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Transition to retirement update

A transition to retirement allows older workers who are moving towards retirement to continue working, while at the same time, draw down on some of their superannuation benefits. Since its introduction in 2005 by the Australian Government, the policy has been used by many Australians as a strategy to save tax and boost super before retirement.

Under the tax office’s new transition to retirement rules, those who have reached their preservation age are now able to reduce their working hours without having to reduce their income.

Individuals can do this by topping up their part-time income with a regular ‘income stream’ from their super savings. Under previous rules, taxpayers could only access their super once they turned 65 or retired.

Under the new regulations, individuals can only access their superannuation benefits as a ‘non-commutable’ income stream. A non-commutable income stream cannot be converted into a lump sum. This means that individuals cannot take their benefits as a lump sum cash payment while they are still working. Instead, they must take their superannuation benefits as regular payments.

Employers are still required to make compulsory super guarantee contributions for all eligible employees, which includes people on a transition to retirement.

Those considering the tax aspects of retirement or a transition to retirement should seek financial advice to find out what is best for their individual circumstances.

Posted on 2 February '16 by , under Super.

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What to consider when consolidating your super

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds' policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

  • Exit fees
  • Insurance policies
  • Investment options
  • Ongoing service fees
  • Performance of the funds

Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready:

  • Your tax file number.
  • Proof of identity. This could include your driver's license, birth certificate or passport.
  • Your fund's superannuation product identification number (SPIN).
  • Your fund's unique superannuation identifier (USI).
  • Details of your previous fund.

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