Pay yourself a regular income
An account-based pension (also known as an allocated pension) is
a regular income stream, purchased with money you have accumulated
in super, after you have reached preservation age.
How account-based pensions work
An account-based pension is started with a
lump sum from a super fund. This is usually done by transferring
money from an accumulation account to an account-based pension
account, after you have reached your preservation age.
Find out your preservation age.
pension age calculator
How do I access and withdraw money from super?
To access super you must also have met a condition of release unless you are
setting up a transition to retirement
How much do I have to withdraw each year?
You will have to withdraw a minimum amount each year, depending
on your age, and if you are using a transition to retirement
pension you will be limited to withdrawing a maximum of 10% each
||Annual payment as a
% of account balance
How often are income payments made?
Income payments can be made monthly, quarterly, half-yearly or
annually and continue until the account balance is exhausted.
Can I withdraw a lump sum?
Yes. You can withdraw some or all of your pension account,
unless it is a transition to retirement pension. You can also roll
it back into a super accumulation
How long do income payments last?
Account-based pensions are not guaranteed to last for a set
period of time. How long your pension lasts will depend on how much
you withdraw each year, the investment returns you receive and the
amount of fees you pay. Our account-based pension calculator will
give you an idea of how long your account-based pension will last,
but remember it's only an estimate.
See how long your account-based pension might
What happens if I die?
If you die, any money remaining in your account will be paid to
your beneficiaries or your estate.
If you have nominated a reversionary beneficiary then that
person will continue to receive your pension payments until the
account runs out and will be able to manage the account just as you
could before your death. If you nominate a child as your
reversionary beneficiary they will only be able to receive pension
payments until they reach age 25, and then any remaining balance
will be paid to them as a lump sum.
If your beneficiary is a spouse or dependant they may
choose to receive your death benefit payment as a pension or a lump
sum. Non-dependent beneficiaries will only be able to receive
super death benefits as a lump sum.
Will I get the age pension if I also have an
The amount of Age pension you are entitled to is determined by
applying an income test and an assets test. The test that results
in the lowest Age pension being paid to you is the one that
Centrelink will apply, this may change over time.
Under the assets test the whole balance of your account-based
pension will be assessed.
If you started your account-based pension before 1 January 2015,
and were already receiving a Centrelink pension or
allowance, then only part of your pension income will be
assessed under the income test. If you commenced your pension on or
after 1 January 2015 then the whole balance will be deemed for
income test purposes.
Contact a Centrelink
Financial Information Service officer or your financial adviser
to see whether your income will affect your Age pension. See social
security for more details.
Changes to account-based pensions in 2017
From 1 July 2017 there will be a limit on how
much money can be held in an account-based pension. Details of
the changes are available on the Australian Tax Office (ATO) website.
Benefits of account-based
- You don't pay tax on investment earnings
- You won't pay tax on pension payments from age 60
- If you are aged 55-59, the taxable portion of your
account-based pension will be taxed at your marginal tax rate less
a 15% tax offset
- You can access your money at any time i.e. you can withdraw
some or all of the money as a lump sum
- Your balance will increase as investment earnings are added to
- You can vary the payments (subject to minimum and maximum
- You can choose how your money is invested by the fund
- There may be money left over for your estate
Case study: Nadia takes
out an account-based pension
Nadia is 61 and single. She invests $150,000 in an account-based
pension on 1 July 2013. Based on her age, she must take out a
minimum of 4% of her investment, which is $6,000, during the
financial year. Nadia decides to draw down $500 every month to
supplement her income from her part-time job.
- Your investment earnings are not guaranteed and may fluctuate
in line with market performance depending on how your money is
- There is no guarantee your super will last as long as you
Account-based pensions are a good choice if you
want a regular, flexible and tax-effective income. But they do not
guarantee an income for life. Seek independent financial
advice to ensure this is the right choice for your needs and
Last updated: 18 Apr 2017