We are not planning on taking a lump sum, but rolling our Super into a
pension product and using that to live on. The pension will never feature for us due to the asset test (our Super alone will take us over the $840Kish mark).
I hadn't heard of a pension product before.
I found the following useful information on them:
What are the benefits of a pension?
The main benefit of drawing an income from a super pension, rather than relying entirely on investments held outside super, is tax. Or rather, the absence of it.
Once you start drawing a super pension, both the earnings on investments in your pension account and the income you receive is tax free from age 60. If you are aged 55–59 the taxable portion of your pension income is taxed at your marginal rate less a 15% tax offset.
The other benefit of an account-based pension is flexibility. You decide how the money in your account is invested and whether to withdraw income monthly, quarterly, six-monthly or annually. You also have the option of withdrawing some or all of your money as a lump sum or rolling it back into an accumulation account.
Withdrawing your super as a pension rather than a lump sum also allows your savings to keep growing inside super in a favourable tax environment.
What are the drawbacks of a pension?
The main drawback of an account-based pension is that investment earnings are not guaranteed and can fluctuate with financial markets, depending on the investment options you choose. If the market falls steeply, the requirement to withdraw a minimum amount each year effectively crystallises your loss.
And that leads to the biggest drawback of all; that your money may run out before you do unless you have other sources of income to draw on.
As a result, the temptation is to choose a conservative investment option in retirement phase, but it’s important to have a meaningful allocation to growth assets so your savings keep growing even as you withdraw pension income.
www.superguide.com.au/in-retirement/types-superannuation-pensionsI am a few years away from retirement. I need to do some research into super pensions.