Things you need to consider NOW
Claire urged all the Probus members in the audience to consider the following issues:
- 3 or 2 bucket strategy
- First bucket in super = $1.6m tax free pension
- Second bucket in super = Accumulation account at 15% tax
- Third bucket outside of = Non super investments company/personal tax
- Withdraw and re-contribute to partner’s super?
- Withdraw and invest outside of super?
- The mechanics
- $1.6m transfer balance cap
- Transition to retirement – retain, transfer to account based pension or commute?
- Things your advisors should be looking at
- Transitional Capital Gains Tax relief
- Structure of your Self Managed Super Fund?
- Review estate planning
Tax you will pay
Many of Claire’s clients hold member balances well in excess of $1.6m and she shared with Probus members Quantum Financial’s estimate of what tax may be paid depending on what account balance you may have. You can view this analysis in Claire’s Powerpoint presentation attached below.
What is included in $1.6m cap?
Claire explained that it was important to understand what exactly would be included in the $1.6m cap from 1 July 2017.
- Defined benefit pensions
- Defined benefit lifetime pension
- Defined benefit life expectancy pension
- Market linked pensions (term allocated pensions)
End of Transition to retirement pension?
Transition to retirement pensions have long allowed those aged 55 to 65 still working to have their cake and eat it.
The reforms that will be introduced from 1 July 2017 significantly reduce the attractiveness of Transition to Retirement pensions so if you have one, review it now.