When you retire you may choose to roll over your lump sum
(capital) or a pension. In each case, your money stays invested in a
favourable tax environment and you receive an income stream. The income stream
you choose will depend on what features most suit your needs.
Comparison of three types of income streams at a
glance
Type
Feature
Benefits
Account-based Flexible pension
You receive a regular income stream until the account is exhausted or you
pass away.
You choose which investment options suit your timeframe and risk
tolerance.
You can choose your income level (above a prescribed minimum)
You are not restricted to any maximum amount of income each year
You can change your payment amount
You can make withdrawals as you need extra cash
Transition to Retirement Flexible Pension
You convert some or all of your super to a non-commutable income stream (no
ad-hoc withdrawals permitted)
Allows you to draw down your super after age 55 even if still working
You can draw down up to 10% of the account balance (at the start of each
year) in any one year.
The capital becomes accessible to you when you fully retire.
You don’t need to be fully retired to access an income stream
Allows you to reduce your hours at work but not sacrifice your lifestyle.
You can supplement reduced salary with income stream payments.
Account Based Pension
Income payments at a fixed rate of return for a fixed period of time.
Will become a legacy product after 20 September 2007
Account based pensions purchased prior to 19 September 2007 will lock
in a 50% Assets Test exemption
This window will close after 19 September 2007. Only Account Based
Pensions purchased before 19 September 2007 will lock in the 50% assets
test exemption.
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