Comprehensive Guide to Account Based Pensions

Considering an
account based pension?

We all know that we need to save for our retirement, but what should we do with our super once we retire? An account based pension could be the answer.

Account based pensions offer a tax-effective, regular and flexible income from your super. It’s purchased with money that you have accumulated in your super when you retire, and is one of the most popular income streams for retirees due to the flexibility.

How do account based pensions work?

An account based pension allows you to receive regular payments from your super (similar to a salary), while your super remains invested. Investment earnings are added to the account balance and pension payments made from the account reduce the account balance.

Pension payments made to you within a financial year must be at least equal to the legislated minimum amount, however there is no maximum1 so you can choose how much you want to receive. You can also choose to receive payments at regular intervals to suit your lifestyle, either fortnightly, monthly, quarterly, half-yearly or annually.

The benefits of account based pensions
  • Investment earnings are tax free2.
  • No tax is payable on pension payments if you are 60 or over.
  • You can access your money at any time and make additional lump sum withdrawals if you need to.
  • You can vary your payments at any time subject to legislated minimum amounts, and you can choose how your money is invested.

Please note, your account based pension account balance will fluctuate in line with market performance. The income stream is not guaranteed for life and payments will cease when there is no money left in your account.

Tax on pension payments

The tax treatment for pension payments depends on your age. Pension payments are taxed on a Pay-As-You-Go (PAYG) basis however, part or all of your pension may be tax free depending on your age, eligibility for tax offsets and the income tax-free threshold, as shown below:

60 or over: generally, no tax is payable on your pension payments or lump sum withdrawals.

Under 60: your pension payments may contain both a tax free and a taxable component. The taxable component is taxed at normal pay as you earn PAYG rates. However, you may be eligible for a 15% tax offset, which reduces the amount of tax you have to pay. The tax free component is received with no tax payable.

How can EISS Super help?

An EISS Super Pension can provide you with a flexible and tax effective investment that converts your super savings into a pension. We offer two types of pension - a standard account based pension and a transition to retirement pension.

We're here to help

Make an appointment to see an EISS Super financial planner.

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1 If you have a transition to retirement pension there is a maximum limit you can withdraw each year. Visit  for more information.
2 Excludes transition to retirement pensions