If you’re between preservation age and age 65 with at least $15,000 to invest, you can transition to retirement by reducing your working hours with your employer’s agreement (or continuing working full time if you wish) and supplementing your income with regular pension payments.
Benefits of a pre-retirement pension
- Flexible: receive a regular income.
- Tax benefits: tax-free payments if you’re over age 60. If you’re between preservation age and age 59 a 15% tax offset reduces the tax on your payments.
- Great value: pay only $180 pa for your pension, irrespective of your account balance, with no entry, exit, investment switch or withdrawal fees.
Example: Cut my hours, not my income
When Bill hits 57 he wants to slow down and spend more time enjoying his hobbies. He talks to his employer, who lets him work part-time.
However, Bill wants to maintain his full-time income. Using his super savings of $582,378, he purchases a Mine Wealth + Wellbeing Pre-retirement Pension – drawing down $26,500 in the first year, or around 4.5% of his account balance, in concessionally taxed fortnightly pension payments to supplement his reduced take-home pay.
At the same time, his employer continues contributing 9.5% of his income to his super for the next five years. After taxes, at the end of five years Bill has managed to save $49,895 in his super, while his pension savings amount to $579,779, giving him a total of $629,674 in retirement savings.
Assumptions:Salary of $100,000 pa. Salary and wages increase at 3% pa. Net rate of return after fees and tax is 7.46% Member has private health insurance. Amounts are in today’s dollars. Source: Mine + Wellbeing Financial Advice July 2014.
Apply for a pre-retirement pension
Download the Mine Wealth + Wellbeing Pension Product Disclosure Statement for more information and to apply for a pre-retirement pension