Moving from accumulation to pension phase

Understanding the rules can help you make confident decisions about your retirement income.

In superannuation terms, reaching the age of 60 is a key milestone for being able to gain either partial or full access to your accumulated retirement savings.

It can be an opportunity to start drawing out some of your super as a regular income stream or a lump sum, even if you’re still working. Alternatively, if you’ve stopped working completely, you can now gain full access to your savings and significant tax benefits.

The most important thing is to the understand the regulations that determine what you can and can’t do, and that’s largely based on your current work status.

If you’ve reached preservation age, currently 60, there are several applicable scenarios covering how you could access your super.

Scenario 1: I’m still working

If you’re still working, with no intention to retire at this stage, you could choose to start accessing some of your super through a Transition to Retirement (TTR) account.

Opening a TTR account enables you to rollover savings from your normal super account and withdraw regular income or a lump sum amount, while you continue to work. The income you withdraw is tax-free, however the investment earnings inside your TTR account are taxed at a minimum rate of 15%*.

Under legislated drawdown requirements you are required to withdraw a minimum of 4% of your TTR account balance each financial year, up to a maximum of 10%.

How you use your TTR income is up to you. You can choose to treat it as additional income to supplement your salary, or you use your TTR income to help you reduce your work hours. At the same time your regular Super Guarantee employer contributions and any other personal contributions you make need to be made into your normal super accumulation account.

Keep in mind that your TTR pension will automatically be converted to a standard, retirement pension with unrestricted access to your super once you turn 65, even if you are still working.

Scenario 2: I’ve ceased an employment arrangement

If you’ve turned 60 and have ceased an employment arrangement, you may be eligible to start an account-based pension (ABP) and access your super, even if you are still working somewhere else.

Many people meet this condition of release simply by finishing a job, ending a contract or changing employers after their 60th birthday.

The key advantage of this is that all pension payments and investment earnings within an ABP are tax-free*. Also, another major advantage is that the profits from any investments sold within a pension account are free of capital gains tax.

Once you reach 60 and leave an employment arrangement, your super becomes fully accessible, and you can rollover funds into your ABP from your existing accumulation account. You can also maintain your existing super accumulation account to receive and make regular super contributions until another condition of release is met.

Another option after turning 60 is to start an annuity using money from your super, which can provide you with a guaranteed regular income stream either for the rest of your life or for a fixed period. This involves you providing a lump sum amount from your super to a life company or an annuity provider.

Scenario 3: What happens when I turn 65?

Reaching 65 is an automatic condition of release for your super under superannuation law, regardless of your work status.

This means, even if you’re still working, you have full access to withdraw some or all of your retirement savings and open an ABP to receive regular, tax-free income payments.

Scenario 4: I’ve now retired completely

In the context of meeting a condition of release (after turning 60), this scenario is essentially the same as scenarios 2 and 3. All three scenarios enable the opening of an ABP.

But keep in mind for all these scenarios that there is a limit on the maximum amount that can be transferred from your super accumulation account into a tax-free ABP.

This is known as the transfer balance cap, which is currently set at $2.1 million (as of 1 July 2026). The Australian Taxation Office keeps track of how much you transfer and, if you go over the cap, it will levy an excess transfer balance tax.

Any amount above the cap can be retained in a super accumulation account, however this will be subject to the minimum 15% earnings tax (see footnote below). You always have the option of withdrawing any excess super as a lump sum amount.

The process of moving from accumulation to pension phase is relatively straightforward. You need to complete a pension application form, confirm that you’ve met a condition of release, and choose how much income you want to receive each year.

Eligible legalsuper members can easily apply to open either a TTR account or an ABP account online. To learn more, click here.

What are the minimum ABP withdrawal amounts?

Once you’ve rolled over some or all of your super to an ABP you are required by law to withdraw a minimum pension amount each financial year, which is a percentage of your account balance based on your age.

For new pensions, the minimum withdrawal amount is calculated on a pro-rata basis from when a pension commences to the end of the financial year.

For those aged between 60 and 65 the minimum drawdown rate is 4% of your account balance. The minimum drawdown rates rise progressively as you age, reaching a peak of 14% from the age of 95.

Minimum pension drawdown rates

Age at 1 July	Minimum % of Account Balance
Under 65	4%
65 - 74	5%
75 - 79	6%
80 - 84	7%
85 - 89	9%
90 - 94	11%
95+	14%

^{Source: Schedule 7, clause 5 of the Superannuation Industry (Supervision) Regulations 1994}

Any amounts left over in your pension account when you die will go to your nominated beneficiaries or estate. Depending on the type of beneficiary (reversionary, spouse, dependant or non-dependant) the amounts can be paid as an ongoing pension stream until the account runs out or as a lump sum.

Consider professional advice

Managing the combination of a super accumulation account, an ABP, a TTR pension, an annuity income stream, an Age Pension entitlement (if eligible), potential investment earnings outside of super, and irregular lump sum payments, can be highly complex.

Using the services of a licensed financial adviser is a worthwhile consideration as you weigh up all of your retirement options.

Need more help? Contact our Client Services Team

As a member, our Client Service Managers can provide you with general advice and information.

Book an appointment here.

Note: *Earnings within a super accumulation account are taxed at 15%. An additional 15% tax is payable on the proportion of earnings on super balances above $3 million. Furthermore, an additional 10% tax is payable on the proportion of earnings on balances above $10 million.