LG Super

Pre-retirement Pension accounts

If you have reached your preservation age and you're still working, you can open a Pre-retirement Pension account and receive income from your super. Use it to top up your income while working less. Or, combine a pension with salary sacrifice to boost your super the tax effective way.

You should consider the Pension accounts PDS in deciding whether to acquire, or continue to hold, this product.

You'll find the key features of this type of account in the table below.

Feature
Income payment amount Calculated based on your account balance and minimum pension factors, each year. Maximum of 10% of account balance per year.
Income payment frequency Monthly, quarterly, half-yearly or annually.
Minimum investment amount $50,000
Investment choices Select one option from a range of investment choices.

If you do not make a choice, your money will be invested in default investment option as outlined in the PDS.

You can switch investment options up to four times each financial year.
Lump sum withdrawals Not allowed.
Defined Benefits Fund members Members with the Defined Benefits Fund are unable to transfer to a Pre-retirement Pension effective 1 April 2009.

Salary sacrifice and pre-retirement pensions

Salary sacrificing your pay to super, and taking income from a Pre-retirement Pension account instead, could make a big difference to your retirement benefit. That's because income from your super is tax free once you're 60, and for most people, more tax effective than regular income between the ages of 55 and 59.

The example below sets out how this strategy can work. Contact us to see an example tailored to your situation.

Bill, age 60, earns $50,000 p.a. and is salary sacrificing his 6% standard member contribution. If he increases his salary sacrifice contributions from $3000 to $15,000 p.a. and replaces the drop in take home pay with $8620 p.a. from a pre-retirement pension, his overall super balance would be $2374 better off after a year - without any less in his pocket each fortnight.

BillHigher salary sacrifice with pension income (p.a.)Salary sacrifice and employment income (p.a.)
Salary

$50,000

$50,000

Less salary sacrifice to super

$3000

$15,000

Less tax

$8655

$4875

Less after-tax voluntary contribution

$0

$397

Plus super co-contribution

$0

$397

Plus pre-retirement pension income

$0

$8620

Net income

$38,345

$38,345

Amount added to super after contributions tax

$2550

$13,544

Amount taken from super

$0

$8620

Overall benefit to super

$2550

$4924


  • Pension account & Pre-retirement Pension account (PDF 209kb).