What is an account-based pension?

Your account-based pension, or Retirement Income account, could turn your super into a retirement income stream.

You may not need to withdraw all your superannuation when you stop working. You can receive regular payments from your super if eligible. By turning your super into an income stream, your money stays invested and your savings may continue to grow.

What is an account-based pension?

An account-based pension turns your super into an income stream by enabling you to take your super as regular payments when you retire or reach your preservation age, which is the age at which you can access your super.

An account-based pension has various names within the superannuation industry.

At QSuper, we call our account-based pension product an income account.

It lasts as long as your super money does, but is not a guaranteed income for life.

QSuper’s account-based pension options

QSuper offers two account-based pension options – a Retirement Income account and a Transition to Retirement Income account. We also have a new product called Lifetime Pension, which works in conjunction with a Retirement Income account.

As an eligible member, you could pay yourself a regular income and benefit from tax-free investment returns with our Retirement Income account, which in 2020 was named Chant West's Pension Fund of the Year for the fifth time,¹ and SuperRatings' Pension of the Year for the third year in a row.²

Alternatively, as you get closer to retirement, you may decide to ease into it gradually with part-time work, or use your last few years in the workforce to build your super balance.

One way to do this is through a Transition to Retirement Income account (TTR).

With a TTR, you start receiving payments from your super while you're still working, which gives you flexibility, without reducing your income.

How does an account-based pension work?

With an account-based pension, you have access to your money, which means you may choose:

• How much and how often you receive payments (within the minimum or maximum allowed)
• How you want your super invested (through your fund).
• You may also withdraw extra money whenever you want it (if you have a Retirement Income account)

By transferring money from your super to an account-based pension, your account balance stays invested while you draw regular income payments.

Note that there is a limit to how much money you can transfer to the pension phase (this refers to your account-based pension and any other retirement products you may have with QSuper or another fund). This is called the transfer balance cap.

Benefits of a superannuation income stream

The benefits of a superannuation income stream through an account-based pension include turning your super into a regular income with arrangements that suit you. This means you may control how much and how often you are paid.

If you have a Retirement Income account, you may also withdraw extra money at any time, if you need it.

Other advantages may include:

• Keeping your savings working for you as the money in your account stays invested
• Saving on tax as you don’t pay tax on pension payments from age 60
• Tax-free investment earnings as you can choose how your fund invests your money and returns are added to your account
• Potential to work less while keeping the same take-home pay with added income from your TTR Income account
• Choosing to contribute more of your before-tax salary into your super and supplement your pay packet with tax-effective payments from your TTR Income account.

Be aware that your Retirement Income account forms part of the income and assets test when you’re considering your eligibility for an age pension.

Your investment earnings may also drop in value depending on market performance, which can fluctuate. There is also always the chance your super balance may not last as long as you do, depending on how much you choose to access.

Keep your goals on track

Make smart decisions with the help of a professional financial adviser.*

Find out more

* Deciding what is best for you will depend on your personal circumstances and you may want to seek personal financial advice to get the most from your superannuation. You can find out more about financial advice options at qsuper.qld.gov.au/advice

1. Chant West does not issue, sell, guarantee, or underwrite this product. For further information about the methodology used by Chant West, see chantwest.com.au. Past performance is not a reliable indicator of future performance. Awards and ratings are only one factor when deciding how to invest your super.
2. SuperRatings does not issue, sell, guarantee, or underwrite this product. Go to superratings.com.au for details of its ratings criteria. Ratings are subject to change without notice. Past performance is not a reliable indicator of future performance. Ratings, awards, or investment returns are only one factor that you should consider when deciding how to invest your super.