Generating an income

The government wants to try and make sure your super money lasts throughout retirement, so they will offer you various tax benefits if you convert your super into a retirement income stream. Some of the rules can be quite complex and you should discuss your options with a qualified financial planner. Call Intellichoice now and your first 30 minute review is free.

Below is a brief summary of the various types of income streams available.

Allocated Annuity
An allocated annuity is like a personal pension that lets you invest any of your accessible superannuation or rollover money and provides you with a regular and flexible income.

Some of the benefits are:

• It provides a way to defer or totally eliminate lump sum tax on your superannuation or rollover money
• You pay no tax on the investment earnings of your annuity
• Part of each income payment may be tax free, and the rest could attract a 15% rebate.
  
• It may help you receive social security benefits.
  
• You can choose from a range of investment options with varying degrees of exposure to asset types such as shares, property, cash and fixed interest. So you have the opportunity to invest in options with low to high growth potential.
• Easy to understand.
• Your income is flexible and you can withdraw additional lump amounts if needed. 
  
• You can choose the amount and frequency of your income payments (within government prescribed limits)
• You can change your income level to suit your changing needs or to keep pace with inflation (within government prescribed limits)
• Upon your death, the balance of your account can be used to pay an income to your spouse until the money runs out or can be paid as a lump sum to the beneficiaries of your estate.
  

Guaranteed Super Pension
A guaranteed super pension provides a regular income stream, just like a salary, for either a fixed period of time (fixed term pension) or the rest of your life (lifetime pension). 

Some of the benefits are:

• Peace of mind with income payments guaranteed for your life or for a fixed period of time
• Easy to understand
• You can choose how often you want to be paid the income each year
• The ability to have payments increased in line with inflation
• The ability to provide for your spouse to receive income from the pension after your death
• Tax which would have applied to your ETP is generally eliminated when you invest it in the pension
• Part of each income payment may be tax free and eligible for a tax rebate of up to 15%
  
• It may help you receive social security benefits
  

 
Lifetime Annuity
A lifetime annuity lets you invest money and receive a guaranteed and regular income for the rest of your life. You can invest in a lifetime annuity using any accessible superannuation/rollover savings or other savings. 
 
Some of the benefits are:

• Peace of mind with income payments guaranteed for your life.
  
• Easy to understand.
• You can choose how often you want to be paid the income each year.
• The ability to have payments increased in line with inflation.
• The ability to provide for other people to receive income from the annuity.
• It can provide a way to defer or totally eliminate lump sum tax on the accessible superannuation or rollover savings.
• Part of each income payment may be tax free and eligible for a tax rebate of up to 15%.
• It may help you receive social security benefits. 
  

For more information and to clearly understand the various options available for your transition to retirement, speak to one of our experienced financial planners now on 1300 55 10 45 and they will help you take the drama out of your retirement planning.