So you’re nearing retirement? You have worked hard your entire life to build up a good nest egg with your superannuation fund and it is now time to start living off your hard earned funds. One of the first things you should look into is setting up a pension fund.
An allocated pension fund is an account from which you stream your money saved in your super fund. However, if you also want to withdraw lump sums of money whenever you want, an allocated pension fund also allows you this flexibility. Your retirement money is then accessible from these pension funds, generating a regular income for you. Usually, you will be unable to access the money in your superannuation account until you reach preservation age and permanently retire (or turn 65). However, there are some cases in which your superannuation funds would be available to you while you are still working. This is sometimes referred to as a ‘pre-retirement pension’ or transition to retirement pension.
If you are over 60 both pension payments and lump sum withdrawals will be tax free. Some pension funds offer services to help you make the most of your pension fund money as well. Some pension funds give you access to financial advice and a personal consultant. These valuable tools can help you direct your retirement money towards the wisest investments.
On retirement there is a requirement that you withdraw a minimum amount of money from your pension fund each year. From 2007 there is no maximum limit on the income you can take from your pension fund, unless it is a pre retirement pension or term allocated pension. Many funds allow you the option to choose whether you would like to have payments from your pension account on a monthly, quarterly, half-yearly, or yearly basis.
Allocated pension funds can hold a wide variety of assets, from shares to managed investments. It of course can also hold cold hard cash if that’s how you choose to invest your earnings.
Every pension fund has different fees associated with it, so be sure to shop around in order review allocated pension funds on offer to ensure you choose one that is the most cost effective and economical for you.
With some time taken to research the options available to you with regards to your superannuation money and what you can do with it once your retire, you can find the perfect allocated pension fund and not have to worry about your money. Peace of mind and fun is what retirement is all about, so take care of the financial details as soon as you can and secure the right pension fund for you.