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Rhonda, 64, retired as a bank branch manager in 2025, after reaching her preservation age, and started an account-based pension with A$650,000. In 2026-27 she wants to take out an extra A$40,000 for a new car. Rhonda's adviser can correctly tell her that… (i) she cannot take lump sums from the pension until she turns 65. (ii) earnings on the assets supporting her pension are taxed at 15% until she reaches Age Pension age.
Statement (i) is false: retiring after preservation age is a condition of release, so Rhonda's benefits are unrestricted and she can commute part of her account-based pension as a lump sum now; at 64 it is also tax-free (ATO, Super withdrawal options and conditions of release, updated 10 Jul 2026). Statement (ii) is false: earnings on assets supporting a retirement-phase income stream are exempt from tax in the fund, whatever the member's age (ATO, Payments from super, updated 16 Sep 2026). The Age Pension age of 67 is a Services Australia rule and does not affect fund tax.
Once a member has retired after preservation age, an account-based pension can pay lump sums and its earnings are tax-free.
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