Super or pension account. What’s best for you?

Maximise your super in retirement

You’ve done the hard work, saving and growing your super over the years. Now, it’s time to consider how you can set up your finances to maximise your retirement income.

Did you know that there’s generally no tax on investment returns in an account-based pension but returns in a super account are taxed up to 15%?

You might be missing out on tax savings if you still have your retirement savings in an accumulation phase super account and:

• You’re 60-64 and you’ve retired, or
• You’re 60-64 and you stopped working for an employer after you turned 60, or
• You’re 65 or older, even if you’re still working.

How you could save with an account-based pension like Choice Income

When comparing an account-based pension with a super account, it’s important to consider the difference in investment returns, taxes and fees.

Generally, the tax savings on investment returns in Choice Income outweigh the difference in fees.

Minimum drawdowns are another important difference. In an account-based pension, you must take out a minimum amount of income each year by law. You’re not required to take money out of a super account, but you can choose to do so if you meet eligibility requirements. The withdrawal process can be simpler with a Choice Income account than a super account. If you’re aged 60 or over, withdrawals are usually tax-free for both account types.

See how Jan and Raj would benefit from moving their super into a pension account.

Jan’s story

Jan retires at age 65 and moves her super balance of $300,000 into Choice Income. Jan withdraws $78,341 tax-free over 5 years to fund her lifestyle. Compared to a super account, she pays a little more in fees but she benefits from tax savings on any returns her investment earns in Choice Income. After 5 years, Jan would have an additional $11,690* by moving her balance into Choice Income.

 

Raj’s story

Raj retires at age 67 and moves his super balance of $75,000 into Choice Income. Raj withdraws $19,565 tax-free over 5 years to fund his lifestyle in retirement. Compared to a super account, he pays a little more in fees but he benefits from tax savings on any returns his investment earns in Choice Income. After 5 years, Raj would have an additional $2,892* by moving his balance into Choice Income.

* These examples are for illustration purposes only. The actual benefits you receive will depend on a range of factors including future economic conditions, investment performance and legislative change. Investment performance is not guaranteed. The calculation is based on investment return assumptions of 6.5% for super accounts and 7.3% for pension accounts, and members withdrawing the minimum drawdown amount for their age from Choice Income or the equivalent amount from super account. Results in today’s dollars. Source: AustralianSuper calculations, February 2025.

Key takeaways

Tax savings

Tax savings

You generally don’t pay tax on investment returns in Choice Income, but returns in a super account are taxed up to 15%. The Balanced option has delivered an average annual return of 8.11% in Choice Income and 7.44% in super in the 10 years to 31 March 2025².

Fee differences

Fee differences

Although admin fees can be up to $311 more per year in Choice Income (depending on the account balance), the tax savings on any investment returns has historically been greater than the difference in fees³.

Minimum drawdowns

Minimum drawdowns

You must take out a minimum amount of income from a Choice Income account each year by law. You are not required to do so with a super account.

It’s important to note that the Government has a lifetime limit on the amount of super you can transfer into any tax-free retirement account(s), like Choice Income. This is called the ‘transfer balance cap’. The transfer balance cap is $1.9 million for individuals who commence their first account-based pension after 1 July 2023.