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An account based pension (also known as an allocated pension) is commenced by transferring the money you've accumulated in super, and provides you with a regular income stream.
Unlike super, where your money is unable to be accessed until you retire, when you invest in an account based pension you can gain additional tax benefits and you’re free to make lump sum withdrawals whenever you want.
If you've made the decision to fully retire from the workforce and reached your preservation age (see section below)—or satisfied another condition of release—you can start an Australian Catholic Superannuation account based pension.
If you've reached your preservation age, but not yet retired from work, you can take out another type of account based pension called a transition to retirement pension.
We offer you a choice of two different account based pensions—RetireChoice and RetireSmart. The main difference between the two is in whether you want to make your own investment-related decisions or if you prefer an investment strategy that has been pre-mixed for you.
Both of these products can be used:
Many people will find that their income in retirement will comprise both a pension from their super savings as well as income from the part Age Pension. In fact 75% of all retirees currently receive some level of Age Pension income*.
Centrelink takes into account your age and residence when determining your eligibility for the Age Pension. In addition to these requirements, two means tests are also applied.
*Department of Human Services statistic for 2014/2015
The following key features apply to our RetireChoice and RetireSmart account based pensions.
Choose the investment mix that best meets your retirement objectives. Different investment mixes will provide different levels of income and capital growth. You can also change your investment mix at any time. (Not available to RetireSmart members as this pension has a pre-set investment strategy.)
Nominate your annual income (as a percentage of your account balance), subject to an age-based minimum. Maximum annual pension limits also apply to transition to retirement pensions.
You can also choose the option/s from which your income is paid. (Not available to RetireSmart pension members).
Make lump sum withdrawals at any time. The minimum amount for each withdrawal is $5,000. (Lump sum withdrawals not available to members with transition to retirement pensions.)
Choose to receive weekly, fortnightly, monthly, quarterly, twice-yearly or yearly pension payments.
$25,000 (RetireChoice) | $100,000 (RetireSmart)
Death benefits can be paid to your spouse as continued pension payments, or as a lump sum to your dependants or estate.
Learn more about our RetireSmart and RetireChoice pension products.
Your preservation age is the age at which you can access your super if you're retired (or have started a transition to a retirement pension). It's not the same for everyone as it depends on when you were born. Preservation age should not be mistaken with qualifying for the government Age Pension. Use the table below to work out your superannuation preservation age.
For detailed information on when you can access your superannuation, download the Conditions of release pension fact sheet (PDF).
You start with money that has already been contributed, saved or rolled over into your super account and transfer into a pension account. It's then invested and earnings are allocated to your account. Depending on the product you choose, you may be able to decide how your money is invested. This is very similar to a super account except you can’t make any more contributions to an existing pension account once it is opened. (You can of course open an additional pension account). Within certain limits, you can also decide on the amount of pension income you wish to receive each year.
Each financial year, you must take at least the minimum annual pension payment, as determined by government legislation. This is calculated as a percentage of your account balance when you start your pension (1 July in later years) and depends on your age, as shown in the table below.
There is no annual maximum payment limit for RetireChoice. However, there is a maximum limit of 20% of your account balance for RetireSmart. In both cases, if you have a transition to retirement pension, there is a payment limit of 10% up to age 65 (or when you retire). See the following income calculation example.
Andrew is 56 years old and still working. He wants to roll $350,000 from his super into a transition to retirement account based pension. If he starts his pension on 1 July of any year, his income limits for the first year would be:
Andrew can nominate to draw an annual income amount anywhere between his minimum limit of $14,000 and maximum limit of $35,000, and choose the frequency of his pension payments. At the start of the financial year, Andrew's minimum and maximum income limits will be re-calculated using his 1 July account balance for that year.
You can choose to have your pension paid weekly, fortnightly, monthly, quarterly, half-yearly or annually.
You can change the amount and frequency of your pension payments during the year as long as you meet the legislated minimum and maximum requirements.
Account based pensions receive favourable tax treatment. Learn more about tax and account based pensions.
Your account based pension may affect your Centrelink entitlements as it will be included in both the assets test and the income test. You should contact Centrelink or your financial adviser for further details.
Regular pension payments, and in some cases lump sums, are deducted from your account. Your pension will last until your account balance reduces to zero. The length of time this takes will depend on the size of your initial investment, investment earnings and how much you withdraw. Use our super projection calculator or seek advice from a licensed financial planner who can help you estimate how long your pension is likely to last.
If you have money in your account based pension when you die:
Unless you have a transition to retirement pension, you can cash in all or part of your account based pension at any time. The minimum lump sum withdrawal amount is $5,000. There's no maximum partial withdrawal.
Before cashing in your full pension, you must have received at least the pro rata minimum pension payment for the financial year. You can only cash in a transition to retirement pension in limited circumstances.
You can also transfer your pension back to a superannuation account at any time.
Download the Transition to retirement account based pension fact sheet (PDF) for further details on the circumstances in which you can make lump sum withdrawals.
There is no upfront cost to start either a RetireChoice or a RetireSmart account based pension with Australian Catholic Superannuation, apart from the amount of your minimum initial investment. However, some ongoing fees and costs to administer your pension account and manage your investments will apply. For more information and examples, download the Retirement Product Disclosure Statement (PDF).
Superannuation is not like a bank account—investment returns can't be predicted and they're not guaranteed.
Your money is normally invested in assets such as shares, bonds, infrastructure and property, which can go up or down in value depending on how investment markets perform. Unless you invest in cash, it is likely that in some years you will experience a negative investment return.
As a rule, there is a trade-off between risk and return. Investments with the potential for higher long-term returns (such as shares) are subject to higher risk. Returns are likely to fluctuate more from year to year and negative returns are more likely.
To learn more about the relationship between risk and return for different investment options for super and a RetireChoice pension refer to this chart.
Lower risk investments (such as bonds and cash) are less likely to experience negative returns. The long-term returns are likely to be lower and may not keep up with inflation.
Some investments (such as property) are illiquid and you may not be able to redeem your investment quickly.
Legislative changes may also impact on the value of your investment or alter your ability to access your superannuation.
Other risks include operational risks, such as fraud, negligence or an external service provider may fail to provide an adequate level of service.
For more detail on Australian Catholic Superannuation's account based pensions, including transition to retirement pensions, download and read the Retirement Product Disclosure Statement (PDF).
If you have questions about our pension products or require specific advice on your own situation, you could benefit from making an appointment to meet with a financial planner at Australian Catholic Superannuation. They'll be able to help you decide if an account based pension is best suited to your financial needs. You can call us on 1300 658 776 for more information or to make an appointment for an initial obligation-free discussion.
Learn more about our financial advice services.
The Australian Catholic Superannuation financial planning service is offered through an arrangement with Industry Fund Services Limited (IFS) (Australian Financial Services Licence 232514).
Retirement Product Disclosure Statement
Transition to retirement pension
fact sheet(PDF 177KB)
release pension fact sheet(PDF 251KB)
Account based pension
payments fact sheet(PDF 262KB)
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