You’ve been working hard to save into your super with a view to an enjoyable retirement; but as retirement approaches, or you approach the preservation age*, how do you actually transition to retirement? What are the options available to you?
Once you get access to your super, you have five main options:
To make the right decision, it’s important that you understand what your expectations for retirement mean for your finances. It can be tempting to cash it out as one lump sum to fund that once-in-a-lifetime trip or landscape your garden, but there are other options available to you. Remember the money you’ve saved over your working life may have to last you 20 years or longer. One option is to transfer all or some of your funds into a suitable pension account.
Opening a pension account means you can set yourself up to receive a flexible and potentially tax-effective income to fund your lifestyle whilst your money keeps earning.
Here are just a few reasons why it’s a good idea.
What type of pension you originally choose with the Alcoa Plan may depend on whether or not you have completely retired or if you are choosing to take some of your pension whilst continuing to work.
If you are continuing to work, the Alcoa Plan has established the Transition to Retirement Facility to enable eligible Plan members to receive from the Plan a non-commutable income stream in the form of an TTR Transition to Retirement Pension).
Alternatively, if you are retiring permanently from the workforce you may be eligible for the Allocated Pension account. An allocated pension allows you to nominate the amount of income you wish to receive, rather than having a set or indexed amount for the life of the pension. This is subject to Government-imposed minimum amounts. Payments are made until the balance in the account runs out. It is important to understand that there is no guarantee that your pension payments will continue for any particular period, or for the rest of your life. Pension payments will cease once your pension account is exhausted.
The length of time over which payments continue depends primarily on three factors:
To find out more about Alcoa's Retirement Options view our factsheet
Ultimately, it’s important to understand the options available to you for your individual situation and if you’re having trouble wading through the numerous options, speaking to a financial adviser is a great place to start. They can recommend strategies to get the best from your super in your retirement. Alcoa of Australia Retirement Plan members can speak to a Mercer Financial Adviser by calling 1800 355 028 to arrange an appointment.