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An account based pension is an investment that lets you rollover your super money into an account held in your name in a super fund. The returns you make on your investments are added to your account, which pays you regular income payments. Account based pensions were previously known as allocated pensions prior to the reforms announced in the 2006-07 Federal Budget which changed the rules for superannuation pensions.
The advantages of account based pensions:
- Regular income - You nominate the frequency and amount of payments, which gives you access to a regular income. You must draw a minimum payment, which is calculated based on your age, at least on an annual basis.
Minimum pension payment
(Source: FIDO)
|
Age
|
Minimum balance as a % of account balance |
| 55-64 |
4% |
| 65-74 |
5% |
| 75-79 |
6% |
| 80-84 |
7% |
| 85-89 |
9% |
| 90-94 |
11% |
| 95+ |
14% |
- Tax benefits - No tax is payable on investment returns, lump sum withdrawals and pension payments if you are aged 60 and over.
- Flexibility – Have access to your money when you need it; you can make lump sum withdrawals (except if transitioning to retirement) and most account based pension products allow you to change the frequency and amount (above the minimum payment) of your pension payment to suit your needs.
- There is no maximum limit set on the income that can be drawn each year giving you greater flexibility in determining your income requirements.
- Investment Choice - You can choose how your money is invested by your chosen pension fund provider. Fund managers offer different investment options to suit your investment strategies. Most retail pension master trusts offer dozens of investment options and easy switch facilities.
You need to be aware that there is no guarantee your pension payments will continue throughout your lifetime. This may be due to lack of superannuation savings, withdrawals, fees and investment returns from your chosen investment options may not perform to your expectations.
You should also be aware that the capital value of the pension, and the income from it, cannot be used for borrowing.
2020 DIRECTINVEST provides you with the Find a Fund tool to help you research pension funds using independent fund performance, fee and ratings data from Morningstar and independent fund ratings data from Standard & Poor's.
Find out what the star ratings mean. |
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| Allocated Pensions | Compare 1,000s of allocated pension funds using our research tools. Then invest with no entry fees.
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| Education Savings | Save money for the future education of a child or grandchild via tax-effective education savings plans.
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