Once you’re ready to retire and can access your super, you have some options
There are several ways you can use your super in retirement. You can choose one or combine multiple retirement income options to support your needs. Here’s some things you need to know to help weigh up which option is right for you.
Option 1: Open an allocated pension account
An allocated pension allows you to receive regular income when you retire.
Why an allocated pension?
If you decide to fully retire, an allocated pension can replace your take-home pay and support your desired lifestyle. Discover more of the benefits of starting a Mercer SmartRetirement Income allocated pension.
When can I access it?
You can generally start an allocated pension account when:
- you turn 60 and have left the workforce for good, or
- you turn 65
How do I start an allocated pension account?
You can transfer some or all of your super to a Mercer SmartRetirement Income allocated pension account by completing our digital application form.
Option 2: Start a Transition to Retirement (TTR) pension
A TTR pension allows you to access up to 10% of your super each year while you continue working.
Why transition to retirement?
A TTR strategy is useful if you’re not quite ready to retire but would like to work a little less and use your super to top up your take-home pay. Though helpful, a TTR can be complex and it’s not for everyone. We recommend you get financial advice before starting a TTR.
When can I access it?
You can start a TTR pension when you turn 60. When you turn 65, the TTR is automatically converted to an allocated pension, or earlier if you declare retirement.
How do I start a TTR pension account?
You can transfer some or all of your super to a Mercer SmartRetirement Income TTR account by completing our digital application form.
Comparing TTR and allocated pension accounts
There are a few important differences between Transition to Retirement (TTR) and allocated pension accounts. Generally, TTR pensions are designed for those who are still working and haven’t yet retired, whereas allocated pensions are for those who’ve retired from work permanently.
TTR and allocated pension accounts share the same basic rules. For example, you can’t add more money to either allocated pension or TTR accounts, so if you’re still working and contributing to your retirement savings, you’ll need to keep a super account open to receive those contributions.
| Transition to Retirement (TTR) account | Allocated Pension account | |
|---|---|---|
| Age requirement | Age 60-641 | Age 60 and have left the workforce for good, or age 65 |
| Pays a regular income | Yes | Yes |
| Can make lump sum commutations | No2 | Yes, up to 100% of account balance |
| Minimum annual payment amount | 4% per financial year | Yes, depends on your age (4%-14% per financial year) |
| Tax-free income payments | Yes | Yes |
| Tax applied to investment returns | 15% | 0% |
| Investment choice | Yes | Yes |
| Additional contributions | No | No |
| Does the transfer balance cap apply? | No | Yes |
1 When you reach age 65 your balance will be automatically transferred to an allocated pension account.
2 You can take a single income payment of up to 10% of your account balance per financial year.
Option 3: Take out a lump sum
Once you’re eligible to access your super you can withdraw some or all your account balance as a lump sum, but you don't have to take an all or nothing approach. Taking some of your super as a lump sum could give you access to money for one-off expenses, and moving your remaining balance to an allocated pension account could provide a regular income. You can always withdraw further lump sum amounts from your pension account.
Why take a lump sum?
Taking some of your super as a lump sum could give you access to money for higher cost expenses, like paying off your mortgage. Mercer Financial Adviser Ron Smith says lump sum withdrawals are an important consideration in retirement planning. "There are usually lumpy costs you need to plan for; things like updating your car every so often, holiday plans, home renovations and even health costs,” Ron says. “Some of those costs are going to come up regularly, not just as a once off when you retire."
When can I access it?
You can withdraw a lump sum from your super when you turn 60 (and retire) or when you turn 65 (even if you’re still working).
How do I withdraw a lump sum?
You can withdraw some or all your account balance as a lump sum – from your super account or pension account – by completing our withdrawal request form.
If you withdraw all your super, please be aware that we’ll close your account after processing your lump sum.
Option 4: Apply for the government Age Pension
The Age Pension is income support paid by the government to eligible Australian retirees.
Why draw on the Age Pension?
Retiring with less super than you need can be challenging – but the Age Pension can help reduce the financial gap so you can retire with confidence. Combined with your retirement savings, the Age Pension can help provide a reliable and consistent source of income.
When can I access it?
To receive the Age Pension, you’ll need to be 67 years or older. You’ll also need to meet other criteria such as residency requirements, the income test and an assets test.
Additional resources
Download our Age Pension fact sheets to decide if you’re eligible and learn how to apply.
Did you know?
You can submit a claim to receive the Age Pension up to 13 weeks before you turn 67.
Ready to navigate your retirement with confidence?
Chart a course toward your ideal retirement with Retirement Navigator. Access over the phone financial advice from a financial adviser on a range of retirement topics related to your Mercer Super account – all at no extra cost.
Disclaimer: This content has been prepared on behalf of Mercer Superannuation (Australia) Limited ABN 79 004 717 533, Australian Financial Services Licence #235906, the trustee of the Mercer Super Trust (‘Mercer Super’) ABN 19 905 422 981. Any advice is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on any advice, please consider the Product Disclosure Statement (including incorporated documents) and Financial Services Guide available at mercersuper.com.au. The product Target Market Determination can be found at mercersuper.com.au/tmd. The material contained in this document is based on information received in good faith from sources within the market and on our understanding of legislation which we believe to be accurate.
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* Any information in this material regarding legal, accounting or tax outcomes does not constitute legal advice or an accounting or tax opinion and prior to relying and acting on this information it is important that you seek independent advice from a qualified lawyer or accountant regarding this information. Past performance is not a reliable indicator of future performance. 'MERCER' is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917.
Past performance is not a reliable indicator of future performance. 'MERCER' is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917.