An account-based pension keeps your money invested and flexible. An annuity swaps some of that flexibility for a guaranteed income. Many retirees use one, the other or a mix.

Reviewed 31/10/2026. General information only, not personal advice.

Side by side

• What it is: Account-based pension: Your super moved into a pension account that stays invested. Annuity: A product that pays a set income, bought with a lump sum (from super or savings)
• Income: Account-based pension: You choose the amount, above a yearly minimum. Annuity: Fixed or indexed payments set when you buy
• How long it lasts: Account-based pension: Until the balance runs out. Annuity: A fixed term, or for life (a lifetime annuity)
• Investment risk: Account-based pension: Yours: the balance rises and falls with markets. Annuity: Mostly carried by the provider
• Access to capital: Account-based pension: Withdraw lump sums at any time. Annuity: Limited, depending on the product
• On death: Account-based pension: The remaining balance goes to your beneficiaries or estate. Annuity: Depends on the product's terms
• Age Pension: Account-based pension: Assessed under the usual income and assets tests. Annuity: Lifetime products bought from 1 July 2019 have special means-test rules

What each one is good at

An account-based pension suits people who value:

• flexibility to change their income from year to year
• keeping money invested for long-term growth
• being able to leave money to family

An annuity suits people who value:

• a predictable income that doesn't depend on markets
• protection against running out of money in a long retirement
• covering essential spending with a reliable income

Using both

Some retirees use an annuity to cover essential costs, such as food, bills and rates, and an account-based pension for flexible spending and emergencies. Whether that makes sense depends on how much you have, your other income, your health, and how comfortable you are with market ups and downs.

We don't recommend specific products on this page. Annuity terms vary widely, so read the Product Disclosure Statement and get personal advice before buying.

Weigh it up for your own situation

This page explains how the options generally compare. Which one suits you depends on your goals, balance, health, family and the rest of your finances. Book a free initial discussion or call 07 3733 1731. Meet face to face in Eight Mile Plains, or online anywhere in Australia.

Frequently asked questions

What is longevity risk?

Longevity risk is the risk of outliving your savings. An account-based pension can run out if you live a long time or draw too much. A lifetime annuity is designed to keep paying for as long as you live.

Can I get my money back from an annuity?

It depends on the product. Some annuities allow withdrawals or have a death benefit for a period, while others don't. The terms are set out in the product's Product Disclosure Statement.

Do annuities affect the Age Pension?

They can. Lifetime income streams bought from 1 July 2019 have their own means-test rules, where generally only part of the purchase price and payments is counted. Services Australia sets out the current rules.

Related reading

• Retirement Planning
• Account-based pensions explained
• Super calculator
• The Age Pension and your super