Smarter Super - Invest in your future and make the most of your retirement
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Important Notice

This booklet gives information of a general nature and is not intended to be relied on by readers as advice in any particular matter.

You should consider consulting a financial adviser regarding how this information may apply to your own circumstances.

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An older married couple holding hands and looking towards each other and laughing

You've worked hard for many years and are looking forward to your retirement. The idea of never working again might really appeal to you. You might be planning to retire early and pursue your post-career dreams. Or perhaps you want to continue working later in life and just adjust your life-work balance. The ‘retire at 60’ mentality has changed and people in their 60s and 70s have a lot more options available to them.


By law, your superannuation generally can't be accessed until you reach your ‘preservation age’. Before you decide to retire early, check whether you can access your superannuation.

For more information about you're 'preservation age', click here.


Some people don't want to make a sudden break from working full-time to not working at all. Instead, they choose to reduce working hours and keep the stimulation, remuneration and social contact of their job while blending it with the freedom and gentler pace of semi-retirement.

The Government's ‘Transition to Retirement’ rules make this option more attractive. Once you have reached your 'preservation age' you can access your super and continue to work. For example, you could continue working part-time and use some of your super to supplement your income. The income stream needs to be 'non commutable', which means you can't take lump sums from it while you are still working.


Achieving the standard of living you want in retirement isn't likely to happen by accident. Planning your finances in advance can give you a lot more flexibility and choice in retirement.

Putting in place the most appropriate plan for your retirement will be one of the most important financial decisions you'll make. If you're approaching retirement age, it's a good idea to take steps to understand your options.

While super may be a significant source of retirement income, you might also have other potential income sources, such as the age pension, and investments, such as term deposits, shares and rental properties.

Retirement planning can be quite complicated because how you structure your assets and income can have very different tax and social security implications. Clever planning could result in you having to pay less tax and also being able to access age pension entitlements.


Generally, you won't be able to access your super until you reach your ‘preservation age’.

Since May 2006, you are no longer required to withdraw your super or commence an income stream once you reach a particular age. Regardless of your age or employment status, you can leave your money accumulating in your super fund in the tax advantaged environment for as long as you like.

Once you are entitled to access your super you might want to take it as a lump sum or invest in a superannuation pension or annuity to provide you with a regular income stream. Put simply, pensions are available from superannuation funds, whereas annuities are available from life insurance companies.

You might choose to:

  • Access your super as a lump sum
  • Roll it over to a pension or annuity product and commence a regular income stream
  • Leave it accumulating in your super account
  • A combination of the above.


There could be significant benefits in ‘salary sacrificing’ income to super while supplementing your income with a super pension – including the potential to pay less tax and accumulate greater superannuation benefits. A financial adviser will be able to help you understand issues involved with 'transitioning to retirement' and whether it is suitable for you.


Deciding when and how you will utilise your superannuation can be quite complex, as different decisions will have different consequences including tax and social security implications. There are different income stream products available, so shop around to find the product that suits your needs. You should consult your financial adviser who can assist you with your retirement planning.



Choosing to draw on your super through a pension or annuity product can provide you with tax advantages and a regular income. Earnings on assets supporting these pensions and annuities are tax exempt.

There can also be social security advantages by purchasing certain types of these products before 20 September 2007.

Prior to the new rules that commenced on 1 July 2007, there were many income stream options available, each with different features and benefits. Three of the most popular options include:

  • Term allocated income streams – provide a fixed percentage of the account balance each year. Income can go up and down depending on market movements.
  • Allocated income streams – allow recipients to choose how much income they receive each year between minimum and maximum limits, calculated based on the account balance. Income can go up and down depending on market movements. They provide the added flexibility of being able to make lump sum withdrawals at any time and continue until your money runs out.
  • Complying guaranteed income streams – provide a guaranteed amount each year for the guaranteed period
  • .

On 1 July 2007, one simple set of rules replaced the multiple rules for pensions, although providers have a transition period whereby they on the rules before 1 July – this is only until 19 September 2007.

Pensions that met the previous rules and were commenced before 1 July 2007 are deemed to meet the new minimum standards:

  • Pre-July 2007 complying guaranteed income streams will continue to be acceptable, but the new rules accommodate more traditional guaranteed income stream products.
  • Pre-July 2007 allocated pensions are allowed to transfer to new pension products from 1 July 2007 without needing to commute.

New products called ‘account based income streams’ commenced from 1 July 2007. These income streams must pay a minimum amount at least annually but there will be no maximum, allowing people to draw out as much as they wish, including lump sums – even the entire balance. Upon your death, the unused portion can be transferred to a dependant or cashed as a lump sum to your estate. If you commence an income stream under ‘transition to retirement’ conditions, a cap of 10% of the account balance will apply as the maximum payment available each year.

From 20 September 2007, the 50% assets test exemption for complying income streams will be removed for income streams commenced from 20 September 2007. Pre-20 September 2007 income streams will not be affected.


Your income and assets need to be below a certain amount to qualify for the age pension. An important part of the retirement planning process is reviewing your financial affairs and making decisions with an understanding of how they impact on any potential social security entitlements.

From 20 September 2007, the age pension assets taper halves so recipients only lose $1.50 per fortnight rather than $3 for every $1,000 of assets above the assets test threshold. This may result in more people becoming eligible for age pension payments and many who receive part-pensions may have their payments increased.

The income test also applies and it is the lower amount achieved under the two tests that determines whether the person receives an age pension and if so, how much. For details about qualifying for the age pension, contact Centrelink or consult a financial adviser.

Did you know?

Significant changes to the rules governing income streams take effect in 2007 – some came into effect on 1 July 2007 and some on 20 September 2007.

For example, term allocated and complying guaranteed income streams can be 50% exempt from the age pension assets test if purchased before 20 September 2007.

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