Robert's Retirement Blog

When I first started in the industry over 8 years ago – there was no such thing as a retirement bonus (except for 1 super fund). There was and technically still is two main forms of superannuation funds with two different ways of calculating tax.

For example:

• Industry Funds: Tax is paid up to 15% on earnings within the accumulation phase. Then when you come to retirement and want to setup an account-based pension. Your balance is your balance and from there on – any further fund earnings are tax free in the pension environment.
• Wrap Funds or Self-Managed Super Funds: These funds pay tax on any capital gains and income up to 15% in accumulation phase. Then when you get to retirement – you are able in most cases to transfer the balance into an account-based pension and NOT pay any tax on any unrealised capital gains within the fund.

Now industry funds have been at a disadvantage to these wrap funds for years due to them not having this flexibility due to their “pooled” investment structure and you may not be getting your actual tax benefits relevant to YOU as the tax is built into the unit price.

A lot of scrambling by these industry funds has now started as they are trying to give members a “bonus” of missed tax concessions they …

When going into retirement, secure housing is a big consideration and having your own home that is paid off and owned outright is the goal for many, although it can be hard to achieve.

The Centrelink Age Pension system I believe benefits homeowners (who own their home outright) more than it benefits non-homeowners (note that these are just my personal views). If you don’t have your home paid off and have a mortgage – this can also be challenging as there is no extra payments for pensioners with a mortgage (so in some instances you may be better off financially renting as you might be able to claim some rent assistance).

In this blog, I will explain some differences between the two.

These are firstly what I see as disadvantages of being a non-homeowner from a Centrelink perspective:

• Both homeowners and non-homeowners have the same income test for Centrelink. Now potentially a non-homeowner might need to work more to afford rent etc but is penalised the same for doing so as a homeowner.
• You get paid the same age pension whether you own a home or not.

Some advantages of being a non-homeowner:

• There are higher allowable asset limits you can have before your pension starts to reduce and higher limits before it cuts out. For singles …

(LSL) Long service leave. When retiring don’t take it as a lump sum! In some cases…..

It is important every individual seeks advice relevant to their situation and don’t just follow “what your friend did with their long service leave pay out”.

For example, there are many benefits of taking long service leave over a period of time, i.e. super contributions may still get paid, and you might be able to spread your income and therefore tax over multiple financial years.

But there are also other considerations to take in. For example, if you take long service leave as a lump sum - this may mean you are entitled to the Age Pension quicker (if you are age pension age). So, it is always good to weigh up the potential extra age pension you will get from taking it as a lump sum and what the missed benefits may be from not taking it over a period of time.

In some scenarios you might be selling an investment property next financial year and realise significant capital gains - so again taking it as a lump sum this year may help reduce your tax next year. Every individual is different regarding what they want to achieve and there are usually different ways to get there.

If you are partnered, this can also add some …

As I advise a lot of pre and post retirees, I see the importance of having your details up to date. This can be with everything through to MyGov, the ATO, Centrelink and your super fund. I come across clients from time to time where for example they may have a spelling error in their name with their super fund, a maiden name might still be showing or their preferred name is what is reflected on the superannuation account which in turn just causes delays.

When monies are moving between superannuation accounts, or when you are setting up income streams and/or withdrawing money from superannuation. Everything must match, there is quite a lot of security measures in place now and most superannuation funds will ask for certified ID documents – or run a digital ID check, then if something doesn’t match, you can’t get access to your funds until it does match.

In addition to having up-to-date details, it is always good to know where important documentation like passports and birth certificates are, this is because when you deal with government departments like Centrelink and apply for pensions, they may still ask for these documents with your initial application.

So next time you get your superannuation statement, or if you can login …

Like most Australian’s – everyone is shopping around for the best deal on everything from a better phone plan to better returns in superannuation and low superannuation fees.

Now this blog is not advice, it is just general in nature like all my blogs. I reference CBUS superannuation as an example and am not commenting on whether they are a good fund or not as it can be the right fund for some people. I just thought I would highlight a recent article here about them being taken to court due to delays in processing times with death and disablement claims inside superannuation.

Now for me and my client’s – a superannuation fund or insurance provider isn’t always about the best on fees and returns (although fees and returns are considered), but goes deeper into other areas like ease of use of the fund and also a funds promptness when client’s are in need.

Now this could be anything from passing away and how promptly their super fund pays their superannuation to their beneficiary, or a client might need money urgently from their super fund as soon as possible without delay!

When it comes to retirement planning especially and choosing a fund in retirement, you are usually by nature interacting with your fund more as you are drawing …

In Australia, as at the time of writing – the current annual cap for contributing money concessionally to superannuation is $30,000 per year.

A concessional contribution to superannuation is a contribution that is generally a “lower tax” than what you may pay if you receive the income and pay tax at your normal marginal rate. Obviously in most cases if you are only earning let’s say $10,000 of income in a year – then it may not be worth it to you as the tax on a concessional contribution is 15% whereas personally if your only income is $10,000 – you will pay no tax. If your marginal tax rate is 30% or higher it starts to make more sense to concessionally contribute to super. Keep in mind things like what your employer already has put in counts to the annual cap and also amounts contributed can’t be accessed until a condition of release is met of superannuation.

If we rewind time back to 2007/2008 – the annual cap for someone aged 50 or less was $50,000 per year and over 50 was $100,000 per year (so quite generous!). Overtime the rules have changed and from 2017/2018 it was just a blanket $25,000 for all individuals. Since then it has slowly increased and is now at $30,000 for the year. All though the rules have changed over time – …

Financial Information Service Officers provided by Centrelink/Services Australia can help provide factual information in some situations but often get confused with a financial planner. I have highlighted some differences between financial service professionals below:

Financial Information Services Officers (FIS) at Centrelink: They aren’t financial planners, so they can’t necessarily consider all of your financial goals and give you specific recommendations to meet them - nor can they make product recommendations in relation to investments etc. However, they can be a good starting point to get factual information around the age pension system and other Centrelink entitlements at no cost.

Industry fund financial planners: These can be a cost-effective way to receive financial advice, though they typically still charge around $3,000 for their services, which can vary and be more or less. From an investment perspective, they generally only look at the industry fund you are currently in and will likely recommend that option, which might be perfectly fine. However, some of their advice can be limiting and “cookie-cutter” to cater to high demand.

Other financial planners: Some are licensed through companies that own their …

Just like everything else on TV or what we hear in the media, it is important to do your own research, as not everything said applies to each individual in the same way. This is also true for advertised superannuation returns. Not too long ago, many funds released their versions of the June 30, 2024, end-of-financial-year annual returns for their various investments. While these returns are generally correct (based on what they disclose), it is important to remember that each member in each fund has a different investment journey and, therefore, a different investment return. Many individuals are either adding money regularly while they are still working or withdrawing/selling to fund pension payments in retirement.

Let’s say Person A had $100,000 invested in one superannuation product’s “Balanced Investment Option” for the entire year, made no withdrawals, and incurred no administration fees. Person A saw their super fund disclose a 7% return on TV for the financial year. In this case, their return would be 7%. However, if Person B had $100,000 (with the same superannuation product and investment as Person A) but made a withdrawal of $10,000 when markets crashed, they would see the same advertised return of 7% on TV. However, …

Retiring soon then looking to convert your superannuation to an income stream and meet the eligibility criteria? It sounds simple enough, however remember that setting up an income stream means dealing with a product provider (i.e. your super fund) with all different options and ways of doing things.

What I mean by that is they all have different administrative requirements to set one up. Some let you complete the application with no paper (just commencing one digitally online), others may need a wet signature, then for it to be scanned and sent in via email. Some even still require you to physically post the application in.

Then there are the identification requirements, you may be asked to send in certified copies of your identification to prove who you are again. Getting the money out may also require providing the super fund with further identification like bank account statements or even a recent council rate notice!

Now once you have everything ready to go, there still may be hiccups along the way, there could be errors in the documents you completed/provided – or things can always get missed and delays can happen when the superannuation fund tries to process your application. I always get clients to start the process sooner …

The goal posts as everyone knows do shift from time to time. In this blog post I am just highlighting how through the recent years the preservation age has changed and the age pension age. Your individual preservation age is when you can start accessing your superannuation - put simply in full if you retire or access in part through a transition to retirement income stream.

The table below shows how it has increased over time, now essentially from 1st of July 2024 onwards – the preservation age is 60 for everyone. See here for preservation age reference

Noting the preservation age is different from when, if eligible you can claim the age pension from Centrelink. Everyone claiming the age pension now needs to be 67. See here for age pension age reference

It can make it hard to plan at times when the rules do change, however my job is to be up to date with all the applicable rules and just focus on what we can control and build a plan from there – knowing that things may change, whether that be any change (not just legislation changes) such as a client’s health or a client’s goals.