As Brett says, money in pension phase can be commuted back to accumulation, so the decision to start a pension is not irreversible.
This AFR article explains the concept, in particular about how to manage the process as a TBC event recorded with the ATO so you retain the right to put that amount back into pension mode again in the future.
Hi Bec, pensions can be rolled back into accumulation in many instances, it's termed "commuting the pension" and it can be partial or a complete rollback
Sorry - I oversimplified it and that was not good -- here's an update I made to the post today: ❌ No going back – Once you move money into pension phase, you generally can’t move it back into accumulation unless you commute the pension and transfer the balance back to accumulation. However, if you want to add more money to super later, you’ll need to make new contributions (usually by opening a new accumulation account in parrallel with your retirement phase account) and stay within the contribution caps.
You also need to be aware of the transfer balance cap (TBC), which is currently $1.9 million (2024-25) and set to move to $2.0M at 1 July 2025. Once you have used part of your cap, any future amounts moved into pension phase will count against your TBC again. Even if you commute (move money back into accumulation), your used TBC amount does not reset—so you can’t start a new pension with more than your remaining cap.
Of course, you can withdraw funds and recontribute to super using any remaining caps.
Account based pensions are good, but if you're younger than your partner and he is eligible for an age pension and your super is in accumulation mode, they won't count it in your partner's age pension asset or income test. If its in account based pension mode, your income is included and could reduce his age pension.
Hi Bec, I retired at the beginning of 2024 and moved my Super into pension mode, and then in mid 2024 was offered an overseas posting, took it, and was able to move my Super back into accumulation mode. I'm still contributing until the posy ends at end 2026 when I'll be 68.
Indeed, I oversimplified the post -- and I have since updated it sorry. For someone who moves it back, if/when you decide to move it back to pension phase you will again use your transfer balance cap a second time. People only have to worry if you have a large balance to commute that would take you near the cap. The other reality for most is that holding an accumulation and a pension account open sees you holding two sets of fees. All choices...
This would see you wanting to learn about withdrawal and recontribution. That's a whole separate topic -- and one your super fund and an adviser will be excellent at helping you with.
All of this is very interesting for me now & I've been learning as much as I can for the last year or , appreciating the Epic Retirement book and other sources. Nearly 61 , I've past the preservation age & fortunately have a very healthy super balance . Still fit & well with lots of interests outside work , I'm keen to give it away next year. ASAP. One thing I have learned is there's a great deal to consider to plan & do it well. Sort of an exciting time despite the " finality " of some aspects.
Could be a toxin or could be polyradicloneuritis - we wont know until we know how quickly he recovers. so we're hanging in there week by week to see if he improves -- he's working really hard to improve so we aren't giving up hope
If the best is pension account for tax free earnings why would anyone leave it in super after retiring?
Still confused why my financial advisor recommended l leave 90% in super even though l have turned 65, is it because they have to charge less in an pension account?
It's all still in super - the choice is between staying in accumulation and moving to pension phase. Did you ask your FA to explain that recommendation? He is best placed to answer that question. However - do you have a partner who is 67 or over and receiving an age pension? Super belonging to a younger partner isn't counted in the assets test while it remains in accumulation phase, so that could be a reason if it applies to your situation.
As mentioned in my first comment, it's all super, when in accumulation or pension phase. Hope your FA can explain his strategy satisfactorily at your next meeting. It's your money, so ask questions until you understand.
As Brett says, money in pension phase can be commuted back to accumulation, so the decision to start a pension is not irreversible.
This AFR article explains the concept, in particular about how to manage the process as a TBC event recorded with the ATO so you retain the right to put that amount back into pension mode again in the future.
https://www.afr.com/wealth/personal-finance/can-i-move-money-in-my-pension-back-to-accumulation-phase-at-75-20210622-p5837l?fbclid=IwAR0YzjREVmM26UDbL801UoFCKEWTEZLQMX-na0OZnUUSkCka-cwoSwL3wUM
This is a useful guide to the TBC, prepared for financial advisors and current as of 1 July. 2023. https://www.mlc.com.au/content/dam/mlcsecure/adviser/technical/pdf/pension-transfer-balance-cap-guide.pdf
Here is an ATO webpage which talks about your TBC account and transfers in and out of pension phase.
https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/retirement-withdrawal-lump-sum-or-income-stream/transfer-balance-account?fbclid=IwAR3cm6wXRIHSyIriKGLH5mD2BFlBhzmgYQpyOBSrNtDb95QCB77L1IpWl30#Debitstoyouraccount
Excellent links! Thanks Liza
Hi Bec, pensions can be rolled back into accumulation in many instances, it's termed "commuting the pension" and it can be partial or a complete rollback
Sorry - I oversimplified it and that was not good -- here's an update I made to the post today: ❌ No going back – Once you move money into pension phase, you generally can’t move it back into accumulation unless you commute the pension and transfer the balance back to accumulation. However, if you want to add more money to super later, you’ll need to make new contributions (usually by opening a new accumulation account in parrallel with your retirement phase account) and stay within the contribution caps.
You also need to be aware of the transfer balance cap (TBC), which is currently $1.9 million (2024-25) and set to move to $2.0M at 1 July 2025. Once you have used part of your cap, any future amounts moved into pension phase will count against your TBC again. Even if you commute (move money back into accumulation), your used TBC amount does not reset—so you can’t start a new pension with more than your remaining cap.
Of course, you can withdraw funds and recontribute to super using any remaining caps.
Hi again Bec, almost correct, a commutation can be partial balance or the full balance.
Not an easy process either way -- and has impacts on use of your transfer balance cap if you want it back in pension phase one day.
Account based pensions are good, but if you're younger than your partner and he is eligible for an age pension and your super is in accumulation mode, they won't count it in your partner's age pension asset or income test. If its in account based pension mode, your income is included and could reduce his age pension.
Hi Bec, I retired at the beginning of 2024 and moved my Super into pension mode, and then in mid 2024 was offered an overseas posting, took it, and was able to move my Super back into accumulation mode. I'm still contributing until the posy ends at end 2026 when I'll be 68.
Indeed, I oversimplified the post -- and I have since updated it sorry. For someone who moves it back, if/when you decide to move it back to pension phase you will again use your transfer balance cap a second time. People only have to worry if you have a large balance to commute that would take you near the cap. The other reality for most is that holding an accumulation and a pension account open sees you holding two sets of fees. All choices...
Hi Bec. Thanks for the great information
One question. Apparently when our surer is left to children, there is a 17% taxable part
Any suggestions on how to avoid the tax
Yvonne
This would see you wanting to learn about withdrawal and recontribution. That's a whole separate topic -- and one your super fund and an adviser will be excellent at helping you with.
All of this is very interesting for me now & I've been learning as much as I can for the last year or , appreciating the Epic Retirement book and other sources. Nearly 61 , I've past the preservation age & fortunately have a very healthy super balance . Still fit & well with lots of interests outside work , I'm keen to give it away next year. ASAP. One thing I have learned is there's a great deal to consider to plan & do it well. Sort of an exciting time despite the " finality " of some aspects.
Hi Bec. So sorry to hear about your furry friend. What is the diagnosis? Hoping he/she recovers completely🙏
Could be a toxin or could be polyradicloneuritis - we wont know until we know how quickly he recovers. so we're hanging in there week by week to see if he improves -- he's working really hard to improve so we aren't giving up hope
Thank you so much for the explanation of super and Centrelink!
If the best is pension account for tax free earnings why would anyone leave it in super after retiring?
Still confused why my financial advisor recommended l leave 90% in super even though l have turned 65, is it because they have to charge less in an pension account?
He made 13% in PA and 9% in super account.
I wish l could understand why.
Marietta
It's all still in super - the choice is between staying in accumulation and moving to pension phase. Did you ask your FA to explain that recommendation? He is best placed to answer that question. However - do you have a partner who is 67 or over and receiving an age pension? Super belonging to a younger partner isn't counted in the assets test while it remains in accumulation phase, so that could be a reason if it applies to your situation.
Thanks Liza
Single and in transition to retirement, taking out $30K and putting it back into super annually.
His answer was that it’s best to keep it in super even though it’s taxed, so a little confused but will be my main question next meeting.
As mentioned in my first comment, it's all super, when in accumulation or pension phase. Hope your FA can explain his strategy satisfactorily at your next meeting. It's your money, so ask questions until you understand.