Retirement Planning

Superannuation and Rollovers

The rules on superannuation and rollovers are extremely complex and we have specialist knowledge on the taxation related to them.

There are "tricks of the trade" which can maximise the tax free components. They are not illegal but rely on a detailed expert knowledge of the rules.

Our charges for setting up superannuation and rollover funds are as low as we can possibly make them and provide a very good deal for clients.

We use low cost funds that are best for our clients. For those retiring we generally use Allocated Pension funds. For a general description of Allocated Pensions please see below.

Allocated Pensions

Allocated Pensions give you a flexible, tax-effective income in retirement.

What is an Allocated Pension?

An Allocated Pension is simply a private pension, where you invest a superannuation lump sum and then draw an income from this investment. It is very tax effective because no tax is payable on the earnings, only on drawings. It is also very flexible because you choose the type of investment fund and the level of income (within minimum and maximum Government limits) which suits you.

An important point is that the capital remains yours and on death any remnant is passed on to your heirs such as spouse and children.

How Does an Allocated Pension Work?

You invest a lump sum in the investment option/s of your choice to suit your preferences for conservative or growth investments. Once set up, you are then paid a monthly income stream from your Allocated Pension account.

How long your funds will last depends on three factors:

• the amount of income you choose to receive each year;
• the investment returns earned on your account; and
• any lump sum withdrawals you make.

Who Can Invest?

You can invest if you have money in a superannuation or rollover fund. If you do not, you can contribute money into a superannuation fund if you are employed or have worked for at least 10 hours in one week in the last two years (generally up to age 65), or if you have not worked then your spouse can make a spouse undeducted contribution to your fund if you are younger than 65. If you have access to these funds, you can rollover the amount into an Allocated Pension.

Social Security Treatment

Under the Assets Test, the balance of the account will be assessed if the allocated pension is purchased after 1 July 1992. Pensions purchased before this date are exempt.

Under the Income Test the payments received are classed as income with a deduction for the part of each payment regarded as the 'deductible amount'.

What are the Advantages of Investing in an Allocated Pension?

An Allocated pension provides you with the following benefits:

• Regular income - you choose how much (within Government limits) and how often you would like to be paid;
• Flexibility - you can vary the level of income you receive each year;
• Tax effectiveness - no tax is payable on the investment earnings. Tax is assessable on the taxable component of income drawn, however if you are over age 55 you will receive a tax rebate of 15% on this component to offset against tax payable or tax payable on other income;
• A choice of investment options - Most Allocated Pensions give you the option to invest across all asset classes e.g. cash, fixed interest, property, Australian and International Shares; and
• No loss of capital on death - Upon death, the balance of the account can be paid as a lump sum to a previously nominated beneficiary or to your estate. Lump sum tax may be payable.

If a 'reversionary' pension has been selected the pension payments continue to be paid to the nominated beneficiary.