Allocated pension fact sheet

What is an Allocated Pension?

An allocated Pension is a form of retirement income. Your pension is paid from the balance of the money remaining in your superannuation fund each year until it runs out. You can start receiving payments when you retire after age 55 or if you are permanently unable to work due to invalidity, or at the age of 65 whether or not you retire. You can cash some or all of your capital at any time, providing you meet a condition of release, or the benefits are unrestricted non-preserved benefits, and it will be taxed as a lump sum eligible termination payment.

Why are Allocated Pensions so popular?

Allocated Pensions are by far the most popular type of self-funded retirement income from superannuation savings. Allocated Pensions are very important and popular because they can give you very flexible income arrangements whilst minimising the amount of tax you will pay.

What is the difference between an Allocated Pension and a Superannuation Pension?

The difference between an Allocated Pension and a Superannuation Pension is the funds remain in an account in the members name.

Advantages of Allocated Pensions

• Allocated pensions enable you to have an allocated pension paid from the same superannuation fund where your superannuation savings have accumulated.
• Flexibility over the amount of pension income paid within minimum and maximum limits.
• Control over investment selection and how much to invest in each type of investment.
• Ownership of capital is retained, and increases in capital value are retained.
• Remaining capital on death is not forfeited, and so can go to dependants or the deceased estate.
• No lump sum tax is paid on the capital whilst it remains in the fund, and generally no tax is payable on the fund earnings and capital gains so long as the fund is a complying fund.
• Once the pension commences any further growth in assets values in the pension fund are not assessed against the persons reasonable benefit limit.
• Part or all of the capital can be changed to a lump sum whenever the owner desires.
• Flexibility in the level of payment.
• Capital is not forfeited on death

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