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 is an income stream payable from a super fund. It is purchased with money that you have accumulated in your super and is one of the most popular income streams for self-funded retirees.
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 maximum so you can choose how much you want to receive. You can elect to receive payments at regular intervals to suit your lifestyle, either fortnightly, monthly, quarterly, half-yearly or annually.
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.
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 taxfree depending on your age, eligibility for tax offsets and the income tax-free threshold, as shown below:
The EISS 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.
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