Knowledge Base > Pensions > Benefits of an Account Based Pension

in Pensions

There are some significant benefits to commencing an Account Based Pension from both a taxation and accessibility point of view.  These include:

  • The tax rate of the fund reduces from 15% to 0% on all income generated from assets funding the account based pension. This includes investment earnings such as interest, dividend, rental, and distribution income, along with capital gains tax.
  • Where the tax rate is reduced to 0% and the fund is invested in listed shares that have attached franking credits, the fund will receive a cheque from the ATO each year equal to these amounts.
  • The income stream recipient can access any level of income from your Fund subject to an age based minimum amount (see below, unless under transition to retirement where a 10% maximum applies).
  • The income you can access is tax free if you are 60 and over.
  • You can take lump sum amounts whenever you want with no limitation tax free.
  • You have absolute flexibility as to when and how regular you wish to take income as long as the minimum pension amount is drawn prior to 30 June each year.
  • There does not need to be a change to your fund’s investments as a result of starting a pension