How it works
- You must be 60 or older with a Super balance in accumulation.
- You withdraw between 4% and 10% of the pension balance each year, tax-free from 60.
- No lump sums until you retire or turn 65.
- Earnings inside the pension are taxed at up to 15% until you retire or turn 65.
Two ways people use it
Working fewer hours without a pay cut. Reduce from five days to three and draw from Super to make up the difference.
Building more Super while you work. Salary sacrifice into Super at 15%, and replace the reduced pay with tax-free pension payments. Take-home pay stays the same and your balance grows faster. This works best on a marginal rate well above 15% with room under the $32,500 cap.
Where people get caught out
- Drawing down Super too early.
- Exceeding the contribution cap when combining salary sacrifice with employer contributions.
- Not converting to a retirement phase pension at 65 or retirement, where earnings are tax-free.
Find out if it works for you →
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