appropriate to start one.

PremiumHow to choose an investment option for your super pension

How to choose an investment option for your super pension

October 5, 2021

Selecting the right investment option for your super pension can have a big impact on how much money you have to spend during your retirement years.

PremiumConsider these two risks before you start a super pension

Consider these two risks before you start a super pension

September 20, 2021

Market volatility and economic uncertainty can wreak havoc with retirement plans, so it’s important to develop strategies to manage the risks.

PremiumStarting a pension from your super

Starting a pension from your super

July 23, 2021

When you retire there’s more than one way to withdraw income from your super; we explain your options.

PremiumWhat are annuities, and how can they help in retirement?

What are annuities, and how can they help in retirement?

April 20, 2021

Annuities are an easy way to convert your super into a regular income stream in retirement. We explain how they can help manage your income without the worry of investing.

What is an investment-linked annuity?

What is an investment-linked annuity?

March 2, 2020

An investment-linked annuity is a lifetime income stream where the retiree’s income varies to reflect changes in the value of a selected investment option.

PremiumChoosing a pension fund

Choosing a pension fund

February 14, 2020

In this video interview Ian Fryer, Head of Research at Chant West, shares some insights into choosing a pension fund, including how choosing a pension fund is different to choosing a super fund, what the process is to starting a pension, and what investment option to consider in retirement.

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