A retirement bonus can give your golden years a bright head start. But don’t rely on this kind of push. Only one super fund in three pays an old-age bonus.
Where available, bonuses are generally calculated in three ways:
- A fixed percentage of the average account balance for a period prior to the transfer, usually 12 months.
- A fixed percentage of the initial retirement account balance (with various limits).
- A unique percentage of the opening balance based on the member’s investment history and balance.
Other bonus structures also exist, such as exemption from administrative fees, although these are less common.
The main point is that the more funds you transfer to a retirement income stream, the bigger the bonus you could receive. So, it’s a way for funds to encourage members to stay loyal to the fund and keep most of their nest egg within the super scheme.
As an indication of the possible sums involved, Telstra Super pays a pension bonus of 0.5% of your invested balance, up to a maximum of $8,000. You’ll need at least $1.6 million invested in a retirement income stream to earn the highest bonus.
The Australian Retirement Trust also pays a 0.5% bonus up to a maximum of $9,500. Brighter Super pays what it calls a “retirement premium” of up to $9,500. MLC currently offers one of the most generous bonuses based on 1.2% of your account balance, although this has fluctuated a bit over the past couple of years.
Since the pension bonus is not a contribution, the money does not count towards your annual contribution limits. Nor is it taxed. However, he can count against the transfer balance limit of $1.9 million. This is the total amount of super that can be rolled over into retirement.
