23 August 2022
Retiring doesn’t need to be a daunting experience. With the right tools and information, you can transition with confidence. Knowing how to manage your finances is important. One option that could be right for you is an account based pension.
During your working life, you’ve probably received a regular salary from an employer or steady payments from your business. In retirement that routine may disappear.
An account based pension could help you keep a routine in place. Rather than taking your super as lump sum, an account based pension lets you set up regular payments over the course of your retirement. This money is paid from your super savings, straight into your bank account for easy access. These regular payments give you control and can help you manage your finances.
Below are 3 ways an account based pension could help you feel more in control of your retirement.
1. You’re in control of your income
When you open an account based pension, you choose how often and how much your payments will be. If your job paid you fortnightly, you could opt for the same. If you prefer a monthly income, you could select monthly. You’re in control. The only condition is you must withdraw a minimum amount each financial year, depending on your age.
Account based pension minimum drawdown rates
| Age at 1 july each year | Temporary minimum drawdown rates for FY2022/23 (% of account balance) | Default minimum drawdown rates from FY2023/24 (% of account balance) |
|---|---|---|
| 64 | 2% | 4% |
| 65 to 74 | 2.5% | 5% |
| 75 to 79 | 3% | 6% |
| 80 to 84 | 3.5% | 7% |
| 85 to 89 | 4.5% | 9% |
| 90 to 94 | 5.5% | 11% |
| 95 and over | 7% | 14% |
Minimum drawdown rates stay reduced for 2022/23
The government has extended the temporary reduced minimum drawdown rates to 30 June 2023 for the financial year 2022/23.
This government measure started in March 2020 in response to COVID-19's impact on investment markets. Reduced minimum rates give you the option to manage your income payments differently during difficult times.
From 1 July 2023, the government minimum drawdown rates for the 2023/24 financial year onwards will defer to the default rate.
FIND OUT MORE ABOUT: MINIMUM DRAWDOWN RATES
Beyond that, you’re free to set up how much you get paid so you can live the retirement you’re after.
With AustralianSuper’s account based pension, Choice Income, you have the option to be paid every 2 weeks, monthly, quarterly, twice a year, or annually.
2. You have flexibility with your super savings
Regular payments offer stability, but Choice Income also offers flexibility. Having flexibility with your finances can give you the confidence to enjoy your retirement, without worrying you’re going over budget. You can access extra money from your Choice Income account when you need it. For example, you may decide to buy a new car, renovate your home or tick off some bucket list travel plans. If you’re 60 or over, both your regular income payments and additional withdrawals are tax free.
Choice Income offers a range of features designed to help you make the most of your super, including:
- Smart Default, which provides a specially designed investment option
- Balance Booster, which provides an option for moving from a super, or TTR Income account to a Choice Income account.
3. You continue to benefit from any investment returns
Many people aren’t aware there are income options to explore in retirement that offer alternatives to taking super as a lump sum when you retire.
When you open an account based pension, your super balance stays invested with your super fund. This gives your savings the chance to keep growing and last a little longer, thanks to compound investment returns.
COMPARE AUSTRALIANSUPER’S INVESTMENT RETURNS
AustralianSuper members
AustralianSuper members can speak to a registered financial adviser for guidance. An adviser can help you decide on your payment amounts and frequency, so you’re making the most of your super savings.
EXPLORE ADVICE OPTIONS
Are you eligible for Choice Income?
You need a minimum balance of $50,000 in your super account to commence a Choice Income account. You can’t add money to a Choice Income account once you’ve opened it, so any other money you’d like to have in your Choice Income account needs to be added to your super first. You also have to meet a condition of release.
For full information: Download the Choice Income PDS – pdf
Staying on top of your retirement income
The best part about knowing how much you’ll be paid, and how often, is you’ll be free from worrying about where your money comes from. You can change how your payments are set up at any time.
That means you have more time to celebrate special occasions, pursue the hobbies you love, and enjoy the retirement lifestyle you worked so hard to achieve.
LEARN MORE ABOUT OUR ACCOUNT BASED PENSIONInvestment returns
are not guaranteed. Past performance is not a reliable indicator of future
returns.
This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/pds or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.
AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.