Phone: 02 6884 2222 | E-mail: admin@fortnumdubbo.com.au

Retirement Quick Tip #2

  • Tuesday, April 18, 2017
  • Sandy Dunshea

If you want to keep working while drawing down some of your Super benefits, this tip is for you...

Changes to Transition to Retirement pensions may mean you need to reconsider your retirement strategy

From 1 July, 2017 the assets supporting a Transition to Retirement Pension will no longer be tax free. The new changes will affect existing and new Transition to Retirement Pensions.

If you are planning to reduce your working hours and start drawing down your Super through a Transition to Retirement Pension, you need to know how these changes could affect you.

The tax advantages associated with Transition to Retirement Pensions will change on 1 July, 2017.

Currently the assets which support a Transition to Retirement Pension are tax free. From 1 July 2017, these assets will be taxed at 15% (the same taxation rate as accumulation phase assets).

These changes may mean that a Transition to Retirement strategy may no longer be an appropriate retirement strategy for you.

To make the most of your retirement you may need to consider other strategies including:

  • Retiring earlier to make the most of a tax-free pension;
  • Revisiting the balance of salary sacrifice contributions and pension payments;
  • Assessing your eligibility for the part-pension or other Centrelink allowances;
  • and Considering spouse contributions to reduce your taxable income and also take advantage of allowable concessional contribution amounts for your spouse. A tax offset is available for spouse contributions, and from July 1, 2017 the spouse’s income threshold increases from $10,880 to $37,000 per annum.

Transition to Retirement pensions cannot be taken as a lump sum unless you fully retire. A Transition to Retirement Pension is able to withdraw a minimum of 4% (depending on your age) increasing up to a maximum of 10% of your Super balance each year.

Transition to Retirement Pensions can only be used by those who have reached their preservation age.

Preservation Age
Born before 1 July 1960     Preservation age is 55
Born after 1 July 1960        Preservation age is 56 – 60
Born after June 1964         Preservation Age is 60

A further legislative change to Super which also needs to be taken into consideration is the introduction of a $1.6 Million Balance Transfer Cap. From 1 July, 2017 you are only allowed to have up to $1.6 Million in pension phase funds. If you reach this limit you will need to reduce your balance.

Changes to the rules associated with Super may have a significant impact on your personal situation and retirement planning. I encourage you to contact me to discuss appropriate options and strategies for your retirement goals. Please contact me on 02 6884 2222 or email: admin@fortnumdubbo.com.au

Sandy Dunshea is a financial adviser with Fortnum Dubbo. Fortnum Dubbo and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.

The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only - unless otherwise stated. Fortnum Dubbo strongly suggests that you should not act on it without first obtaining professional advice specific to your circumstances.

This publication cannot be reproduced in any form without the express written consent of the author.

Fortnum Dubbo and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.

The information contained within this website does not consider your personal circumstances and is of a general nature only. You should not act on it without first obtaining professional financial advice specific to your circumstances. This website holds information for Australian Residents only.

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