After years of working hard you might be thinking about finally leaving work and fulfilling your retirement goals. But we understand that also raises the question – what do you do with your retirement savings? A lot of people think that you need to take all of your super out at once, as soon as you turn 65 and exit your super fund. But this is simply not true.
In short, the answer is no, you don’t have to leave Vision Super when you retire.
Once you retire, or look at working less hours, you have a few options to choose from. You can leave your super invested where it is, withdraw the lot, or open a pension account that will pay you directly into a bank account of your choice (and if you have retired, there is the added bonus that an allocated pension earns you interest tax free). How you decide to use your retirement savings comes down to your personal preference.
Opening a pension account
Once you retire, or start transitioning to retirement, you can open a Vision Super pension account. It will be like receiving an income from your employer if you were working (or it’s simply supplementing your current pay if you decide to work part time), and you can decide on how often you want to pay yourself. Your funds will stay invested within the superannuation system in your chosen option and with this could come some tax benefits however returns would be subject to investment performance. Deciding whether or not to open a pension account will depend on your personal situation, but to be eligible you must meet government requirements such as preservation rules. For many, however, being part of a super fund is a life-long partnership. It has all just become a little easier as well. Vision Super members can now transfer their super directly to a pension with the fund’s secure member portal. When you are ready to make the move, speak to one of our team or start a pension online.
Read more about our products here: https://www.visionsuper.com.au/retirement/retirement-products
If you have a Defined Benefit or Deferred Benefit account, you may be eligible to start a lifetime pension. If your account was created before May 1988 you could use up to 50% of your funds to start a Lifetime Pension account that will pay you out for the remainder of your retirement. And in the event of your death, a portion of it can be paid out to your spouse.
If you have a DB account but don’t know if you’re eligible, please contact us and we’ll let you know. Understanding how this pension works is a little more complex than your average account-based pension and we can organise a meeting with a qualified financial planner to help you meet your retirement goals.
Leave it or take it
Leaving your super in your accumulation account is okay if that suits your needs, however, you may be taxed more on your investment returns than you would be if you were in a pension account. If you leave it in an accumulation account, you won’t be required to take out a minimum amount each financial year but you won’t have the functionality to set up regular payments. To receive a one-off payment, you will have to go through an application process which, end-to-end, can take more than 5 working days to complete.
We are in the process of developing this within our member portal but do not expect this to be available for a number of months.
Taking out the full amount as a lump sum might be the option if you want to pay off outstanding debts, such as a mortgage. But the thing to remember about lump sum withdrawals is that once you have taken the money out of your retirement savings, you may not be able to put it back in if you change your mind.
You do also have the option manage it yourself and roll it over to a self-managed super fund. For many, however, managing your super can be a lot of work when you don’t have experts who understand the industry readily on hand.
We can help
Retirement, and planning for retirement, is an important stage in anyone’s life. Make sure you take the time to consider your options and seek professional advice where necessary. Our financial advisors will look at and help you understand all aspects of your financial life, including where you are now, where you want to be, and a plan of how to get there.
Contact us on 1300 300 820 Monday to Friday 8:30am to 5pm to set up an appointment or email [email protected]
General Advice Warning
This article includes general information and does not contain any personal advice. The information was correct at the time of publication, but may have changed since. It does not take into account your personal objectives, financial situation or needs. You should consider whether it is appropriate for you and your personal circumstances before acting on it and, if necessary, you should seek professional financial advice. Before making a decision to invest in any Vision Super product, you should read the appropriate Vision Super Product Disclosure Statement (PDS).
Vision Super Pty Ltd ABN 50 082 924 561, AFSL 225054 RSE Licence L000239 is the Trustee of the Local Authorities Superannuation Fund ABN 24 496 637 884. Level 15, 360 Collins Street, Melbourne VIC 3000. PO Box 18041, Collin Street East VIC 8003.