How it works

Understanding how pensions work will help you make better investment decisions.

What is a pension?
A pension is a regular periodic payment, made either by the Government or via a superannuation fund.

The types of pensions paid by superannuation funds like AustralianSuper are formally referred to as account-based pensions.

What is an account-based pension?
An account-based pension allows you to access your super as a flexible and regular income stream during, or leading up to, retirement. To be eligible to take up this kind of pension, you need to meet certain eligibility requirements.

How does an account-based pension work?
An account-based pension requires by law that a minimum amount of the account balance be withdrawn every year.

The minimum amount is simply a percentage of your account balance, determined by your age. There is also a 10% maximum limit that can be taken as a pension each year; this is only applicable if you have selected the Transition to Retirement option.

How do I open an account-based pension?
If you meet the eligibility requirements, an account will be set up in your name and some or all of the money in your superannuation account will be transferred to it. Super is generally the only kind of money you can use to set up an account-based pension.

You will then need to decide, within certain limits, how much you want to receive as regular pension payments and how frequently you want these payments deposited into your bank account.

What happens once the pension starts?
Once all your super has been transferred into your pension account, you will begin to receive regular payments.

Over time, your account balance will increase with any positive investment earnings received and decrease with fees, negative investment earnings, your regular pension payments and any lump sum withdrawals you make.

How do I get the money?
Your regular pension payments and any lump sum withdrawals you make will be deposited directly into your nominated bank account.

Can I add money to my pension account?
No, you cannot add money to your pension account once it has been opened and you have started to receive pension payments. Therefore, it is important you deposit any transfers or rollovers into your pension account before you receive your first pension payment.

You can, however, open another pension account with AustralianSuper at any time if you have a further $10,000 or more in super to invest and you meet the eligibility requirements.

How long will my pension be paid?
Your regular pension payments will continue to be paid until the money in your account runs out.

What happens if I die first?
If you die and you have money in your pension account, it will be paid to one or more of your dependants and/or your legal personal representative.