How to start a pension with Australian Ethical
Getting closer to retirement means making some pivotal financial choices, and one of the most significant is figuring out how to access your superannuation savings. An account-based pension offers a great option, as it provides you with a regular income while your money continues to work for you.
In this guide, we'll take you through the process of starting an account-based pension with Australian Ethical.
Before we get into the ‘How’, you may want to think about ‘Why’ an account-based pension could work for you.
Check your pension eligibility
Before starting, let's ensure you meet the requirements for an account-based pension:
- Are you at or beyond the super preservation age?
- Do you have enough superannuation or personal savings to meet the minimum balance requirements of $30,000?
- Are you retired or planning to retire?
| Date of birth | Preservation age |
|---|---|
| Before 1 July 1960 | 55 |
| 1 July 1960 – 30 June 1961 | 56 |
| 1 July 1961 – 30 June 1962 | 57 |
| 1 July 1962 – 30 June 1963 | 58 |
| 1 July 1963 – 30 June 1964 | 59 |
| From 1 July 1964 | 60 |
Source: ATO website
Complete a pension application
You can complete the Australian Ethical pension join form either by filling in the online form or by downloading, printing and filling in the PDF join form. See all pension join forms, along with other important super and pension documents.
Before you get started, here’s a few details you’ll need to gather:
- Proof of identity
- The amount you want to transfer into your account-based pension
- Your super fund details if you’re transferring from another super fund
- Your bank details and the frequency of your pension payments
- Investment preferences and split percentages
- Beneficiary nominations
Set your pension payment plan
Your payment plan is where you decide how often you want to receive your pension payments (monthly, quarterly or annually) and specify the amount you'd like to withdraw.
Note: You’ll need to ensure that your chosen amount meets the minimum and maximum annual pension payment requirements.
| Standard minimum pension payment1 | Maximum pension payment1 | |
|---|---|---|
| Under 65 | 4% | 10% for transition to retirement |
| 65-74 | 5% | N/A |
| 75-79 | 6% | N/A |
| 80-84 | 7% | N/A |
| 85-89 | 9% | N/A |
| 90-94 | 11% | N/A |
| 95+ | 14% | N/A |
You can continue to receive a pension until your account balance is fully paid out or you close your account. It is important to remember that the balance of your account may not be sufficient to pay an income stream for the rest of your life.
When deciding on the level of pension payments you choose to draw from your pension account, you should consider how long your pension needs to last. While there are guidelines available for how much you will need to retire, it's important to use all of the resources available to you and to consider your personal circumstances.
Pick your investment options
There are different investment options for your account-based pension. We have six ethical pension investment options for you to pick from to suit your needs. Each have different risk profiles for you to choose from depending on your financial objectives, risk tolerance and personal financial situation.
This chart represents the potential risk and return characteristics of our super and pension investment options based on historical data. It is not a forecast of actual risk or investment returns. The scale is indicative only.
Defensive: With a short-investment time-frame you seek to conserve capital and ensure stable income.
Neutral: With a medium-term investment time-frame you seek lower volatility, but with some growth and income.
Growth: With a longer-term investment time-frame you are able to accept higher risk, seek growth and are not reliant on income produced by your investments.
Set your payment drawdown strategy
You can nominate which investment options to draw your pension payments from. If no selection is made, pension payments will be drawn proportionately from the investment options you are invested in. You can choose between:
- Proportionately from investments (pro-rata): This option means pension payments will be drawn proportionately from the investment options you are invested in.
- Percentage split: Nominate the percentage split between your investments.
Choose a beneficiary
A beneficiary is someone who can receive your pension if you pass away. Nominating beneficiaries is an important decision to make. You can choose one of the three different types of nominations available:
- Reversionary beneficiary: You can nominate one person to be a reversionary beneficiary. This can include your spouse, defacto partner, children, a person with whom you have an interdependency relationship, or a person who is financially dependent upon you. A reversionary beneficiary is someone to whom the pension will continue to be paid via regular payments (pension) following your death.
- Preferred beneficiaries: You can nominate who you would prefer to receive your pension account balance in the event of your death. You can only nominate a person that meets the definition of a ‘dependent’ under superannuation law. This includes your spouse, defacto partner, children, a person with whom you have an interdependency relationship, or a person who is financially dependent upon you. You can also nominate your legal personal representative(s). These nominations are non-binding and will only be used by Australian Ethical Super as a guide.
- Binding death benefit: If you would like your nominated beneficiaries to be binding, complete the Binding Death Benefit Nomination Form. A binding nomination comes into effect from the date we accept it, and expires three years from the date you sign the form.
We recommend you seek legal and tax advice if you are not sure what is appropriate in your circumstances.
Complete your application
Double-check everything you've filled in and ensure you've included all the required documents and signatures. Once you're satisfied, send the application and keep copies for your records. We’ll send a confirmation once your application is accepted.
Start receiving pension payments
Once your application gets the green light, your account-based pension will be up and running. You'll start getting regular payouts, and you can keep tabs on your investment's performance through statements from your online account.
Starting an account-based pension with your super fund can be a smart move to secure your retirement income. By following these steps, you can ensure a smooth transition into this new phase of your financial life.
Remember, it's always a good idea to seek expert financial advice and take your time to weigh your options to make the best choices for your retirement.
