Superannuation contributions and pensions, Geelong

The transition to retirement is not always a straightforward one for clients in Geelong. Superannuation and pensions is a major part of any retirement planning, and, for many, their superannuation is held in a self-managed superannuation fund (SMSF).

Before you make superannuation contributions or consider establishing a pension from your SMSF, you need to be aware that you are responsible for ensuring that all the necessary rules and requirements are met. As there are a number of limitations and tax implications affecting SMSF contributions and withdrawals, we strongly advise that you consult CD&G Accountants in Geelong for individual advice that is targeted to suit your situation.

When you are making contributions to your SMSF, this is known as the “accumulation” phase. These contributions remain preserved in the member’s account until the member satisfies a condition of release at which time the funds can be withdrawn from the fund.

A member can, however, elect to establish a pension with their SMSF. There are a number of reasons for an account holder to move to this “pension phase”. These include:

  • Retirement
  • Strategy to minimise tax prior to retirement
  • Temporary or permanent incapacity of the member
  • A need to meet current living expenses.

The most common type of SMSF pension that we recommend to our Geelong clients is the transition to retirement pension. This is also commonly known as a “transition to retirement income stream” (TRIS). Relatively easy to understand, the TRIS is essentially an account-based pension with a minimum requirement and no restrictions on the timing of any payments. One restriction is that members can only withdraw up to 10 percent of their balance annually.

Another factor when considering a superannuation pension is that when a member’s balance is in pension phase, no further contributions can be made to that member account within the fund. All is not lost however – there are still ways you can continue to contribute to super. A new account can be set up in the accumulation phase into which you can contribute, with the normal contribution rules and limits continuing to apply.

Our advisors will assess and compare the pension benefit and investment differences and options when advising you on your superannuation contributions, the difference in insurance coverage that may apply, and any differences in fees that may be due and payable. If you don’t need the cash to meet your living expenses it may be more beneficial to retain any capital and earnings within your SMSF to maximise growth. Contact CD&G Accountants and let us advise you on the most effective way to grow your wealth and save for retirement.

We can also provide services for all SMSF tax returns and SMSF administration.