An Account Based Income Stream (ABIS) is a means of creating a regular income, comprising capital and earnings, payable directly from money held in a personal superannuation fund. With unitised products the payments are made by the product provider repurchasing units at the current exit unit price and crediting the member’s nominated account. With non-unitised products, a set sum of money is transferred to the member’s non-superannuation account.
An ABIS can be set up using unrestricted non-preserved superannuation money. A minimum percentage of the balance, based on the age of the member, must be drawn each financial year. The maximum that can be drawn is the total balance of the account.
A Transition to Retirement Pension (TRP) can be set up using ‘preserved’ superannuation money provided the superannuant has reached their preservation age. The minimum payment is the same as an ordinary ABIS but a maximum drawdown limit of 10% of the balance applies and no commutations are allowed except to return part or all of the balance to the accumulation phase of superannuation. These restrictions cease once the superannuant permanently retires or reaches age 65.
Most superannuation providers offer ABIS and/or they can be paid by a Self Managed Superannuation Fund (SMSF). Conversion of all or part of a member’s account from the accumulation phase is relatively simple although asset allocation may need to be reconsidered.