Allocated Pensions

Allocated pensions (also known as account-based pensions) are created using a lump sum from your super account which enables you to commence drawing a retirement income stream. In order to do this, you must have reached your preservation age.


Once you establish an allocated pension, the tax rate on any income or capital gains generated by your funds becomes 0%. In return, you must draw a minimum pension amount each year; this is generally determined by your age and is worked out as a percentage of your account balance.


Once you are aged 60, you won’t pay tax on any income paid to you from your pension and if you are aged between 55-59, the taxable portion of your account-based pension is taxed at your marginal tax rate less a 15% tax offset. This makes an allocated pension a very tax-effective option to fund your retirement.


Just like your super, the money within your allocated pension needs to be invested and this needs to be done with your financial and lifestyle goals in mind to ensure that your hard earned funds last throughout your retirement.


We recommend that you seek the advice of a financial professional in order to maximise your financial potential during retirement and ensure that you have the financial freedom to enjoy this highly anticipated phase of life!