First State Super Logo


Retirement phase income streams

Payment rules

Section: 16.8

The payment standards for account-based income streams cover:

  • the minimum annual income payment that must be made
  • when the income stream may be commuted in whole or in part
  • the circumstances in which the income stream may be transferred to a reversionary beneficiary, and
  • the fact that the income stream cannot be used as security for borrowing.

Minimum annual income payments

In order to meet the payment standards, the terms of an account-based income stream must ensure that a minimum income payment is made at least annually.

A fund may choose to impose a maximum payment under its own rules or it may permit any level of income payment in excess of the minimum to be drawn at the choice of the member. The minimum income amount (rounded to the nearest $10) is calculated as shown below.

Minimum payment for account based income stream (including transition to retirement pensions)

Minimum annual income = account balance x percentage factor where:

Account balance = initial purchase price on commencement of the income stream and account balance at each 1 July thereafter.

Percentage factor = determined from the recipient's age on commencement of the income stream and at each 1 July thereafter.

Minimum income percentage factors

The minimum annual income payment for an account-based pension (including transition to retirement pensions) is calculated as a percentage of the account balance as follows:


Minimum percentage for 2018-19 year

Under 65












95 and more


Pro-rata rule and '1 June rule'

Where an income stream commences part way through the financial year, the minimum income payment is pro-rated based on the days remaining in the year.

Minimum payment = minimum annual payment x remaining number of days in financial year / number of days in financial year


John commences an account based pension on 1 January 2019 at age 67. Initial purchase price is $300,000.

John's minimum annual payment: 5% x $300,000 = $15,000

As John's account based pension commenced part way through the financial year he is subject to a pro-rated annual payment for the 2019-20 financial year.

Minimum payment = $15,000 x 181/365 = $7,438 (rounded to $7,440)

The '1 June rule' may also apply, which means that no payments are required to be made until the following financial year for an account-based pension or annuity commenced after 1 June in a financial year.

Last modified: Wednesday, July 24, 2019