Understanding your pension

This income will last as long as you have money in your super, so it’s important to review it, and update it if necessary, so it goes the distance.

How do I access the money in my super?

Once you have reached age 60 and met a condition of release, there are no restrictions on the maximum amount that can be withdrawn from a super or pension account.

However, some rules apply to pension accounts, including:

• the maximum amount that can be transferred to a pension account is currently set at a maximum of $1.9 million across all pension accounts you may have (this amount applies if you are starting your first pension since 1 July 2023) and anything above this can either be left in a super account (with earnings being subject to the concessional 15% tax rate) or withdrawn, and
• the minimum drawdown requirement for monies held within a pension account starts at 4% (if aged under 65) of your account balance at commencement and increases each 1 July thereafter.

If your pension income exceeds your living expenses, it’s worth considering where you place this excess. Depending on this, any income generated from the excess funds may result in a personal tax liability.

What payment frequency should I set up?

The payment frequency you choose is ultimately up to you and what works for your lifestyle in retirement. Your financial adviser, if you have one, may provide you some advice on what will work best for you.

You could receive your pension monthly, quarterly, or annually¹. But it’s a condition of all account-based pensions that you must receive at least one pension payment between 1 July and 30 June each financial year.

The payment will continue until the account balance runs out, or you take a lump sum payment.

At BT, most of our pension customers choose to receive their payments monthly. By having a regular payment set, you might find it easier to set a budget to manage regular bills and payments, that are often also set monthly or quarterly. These payments can be adjusted at any time if your circumstances change or if you need a one-off payment to fund an expense when something unforeseeable happens.

When should I check my pension payment?

If your circumstances change, such as change to your living expenses, you should take the time to check your pension payment.

In addition to this:

• Your new minimum pension amount is calculated in July each year. If you have elected the minimum pension amount it is good practice to check if it meets your living expenses and adjust if required.
• It’s also worth checking if you have a pension payment that falls around end of financial year (EOFY). Your pension payments are funded by the available cash in your account, so it’s important to ensure there’s enough cash to cover each payment — particularly in July, when it can take longer to convert investments to cash.

You can contact your fund or visit their website to find more information about your pension payment.

Do I need to review my investment strategy during the pension phase?

Reviewing your investment strategy is crucial to ensure it reflects your investment objectives as they may change over time. When you move from accumulation into the pension phase, it is a significant life event and it is a good time to discuss your overall investment strategy with your adviser, if you have one. Your investment strategy might still be appropriate for you, but it can be helpful to see how your super is performing over time and if it’s serving your financial goals. Your circumstances play a big role in your financial goals and in particular your risk appetite, so it’s important to review your financial goals as they may have changed going into retirement. 

Next: How much will you need to enjoy your retirement?

[1] Different frequency options may be available depending on your fund. Refer to the product disclosure statement for your fund for more information.