Three timely considerations to support retirement under the new super rules

On November 23 last year, the complex proposals heralding Australia’s biggest change to super in 10 years received the approval of the Senate. And while the reforms mean that it will soon become much harder to build your wealth entirely in super, the finalisation of the legislation clearly reveals how the government intends those new rules to be implemented.

Of particular importance is knowing that there is now limited time available to review your current strategies and maximise your wealth in super before the new rules come in to effect. To start taking advantage of this six-month short window of opportunity, we suggest you investigate the following three considerations as a priority.

1. Review your eligibility to make non-concessional contributions to super before 30 June 2017

You might want to consider bringing forward non-concessional contributions into this current financial year. And it’s important not to wait – if your total super balances reach $1.6 million after 30 June 2017, then you’ll not be able to make any additional non-concessional contributions. And with the prospect of those limits being further reduced at the next federal election, relying on being able to get the money in later has its own risks.

2. Weigh up the advantages of holding your money inside super

Tax savings can be significant when compared to holding the same amount of money in a higher tax rate environment – particularly when compounded over 10 to 20 years. If you’re considering the sale of an asset, for example property, or transferring shares to boost your super; strategies such as ‘contribution reserving’ can help you manage the capital gains implications.

3. Consider excess funds if you’re a retiree affected by the $1.6 million pension transfer limit

You’ll need to make several decisions regarding any funds above the $1.6 million pension transfer limit – from re-distributing them to an eligible spouse to rolling excess amounts back to the accumulation phase. If you hold an SMSF, the latter is expected to be the most tax-effective and administratively efficient option. It’s worth noting that although amounts above $1.6 million cannot be held in a tax-free retirement pension account, they don’t have to leave the super system altogether and the tax rate within the super accumulation phase is still very attractive.

The reforms are complex so consider seeking advice to understand the full picture

Ask yourself, "How do I want my retirement assets to look not just at 1 July 2017 but in two, five and 10 years’ time". While that’s not always easy to predict, understanding the new rules and the potential impact they may have on your long-term planning may give you a better chance of reaching your retirement goals.
This insight is an update to the version originally published on this website in December 2016.

Any strategies or recommendations are general in nature and do not take into account your objectives, financial situation or needs. As always, your personal circumstances are critical when considering any financial strategy and seeking professional personal advice is highly recommended. Further any forward looking statements are based on current expectations at the time of writing. No assurance can be given that these statements will prove to be correct.

Interested in learning more?

What can you do if you hold more than $1.6 million in pensions under new super rules?

Nerida Cole, Managing Director, Head of Advice

The introduction of the government’s new super rules is fast approaching. And the challenge facing many retirees is how to manage money that cannot be...Read more

Why China's economic transition should continue to foster growth

James Brown, Portfolio Manager, Walsh & Company

China is a unique economy, given both its scale and the fact that it is effectively centrally controlled by the Chinese Communist Party (CCP) and Central...Read more

Need more information?

It’s important to have the knowledge you need to make an informed and confident decision about your retirement savings.

To help you explore your options, you can enrol in our education seminars with our in-house experts, or to talk to one of our directors, sign up for a free initial consult*.

In this section

Our insights

Nerida Cole

Managing Director, Head of Advice

Nerida is a highly experienced financial advisor with a specialisation in all aspects of superannuation including self managed super funds (SMSF), retirement planning and wealth-building strategies. Nerida is responsible for the training, development and mentoring of all of Dixon Advisory’s team of Financial Advisors Australia wide.

Read More

Share

Want to keep informed?

Receive regular insights on a range of financial and investment topics.