Transitioning to Retirement

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:

  1. Start a pension account and receive a regular income
  2. Semi-retire and access your super while you’re still working through a transition to retirement facility
  3. Leave it where it is for a little longer
  4. Withdraw it as cash, all at once, or in stages
  5. Invest in fixed annuities

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.

Let your money work for you

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.

  • Tax-free income payments once you reach age 60.
  • Tax-free income earnings once you’re retired.
  • Adjustable payment frequency, value and investment options.
  • Keeps your funds invested for your future.
  • Could help make funds last longer.

Benefits of having your pension with the Alcoa Plan

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:

  • The amount of the pension payments you receive each year.
  • The amount of investment earnings (after fees earned).
  • Any lump sum withdrawals you make.

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.

Alcoa of Australia Retirement Plan Pty Ltd ABN 80 065 702 454 RSE Licence L0002974, Australian Financial Services Licence #530684, as Trustee for Alcoa of Australia Retirement Plan ABN 80 928 800 255. This website is provided by Mercer Outsourcing (Australia) Pty Ltd (MOAPL) ABN 83 068 908 912, Australian Financial Services Licence # 411980. The Trustee pays a fee for the provision of this service, however this fee is not conditional on you using this service or acting on the information or advice provided through this service.