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Retirement Planning
Don't leave planning for your retirement until its too late, find out some more information below. If you have any queries or would like further information contact us today.
Allocated Pensions
An allocated pension is a pension payable from a member's superannuation benefit account from which regular income payments are made following retirement or cessation of employment. From the capital invested in the allocated pension account you receive regular, tax-effective, social security effective, flexible pension payments. Your pension payments may continue until all benefits are withdrawn or you take the remaining benefits as a lump sum amount.
Pension payments are set between minimum and maximum amounts each financial year. You are able to access more funds than your maximum allowable pension during the year if you wish but any amount withdrawn over the maximum amount is a withdrawal not a pension payment and so does not enjoy the same tax treatment as a pension payment.
On establishment of the allocated pension, you may elect for the pension to be paid to your spouse, or another dependant, upon your death. If you elect not to have a reversionary pension, then a lump sum is paid on death.
Complying Pensions
A complying pension is payable from an account maintained in your Superannuation Fund from which regular income payments are made following your retirement or cessation of employment. From the capital invested in the complying pension account you receive regular, tax-effective, social security effective pension payments. They are useful in maximising Centrelink benefits as the assets which are used to fund certain types of complying pensions are excluded from the assets test (This will alter from 20th September 2004 to a 50% exemption).
Broadly speaking, an income stream is complying if:
A complying pension may be established if you are either:
In practice you would not start a complying pension in favour of an allocated pension unless you had social security entitlement concerns to be overcome.
Immediate Annuities
An Immediate Annuity is a policy in which you invest a sum of money in exchange for a regular predetermined income that is guaranteed for an agreed period of time.
What are the advantages of using an annuity?
Once an annuity has commenced, you cannot change the conditions of the contract. This means that the amount and frequency of income payments and the term of the annuity cannot be altered.
You may not be able to access the capital that you invest in an annuity, and where it is possible to commute part or all of your capital, the total amount you receive (including regular income payments already received) could be less than the amount you invested.
The rate of return is fixed once the investment has commenced.
You should consider receiving financial planning and taxation advice to ensure that the annuity meets your financial and taxation requirements in retirement.
General Advice Disclaimer
This article has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial advisor before making any investment decisions. Lee Virgin and Richard Lovell are an Authorised Representative of Hillross Financial Services Limited, ABN 77 003 323 055, AFS Licence No 232705.
Don't leave planning for your retirement until its too late, find out some more information below. If you have any queries or would like further information contact us today.
Allocated Pensions
An allocated pension is a pension payable from a member's superannuation benefit account from which regular income payments are made following retirement or cessation of employment. From the capital invested in the allocated pension account you receive regular, tax-effective, social security effective, flexible pension payments. Your pension payments may continue until all benefits are withdrawn or you take the remaining benefits as a lump sum amount.
Pension payments are set between minimum and maximum amounts each financial year. You are able to access more funds than your maximum allowable pension during the year if you wish but any amount withdrawn over the maximum amount is a withdrawal not a pension payment and so does not enjoy the same tax treatment as a pension payment.
On establishment of the allocated pension, you may elect for the pension to be paid to your spouse, or another dependant, upon your death. If you elect not to have a reversionary pension, then a lump sum is paid on death.
Complying Pensions
A complying pension is payable from an account maintained in your Superannuation Fund from which regular income payments are made following your retirement or cessation of employment. From the capital invested in the complying pension account you receive regular, tax-effective, social security effective pension payments. They are useful in maximising Centrelink benefits as the assets which are used to fund certain types of complying pensions are excluded from the assets test (This will alter from 20th September 2004 to a 50% exemption).
Broadly speaking, an income stream is complying if:
- It is payable for the rest of your life or for a fixed predefined term
- There is no residual capital value
- It cannot be commuted, i.e. you cannot elect for your future payments to be paid in the form of a lump sum though you can roll over to another complying pension
- The pension or annuity payments are set by an Actuary
- Lifetime Pensions
- Term Pensions
- Market Linked Pensions
A complying pension may be established if you are either:
- Retired and have eligible benefits
- Over age 65 and working
- Working and have Unrestricted Non-preserved Benefits
In practice you would not start a complying pension in favour of an allocated pension unless you had social security entitlement concerns to be overcome.
Immediate Annuities
An Immediate Annuity is a policy in which you invest a sum of money in exchange for a regular predetermined income that is guaranteed for an agreed period of time.
What are the advantages of using an annuity?
- An annuity makes budgeting easy because you know when you will receive each payment, exactly how much it will be, and over what period of time it will be paid;
- You can arrange for the annuity payments to be increased by a fixed rate to keep pace with inflation;
- You can choose the frequency of payment;
- Your payments are not affected by market movements or cycles in the economy;
- You can invest either superannuation or non- superannuation money;
- You can use an annuity to provide regular income for a surviving spouse or dependant;
- Part of your income payments may be free of PAYG tax;
- Depending on your circumstances, your annuity may also receive favourable social security treatment;
- You can nominate to receive a lump sum at the end of the term of your annuity.
Once an annuity has commenced, you cannot change the conditions of the contract. This means that the amount and frequency of income payments and the term of the annuity cannot be altered.
You may not be able to access the capital that you invest in an annuity, and where it is possible to commute part or all of your capital, the total amount you receive (including regular income payments already received) could be less than the amount you invested.
The rate of return is fixed once the investment has commenced.
You should consider receiving financial planning and taxation advice to ensure that the annuity meets your financial and taxation requirements in retirement.
General Advice Disclaimer
This article has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial advisor before making any investment decisions. Lee Virgin and Richard Lovell are an Authorised Representative of Hillross Financial Services Limited, ABN 77 003 323 055, AFS Licence No 232705.
