Pre-retirement pensions

When facing the prospect of retirement, you may be looking forward to being released from the routine of full-time work but still wondering how you’ll adjust to your new lifestyle.

Once you reach your ‘preservation age’, (i.e. the age you can access your super), you may be able to access superannuation through a pre-retirement pension. This is a regular income stream drawn from your super savings while you’re still working.

Pre-retirement pensions give you more flexibility as you begin your transition to retirement.

What are the benefits?

With pre-retirement pensions:

• You can access an extra source of income, which may enable you to reduce your working hours
• In most cases, you’ll pay less tax on your pension income than you would on equivalent salary or wages
• You can keep contributing to super through salary sacrifice while drawing a pre-retirement pension up to a determined age

What do you need to be aware of?

Pre-retirement pensions aren’t for everyone and not all superannuation funds have rules which allow them. You should first discuss your tax position, financial objectives and retirement needs with a financial planner.

You should particularly consider:

• Whether you have enough superannuation savings to support drawing a pension
• If your super fund offers a pre-retirement pension
• If your employer will allow you to work part time at a rate that suits you, continue to pay your super guarantee contributions and allow you to salary sacrifice
• The costs of this strategy

While pre-retirement pensions let you access your super as an income stream before you’ve retired, there are restrictions on withdrawing your super as a lump sum while you’re still working.

There’s a lot to consider before you implement a retirement plan or pre-retirement pension, and we can help. If you’d like more information about your options, you can book an appointment online to organise a complimentary, no-obligation consultation with a Commonwealth Financial Planner and start planning your ideal retirement today.

• Important information
  The information contained on this web page is of a factual nature only and is not intended to constitute financial product advice. It has been prepared by Commonwealth Financial Planning Limited without considering your individual objectives, financial situation or needs. You should consider its appropriateness in light of your circumstances and consider seeking professional advice relevant to your individual needs before making a decision based on this information. Commonwealth Financial Planners are Representatives or Authorised Representatives of Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139, a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.