Starting an account based pension with your super when you retire could enable you to receive a tax-effective income and make your savings last longer.
How does the strategy work?
When you retire, it can be tempting to take your super as a cash lump sum. However, using your super to start an account based pension1 could be a more tax-effective option. This is because:
1 There is a limit on the total amount that can be transferred to retirement phase in a person’s lifetime.
This limit is $1.6 million in 2017/18 (subject to indexation).
2 Assumes you are in retirement phase.
3 Takes into account low income tax offset and 15% pension tax offset and assumes no other
income is received.
4 Preservation age is 55 for those born before 1 July 1960 and gradually increases to 60 depending
on date of birth.
5 Assumes the pension is commenced from a taxed super fund.
SUPER TIP – Simple explanation of super strategies:
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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It's also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.