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Your guide to term allocated pensions

  • What is a term allocated pension (TAP)?

    A TAP pays your super back to you periodically for a set period. The amount you receive depends on how much money you have available, the life expectancy used and the term you set for the payments.

    Asgard has closed TAPs to new members from 20 September 2007, but existing TAPs will retain their asset test status.

    You can hold a range of assets in your TAP account, including shares, managed investments, fixed interest and cash, depending on your investment strategy.

  • Tax benefits

    • While your money is held in a TAP, the earnings in your account are tax free. These tax-free earnings stay in your account to increase the value of your investment, so you'll potentially receive more income with each payment from your term allocated pension.
    • If you are under 60, pension payments from your TAP account are assessed at your marginal rate of tax. If you're aged between 55 and 60 or commenced the TAP as a result of permanently incapacitated, you may be entitled to a tax offset of up to 15%. When you reach age 60 income payments from your TAP will be tax free.
    • If you're under 60 the tax free component of your account is returned to you tax-free over the term of your pension.

  • Estate planning

    A TAP will run for a nominated term (so long as you have enough money in the account to fund all payments) or revert to a beneficiary (usually your spouse or partner) after your death.

    TAPs are a good way to secure an income stream for your spouse or partner, giving you peace of mind.

  • Flexibility

    • Choose your investments with your advisers, according to your personal risk profile. By investing in long-term growth assets, any returns made should, over time, result in an increase of the value of your investment.
    • Vary the amount (by +/- 10% of the fixed annual amount) and frequency of each payment, depending on your changing needs. This is useful if you're balancing your TAP income against other income sources.

  • Restrictions

    • Generally speaking, no lump sum withdrawals are permitted from a term allocated pension account.
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