Account-Based Pension Drawdown Rate Calculator Australia

How Account-Based Pension Drawdown Rules Work

An account-based pension (ABP) is the most common type of retirement income product in Australia. Once you meet a condition of release (typically retiring after age 60, or reaching age 65), you transfer your super balance into an ABP and begin drawing an income. The ATO sets minimum annual drawdown percentages that increase with age — you must draw at least this amount each financial year or the pension may lose its tax-exempt status. In 2026, the minimum drawdown rates for an ABP (permanent retirement phase) are: under 65: 4%, 65–74: 5%, 75–79: 6%, 80–84: 7%, 85–89: 9%, 90–94: 11%, 95+: 14%.

Transition to Retirement (TTR) pensions have a maximum drawdown of 10% and a minimum of 4% — both limits apply simultaneously. TTR pensions do NOT get the 0% earnings tax exemption until you permanently retire; only retirement phase pensions do.

Tax Treatment of Pension Income

Income from an account-based pension for members aged 60 and over is entirely tax-free when paid from a taxed super fund. There is no tax on the payments, no need to include them in your tax return, and the fund's investment earnings in the retirement phase are taxed at 0% (compared to 15% in accumulation). This makes the ABP extraordinarily tax-efficient compared to holding investments outside super. Members under 60 who have reached preservation age may draw a pension but the taxable component is subject to income tax with a 15% tax offset.

How Long Will Your Super Last?

The longevity of your super depends on three factors: the starting balance, the net investment return after fees and inflation, and the annual withdrawal amount. At the ASFA comfortable retirement standard of $51,278 per year (single, 2026 figures), a $500,000 balance with a 6% net return lasts approximately 22 years. Supplement the ABP with the Age Pension when your assets fall below the means test threshold, as the pension continues even as your super balance depletes. Running the account-based pension alongside a guaranteed annuity is a common strategy to insure against longevity risk.

Pension Phase vs Accumulation Phase Earnings

A key benefit of moving your super into an account-based pension is the 0% tax on investment earnings within the fund. In accumulation phase, earnings are taxed at 15% (7.5% for capital gains on assets held more than 12 months). Once you convert to retirement phase, all earnings supporting pension payments are tax-free. However, from 1 July 2025, the Transfer Balance Cap of $1.9 million limits how much can be held in the tax-free retirement phase. Earnings on super above the cap remain in accumulation phase and are taxed at 15%.