Most UniSuper pension payments are tax-free for everyone age 60 and over
But there are some cases where tax applies, depending on your age or the type of account you have. You might pay tax on:
- pension payments
- lump-sum withdrawals
- transfers from other super funds.
You may also pay extra tax if you transfer more than your personal transfer balance cap between ($1.6 million and $1.7 million) into a pension account.*
Flexi Pensions
When you receive Flexi Pension payments, your age and the type of Flexi Pension you have determines whether it's tax-free or you’ll need to pay any tax and, if so, how much you’ll need to pay.
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If you're aged 60 or over
Your UniSuper pension payments and any lump-sum withdrawals are tax-free.
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If you're aged under 60
Your pension payments and withdrawals include a taxable component. The amount of tax you pay on your taxable component depends on your age.
Regular income payments
Under your preservation age?
You’ll pay tax on your pension payments at your marginal tax rate (including Medicare levy).Between your preservation age and 60?
You’ll pay tax on your pension payments at your marginal tax rate, including Medicare levy, less a 15% tax offset.There are different rules for Beneficiary Income Stream Flexi Pensions, so check the Flexi Pension Product Disclosure Statement (PDF, 2.1 MB) if you have this type of account.
Lump-sum withdrawals
Under your preservation age?
You’ll pay tax on your withdrawal at a rate of 22%, including the Medicare levy.Between your preservation age and 60?
The first $225,000 of your withdrawal is tax-free and the rest is taxed at 17% (including the Medicare levy), or your marginal tax rate, whichever is lower. If we don’t have your Tax File Number, you may pay more tax. -
Tax on investment earnings
- Generally, no tax applies to investment earnings for Flexi Pension accounts.
- 15% tax applies to investment earnings for transition to retirement Flexi Pensions.
Remember, you’ll also pay tax on super contributions and investment earnings from your super (if you have a super account).
Read more in the Flexi Pension Product Disclosure Statement (PDF, 2.1 MB).
Defined Benefit Indexed Pension and Commercial Rate Indexed Pensions
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If you’re aged 60 or over
Generally, your first $106,250 of income each year is tax-free (this is known as the Defined Benefit Income Cap). This cap includes all lifetime and defined benefit pensions you have, not just those you have with UniSuper.
If you go over this cap, 50% of the amount over $106,250 is included in your assessable income and you may pay income tax on it.
Example of the Defined Benefit Income Cap
Lisa Brianson
Annual income from all defined benefit and lifetime pensions: $120,000
Tax-free amount: $106,250
Taxable amount (included in assessable income): $6,875 (50% of the $13,750 excess)
We may withhold the tax from Lisa’s pension payments.
We recommend you seek financial advice before applying for one of our indexed pensions.
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If you're aged under 60
Your pension payments include a taxable component that’s taxed at your marginal rate (including Medicare levy).
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Between your preservation age and 60?
You’ll still pay tax on the taxable component of your pension payments at your marginal tax rate, including Medicare levy, but you’ll be eligible for a 15% tax offset.
Read more about how your pension is taxed in the Defined Benefit Indexed Pension Product Disclosure Statement (PDF, 3.4 MB) or the Commercial Rate Indexed Pension Product Disclosure Statement (PDS, 3.9 MB).
Tax on death benefits
Different taxes apply to death benefits depending on your account and the type of beneficiary you’ve chosen, so check the ‘Tax on death benefits’ section of your product disclosure statement.
Tax on transfers
You may transfer money from other super funds into your UniSuper account before opening a Flexi Pension. Tax will only apply if the money you transfer contains an untaxed element (for example, money from a public sector super fund).
The untaxed element will be taxed at 15% when we receive it.
This tax also applies to any untaxed element of a lump sum superannuation death benefit transferred to your UniSuper account. We recommend that you get financial advice in these circumstances.
If you have any questions about tax and your pension, please call us on 1800 331 685 or contact us.