Do you have more than one super account?

Did you know there is over 10[1] million Australians with a superannuation account, approximately 36% of which hold more super accounts, which make up  $20.8[2] billion in ‘lost super’. Is some of that yours?

Find it

Moved house? Changed jobs? Don’t know where your teenage self stashed your super? It’s easy to track it down.

Consider Combining it

Save on fees, reduce your paperwork, keep track of your hard earned money, grow your retirement fund.
But seek professional financial advice first to make sure combining is beneficial for you.

Ask your financial adviser

Many websites offer to help find and combine your super. It is quick, easy and free. You can ask your
financial adviser for help, check with your known superannuation provider or the Australian Tax Office.

Grow it

A professional financial adviser can help you find an appropriate superannuation fund that will grow your
hard-earned income ready for your retirement – and the sooner you get on top of this, the better!

We’re happy to help. Contact Dev Sarker today at 1300 71 71 36.

[1] https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/Super-accounts-data/Multiple-super-accounts-data/

[2] https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/Super-accounts-data/Lost-and-unclaimed-super-by-postcode/

Superannuation is the one thing you could do for your financial future this year, that could make a big difference to your retirement income. But how much do you really need?

That’s a big question.

As we know, everyone’s needs are different, unexpected expenses just crop up and none of us
know how long we will actually be in retirement. Of course, we expect the age pension to be around in years to come, but just how generous the country can afford to be with this payment, and who will be eligible, is also unknown as this may change year to year and none of us have a crystal ball.

So what exactly are the big expenses in retirement we need to budget for?

• Healthcare
• Groceries
• Utilities
• Travel
• Entertainment
• Planned or unexpected expenses such as a new car or home renovations

And what are the major impacts that could affect our superannuation?

• How long you live
• The rate of inflation
• How much you earn on investments
• Whether or not you have dependants – yes some retirees have dependants!

It is wise to have a plan when it comes to your retirement income and a professional financial adviser can help you get a plan in place that is easy for you to manage now, and meets the needs of your ideal retirement.

If you want to get your super sorted this year, give Dev Sarker a call today on 1300 71 71 36.

If you’re a recent retiree and looking to increase your superannuation savings, here’s some good news for you.

The Australian Government is proposing to make it easier for recent retirees to save more super by allowing them to contribute for a year without having to show that they’ve been ‘gainfully employed’.

The current rules

Currently, anyone below 65 can contribute to their super regardless of whether they work or not. But those aged between 65 and 74 need to meet the work test before they can make super contributions. To pass the test, they have to show that they’ve been gainfully employed for at least 40 hours over 30 consecutive days in the financial year they plan to contribute.

The government has already given members with a total super balance of less than $500,000 some flexibility to further grow their super. These individuals can carry forward any unused amount below the concessional contribution cap of $25,000 on a rolling basis for five years starting from 1 July 2018. They can use their unused cap amounts from 1 July 2019.  But people between 65 and 74 must still meet the work test before they can make these ‘catch up’ contributions.

The proposed measure

Now, to encourage this age group to save more for retirement, the government is proposing to give individuals who don’t meet the work test an extra year to beef up their super savings. From 1 July 2019, those aged between 65 and 74 with a super balance below $300,000 will be able to make voluntary contributions in the first financial year that they don’t satisfy the work test requirement. Once eligible, they don’t have to remain under the $300,000 balance cap during the 12 month period.

The annual concessional and non-concessional contributions caps will continue to apply, but members can access any unused concessional contributions cap amounts they have carried forward.

The government will assess total super balances at 30 June of the financial year in which members last met the work test. So those who retire in the 2018–19 financial year may be eligible to make additional contributions.

Seek professional advice

If you’re considering contributing to your super under the proposed work test exemption, it may be wise to speak to your adviser to see how making additional super contributions may work to your advantage. 

Speak to Dev Sarker today on 1300 71 71 36!

A new scheme may help you make your dream of owning a home come true.

High property prices have made owning a home unattainable for many prospective first time buyers. But the First Home Super Saver scheme, passed by the Australian Government in December 2017, may help keep their dream of buying their first home alive.

The scheme helps you save for your first home by allowing you to use the concessionally taxed superannuation environment to build a house deposit. Eligible voluntary contributions are limited to $15,000 in any one financial year and $30,000 across all financial years. They include voluntary concessional and voluntary non-concessional contributions.

You can withdraw eligible contributions, plus associated earnings, from 1 July 2018 to buy or build a first home. You may be allowed to withdraw 100 per cent of eligible non-concessional contributions and 85 per cent of eligible concessional contributions.

Check if you’re eligible

To be eligible to have your contributions released, you must be aged at least 18 and must not have owned property in Australia or asked the Commissioner of Taxation to release funds previously under the scheme. If you have owned property, you may still qualify if the Commissioner determines that you have suffered a financial difficulty that led to the loss of your property.

The Australian Taxation Office will assess eligibility to withdraw contributions on an individual basis. This means you and your partner or a family member may each apply for a release of contributions to buy the same property.

Once your super fund releases your contributions, the Commissioner of Taxation will withhold tax. This will be calculated at your marginal tax rate – less a 30 per cent offset.

You have up to 12 months from the time you receive the first amount to sign a contract to buy or build a house. If you need more time, you may apply for an extension of up to 12 months.

Get advice

It’s important to seek professional advice before you consider making or withdrawing voluntary super contributions to buy your first home.

Contact Dev Sarker on 1300 71 71 36 today to see how the scheme can work for you!

You may be aware of the proposed superannuation changes that the Government announced in the May 2016 Federal Budget. Last Thursday, Treasurer Scott Morrison advised that some of these proposed measures have changed. This article will go some way to providing you with the latest information.

With superannuation being a moving feast it can be hard to keep up and know how you are affected. Your financial adviser can help you to understand these changes in relation to your personal circumstances and help you understand what opportunities this may present.

What are the changes?

The lifetime contribution cap has been abolished

In the May 2016 Budget, the Government proposed the introduction of a $500,000 lifetime cap on non-concessional (after-tax) contributions to superannuation.

What has changed?

This lifetime cap of $500,000 has been replaced by these proposed changes, starting 1 July 2017:

• a non-concessional contributions cap of $100,000 per year
• individuals under 65 as at 1 July each year can ‘bring forward’ three years of non-concessional contributions
• individuals with over $1.6 million in super can no longer make non-concessional contributions.

These proposals won’t take effect until 1 July 2017, so the existing non-concessional contributions caps will continue to apply for the current 2016-17 financial year:

The work test will now continue from age 65

In the May 2016 Budget, the Government announced it was removing the work test for contributions made on or after an individual’s 65th birthday. This would have allowed individuals over age 65 to contribute to super without having to be gainfully employed for at least 40 hours over a consecutive 30-day period.

What has changed?

This change has been abandoned and so individuals looking to contribute to super from age 65 will still need to satisfy the work test, so the current rules will continue to apply.

The ‘catch-up’ of concessional contributions will be delayed

In the May 2016 Budget, the Government announced that from 1 July 2017, the Government proposed to reduce the cap on concessional contributions (such as employer and salary sacrifice contributions) to $25,000, and then allow individuals to ‘catch-up’ on any unused concessional contributions within the next five years, if their superannuation balance was less than $500,000.

What has changed?

While the reduced concessional contributions cap is still proposed to apply from 1 July 2017, the ability to ‘catch-up’ on any unused concessional contributions has been delayed until 1 July 2018.

Do you have a question?

Despite this new round of changes, superannuation remains a very tax-effective way for you to build up your retirement savings. However, these proposals need to successfully pass through Parliament before becoming law and may be subject to further change during this process.

For more information on how these changes could affect you, call us for an appointment on 1300 71 71 36.

Options to consider when handling your spouses’ super when they pass away

• You can choose to take your spouse’s superannuation death benefit as a lump sum, a pension or a combination of both
• A lump sum can allow you to pay off debts, whereas a pension provides a regular income
• Take into account the different tax implications as it could affect your social security entitlements

When coping with the death of a loved one, the last thing you want to deal with is tough financial decisions. But if your husband or wife passes away, it’s good to be prepared in order to handle their super.

Depending on your financial situation, you may prefer to take your partner’s superannuation death benefit as a lump sum, an income stream or a combination of the two. Each option has its pros and cons, so you’ll need to work out which one provides an option more suitable for you. Here are some things to keep in mind.

Taking a lump sum

If you choose to take your spouse’s death benefit as a lump sum, you won’t have to pay any tax on it, regardless of your age or the age of your spouse when they passed away.

Taking your spouse’s death benefit as a lump sum is not only tax-effective, it also means you can use the money to pay off any debts — for example, your home, car, personal loans or credit cards.

Plus, if you take the benefit as a lump sum, you may be eligible for an anti-detriment payment from your spouse’s super fund. Basically, this is an additional benefit paid by the fund to offset the tax paid on your spouse’s super contributions. But check with your spouse’s fund first, as not all funds offer the anti-detriment payment ― and from 1 July 2017¹, it could be removed altogether.

Bear in mind though that if you’re over 65 and retired when you receive a lump sum death benefit, you won’t be able to reinvest it in super. It will also increase your assessable assets, which could affect your social security entitlements.

Keeping the money in super

As an alternative to taking a lump sum from super, you may be able to receive a death benefit pension. If you’re over 60 — or your spouse was over 60 when they died — your pension payments will be tax free.

If you’re under 60 and your spouse also dies before turning 60, the taxable component of the pension payment will be taxed at your marginal tax rate. You will also be entitled to a 15% tax offset. Keep in mind that choosing a pension means you won’t be eligible for the anti-detriment payment. On the upside, if you keep the money in super it will provide you with a regular income and continue to grow over time. Plus, it might have less of an impact on your social security entitlements than a lump sum benefit.

Weighing up your options

So which option is right for you? It depends entirely on your circumstances. Before making a decision, think carefully about your tax position, cash flow and the potential impact on your social security benefits.

Let’s take a look at Clare and Dominic, a retired couple in their late 60s who are both receiving a part Age Pension from Centrelink.

Clare has $400,000 in super, and draws $24,000 from her super each year as an account based pension. Clare commenced her pension prior to 1 January 2015 and retains the previous Centrelink treatment². The deductible amount on the pension is $24,000, which means none of the pension payment is assessed by Centrelink from this account based pension. Clare has nominated Dominic as a reversionary beneficiary, which means her account based pension will revert to Dominic if she dies.

Dominic also draws a $25,000 defined benefit pension from his own super each year. The couple, as homeowners, have $30,000 in savings, plus a car valued at $8,000 and home contents worth $10,000.

Sadly, Clare passes away and Dominic is faced with a decision. He can either:

• Continue receiving the account based pension.If Dominic keeps receiving Clare’s account based pension, it won’t affect his Centrelink entitlements. Based on his income and assets, he’ll still be eligible for an Age Pension of approximately $12,090 a year³. However, when the assets test changes on 1 January 2017, his Age Pension will be reduced to around $7,277⁴ a year.
• Take the death benefit as a lump sum. Dominic finds out that if he cashes in Clare’s $400,000 super balance, her fund will also pay an anti-detriment payment of $35,300. But this cash boost will also impact Dominic’s Centrelink benefits, reducing his Age Pension payments to $5,629 a year. And from 1 January 2017, these payments will be reduced to $4,972.

Choosing the lump sum option will give Dominic an extra $35,300 straight away — which will come in handy if he has substantial debts to cover. On the other hand, his Age Pension will be worth more each year if he hangs on to Clare’s account based pension.

In this case, Dominic needs to look at his short- and long-term financial goals to work out which option will be best for him overall.

A mix of both

The good news is that you don’t just have to choose one option or the other. With most super funds, you can receive your spouse’s death benefit as a combination of a lump sum and an income stream. So you might consider cashing in part of your spouse’s super and taking the remainder as an account based pension. That way you can pay off any outstanding debts and still have a stable income to fund your retirement.

Getting the appropriate advice

Rules around superannuation death benefits are complex, and it can be difficult to know which option is appropriate for you. Speak with a BlueRocke financial adviser to get expert guidance and make a difficult decision a little bit easier.

¹ In the 2016 Federal Budget, the Government has announced they will abolish anti-detriment payment effective from 1 July 2017. At the time of writing, this proposal has not been legislated.

² Account based pensions commenced prior to 1 January 2015 retain its previous treatment if the owner was in receipt of a Centrelink/DVA income support payment continuously since 31 December 2014.

₃ This amount is an annualised amount of fortnightly age pension payment of $465 and includes pension and energy supplement. Calculated based on Centrelink rates and thresholds current as at 1 July 2016.

₄ Estimated based on maximum pension entitlement as at 1 July 2016 and legislated lower asset threshold from 1 January 2017.