Running a pension through your self-managed superannuation fund can be a very tax effective way to build for and fund your retirement.  Earnings on assets in your super fund that are used to fund a pension are tax free (i.e. effectively 0% tax rate). There are however, a few things you need to bear in mind.

There is a minimum pension payment that must be made prior to the end of the financial year, this minimum pension is based on your age at the beginning of the year and the balance of your account. The following table shows the current minimum pension requirements.

Age

Minimum Pension

55-64

4%

65-74

5%

75-79

6%

80-84

7%

85-89

9%

90-94

11%

95+

14%

 

For anyone under 65, who has not retired, there is a maximum pension of 10% that can be drawn in each financial year.

Pension payments must be made in cash. Once the payment is made, the money can be used at your discretion and in certain circumstances (e.g. under 65 years old) can be re-contributed to your super fund.