Frequently asked questions
How old do you have to be to set-up an Allocated Pension account?
To set up a Pension account, you need to have retired and reached your Preservation age, turned 65 or reached 60 and terminated employment.
Your Preservation Age is based upon when you born.
|Date of birth
||Your Preservation Age
|Before 1 July 1960
|1 July 1960 to 30 June 1961
|1 July 1961 to 30 June 1962
|1 July 1962 to 30 June 1963
|1 July 1963 to 30 June 1964
|After 30 June 1964
How much money do I need to start an Allocated Pension?
To start a pension account you need to have at least $30,000. You cannot have start a pension with more the $1.6 million.
Will I pay tax on my investment earnings and payments?
If you are 60 or older, all of your pension payments and investment earnings are tax free.
If you are under 60, the taxable portion of your payments will be taxed at your marginal tax rate, plus the Medicare levy. However, you may be able to get a tax rebate of up to 15%. Your investment earnings are tax free..
What investment options do I have?
Your pension account has the same investment options as your super account. You can invest your money in one option, or across a range of different options. And you can choose which investment option your payments are taken from.
How often are the payments?
You get to decide how often you want to be paid – monthly, quarterly, half yearly or yearly.
Can I withdraw a lump-sum from my account?
You can withdraw some, or all of the money in your account at any time, as long as you have already been paid the minimum pension payment amount that year.
How much can I withdraw?
Your minimum payment amount is based on your age, and starts at 4% of your total balance if you’re under 65. You can elect to receive more than the minimum.
What happens to my money if I die?
Unlike your other assets, your Pension does not automatically form part of your estate. We need you to tell us who you want to get the money in your pension account if you die by nominating your beneficiaries. If you don’t nominate your beneficiaries, it’s left up to the Trustee to decide how the money in your account gets distributed to your dependants. Learn more about nominating beneficiaries.
Are there any risks?
Like you super, and any investment for that matter, there are some risks:
- The amount in your account may reduce if there are negative investment returns.
- Because you have to take a minimum amount out of your account each year, there is the possibility that if there are negative returns these losses will be locked it.
- Your eligibility for a Centrelink Age Pension could be affected.
- Depending on how much you start with, and how much you take out, your pension may not last for the remainder of your life.
- There is the potential that future government changes to super and tax laws could affect your pension.