There are a lot of benefits to having an account based pension but there are also some rules that you need to follow. Once of those rules relates to the amount of income that you need to draw down each year – but restrictions around drawing down regular income don’t extend to taking a lump sum payment!
If you’ve chosen to open an account-based pension rather than leaving your super untouched, then you must withdraw between 4-14% each year. How much you must withdraw each year depends on your age and we have covered those rules here.
Provided you are not using a transition to retirement pension, though, then there are unlikely to be any restrictions around taking lump sums form your account based pension. You should be aware, though, that taking a lump sum from your account based pension will affect your eligibility for the Age Pension
How doe the Age Pension work? Here’s a quick summaryhttps://t.co/Lkqw0vtPN0 pic.twitter.com/5kZUpRn5Oi
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You may be able to withdraw your account based pension in several lump sums. However, be aware that the Australian Taxation Office advises that if you ask your fund to make regular payments from your super it may be considered as an income stream.
If you take a lump sum out of your super, the money is no longer considered to be superannuation and loses its tax-favoured status. If you invest the money, earnings on those investments are not taxed as super and may need to be declared in your tax return.
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