Accessing super when you retire - accumulation to pension phase

3 min read

When the time is right and if you decide to move your super account from the accumulation to pension phase, it is important to know some key facts before accessing your super.

Do I have to fill out any forms? Do I have to notify my super fund?

Once you stop working, your main (possibly only) source of income also ceases. Your superannuation benefits which have been accumulating during your working life, via contributions made by your employer (and possibly additional contributions made by you, your spouse or the government), are now potentially accessible to you, subject to meeting certain conditions1. Your super fund will need to be notified, and they will have a range of forms that can facilitate the next steps.

You may want to consider seeking advice from a qualified professional when thinking about accessing super, as they will be able to assess your personal situation and provide appropriate financial advice to you.

Do I have to transfer my super to a pension account?

When a person retires after reaching their preservation age2, they can request their superannuation monies to be moved to an account-based pension structure. In other words, they can request their superannuation to be moved from accumulation phase, to drawdown (or pension) phase.

Transferring superannuation from accumulation phase to pension phase is not compulsory. However, there may be some tax advantages to transferring your super from an accumulation account to an account-based pension.

Does the tax rate on my super change?

Investment earnings on your super in accumulation phase is generally 15%. If and when your super monies are converted to an account-based pension account or a transition to retirement pension account in the retirement phase, the tax rate on investment earnings reduces to zero. Note that depending on your age when you are drawing down a pension, you may still incur tax on the actual pension payments (if under age 60). Once you turn 60, all drawdowns are tax free in your hands.

How do I take out money? Can I take as much as I want out as often as I like? Are there rules and restrictions in accessing super?

Once you have reached your preservation age and have ceased all paid employment, there are no restrictions on the maximum amount that can be withdrawn from a super or pension account.

The rules do however specify:

  • a maximum amount that can be transferred to a pension account, currently set at a maximum of $1.6 million across all pension accounts you may have (anything above this can either be withdrawn from the super system or remain in an accumulation phase account and be subject to the concessional 15% tax rate on earnings), and
  • a minimum drawdown requirement for monies held within a pension account, which start at 4% of your account balance at commencement and each 1 July thereafter, if aged under 65.

As you get older, the minimum percentage increases gradually. A pension is a zero tax structure but you are required to withdraw a proportion of your accumulated savings, to be able to continue to enjoy the concessional tax treatment it receives.

If you draw down an amount above and beyond your personal requirements, you are likely to accumulate monies in your own name, for which you will be personally liable to pay tax on any earnings that are derived. As a result, it might make sense to only drawdown what you require (or are obliged to draw down).

Is it a good time to change my investment strategy?

This should be part of the broader discussion with your advice professional, but generally speaking, when people move from ‘accumulating’ capital for their retirement to ‘drawing’ on their capital, this usually coincides with a “re-setting” of a person’s asset allocation, as part of their overall investment strategy.

Typically, moving to ‘retirement’ sees a reduction in the proportion of growth assets such as shares and property within a person’s super portfolio, and an increase in defensive assets such as cash and fixed interest. The reason is because you are now selling assets to fund pension drawdowns and as a result, the investment timeframe for a portion of these accumulated monies is in the short to medium term, and as a consequence, the importance of allocating them into suitable assets.

What happens if I retire and start accessing super and then change my mind and go back to work?

Whilst a declaration of genuine intent to cease all gainful employment after reaching your preservation age will potentially make accumulated super monies available, this does not mean you are ever prevented from returning to work. Changing one’s mind (for whatever reason) and returning to work will not reverse the above process, although it does potentially mean that new contributions to super are preserved until you satisfy (or re-satisfy) a new ‘condition of release’.

In summary, it is recommended that professional advice is sought from a suitably qualified adviser, as this will mean your superannuation savings are within the appropriate structure and have the right investment mix to help you through your retirement years.

Next: Developing a retirement savings plan


[1] The ATO has a useful summary on the circumstances in which you can access your super.
[2] Your preservation age is based on your date of birth.  Your preservation age can be found here.

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This article was prepared by BT, a part of Westpac Banking Corporation ABN 33 007 457 141, AFSL and Australian Credit Licence 233714. This information is current as at 7 January 2020.  

This article provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.  It does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to these factors before acting on it. This information may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, no company in the Westpac Group accepts any responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, we intend by this notice to exclude liability for this material. BT cannot give tax advice. Any tax considerations outlined in this article are general statements, based on an interpretation of the current tax law, and do not constitute tax advice. As such, you should not place reliance on any such taxation considerations as a basis for making your decision with respect to the product.

Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investment held in superannuation. For more detail, speak with a financial adviser or visit the ATO website.