Liam Shorte

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All posts tagged reset pensions

Taking SMSF & Retirement Questions on Sky Business Channel – Retirement Show

I appear on Sam Henderson’s Your Money Your Call – Retirement Show about once a month and a video copy of the January 24th show is included below.

For those not open to viewing the full show you can catch my comments at the following points by scrolling along the bottom of the video:

6.30 Moving from Cash to other sectors

8.40 Getting International Exposure

15.08 Outlook for Aussie Shares and Property

17.50 Selling out of resource stocks to chase performance – good or bad idea

23.10 Making large contributions at or near age 65

29.00 Off Market Transfer of share in to your SMSF

39.55 Investing through super in your 20’s

41.39 The hidden danger of Life-Cycle funds (Asset Allocation becomes more conservative as your age)

46.30 Investing in your 60’s

To get your own questions answered why not make an appointment at our Castle Hill or Windsor offices of we can meet in the city. always happy to deal with people by email. phone, Skype or a combination of them all. Just click the Schedule Now button up on the left to find the appointment options.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

How much do I need to live comfortably in retirement? 2017 Update

I wrote an article a few years ago for MYOB’s small business blog called How much do I need to retire at 60? that certainly caused some heated debate and has been viewed over 375,000 times. Just read some of the comments to see how people’s vision of a “budget” and “comfortable lifestyle” is so different depending on their circumstances.

Some of the figures used for sample retirement budgets have been updated so I thought I would provide those figures as guidance for people facing the retirement funding conundrum and not sure where to start.

The latest figures released by the Association of Superannuation Funds of Australia ASFA Retirement Standard benchmarks the annual budget needed by Australians to fund either a ‘comfortable’ or ‘modest’ standard of living in retirement.

Budgets for various households and living standards for those aged around 65
(December quarter 2016, national)

	Modest lifestyle		Comfortable lifestyle
	Single	Couple	Single	Couple
Total per year	$24,108	$34,687	$43,538	$59,808

Budgets for various households and living standards for those aged around 85
(December quarter 2015, national)

	Modest lifestyle		Comfortable lifestyle
	Single	Couple	Single	Couple
Total per year	$23,603	$34,992	$39,8171	$54,960

Source ASFA Retirement Standard. The figures in each case assume that the retiree(s) own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement. Single calculations are based on female figures. All calculations are weekly, unless otherwise stated.

The figures in each case assume that the retiree(s) own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement. Single calculations are based on female figures. All calculations are weekly, unless otherwise stated.

As you can see from the figures if you are looking at a ‘comfortable’ retirement you need to consider a budget of $59,808 for a couple or $43,538 for a single person household.

In my previous article I talked about retiring at age 60 but as most people will be looking more likely at 65 as their target, I wanted to clarify what I believe you need to fund such a retirement. In my opinion a couple would need a combined superannuation and non-super investment assets balance of around $750,000 minimum and a single individual would need a balance of around $550,000. This at odds with ASFA who have recently increased their requirement by a whopping $130,000 but still have lower figures than mine as they believe you only need $640,000 for a couple or $545,000 as a single person.

My figures are based on No Centrelink Support. I am happy to accept ASFA are correct if you take into account some age pension but I find that many clients do not qualify for this because of non-income producing assets like holiday homes, caravans boats etc reducing their pension entitlements. Also there is an inherent risk that the now reduced Asset and Income Test limits may be reduced further in the search for more Government Budget Savings.

Most people I see in my day-to-day work advising on retirement planning have a “sugar coated view” of how they want to spend their time in retirement. Many have hobbies or interests that cost very little but others who like international travel or partaking in expensive social lifestyles of hobbies often under-estimate the costs.

Another worrying trend is people borrowing in their 50’s to fund lifestyle for fear of missing out or to keep up with the Jones! Others are helping children with home deposits and losing the vital compounding interest on their savings. Many tell me they believe they can live on the Government Age Pension in retirement. Well if you can’t manage on your current wage now without borrowing then you are in for a big shock if you plan to rely on the meager Age Pension.

I see one industry commentator saying that the savings required to live a modest lifestyle in retirement only requires a small amount of retirement savings in addition to the age pension, however that sort of budget leaves you very vulnerable to food and utility price inflation as people will have seen with rising vegetable and electricity pricing in the last few years.

When you look at these estimates of the amount capital or assets you need to achieve the lifestyle you want in retirement, it’s still important to remember that most of these work on the average life expectancy. If your family has a history of longevity or early death, then you need to make allowances accordingly.

The bottom line: It’s never too early and hopeful not too late to start planning. So if you want to see where you stand at present based on your current savings and contributions to super, then use the Retirement Planner on the ASIC’s free Money Smart website.

Once you work out you target you should consider seeing a Financial Planner to see what strategies are available to you to boost your savings such as using a Transition to Retirement Pension and Salary Sacrifice strategy to save on personal and superannuation tax and build your nest egg.

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

6 Comments

by SMSF Coach - Liam Shorte on February 7, 2014 • Permalink

Posted in Retirement Planning

Posted by SMSF Coach - Liam Shorte on February 7, 2014

https://smsfcoach.com.au/2014/02/07/how-much-do-i-need-to-live-comfortably-in-retirement/

SMSFs and Estate Planning: When the documentation does not match

Western Australian has a habit of bringing to light interesting estate issues and one of the2013 cases lives up to that reputation and highlights the importance of really understanding estate planning where a self-managed superannuation fund is involved (Ioppolo & Hesford v Conti [2013] WASC 389).

The background to the case is that a Mrs Conti passed away with large balance in an SMSF, of which her husband was the surviving individual trustee and the only other member.

In the decade before her death Mrs Conti had signed a series of non-binding and binding death benefit nominations (BDBN) directing that her superannuation death benefit should be paid to her husband but these had lapsed. Note, many deeds still unnecessarily refer to the SIS regulations and in specific the need to renew BDBN every 3 years when dealing with Binding Nominations.

However in her Will, Mrs Conti had directed that her SMSF member balance be paid not to her husband but to her children and she specifically expressed her wish that none of her benefit should be paid to her spouse.

Mr Conti, (as the sole surviving trustee of the SMSF) resolved to pay her entire balance to himself. (This would have needed to be done within 6 months of her death under Section 17A(4) of the SIS Act or else a second trustee would have to be appointed).

It is worth reminding you that the Superannuation Complaints Tribunal (SCT) has no authority to review an SMSF trustee decision.

As such, Mrs Conti’s children who were the executors under her Will had to challenge this trustee decision in the Supreme Court of Western Australia.

The Court held that the trustee of the SMSF could pay the death benefit to Mr Conti, and the children failed in their application.

This reinforces the need to consider an overview of the entire estate and other assets like trusts, companies and superannuation to ensure the various documentation required in succession planning is supportive of the clients wishes. Estate planning must consider the full circumstances and specific tailored solutions, especially where there is superannuation and in particular where a SMSF is included.

Some finer points worth noting on this case are that the will which expressed the intention to leave the funds to the children was made in 2005, however she also made a later binding nomination in 2006 where she (again) directed the payment to her husband. So you can see that there was some confusion as to actual wishes. The later nomination lapsed, so at death, there was no binding nomination in force and two conflicting expressions of her wishes (ie the will in 2005 went one way and the BDN in 2006 which went the other).

The central point of the article remains the same, but I don’t think we can be sure what the wife’s actual wishes intentions were at the date of death, given the conflicting and confusing messages she left behind.

The use of a Corporate Trustees, updating the Trust deed to allow for a Non-Lapsing Binding Death Benefit Nomination are some of the measures that may have prevented this outcome.

We can work with you and your solicitor or introduce you to a solicitor with specialist SMSF training to minimise the chances of such problems occurring.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

Do I Need Annual Valuations If My SMSF Has Investments In Private Trusts Or Companies

The new requirement to value all assets supporting a pension at market value annually will have an impact on minimum pension amounts from here onwards. To be precise, SIS Regulation 8.02B requires all SMSF assets to be valued at market value each year. In the past we relied on ATO Taxation Determination TD 2000/29 that required that where an accumulation fund has underlying assets supporting a pension, those assets must be valued at their net market value on the commencement day of the pension.

In subsequent years we found that SMSF assets used to pay a pension may not have been re-valued correctly after commencement of the pension.

The new risk associated with Regulation 8.02B is that failure to mark to market the value of the asset has potential to cause the fund to fail to meet the minimum pension requirements. With normal shares, managed funds, commodities like gold etc this is not too hard as they can be valued quite easily but the danger arises when the fund has investments in private companies or private trusts, patents or unique property assets.

Unlike SMSFs that must value assets at market value, private trusts and companies are generally not subject to the same regulations or requirements. Therefore, those controlling these entities may adopt a different valuation method such as valuing shares or units at cost in their financials. The impact of the different valuation methods is that the fund’s investment in the private company or a unit trust may not be valued at market value, with the implication being that the fund fails to meet the minimum pension payment required to maintain the tax exempt status of the pension.

The problem is that the cost of valuing an unlisted company or trust assets may require a great deal of work and even a specialist to provide a report. This is definitely a matter to consider sooner rather than later as it is most likely to affect larger pensions accounts and therefore the cost of losing exempt current pension income status (ECPI) may be a considerable amount.

Likewise if you have assets such as patents that are hard to value as they may have nothing to compare with or their value is subject to many other factors you need to document your valuation method and be prudent in your assumptions. Not the time for aggressive tactics and I would always suggest speak with your auditor before completing the valuations for the financials to ensure they are happy with your assumptions.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

1 Comment

by SMSF Coach - Liam Shorte on November 14, 2013 • Permalink

Posted in Audit, SMSF Management

Posted by SMSF Coach - Liam Shorte on November 14, 2013

https://smsfcoach.com.au/2013/11/14/do-i-need-annual-valautions-if-my-smsf-has-investments-in-private-trusts-or-companies/

Deeming rates to reduce – relief for SMSF cash investors

Some good news on the Centrelink front at last. We have watched as the interest rates drop but Centrelink deeming rates stayed static. With Term Deposits now paying less than 4% the deeming rate seemed out of touch and the Minister for Social Services has announced a reduction to the deeming rates reflecting those lower returns available to income support recipients from financial investments.

From 4 November 2013 the deeming rates will be:

Deeming rate	Single	Couple
2%	First $46,600	First $77,400
3.5%	Above $46,600	Above $77,400

So deeming rates are now set to reflect returns on cash investments available to pensioners and other income support recipients. It recognises that many pensioners and social security recipients who also rely on own-source income have been adversely affected by the global economic downturn.

Means tested part rate income support recipients paid under the income test, with financial investments mainly in high interest savings accounts, term deposits, shares, bonds and managed investments, may receive an increase in their pension payments, to reflect the reduction in their assessable income. However after a solid year in the share and property markets do not be surprised if the effect is cancelled out or you actually receive a little less once Centrelink updates its values for your portfolio.

This change applies to both Centrelink and Department of Veterans’ Affairs means tested recipients.

For those managing money for relatives in Aged Care you may find the income-tested fees may have lower costs as a result of the new lower deeming rates.

As always if you have any comments please add them below or if you wish to discuss your position and strategies for Centrelink and/or Aged Care costs then please contact us for an appointment at our Castle Hill or Windsor office or call me direct on my mobile 0413 936 299.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

Do You Have Access to Copies of Your Important Personal and SMSF documentation

After a week of “Bush Fire Emergencies”, packing “what we could not do without” into cars and trailers at our home in the beautiful Hawkesbury region of Sydney I have learned a few lessons and had the complacency beaten out of me when faced with having to evacuate our home at short notice and needing to take all essential paperwork with us.

Get Away Folder

Now I have always considered myself to be somewhat prepared for emergencies, mostly because I know I am normally disorganised so if I do not have things pre-prepared then I know I would struggle to find the items needed. So I have a my Get Away concertina folder of essential paper work which includes:

copies of our drivers licences
copies of our passports
car insurance schedule and PDS
home and contents insurance schedules and PDS
bank account and credit card details

I considered this to be enough as I knew I could find copies of most other information online or in my work computer.

In reality, I had considered this only from my point of view and not considered what my wife or family would have needed if I had been injured or worse. Like many couples, we agreed that one of us handles the finance and the other handles everything else that keeps our family going. It was only when actually faced with the reality that I realised how much else I should have included to make sure my family were not burdened with unnecessary paperwork if things went wrong:

contact details for our Accountant, Lawyer, Doctors, Vet and Financial Adviser (yes, i do have one too; my business partner as otherwise you always leave your own needs until last).
copies of our wills
copies of Enduring Powers of Attorneys
copies of our SMSF Binding Death Nominations
certified copies of my SMSF Trust Deed, Corporate Trustee constitution and Family Trust Deed (most are issued with 3 originals and you should always keep one and not leave everything with your Accountant as things can go wrong in their office too)
life Insurance schedules
superannuation statements
rates notice to show ownership of the property
Account numbers, user ids and Password details for personal and SMSF bank accounts, share trading facilities, mortgage providers, electricity and medical insurer among other essential sites.
spare keys for house and car (i am still trying to find the key to the ride-on mower that I removed and put somewhere safe because of looters and I had to ask my wife for a key to the house after 4 years living there!)

Keep the folder updated

We had changed mortgage provider and home insurer in the last 3 months (bet they are sighing with relief!) and had just renewed my sons passport, so make sure to keep your Get Away Folder updated.

Keep a scanned copy

Thankfully we also have another complimentary option and that is to store much of this information on the web to have an additional backup. Now while this is a way to store your essential information, DO NOT use this as the only method as technology has a habit of failing you when most needed. There are numerous portable storage devices and online storage options available to you, including Dropbox, Google Drive and SkyDrive to name a few and they area a pretty easy and reasonably secure option for making sure your stuff is available off site from your home. This option is only advisable after you’ve completed the Emergency pack and be absolutely sure to write down where this information can be found and how to access it in case you can’t be there.

Get organised and don’t delay

This past week was a wake up call for me and I am so grateful that none of this information was actually needed this time. However, I don’t ever want my wife to be put in the frustrating position of searching for paperwork about our finances in the aftermath of an accident or emergency, and I’m pretty sure you don’t either.

I would also urge you to read the following resources; but please feel free to add your own ideas in the comments section below as well.

Emergency survival Kit and Bush Fire Survival Plan.

Last but definitely not least, I would like to thank the amazing people at Kurrajong Heights RFS and all the NSW and interstate personnel and volunteers that are putting their lives on hold to protect others.

IF YOU KNOW SOMEONE AFFECTED BY THE FIRES I AM HAPPY TO HELP THEM FREE OF CHARGE FROM OUR CASTLE HILL OR WINDSOR OFFICES. The FPA also has a free service where victims of the fire can call 1300 626 393 or complete the application form to arrange to speak with a financial planner free of charge and begin to rebuild their lives and financial strength.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

1 Comment

by SMSF Coach - Liam Shorte on October 25, 2013 • Permalink

Posted in SMSF Management

Posted by SMSF Coach - Liam Shorte on October 25, 2013

https://smsfcoach.com.au/2013/10/25/do-you-have-access-to-copies-of-your-important-personal-and-smsf-documentation/

Making the most of the Transition to Retirement Pension over age 59

After my last blog article I have been asked for some guidance on how to maximise the Transition to Retirement (TTR) & Salary Sacrifice strategy under the new SG and Concessional Contribution (CC) limits for those over 59. Also readers wanted to know more about the “resetting” pensions to move each year’s contributions to Pension phase.

This general advice applies equally to those using an Self Managed Superannuation fund (SMSF) , Industry, Retail or Employer fund.

Pensions are not set in stone. Review them regularly

Resetting the pension periodically (eg annually) from age 60, can help TTR users to get more money into a tax-free environment. Also, the additional income payments, which would be tax-free, could be re-contributed into super by utilising any remaining CC cap or by making non-concessional contributions (NCCs).

Example: Strategy Changes for those age 59 or over

When strategy commenced Marie, an Administration Manager in Castle Hill, is 60 years of age and earns a salary of $90,000 pa plus Employer SG for a total package of $98,100. On 1 July 2012, she:

used her entire super balance of $250,000 to start a TTR pension
based on our recommendations elected to receive TTR pension payments of $10,703, and
arranged with her employer to salary sacrifice $16,900 in to super to use up her full $25,000 limit applying that year.

The key point to mention is that using this strategy Marie maintained her exact same after-tax income but selected it from the most tax effective sources..

Then we had the latest government changes to Super from the Budget.

SG increased to 9.25%
Concessional Contribution limit for those over 59 on 01 July 2013 increased to $35,000

So strategy changes were needed. On 30 June 2013, she had $22,101 in her accumulation account and $260,387 in her pension. On 1 July 2013, she:

stopped her current TTR pension, merged the money with her accumulation balance and started a new TTR pension with $282,488. (Resetting)
elected to receive pension payments of $17,105 from the Transition to Retirement pension, and
increased her salary sacrifice contributions to $26,675 again to use up the $35,000 limit and maintain the same Net Take Home Pay.

The outcome

The table below summarises her income and super contributions in 2012/13 (with and without using the TTR strategy) and the changes she made in 2013/14 in response to the super changes.

	In 2012/13		Adjustments in 2013/14
	No TTR	With TTR	with TTR
Salary	$90,000	$73,100	$63,325
TTR Income	Nil	$10,703	$17,105
Tax	-$22,597	-$16,400	-$13,027
Net Take Home Income	$67,403	$67,403	$67,403
SG	$8,100	$8,100	$8,325
Salary Sacrifice	Nil	$16,900	$26,675
Total CCs*	$8,100	$25,000	$35,000

*CCs = concessional contributions (SG + Salary sacrifice or Self Employed Contributions)

By making the adjustments, she will:

get an extra $22,101 into the tax-exempt pension to take greater advantage of the 0% tax rate that’s payable in the fund on investment earnings
salary sacrifice an extra $9,775 into super taxed at 15% instead of her marginal 38.5% rate
take full advantage of the higher Concessional cap of $35,000, but also taking into account the SG increase to 9.25%
reduce her income tax by $3,373
reduce the total tax paid by $1,873, after taking into account the 15% tax that will be deducted from the additional $10,000 of concessional contributions, and
maintain the same after-tax income or net take home pay

Marie can also restart her pension at the beginning of each financial year until she retires at age 65 to maximise the amount in pension phase and make any further changes required as a result of future rule changes.

This is a strategy that has very little to do with the actual investments in your fund so you can see it as a “low/no risk” strategy that enhances your retirement savings without taking on additional investment risk.

Now to make the most of the tax-exempt pension environment you may alter your investments to seek more income or franking credits but it is not compulsory.

It’s not too late to get your plan in place for 2013/14 tax year so why not click here to Schedule a Meeting by phone, face to face or via Skype if you want to look at your own options. We have offices in Castle Hill and Windsor but can meet clients anywhere in Sydney or online via Skype.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

1 Comment

by SMSF Coach - Liam Shorte on September 10, 2013 • Permalink

Posted in Contribution Strategies, Pension Strategies, Tax Planning

Posted by SMSF Coach - Liam Shorte on September 10, 2013

https://smsfcoach.com.au/2013/09/10/making-the-most-of-the-transition-to-retirement-pension-over-age-59/

Aged 59 – 64 and not on a Transition to Retirement Pension – SHAME ON YOU!

Yes, that’s me shouting!. In this day and age with utility prices rising , people struggling to save and interest rates so low that it is making pensioners weep, we are still finding many people not using the simple, relatively risk-free strategies available to them to reduce their income tax and tax on the earnings of their superannuation savings.

Day in day out I meet new prospective clients, some with SMSFs and some in industry or retail superannuation funds who worry about paying Advice Fees but have ignored the ability to save ten of thousands of dollars in tax, over those pre-retirement years, using the same system that most of their peers are enjoying in a tax-free pension environment.

DON’T WASTE MONEY PAYING TAX WHEN YOU DON”T HAVE TO.

In fact I am willing to promise that you can improve your annual retirement income by on average 5% by implementing the Transition to Retirement Pension coupled with a Salary Sacrifice strategy for 5-10 years before retirement.

Benefits of a Transition to Retirement Strategy

Give your retirement savings a boost – your super balance will keep growing as you make self-employed contributions or your employer continues to make contributions into your super account.

Lower you taxable income – If you choose to salary sacrifice some of your pre-tax income into your super, you can further boost your retirement savings. This is because your salary sacrifice contributions are taxed at a lower rate (15% for those earning less than $250K) when they go into your super so that saves an immediate:

19.5% for anyone earning more than $37,000 and less than $80,000 as your marginal tax rate is 34.5% inclusive of Medicare on every dollar over $37,000
24% for anyone earning more than $87,000 and less than $180,000 as your marginal tax rate is 39% inclusive of Medicare on every dollar over $80,000
34%* for anyone earning more than $180,000 and less than $300,000 as your marginal tax rate is 49% inclusive of 2% Medicare and 2% Temporary Budget Repair levy on every dollar over $180,000

Oh yes, that 2% extra Temporary Budget Repair levy applies to those earning over $180,000 per year.

July 1 2017 changes: From this date by moving to pension phase your balance in the transition to retirement pension account no longer moves to a “tax exempt” status so it will continue to pay tax at up to 15% on dividend income, rental income or capital gains. That is why it is essential you look for or are aware of triggers to move to a full Account Based Pension

A Transition to Retirement (TTR) strategy remains valid after the changes announced in the 2016 Budget.

Pay less tax and keep the same take home amount
You can enjoy generous tax concessions for both retirement income streams and super contributions while still taking home the same net amount. you are just taking the money from the most tax effective source. Remember after you turn 60, you won’t pay any tax on your pension income stream payments.

Pre July 1 2017 Case Study: Ann aged 59 on 01 July 2013 has $300,000 in Superannuation. She has an annual income of $95,000 and wants to keep her take home pay the same but look at a TTR combined with salary sacrifice to improve her retirement savings.

Results for 2016-17 Year
Without Transition to Retirement Strategy
Drawdown Percentage 0.000 %
Package $104,025
Plus Assessable Pension Income $0
Less Concessional Contributions $9,025
EQUALS TAXABLE INCOME $95,000
Less tax and Medicare $24,682
Plus Rebate $0
EQUALS AFTER TAX INCOME $70,318
Plus Exempt Pension Income $0
Less Non Concessional Contributions $0
EQUALS TAKE HOME INCOME $70,318

Accumulation Start Balance $300,000
Plus 85% of Concessional Conts $7,671
Plus Non Concessional Conts $0
Plus Interest $13,701
EQUALS ACCUM END BALANCE $321,372
FUND ASSETS END BALANCE $321,372
With Transition to Retirement Strategy
Drawdown Percentage 5.600 %
Package $104,025
Plus Assessable Pension Income $0
Less Concessional Contributions $35,000
EQUALS TAXABLE INCOME $69,025
Less tax and Medicare $15,361
Plus Rebate $0
EQUALS AFTER TAX INCOME $53,664
Plus Exempt Pension Income $16,800
Less Non Concessional Contributions $146
EQUALS TAKE HOME INCOME $70,318 (so same net take-home pay)

Pension Start Balance $300,000
Less Pension Payments $16,800
Plus Interest $14,585
EQUALS PENSION END BALANCE $297,785
Accumulation Start Balance $0
Plus 85% of Concessional Conts $29,750
Plus Non Concessional Conts $146
Plus Interest $782
EQUALS ACCUM END BALANCE $30,678
FUND ASSETS END BALANCE $328,464

In this example Ann keeps the same take home pay of $70,318, adds an extra $7,092 to her Retirement Savings and pays $4,071 less in tax. That’s just one year with no change to her investment profile as it has nothing to do with the actual investments. If you do not need the pension income then just put it back in to the fund as a non-concessional contribution,

Don’t ignore these crucial annual savings as they add up to that extra holiday a year in retirement.

There are benefits to this strategy for anyone over 55 but it becomes a “win-win” situation once in the 59-64 age group. So don’t ignore this strategy and please pass it on to others you think it may suit.

Why not click here to Schedule a Meeting by phone, face to face or via Skype if you want to look at your own options. We have offices in Castle Hill and Windsor but can meet clients anywhere in Sydney or online via Skype.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

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by SMSF Coach - Liam Shorte on September 4, 2013 • Permalink

Posted in Contribution Strategies, Pension Strategies, Retirement Planning, SMSF Management

Posted by SMSF Coach - Liam Shorte on September 4, 2013

https://smsfcoach.com.au/2013/09/04/aged-59-64-and-not-on-a-transition-to-retirement-pension-shame-on-you/

How do I add more money to Pension Phase in my SMSF

This is a common question I get from people who have added more contributions to super and now want to move these to pension phase or are doing a re-contribution strategy to improve the tax-free percentage of your fund.

Option 1: Starting a new pension

The first option is to set up a new pension with those new or recycled funds. Yes, you can have as many pension accounts in the fund as you wish and as part of long-term strategies and estate planning we have had clients with 4-6 pension accounts prior to consolidation. We often set up new pensions when dealing with Non-Concessional contributions as they are 100% tax-free and we like to maintain that position and not taint it with a mixed taxable / tax-free balance.

Bear in mind that you can make a contribution in June of a financial year and start a pension immediately without having to take any minimum pension for that financial year. This can aid a trustee in ensuring the funds go in to the fund and immediately in to pension phase.

Option 2: Consolidating Pensions by resetting the current pension

(more…)

3 Comments

by SMSF Coach - Liam Shorte on May 22, 2013 • Permalink

Posted in Contribution Strategies, Pension Strategies, Retirement Planning, SMSF Management

Posted by SMSF Coach - Liam Shorte on May 22, 2013

https://smsfcoach.com.au/2013/05/22/how-do-i-add-more-money-to-pension-phase-in-my-smsf/

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