After working and saving for years, the prospect of a relaxed retirement is no longer a distant dream. By now you have you’ve probably paid off most of your major debts and can look forward to having the freedom to live your life “your way”.
Pensions can include Age Pensions as well as Superannuation Pensions, which may be able to be accessed at earlier ages. In some circumstances, ‘Transition to Retirement Pensions’ can be paid while your Superannuation continues to work for you. A ‘Pensions Age’ will generally determine the entitlement and tax consequences of any Pension.
Centrelink will assess an entitlement to an Age Pension based on a person’s assets and income, and there is an indexed entitlement range.
Two tests are applied to determine an individual’s entitlement, with the lower of the two entitlement calculations applied. Obtaining even a small pension will entitle you to benefits including pharmaceutical cost support. However, some pharmaceutical items are exempt from assessment up to certain ages.
The ability to access lump sums from a pension depends on a person’s age and the type of pension. Many pensions are flexible and allow lump sums to be withdrawn which may or may not affect ongoing income streams.
What happens if I die?
Pensions today have a number of death-related provisions, including reversion to another person or payment to another estate. This is an area where the tax effectiveness of your Estate Plans needs careful consideration.
Guaranteed Income Stream
Guaranteed income streams can be structured to provide an income for your lifetime. The underlying assets are generally fixed-interest securities, and investment returns will reflect this lower volatility.