What is an allocated pension?
An allocated pension (or income stream) is a retirement income stream paid to you by your super fund. It’s like receiving a regular wage again! But this time it’s paid to you from your super account, not from your employer. It is your private account-based pension, as opposed to a Government pension – but the two can work together.
Opting for an allocated pension
Income streams generally offer account-holders a number of advantages including:
- Greater tax benefits than taking all super as a lump sum
- Ease of use – simply set it up and enjoy a regular retirement income, with your fund taking on the responsibility of ensuring you’re drawing down the minimum amount each year
- Compatibility with Government pensions, which means that, if you’re eligible, you can receive income from your super and the Government Age Pension
- The balance of your super continues to act as an investment, with you deciding the level of risk or safety
Opting for an income stream is usually a pretty easy process too, since most super funds, and indeed all Industry SuperFunds have specially designed income stream accounts.
Your money keeps working
With an income stream, the balance of your super remains invested with your super fund, just as it did when you were working. In fact, much like the investment options available to you when you’re working, super funds in Australia allow you to choose the style of investment, from conservative to growth options.
Government Age Pension
An income stream can also supplement the Age Pension you could be entitled to. Naturally, the more income you have, the lower your pension will be, but a good financial adviser will be able to help you maximise your income from your different sources.
Choosing a fund
When looking for a suitable income stream account, a good place to start is with your Industry SuperFund. If you’re not a member of an Industry SuperFund you should look for a fund which offers:
- Low fees
- A choice of investment options
- Flexible income payment options
- Ease of joining
- Competitive long-term performance
- Transition to retirement options if you are still working
- Online access to your pension account
All Industry SuperFunds meet these criteria.