Retiring soon? Options for your super

Here are two options for how you can invest your superannuation funds to provide an income in retirement.

Allocated pensions

Allocated pensions provide a regular income, paid directly to your bank or credit union account. Income payments are funded by your superannuation lump sum and the investment earnings generated. You choose how much income you receive, above a set minimum amount. There is no maximum amount (unless you are using the allocated pension to draw a "pre-retirement" pension). The income payments will continue until your account balance is used up or is withdrawn in full.

Allocated pensions are a popular choice for those wanting a regular, flexible and tax effective income in retirement. Other benefits include:

• A wide choice of investments
• Ready access to your capital
• Possible social security and tax concessions
• The balance of your account can be passed to your beneficiaries when you die

 

Some potential disadvantages of allocated pensions include:

• 100% of the asset balance and income payments are counted for Centrelink purposes
• Income payments are not "guaranteed" or paid for a fixed term – they cease automatically when your capital runs out

 

Annuities

Annuities provide a guaranteed income in retirement. The two main types of annuities are:

• Term annuities which pay a guaranteed income for a defined period of time (e.g. 1–25 years) and have the possibility of capital draw-downs
• Lifetime annuities which pay a guaranteed income for the remainder of your life

 

Some benefits of annuities include:

• The certainty of guaranteed, regular income payments
• Many annuities have the option of automatically increasing the income payments in line with inflation
• Possible taxation benefits, based on your personal circumstances
• Tax benefits for over 60 year olds
• Annuity payments are guaranteed by CommInsure
• Longevity protection in the form of an income for as long as you live
• A stable guaranteed income as part of a diversified portfolio

Find out more about annuities, or talk to a Commonwealth Financial planner.

Seek investment advice

Whether you're an expert or novice investor, good advice is important. A Commonwealth Financial Planner can help you choose the best retirement income investments for you.

If you would like to know more about how a Commonwealth Financial Planner may be able to help you, or to make an obligation-free appointment with a Commonwealth Financial Planner call 1800 241 996 or email us.

 

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 Bank customers who wish to obtain information about Retirement Planning may do so by contacting a Commonwealth Financial Planner. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139. Commonwealth Financial Planning Limited is a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.

Superannuation and taxation considerations are general and based on present superannuation and taxation laws, rulings and their interpretation as at April 2006