What is an allocated pension?

There are two main types of retirement income streams: allocated pensions and annuities. 

In a sense, an allocated pension account is like continuing with the super account you had all your working life, except you’re now allowed to withdraw money from it. It gives you regular income payments, taken (ie ‘allocated’) from your lump sum super savings. 

You can choose how much income to receive each year and can change your payment amounts (within certain limits) or take out a lump sum.* 

Your ongoing pension account balance will fluctuate for two reasons:

- Your savings continue to be invested according to your chosen investment option – so they may continue to grow, depending how your money is invested and how investment markets perform.

  • - Your ongoing pension payments or any lump sum withdrawals come directly from your account balance. 

For most people, the overall effect of this is that the money in their pension account will gradually decrease over their retirement years, until eventually it runs out completely (assuming they haven’t died first). 


*Between age 55 and 65 the minimum pension you normally have to take is 4% of your account balance. A maximum of 10% will apply if you have a transition to retirement pension. (2012-13 rates.)

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