What Is an Account-Based Pension?

An account-based pension is one of the most common ways Australians turn their superannuation savings into income after retirement.

Instead of withdrawing your entire super balance at once, you transfer some or all of your eligible super into a pension account and draw regular payments.

How does an account-based pension work?

You generally choose:

• how much eligible super to transfer

• how your pension money is invested

• how frequently you receive payments

• how much you withdraw, subject to minimum pension requirements.

You can generally make additional lump-sum withdrawals when required. However, unlike certain lifetime income products, an account-based pension does not guarantee income for life. Your payments ultimately depend on the money remaining in your account.

Are account-based pensions tax-free?

For most people aged 60 or over, payments from an income stream from a taxed super fund are tax-free.

Investment earnings within a qualifying retirement-phase pension can also receive favourable tax treatment, making the structure an important part of retirement planning.

How much can you transfer?

There is a limit on how much super can be transferred into retirement phase.

The general transfer balance cap increased to $2 million on 1 July 2025. Your personal transfer balance cap can differ if you previously commenced a retirement-phase income stream.

Making your pension last

The important question isn't simply how much you can withdraw. It's how much you can sustainably withdraw while maintaining the lifestyle you want.

A retirement income plan can help determine an appropriate pension, investment strategy and withdrawal rate for your circumstances.

General information only. Super and pension rules can change and personal transfer balance caps may differ.