Allocated pensions

An allocated (or account-based) pension provides you with a regular income in your retirement. Income payments are funded by your superannuation lump sum and the investment earnings this generates.

You can choose the amount of income you wish to receive each year above a minimum amount based on your age. The income payments will continue until your account balance is used up or is withdrawn in full.

Generally, it is far more tax-effective to convert your super into an allocated pension or annuity than it is to cash it out. This is because:

• You receive a 15% tax offset on any taxable income if you are aged between 55 and under 60. Conditions apply for those under 55.
• Any investment earnings are tax free.

Other benefits of allocated pensions include:

• A wide choice of investments
• Ready access to your capital (except if commenced as a pre-retirement pension)
• Ability to make lump sum withdrawals whenever you wish
• Choose how much income you want to receive (above a certain minimum)
• Possible social security and tax concessions
• The balance of your account can be passed on to your beneficiaries when you die.

 

Allocated pensions can be complex, but Commonwealth Financial Planners are dedicated to making them simple to understand. If you would like to find out more about allocated pensions, why not arrange an appointment with a Commonwealth Financial Planner? Simply phone 1800 241 996 or complete an appointment form.

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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.
  
  Superannuation and taxation considerations are general and based on present superannuation and taxation laws, rulings and their interpretation as at 16 January 2009.
  
  Commonwealth Bank customers who wish to obtain information about retirement planning may do so by contacting a Commonwealth Financial Planner. 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.