Things to decide on before you set up a retirement income stream
August 19, 2024
Soon to retire and wanting to turn your super into an income stream*? Here’s a snapshot of what you may need to consider.
Opening Balance
You can open an account-based retirement income stream once you must have reached your ‘preservation age’ (between 55 and 60, depending on when you were born). To set up a TelstraSuper Retireaccess income stream you’ll need to transfer a minimum amount of $10,000 from your super account to the ‘pension phase’**.
When you start a retirement income stream for the first time, the maximum amount you can transfer across is determined by the Government and known as the general transfer balance cap#. This amount is indexed in line with inflation and is currently $1.9 million.
Whatever amount you decide to open with, a minimum drawdown rate will apply each year. This rate is a percentage of your balance as at 1 July each year and it varies by age. It’s also set by the Government.
Tax savings and Retirement Bonus
Transferring super into an income stream can provide tax savings as the income and earnings from income streams are generally tax-free. At TelstraSuper there are also other potential benefits, such as the retirement bonus##.
Investments
Once you’ve settled on how much you’re putting in, you need to choose where to invest it.
You can choose from diversified or single asset investment options. There’s also TelstraSuper’s Lifestyle Investment options which are purpose built for retirement and are designed to help produce a higher level of income and manage retirement risks. Lifestyle Investment options include an optional cash allocation feature that lets members automatically allocate some of their investment to their cash investment option each month.
If you’re not sure where to invest, you can use the Investment Choice Selector tool or call us for help over the phone at no extra cost – it’s part of your membership. ***
You’ll also need to decide if you want your portfolio to automatically re-weight and if so, how often. This means that we’ll adjust your investments so your investment choice split remains as close as possible.
Payments
You’ll need to let us know the amount and frequency of payments you’d like (don’t forget we are required by law to make at least the annual minimum payment each year). You’ll also need to tell us where to pay your income, and when you want it to start.
Insurance
Do you still need life insurance through your super? You may already have Death Cover you wish to retain from an existing super account or you may choose this as an opportunity to apply for default cover^. Alternatively, you may choose to opt-out of default Death cover. Things to consider may include surviving spouses, mortgages, or other ongoing costs and how they would be met in the event of your passing.
Beneficiaries
Nominating a beneficiary helps us to determine who should receive your death benefit in the event of your death. There are several types of nominations you can make, but you can only choose to nominate a Reversionary Beneficiary when you first open an income stream.
A Reversionary Beneficiary is someone you choose to receive your income stream payments after your death. The person must be an eligible dependant at the time of your death and you can only nominate one person. This can’t be changed or revoked.
Advice
Retirement can be complex. If you need help weighing up your retirement options, you can get general and simple advice from TelstraSuper Financial Planning over the phone at no additional cost – it’s part of your membership.*** You can then opt to get more comprehensive advice if you wish for a competitive fee.
Get started
Think you’re ready to get started? It’s simple to open an income stream with TelstraSuper. Existing members can log into their online account and fill out our digital form. New members can join TelstraSuper online.
*excludes Transition To Retirement income streams**excludes transferring super into Direct Access investment. You need to transfer a minimum of $50,000 if you intend to register for the Direct Access investment option
*** Simple personal advice is advice about contributions, investment options and insurance cover within your TelstraSuper account.
#Transfer balance cap applies to all pension accounts (except TTR accounts) held by the member, including if these are held outside TelstraSuper.
##For more information, including the Retirement Bonus eligibility requirements, visit telstrasuper.com.au/bonus
^ Insurance cover available if under age 75 (as at last 1 July). Your insurance cover will differ depending on your individual circumstances, for example whether you are an existing or new Telstra Super member. Terms and other eligibility conditions apply. For more information refer to the RetireAcces PDS and RetireAccess Target Market Determination which are available at www.telstrasuper.com.au and consider if this is right for you.