Comparing retirement income streams

The following table compares the benefits and features of the two types or retirement income streams - account based with non-account based. 

Please note: the Government has extended the temporary relief on account based income stream payments announced in February 2009, by continuing to halve the required minimum payment for the 2010/2011 financial year.

  Account based Non-account based
Payments available Minimum payments range from 2% of your balance at age 55 to 7% once you reach age 95.*

Maximum payment of 10% of your balance for Transition into retirement income streams only. 

 If issued by a super fund: minimum payments range from 2% of your purchase price at age 55 to 7% once you reach 95.*

If issued by a life company: minimum standards do not apply. Your income payment will be dependent upon the term of your annuity, the amount you invest and the other terms of your agreement.
Tax on 
payments		 If purchased with super:
Tax-free if you are aged 60 or over.** Potential tax-free element and tax offset of 15% if you are aged 55-60.

If purchased with money outside of super:
Potential tax-free element. Taxable component taxed at applicable Marginal Tax Rate (up to 45% plus Medicare).		 If purchased with super:
Tax-free if you are aged 60 or over.** Potential tax-free element and tax offset of 15% if you are aged 55-60.

If purchased with money outside of super:
Potential tax-free component. Taxable component taxed at applicable Marginal Tax Rate (up to 45% plus Medicare).
Tax on 
investment earnings
 If purchased with super:
Tax-free 

If purchased with money outside of super:
Taxed at applicable Marginal Tax Rate (up to 45% plus Medicare)		 If purchased with super:
Tax-free

If purchased with money outside of super:
Taxed at applicable Marginal Tax Rate (up to 45% plus Medicare)
Withdrawals Available, once minimum income levels are reached. Unlimited withdrawals except for Transition to Retirement income streams. Not generally available. Dependent on the terms of the product.
Investment choice Yes Yes
Portability Yes. You can withdraw all of your funds and close your account at any time or roll your money over into another account based income stream. Not generally portable. Once purchased you cannot generally close your account and withdraw your funds.
Duration of payments Until the account balance is zero. For the fixed term or until you die.
On death Balance paid to dependants as a lump sum or income stream. Any remaining money is payable to your dependants or estate as a lump sum or income payments dependent on the terms of the product.
Centrelink Assessable under both the Assets and Income tests. There may be a non-assessable component, but this will differ depending on the characteristics of your income stream. See Centrelink for more information. Assessable under both the Assets and Income tests. There may be a non-assessable component, but this will differ depending on the characteristics of your income stream. See Centrelink for more information.

*These will increase to 4% and 14% respectively from 1 July 2011 if the current relief is not extended.
** Provided that the super is funded from a taxed source.