Robert's Retirement Blog

Superannuation can only be accessed in limited ways. Superannuation has always been designed as a mechanism to assist funding someone’s retirement. The legislation recognises people’s lives don’t always follow a simple path of working until 65 then retiring for example. Some people may not make it there and due to a terminal illness and then legislation allows those who are terminally ill, to access superannuation early.

The ATO’s definition of when you are classified as being terminally ill is “ 2 registered medical practitioners have certified, jointly or separately, that the member suffers from an illness, or has incurred an injury, that is likely to result in the member’s death within 24 months of the date of certification” (see reference here). Noting there are a few other pieces of criteria. This has to do with accessibility of superannuation and sometimes your fund may hold insurance which has a different definition – so it is important that this is looked into.

With SuperSA Triple S scheme here in South Australia, when concessional contributions get paid into the fund (i.e. from your employer) or earnings are accrued in the fund – no tax is taken out, where in the private sector world, this is usually up to 15%. The …

Superannuation has been around in Australia for many years since I believe the early 1900’s. However, it hasn’t been compulsory for employers to pay super contributions until 1992 when Paul Keating the prime minister introduced SG (Superannuation Guarantee). It is interesting though how guarantee is in the name yet over 30 years on – I still see clients that don’t have this guarantee, and employers have missed or not paid compulsory superannuation payments.

Currently employers can pay superannuation quarterly if they like, which can get confusing. For example, you look at your pay slip that might be fortnightly for example and it shows an amount that your employer has paid in superannuation – however you sort of have to go through your last quarters pays’ – add them up on each pay slip, then check with your super fund to make sure you have been paid the correct amount.

Now, with the new laws, after pay day – employers will have 7 days to pay your SG into super, this way I think it is a good step forward so employees can easily monitor their payments. Also, hopefully it encourages employers to pay super on time and actually pay it as the frequency is higher so employees can more closely monitor it and question discrepancies.

Noting …

As time goes on – I have seen more and more tools online to help people plan for retirement. Obviously, my views are bias being a financial planner but these online calculators can be misleading due to so many different variables and unknowns. However, they can also be a good starting point to get people thinking.

Moneysmart.gov.au has a full retirement planning calculator now – I am not sure when it was released but I don’t personally remember it being there say over 2 years ago. For the purpose of this blog though – I am just comparing their account-based pension calculator as the full retirement planning calculator has even more variables that can be hard for a user to understand and input to ensure an accurate output.

The calculator asks for the following variables for users of the calculator to input:

• Your age
• Retirement date
• Current super balance
• What income you would like from your superannuation
• Pension fees
• Investment option

The above are fairly simple variables but retirement isn’t always simple and here are my thoughts on the variables compared to what I see in everyday practice:

• Your age
  • Pretty straight forward this one and should be easy (although I have been guilty of not remembering my age sometimes!). …

Generally – no two returns in superannuation are the same.

What I mean by that is sometimes people see on the TV that Superfund XYZ has an investment option that has performed 8% for the year. Now, you might be in the same super fund as your neighbour/family/friend – invested exactly the same – but what is happening in each fund is different. Your neighbour might be self employed and made a one-off contribution to the fund once markets dropped during the year – this means that they might have purchased “investments” in the super fund at a cheaper price than yourself if you had your employer making regular contributions throughout the year effectively purchasing “investments” within the same fund as your neighbour but at different times.

The returns generally quoted are if you held the same investment from 1st of July to 30th of June in the financial year – they don’t account for any individual withdrawals you may have made (i.e. if you retired and took money out) and also don’t account for any contributions you had made. The reason your return can differ is because anytime you make a withdrawal or contribution, you are effectively purchasing or selling investments within your fund. This then has an impact to your overall return. …

People often say my super fund has performed good this year or my super fund has performed bad.

Really to be technically correct - I think you should say my investments I have chosen (or not chosen as it was default) inside my super fund has performed good - or my investments that I have chosen inside my super fund have performed bad.

Superannuation is just an investment vehicle where you can hold investments inside.

There are many types of structures like industry funds where generally there is only 10 or so investment choices (some have more and some less), then there are retail funds where investment choices can be in the 100’s or self-managed super funds where there is almost unlimited (provided they meet the governing rules of an SMSF).

Sometimes superannuation funds like industry funds’ will manage the majority of the money themselves in their “pre-mixed or blended” options. Effectively meaning they employ people to physically buy and sell shares and other investments on behalf of the members. Other industry funds such may only manage a small portion of members money “in-house” and the rest they will employ people to find other institutions or businesses to “buy and sell shares” put simply.

With retail funds - there …

Firstly, what is deeming? Deeming and deeming rates apply to many different Centrelink payments. I like to think of it as: if you bundle up all of your financial assets like bank accounts and account-based pensions, you will come up with one number. Now, Centrelink doesn’t actually look at each individual asset you have and assess the earnings for each asset — they bundle them up and apply a blanket “deeming rate” to all the financial assets. This amount is then added to your income to help calculate your entitlement.

To view a more detailed summary of deeming in relation to the Age Pension, you can visit Services Australia’s website here.

Since 2020, deeming rates have been at historically low levels and remained that way for quite some time (due to the COVID-19 pandemic).

From the 20th of September 2025, they will be increasing. There are two main rates — the lower rate, currently 0.25% p.a., will increase to 0.75% p.a., and the upper rate will increase from 2.25% p.a. to 2.75% p.a.

There are different thresholds these apply to depending on your situation. Everyone is impacted differently. If you are income tested, for example, this will likely have an immediate impact. Then there are those who are asset tested — depending on …

Planning for retirement, retiring then managing your finances in retirement isn’t always linear.

What I mean by that is sometimes when retirement is discussed, living expenses are worked out, income is setup and then sometimes people leave it as a set and forget.

That maybe the case for some people but especially in the recent years since 2020 we have seen inflation some years in Australia increase by over 7%. Now if you planned for an increase of let’s say 2-3% year on year. Your original plan is already outdated.

On one side though the general headline inflation might be 7% (which considers multiple different goods and services) but you may feel it more personally than 7%. I.e. your insurance premiums might have gone up by 20% and your weekly food shop by 15% amongst other increases greater than 7%.

It is important to consider how this affects you personally, it isn’t a reason to panic but more just plan ahead, rarely when someone starts out in retirement vs 15 + years in retirement are they spending as much as when they start. So, it may be the case that you can spend more in your early years and then when you are older, you might not be as active with travelling or you may only need one car instead of two if you are a couple. …

It is a common misconception that to access a transition to retirement income stream, you need to reduce working hours. Although this can be a viable strategy, it isn’t a necessity.

Transition to retirement income streams can be a valuable way to do a range of things in the lead up to retirement provided you meet the criteria to set one up and it is actually beneficial in your circumstances to do so. Ways to use a transition to retirement income stream can include:

· Assisting in debt reduction.

· Helping to cover the costs of renovations (like installing solar panels to reduce electricity costs in retirement).

· Helping to fund your cash flow to maximise the amount of tax affective contributions to super you can make.

· Or you can use them “traditionally” i.e. reducing 2 days a week work then “topping up” the lost income with funds from your transition to retirement income stream.

You generally can only access a maximum of 10% each financial year (and a minimum of 4%). Depending on which fund you are with though you may be able to take your requested payment spread out on a fortnightly or monthly basis or even as a once off annual amount.

This is a myth and I hear this getting mentioning quite often when people think having SuperSA Triple S (being a SA Government fund) is safer than other super funds. Just because it is state government run – it does not provide any extra security with how your funds are invested and the risks compared to any other super fund that invests money on your behalf.

Ultimately when I hear people saying “safe” they are referring to the chance of losing capital value of their investments. When in reality what it really comes down to is how you invest your superannuation fund in terms of the types of assets you carry which will determine how “safe” your fund will be. For example if you compare SuperSA Triple S and an investment within it that carries lots of shares compared to another industry fund with an investment that carries a lot of shares, being a government fund it doesn’t provide any additional security and your performance and risks of losing or gaining money comes down to what your invested in.

SuperSA does have other funds though (some older schemes) which have a defined benefit value (usually calculation based with things like length of service and salary) – these funds are maybe where the rumours start of SuperSA being “safe” …

Well, it isn’t exactly a limit, it is more essentially saying that balances in superannuation for an individual above $3 million will incur an additional tax of 15% on earnings above the $3 million you hold. Currently, the tax rate is 15% so this will effectively increase it to 30% on earnings for balances above $3 million.

This was announced firstly I believe back in February 2023 by Jim Chalmers (see article here).

It is planned to take effect from 1st of July 2025 but has not been legislated yet at the time of writing.

There are a few concerns about the proposal which include, it is set to tax also the portion of “unrealised gains” the superannuation fund has above $3 million. Whereas currently superannuation capital gains are taxed when the event happens, i.e. sale of shares or property. The proposed legislation is saying even if you don’t sell the shares, they will be applying a tax on the unrealised growth that you haven’t sold yet. This can be problematic for a few obvious reasons as funds might not have the money to pay the tax if they haven’t sold the asset!

There is also no proposed indexation on the $3 million dollars. Now that might seem fine, but the argument is for people my age or younger, having over $3 million …