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Account-based pensions

Turn your super into a regular income stream

Page reading time: 4 minutes

An account-based pension offers regular, flexible and tax-effective income from your superannuation.

You can open an account-based pension when you reach preservation age and meet a condition of release. It lasts as long as your super money does but is not a guaranteed income for life.

High-pressure sales tactics are putting your super savings at risk. Be on red alert for phone calls, click bait advertising and promises of unrealistic returns to encourage you to put your super into risky investments. Stop, think carefully, and check the claims first.

Read the investor alert and our tips on how to protect your money.

How an account-based pension works

An account-based pension (sometimes called an ‘allocated pension’) is a regular income stream bought with money from your super when you retire.

Typically, you get to choose:

How your money is invested

With an account-based pension, you can choose how your money is invested from the various investment options offered by your super fund.

For example, you might decide to allocate the money in your account-based pension into cash, shares, property, bonds, or a mixture of asset classes. Learn more about super investment options.

It's important to know that the money in an account-based pension is subject to investment market risk - it doesn't have a guaranteed return. your account balance many go up and down, depending on the performance of the asset classes you're invested in. This, in turn, will affect the amount of regular income you receive, and how long your account-based pension will last in retirement. 

Minimum amount of money to withdraw

There is a minimum amount you must withdraw from your account-based pension annually, which is calculated as a percentage of your account balance. There is no maximum amount - you can withdraw as much as you like from your account each year.  

Age at 1 July

Annual payment as % of account balance 

Under 65

4%

65—74

5%

75—79

6%

80—84

7%

85—89

9%

90—94

11%

95+

14%

Frequency of payments

You can arrange for monthly, quarterly, half-yearly or annual payments. Check with your provider what frequencies are offered. Payments continue until the account balance runs out and you can also draw lump sums in addition to regular payments.

How long your pension lasts

How long your account-based pension lasts depends on:

Getting the Age Pension

Your eligibility for the Age Pension depends on your age, assets and income. Your account-based pension forms part of the income and assets test to assess your eligibility. If you are eligible, the Age Pension can supplement payments received from an account based pension.

Your account-based pension after you die

Money left in your account-based pension account when you die will go to your beneficiary or your estate.

If you have super in a retirement income stream and still have super in an accumulation account, you can have different beneficiaries. If you make changes, check both are up to date with your wishes.

Pros and cons of an account-based pension

Consider the pros and cons to decide if an account-based pension is right for you.

Pros

Cons