Your superannuation retirement pension guide.

Commencing a pension from your Australian superannuation savings is an important step towards securing a stable income stream for your retirement years.

This guide aims to provide you with a clear understanding of the process and considerations involved in commencing a pension within the Australian superannuation system.

What is a pension?

A superannuation pension, also known as an account-based pension or allocated pension, is a regular income stream paid from your superannuation savings. It provides you with a source of income during your retirement years, allowing you to maintain your lifestyle and cover living expenses.

Eligibility criteria

Before commencing a pension, it’s essential to ensure that you meet the eligibility criteria:

  1. Age requirement: You must have reached your preservation age, which varies depending on your date of birth. Currently, preservation age ranges from 55 to 60 years. Anyone born after 30 June 1964 has a preservation age of 60.
  2. Retirement status: You must meet the definition of retirement as per the superannuation laws. This generally means that you have ceased employment and do not intend to return to the workforce on either a full-time or part-time basis.
  3. Meeting a condition of release: You must meet a condition of release to access your superannuation benefits. Common conditions of release include reaching preservation age and retiring, reaching age 65 (regardless of retirement status), or being permanently incapacitated.


What is the maximum value I can transfer into a pension?

The transfer balance cap limits the total value of superannuation pensions an individual can have in the tax-free retirement phase. The current limit an individual can have in retirement phase is capped at $1.9 million. This cap is relevant for individuals who have not yet commenced a pension. For individuals with a pension already, they will have a cap between $1.6 million and $1.9 million.

It’s important to note that this cap applies to the total value of superannuation pensions an individual holds, including any pensions commenced in multiple superannuation accounts. If an individual exceeds the transfer balance cap, they may face tax consequences, such as additional tax on excess transfer balance earnings.

What are the benefits of commencing a retirement pension?

  1. Tax-free investment earnings: Investment earnings on assets supporting the account-based income stream are generally tax-free for individuals aged 60 and over. This can result in significant tax savings.
  2. Flexibility in withdrawals: Account-based income streams offer flexibility in withdrawals, allowing you to choose the frequency and amount of pension payments based on your financial needs. You can also make lump-sum withdrawals as required.
  3. Access to superannuation savings: Commencing an account-based income stream provides access to your superannuation savings, allowing you to use these funds to supplement your retirement income and cover living expenses.
  4. Potential for investment growth: By investing your superannuation savings in growth assets such as stocks and property within the account-based income stream, there is the potential for your investments to grow over time, providing you with a larger retirement income.
  5. No maximum withdrawal limits: There are no maximum withdrawal limits with account-based income streams. You have the flexibility to withdraw as much or as little as you need, subject to minimum withdrawal requirements.

What are the drawbacks of commencing a retirement pension?

  1. Minimum withdrawal requirements: You are required to withdraw a minimum percentage of your account-based income stream every financial year. This percentage is based off your age, and increases over time. This can negatively impact the balance of your superannuation, especially when there is poor investment performance.
  2. Inflation risk: Inflation can erode the purchasing power of your retirement income over time. While account-based income streams offer potential for investment growth, it’s essential to consider how inflation may impact your ability to maintain your desired standard of living in retirement.
  3. Complexity and management: Managing an account-based income stream requires ongoing monitoring of investment performance, asset allocation, and withdrawal strategies. This complexity may require active management or the assistance of a financial advisor, which can involve additional costs.


What other pension types are there?

Transition to retirement income stream (TRIS)

A TRIS is a specific type of pension that allows individuals who have reached their preservation age to access their superannuation savings as a non-commutable income stream while still working. The maximum an individual can withdraw in any one financial year is 10% of the balance of their TRIS.

What are the personal tax implications when receiving a pension?

Income payments from an account-based income stream or TRIS are tax free personally if you are over the age of 60. If you are under age 60, they may be subject to tax at your marginal tax rate with a tax offset of 15% applied.

Seeking professional advice

Commencing a pension is a significant financial decision that can have long-term implications for your retirement income. It’s essential to seek advice from a qualified financial advisor or accountant before proceeding. They can provide personalised guidance based on your individual circumstances and help you navigate the complexities of the Australian superannuation system.


Commencing a pension from your Australian superannuation savings is an important step towards achieving financial security and peace of mind in retirement. By understanding the eligibility criteria, process, and considerations involved, you can make informed decisions that align with your retirement goals and aspirations. Remember to seek professional advice to ensure that your retirement plan is tailored to meet your needs and objectives.


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Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.