Finding the pension that's best for you in retirement

When you get to the end of your working life you want to be able to enjoy your retirement, but before you go wild there are some big financial decisions that have to be made. Will you look at reducing your debt, will you make some big purchases (a great many retirees buy a new car or caravan to go exploring in), and most importantly what are you going to do with your superannuation pension?

It appears taking your super as a pension, as opposed to a lump sum, is a more popular option for retirees these days.

There are a number of options when it comes to your pension. You might arrange for a pension thought your current super fund or you could look elsewhere for a fund with a better deal. If you choose the latter, navigating your way through the funds to ensure you get a better deal can be quite complicated. However, choosing the right pension fund can make all the difference to your retirement.

Interestingly, earlier this year comparison website Canstar took a close look at 64 account-based pensions from more than 55 different fund managers and came up with a ‘top five’ in three different categories: low balance ($100,000 average); medium balance ($400,000 average); and high balance ($700,000 average).

It assessed these account-based pensions using the fees and costs you would pay and what you get in return. It says the top five winners in each category are those that provide outstanding value for money.

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Low balance funds

ANZ’s Smart Choice Pension has no minimum investment amount and a total annual cost at $100,000 of $550.

AMIST Pension had a $20,000 minimum investment amount and had a total annual cost at $100,000 of $668.

BUSSQ pension Choice had $25,000 minimum investment amount and a total annual cost at $100,000 of $720.

Club Plus Pension also had a $20,000 minimum investment amount but its total annual cost at $100,000 was $714.

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ING – Living Super Pension had a $20,000 minimum investment amount but its total annual cost at $100,000 was $750.

LGS Account-based Pension Plan had $25,000 minimum investment amount and a total annual cost at $100,000 of $730.

Medium balance funds

The results here are slightly different with two retail funds and three industry funds making up the most preferred.

According to Canstar, AMP’s Flexible Super Retirement Account – Choice has no minimum investment amount and has a total annual cost at $400,000 of $2,786.

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ANZ’s Smart Choice Pension also has no minimum investment amount but a total annual cost at $400,000 of $2,050.

Club Plus Pension had a $20,000 minimum investment amount but its total annual cost at $400,000 was $2,574.

HESTA Income Stream had a $50,000 minimum investment amount and a total annual cost at $400,000 of $2,651.

ING – Living Super Pension had a $20,000 minimum investment amount and its total annual cost at $400,000 was $2,000.

LGS Account-based Pension Plan had $25,000 minimum investment amount and a total annual cost at $400,000 of $2,710.

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Sunsuper for Life Income Account had $60,000 minimum investment and a total annual cost at $400,000 of $2,528.

High balance funds

As you might expect — because the requirements for small investors can be different to the needs of a larger investor — the value list is different in those high balance funds.

AMP’s Flexible Super Retirement Account – Choice has no minimum investment amount and has a total annual cost at $700,000 of $4,766.

ANZ’s Smart Choice Pension also has no minimum investment amount but a total annual cost at $700,000 of $3,550.

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Club Plus Pension had a $20,000 minimum investment amount and its total annual cost at $700,000 was $4,434.

ING – Living Super Pension had a $20,000 minimum investment amount and its total annual cost at $700,000 was $2,750.

Media Super Pension had a $10,000 minimum investment amount and a total annual cost at $700,000 of $5,175.

Sunsuper for Life Income Account had $60,000 minimum investment and a total annual cost at $700,000 of $4,268.

While the lists are not in order of preference, they highlight the variations in cost that can exist. If nothing else this is one reason you should assess your super fund and pension, otherwise it could cost you.

Have you decided how you will access your super — lump sum or pension? Had you given any consideration to the pension fund you might access?

Important information: The information provided on this website is of a general nature and for information purposes only. It does not take into account your objectives, financial situation or needs. It is not financial product advice and must not be relied upon as such. Before making any financial decision you should determine whether the information is appropriate in terms of your particular circumstances and seek advice from an independent licensed financial services professional.