14.1 Income streams

Super funds can pay benefits to a member as a super income stream if the member has met one of the conditions of release. A super income stream (also known as a super pension or annuity) is a series of periodic payments to a member.

These standards ensure that super income streams are structured to provide stable and regulated retirement income for members, addressing both minimum payment requirements and other regulatory provisions to safeguard retirement savings.

1 July 2024

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

14.4 Account-based minimum drawdowns

• When a member starts a superannuation pension or annuity, a minimum amount is required to be paid out to the member each year.
• There is no maximum amount other than the balance of the account, (unless it is a transition to retirement income stream (TRIS)).

*Temporary reduction in minimum drawdowns from 2019/20 to 2022/23. Minimum drawdown requirements for account-based pensions and annuities, allocated pensions and annuities and market-linked pensions and annuities were reduced by 50% for the 2019/20, 2020/21, 2021/22 and 2022/23 income years. This measure was designed to ease pressure on retirees to sell investment assets in a volatile economic climate

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

14.5 Taxation of super income stream

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

14.7 Retirement Income Covenant

What is the Retirement Income Covenant (RIC)?

The RIC is a legal obligation that requires Australian superannuation funds to have a strategy to assist members who are in, or approaching retirement, with their retirement income needs.

Why was it needed?

The Financial System Inquiry (2013-14) found that the decisions people faced at retirement were complex and that many did not seek any professional advice. At the same time the Inquiry noted that the market for retirement income products was underdeveloped.

While MySuper product options offer relatively simple default products for the accumulation phase of superannuation, when it comes to retirement, people are often left to manage multiple financial objectives and risks themselves.

The challenge facing retirees is to know how to maximise income from their savings while meeting planned and unplanned expenses-all while managing longevity risk. With many lacking the confidence to draw ongoing sustainable amounts to support their preferred retirement lifestyle, they instead draw only small amounts from their superannuation and so end up with a large amount of their savings unspent.

What is the outcome of the RIC?

The RIC is a policy aimed at getting more superannuation funds to find ways to help their members with their retirement income choices.

Superannuation funds must develop a retirement income strategy that outlines how they plan to assist their members who are retired or are approaching retirement to achieve and balance the following three objectives:

• maximise their retirement income
• manage risks to the sustainability and stability of their retirement
• have some flexible access to savings during retirement

The strategy(ies) developed will likely reflect the broad membership of each particular superannuation fund, but they may also divide their membership into groups of members (or cohorts) and make different provisions for each group, rather than individual members. As such, strategies will consider factors such as average member superannuation balances, if members are partnered or not and age at retirement.

With this guidance from superannuation funds it is hoped that retirees will gain the confidence to spend more of their superannuation and other savings, in the earlier years of their retirement while enjoying better health.

14.8 Life expectancy table

Table of life expectancy - January 2025

The Australian Life Tables 2020-22 was released in December 2024 by the Australian Government Actuary. It is released every 5 years, based on 3 years' of information centred on each Census year.