Retirement planning seminar, October 2014
•Télécharger en tant que PPT, PDF•
2 j'aime•1,687 vues
AvSuper provides an overview of the nature and issues for retirement planning in Australia, along with case studies
Recommandé
Contenu connexe
Tendances
Tendances (19)
En vedette
Similaire à Retirement planning seminar, October 2014
Similaire à Retirement planning seminar, October 2014 (20)
Dernier
Dernier (20)
Retirement planning seminar, October 2014
- 2. Disclaimer The following information is general advice and was prepared without taking into account your objectives, financial situation or needs. Therefore you should consider the appropriateness of the advice in light of your own objectives, financial situation or needs before acting on the advice. An AvSuper Product Disclosure Statement on any financial product mentioned in this document should also be obtained and read prior to proceeding with an investment decision.
- 4. Increase to SG contributions The Superannuation Guarantee increases to 12% to be delayed. From 1 July Superannuation Guarantee (SG) rate (%) current law Budget proposals 2014 9.5 9.5 2015 10.0 9.5 2016 10.5 9.5 2017 11.0 9.5 2018 11.5 10.0 2019 12.0 10.5 2020 12.0 11.0 2021 12.0 11.5 2022 12.0 12.0
- 5. Increasing concessional contributions caps Increase concessional cap to $35,000 per financial year • For members over 50 from 1 July 2014 Indexed cap expected to reach $35,000 for all age groups by 1 July 2018.
- 6. Increasing non concessional contributions caps Increase in non concessional cap to $180,000 per annum and $540,000 (bring forward provision) (this means members can contribute $540,000 in a financial year but are then excluded from making non concessional contributions for three years. This provision is only available to members who are under 65 years old) Effective 1 July 2014
- 7. Excess non-concessional contributions withdrawal Withdraw amounts above the limits and their earnings Pay marginal tax rate on the earnings AvSuper: for many this means reduced tax and no penalty on excess contributions For contributions made after 1 July 2013
- 8. Age pension changes Pension age increasing to 70 •For people born after 1 Jan 1965 •Phased in for people born after 1 Jan 1958 •No impact on preservation age
- 9. Age pension changes 1. Indexed by the CPI from 1 Sept 2017 2. Eligibility thresholds freeze 1 July 2017 to 30 June 2020 3. Senior supplement ends June 2014 4. Reduced asset testing deeming thresholds from 20 Sept 2017 5. Untaxed super counted as income for Seniors Health card
- 10. Other changes 1. Budget repair levy for high income earners (over $180,000) 2. From 1 July 2016, ADF members could choose to roll into AvSuper 3. Agreement with India to simplify super for seconded workers 4. Non-pension payments not indexed for 3 years from 1 July 2014
- 12. Aged Pension – Retirement incomes policy – The Three Pillars • Compulsory Super + • Means Tested Age Pension + • Voluntary Savings and Super – Safety net principle
- 13. Changing Life stages 0 10 20 30 40 50 60 70 80 90 100 1929 1969 2009 Change in life expectancy over 80 years in Australia 63 71 Source: United Nations Statistics Division, KPMG 82
- 14. Life expectancy Current age Male (years) Female (years) 55 27.3 30.8 56 26.4 29.9 57 25.5 28.9 58 24.7 28.0 59 23.8 27.1 60 23.0 26.2 65 18.9 21.8 70 15.0 17.6 80 8.5 10.1 90 4.2 4.8 Released: 10 November 2011 Australian Bureau of Statistics
- 15. Access to the Age Pension Affects people born Age Date 1 July 52 to 31 Dec 53 65 ½ 1 July 2017 1 Jan 54 to 30 June 55 66 1 July 2019 1 July 55 to 31 Dec 56 66 ½ 1 July 2021 1 Jan 1957 67 1 July 2023 1 Jan 1958 to 31 Dec 1959 67 ½ 1 July 2025 1 Jan 1959 to 31 Dec 1960 68 1 July 2027 1 Jan 1961 to 31 Dec 1962 68 ½ 1 July 2029 1 Jan 1963 to 31 Dec 1964 69 1 July 2031 1 Jan 1964 to 31 Dec 1965 69 ½ 1 July 2033 from 1 Jan 1965 70 1 July 2035
- 16. Your Pension Rate • Base Pension PLUS • Pension Supplement – Pharmaceutical allowance – Telephone allowance – GST component – Can opt to receive supplement quarterly MINUS • The effect of income or assets
- 17. Centrelink age pension rates Current Age Pension* : •Maximum Age pension for singles = $842.80 per fortnight •Maximum Age pension for couples = $635.30 per fortnight each *Age Pension is indexed on 20 March and 20 September each year. Above rates include pension & clean energy supplements
- 18. Single Couple Lifestyle Modest Comfortable Modest Comfortable Income PW $446 $810 $642 $1,108 Income PA $23,283 $42,254 $33,509 $57,817 Aged Pension $21,912 $21,912 $33,035 $33,035 Estimated capital required $71,000 $650,000 $147,000 $852,000 Aged Pension comparison for homeowners March 2014 ASFA / Westpac Retirement Standard Figures are updated each quarter at www.avsuper.com.au Assumptions: Retirement income generated to retiree age 90; Spouse is 4 years younger; Homeowner; Age Pension included; Standard MoneySmart assumptions - capital stable investment. – earning 6% pa Sources: www. asfa.asn.au and www.moneysmart.gov.au
- 19. Age Pension Presented by Carl Wilson
- 20. Rate using Income Test Rate using Income Test Potential Maximum Potential Maximum Rate using Asset Test Rate using Asset Test Lower Rate Applies Lower Rate Applies Age Pension rate paid
- 21. Couple Homeowner $286,500 $1,134,000 Non-homeowner $433,000 $1,280,500 Asset test thresholds Threshold* Cut-out point** Single Homeowner $202,000 $764,000 Non-homeowner $348,500 $910,500 *Thresholds are indexed bi-annually **Pension reduces by $1.50 per fortnight for every $1,000 of assets above the threshold
- 22. Couple $284.00 PFN $2,825.20 PFN $7,384.00 PA $73,455.20 PA Income Test thresholds Full Pension $ No Pension* $ Single $160.00 PFN $1,845.60 PFN $4,160.00 PA $47,986.00 PA * Pension reduces by 50c for every $1 of income above the Full Pension Threshold Budget proposes freezing thresholds from 1 July 2017 to 30 June 2020
- 23. Example - Homeowner Couple Item Asset Income Home (on < 2Ha) Exempt - Household/Personal $10,000 - Motor Vehicles $18,000 - Caravan $4,500 - Holiday Shack $200,000 - Bank Acct, Investments $140,000 $3,739 pa Allocated Pension $650,000 $4,128.75 pa Totals $822,500 $7,867.75 pa Asset test rate = $455.35 pf combined Income test rate = $1,257.10 pf combined
- 24. Pension Rate Indexation • Twice Yearly • 20 March & 20 September • 27.7% of Male Total Average Weekly Earnings • Pensioner and Beneficiary Living Cost Index
- 25. Pension Payments • Fortnightly in arrears • Payday determined at commencement • Change Payday to suit you • Direct deposit to financial institution • Centrepay • Direct deduction to registered organisations (gas, electricity, etc.)
- 26. Assessment of Income • Earnings from employment • Gross amounts before tax and other deductions • Includes salary sacrifice amounts • Excludes 9.50% employer contribution to super • Less the “Work Bonus” if applicable
- 27. Work Bonus • For those over Age Pension age, who receive a pension • Disregard the first $250 per fortnight of earnings from employment Alan earns $1,300 pf. Of this $250 pf is disregarded. Only $1050 pf is assessed under the Age Pension income test
- 28. Work Bonus Balance • If you do not work, the work Bonus amount is saved • This accumulates as the Work Bonus Balance • Balance can reach a maximum of $6,500 Peter’s Work Bonus Balance is $500. He returns to work & is paid $1000 in a fortnight The $1000 income is reduced by $250 for the Work Bonus, and $500 Work Bonus Balance
- 29. Work Bonus - Couples • Each person can have a Work Bonus • But each must be over Age Pension age and receiving a pension • Jane and Dan earn $600 pf each. • They both receive a Work Bonus so only $350 each is assessed under the pension income test
- 30. Work Bonus • Fortnightly assessment – Fortnightly reporting for some • Applies to income from salary and wages only • Bev can take advantage of the Work Bonus if her private company pays her a salary, but not if she only receives distributions of company profits
- 31. Income Streams -Example • Ted bought an account based income stream at 65 with his $500,000 super • He plans to take $28,000 pa • Deduction Amount* ($500,000 / 18.54 years) $26,969 pa • Assessed income $1,031 pa * rationale – purchase capital is spread over term/lifetime (proposed legislation)
- 32. Assessment of Income • Earnings from employment • Income stream products – Annuities, Allocated Pensions, Term Allocated Pensions, Account Based Pensions – Gross Income – Deduction amount – Beware – withdrawals from these products will affect the Deduction Amount – discuss with FIS or your Financial Planner
- 33. Assessment of Income • Earnings from employment • Income stream products • Super pensions • Farm or business income • Deemed income on financial assets • rental income
- 34. Deeming All financial investments are aggregated (cash, shares, bank accounts, investments, loans) •Single – First $48,000 is assessed at 2% – Remainder assessed at 3.5% •Couples – First $79,600 combined is assessed at 2% – Remainder is assessed at 3.5% …irrespective of actual income received
- 35. Deeming –Example Bruce is single and has the following Bank Account $4,473 @ 1% $44 pa Term Deposit $72,000 @ 4.5% $3,240 pa Shares $28,000 $1,120 pa Total $104,473 $4,404 pa ($169 pf) Bruce’s deemed income First $46,600 @ 2% $932 pa Remaining $57,873 @ 3.5% $2,026 pa Total $104,473 $2,958 pa ($114 pf)
- 36. Deeming Options • Deeming accounts – Offered by most financial institutions – Interest rate reflects deeming rates – Fees, rates and conditions vary –shop around – Are there better options for your needs / timeframe? • Internet accounts • Cash management trusts • Term deposits • Managed funds
- 37. Asset Test • Assets = the things you own – Different thresholds for • Homeowners • Non homeowners – Assets above the threshold reduce pension at $1.50 pf per $1,000
- 38. Assets include… • Motor vehicles, boats, caravans etc. • Household contents and personal effects • Bank accounts, investments, loans • Real estate (net value) • Farms, business (net value) • Antiques, collectables • Gifting
- 39. Valuing assets • Net market value • Motor vehicles, household contents etc – Your estimate • Real estate – Current market value – Australian valuation office • Financial investments – Current value or account balance
- 40. Assets DO NOT include… • Principal home and surrounding land on same title – Up to 2 ha under private land test – No limit under extended land use test
- 41. Assets do not include… • Accommodation bond paid for aged care • Funeral bonds, prepaid funerals • Special disability trusts • Super/rollover investments – Up until Age Pension age – Ministerial exemption – Peter is 65 and his wife Jill is 58; Super in Jill’s name is not included when assessing Peter’s Age Pension
- 42. Assets do not include… • Complying income streams bought before 20 Sept 2007 – 50% or 100% exemption (based on purchase date) – Must meet specific criteria
- 43. Assessment of Gifts Gifting and Deprivation – up to: – Single $10,000 per financial year* – Couple $10,000 combined per financial year* – $30,000 in any 5 year rolling period – Excess over limits • Assessed as an asset for 5 years • Added to financial investments, deemed 5 yrs A $10,000 gift could increase your pension by up to $390 pa but lose interest ) * includes 5 years prior to Pension claim
- 44. • Pensioner Concession Card – All pensioner recipients – Primary entitlements • Health / Pharmaceutical • Transport & Household Bills – Informal Entitlements • Club memberships • Sports & Entertainment • Other concession cards • Commonwealth Seniors Health Card • Health care card • Low income health care card • DVA concessions & State Seniors cards
- 46. Investing with AvSuper • Seven Investment Options • Growth default option (a balanced option of moderate to high risk) • You have the freedom to make an investment choice!
- 47. Investment performance* Investment options Performance to 30 September 2014 1 year 3 year^ 5 year^ 10 year^ Growth (MySuper) Option 9.0% 12.6% 7.7% 6.0% Cash 3.6% 3.5% 3.7% 4.3% Conservative Growth 6.4% 7.4% - - Stable Growth 8.6% 9.7% 7.1% 5.9% High Growth 10.8% 16.3% 9.0% 6.6% Australian Shares 7.6% 16.4% - - International Shares 13.1% 16.8% - - * Past performance is not a reliable indication of future performance ^ Compound average returns
- 48. How much do I need to save for retirement?
- 49. Single Couple Lifestyle Modest Comfortable Modest Comfortable Income PW $446 $810 $642 $1,108 Income PA $23,283 $42,254 $33,509 $57,817 Aged Pension $21,912 $21,912 $33,035 $33,035 Estimated capital required $71,000 $650,000 $147,000 $852,000 Aged Pension comparison for homeowners March 2014 ASFA / Westpac Retirement Standard Figures are updated each quarter at www.avsuper.com.au Assumptions: Retirement income generated to retiree age 90; Spouse is 4 years younger; Homeowner; Age Pension included; Standard MoneySmart assumptions - capital stable investment. – earning 6% pa Sources: www. asfa.asn.au and www.moneysmart.gov.au
- 50. QUESTIONS?
- 51. How can I increase my retirement capital?
- 52. Investing in super Several ways to contribute to super: • voluntary after-tax contributions • government co-contribution • salary sacrifice • spouse contributions
- 53. Retirement planning strategies Your strategy can be tailored to your particular situation •Case studies •Increasing your retirement benefit while still working •Maintaining your income when you reduce working hours
- 54. Transition to retirement Allows access your super to start an income stream while still working •Cut back working hours without reducing your income, or maintain current working hours •Can start from age 55 to 64 •No lump sum payments until condition of release is met •Limited to 10% of account balance at start of each financial year
- 55. Transition to retirement • Funds can be withdrawn if retired • Tax free to those aged 60+ • No tax on investment earnings • Remaining balance can be paid to dependants or legal personal representative on death • 100% counted towards Asset Test
- 56. Employer 9.5% + salary sacrifice One-off rollover Must draw 4% Min pa 10% Max pa Salary Take home pay AvSuper super account AvSuper Income Stream Open a AvSuper Income Stream account
- 57. Case study: Sam • Sam is age 58 • has accumulated $240,000 in AvSuper • current gross salary is $100,000 • wants to increase super while maintaining current after-tax income • Balance at age 65 is currently projected to be $375,064 What strategies may work for Sam? He could consider a Transition to Retirement ** Source: AvSuper Calculator. Investment performance can be both positive and negative. Assumptions: investment earnings of 7%, inflation of 3%
- 58. Without TTR income stream Using TTR income stream before age 60 Using TTR income stream after age 60 Salary SG contributions Salary Sacrifice full time $100,000 $12,750 $0 $100,000 $12,750 $12,250 $100,000 $12,750 $22,250 Income stream Nil $12,000 $15,000* Tax paid (inc Medicare levy and offsets) $26,700 $26,350 (tax offset) - $1,800 = $24,550 $17,981 After-tax income $73,300 $75,199 $74,769 *Net into super $10,625 $21,250 $29,750 Case study results: Sam * Tax free after age 60 Assumes 15% contributions tax Includes Low Income Tax Offset and Mature Age Worker Tax Offset
- 59. Impact on Sam What impact could this have on Sam’s retirement benefit? Estimated Retirement benefit at age 65: •No personal contributions = $375,064 •Using TTR income stream = $422,690 Without any reduction in Sam’s pre- retirement after-tax income!
- 60. Structuring Income Streams in Retirement One of the most important issues of retirement is ensuring you have a well-structured and sustainable retirement income strategy. A strategy that is proving popular is to take an approach that segments your income into tiers that relate to specific retirement time periods. •The first and most important investment tier is Cash. This tier should hold enough money to cover income payments for three to five years depending on your investment risk profile. •The second tier should include a conservative or stable investment option. These options hold a large percentage of fixed interest investments and hold 50 – 70% in defensive assets which reduces the risk in these options when compared to more aggressive investment options. •The third tier in this portfolio consists of investments that are traditionally more risky and volatile such as AvSuper's High Growth, Australian Shares, Growth and International Shares options.
- 61. Structuring Income Streams in Retirement
- 63. AvSuper Member Advice Solution personal advice on issues such as: •contributing extra to your super •co-contributions •salary sacrifice •insurance cover •investment options •Retirement planning/TTR No commissions or ongoing advice
- 64. Impact your super now! Visit the AvSuper website Make a free advice appointment Test your options with AvSuper Calculator Check your balance in Member Online www.avsuper.com.au 1800 805 088
Notes de l'éditeur
- Welcome I would like to welcome everyone to tonight’s Retirement Planning Seminar. This seminar is one of the many benefits of being an AvSuper member We trust that it will provide you with invaluable information about planning for your retirement. Introduction – I would like to introduce a few people here today My name is Silas Dingiria and I am an AvSuper Member Advice Consultant. I will explain exactly what that means shortly. Connie Letizia, is AvSuper’s Member Education Manager and she will take you through the first part of the seminar. Before we start some housekeeping matters: Toilets / Phones / Feedback Format Tonight’s presentation on Retirement Planning should take approximately an hour and a quarter with time after for any questions.
- Caps for older members not indexed so general cap will catch up then one cap will apply to everyone – from about 2018 Positive to note caps for older members not based on their super balance or income Eligibility for higher caps based on age at 30 June of previous year
- Caps for older members not indexed so general cap will catch up then one cap will apply to everyone – from about 2018 Positive to note caps for older members not based on their super balance or income Eligibility for higher caps based on age at 30 June of previous year
- No details on what interest charge will be 2012-13 refund for first excess still applies
- The nature and length of retirement…. 1929: Short childhood – then worked until you were too old to work and had a short retirement 1969: A new concept – adolescence. A time when children were old enough to contribute and work – but no longer expected to. Instead focus on their education etc. Adolescence ended before age 20…… Fast forward – 2009 We all know adolescence doesn’t end at age 20!! Much longer period of study and in a sense self-indulgence for our youth before they take on major responsibilities in life. And if they aren’t even thinking of moving out of Mum and Dad’s home and buying a property – you can bet they aren’t thinking of super! But even more interesting – what&apos;s happening at the other end of the spectrum. A long period of retirement. The time to save for retirement – the purple block. Look what’s happened to this…. Commonwealth Age pension – introduced in 1909 – life expectancy from birth was under 60 essentially a “disability” pension
- The life expectancy table is generated from age-specific death rates and the resulting values are used to measure the mortality, survivorship and life expectance. (wording from the ABS website) These rates are based on 2008-2010 data. So here you can see the life expectancy for people who are currently 65 is age 83.9 for men and 86.8 for women…… In a way, it would be much easier to plan if we knew that these figures were definite, but of course, they are only statistics and therefore indicative only
- Go through this slowly!!! To give an indication of what might be required we have statistics from ASFA and Westpac ASFA is the Association of Superannuation Funds of Australia Limited. Together with Westpac they have provided detailed annual budgets for both Modest and Comfortable retirement living standards for Australians. Go through figures Single/Couple Modest – Single/Couple Comfortable Modest = able to pay the bills and have basic necessities Comfortable = eating out, wine, better clothes, improved quality whitegoods, private health insurance, a better car, occasional overseas holiday &apos;Older women currently comprise 60.8% of age pension recipients and most are dependent upon government pensions for most of their income, ___________________________________________________________________ The figures are based on couples and female singles, aged 70 who are homeowners. The reason they used females is because they traditionally live longer, hence would require more funds in retirement. .
- The pension you receive will be the lower amount after both tests have been applied.
- The Asset test.. What is counted as an “asset” for Centrelink purposes? Almost everything except your family home (contents, cars, investments) …..Funeral Bonds, prepaid funerals, special disability trusts …. also superannuation if you are &lt; age pension age are exempt from the asset test. This explains to you that, as a single person Homeowner, you will receive a full age pension if your assets are less than $178,000 but a part pension up to $645,500 when it cuts out altogether And for a couple who own their home If your assets are valued at under $252,500 you should be eligible for the full pension and then a part pension up to assets reaching $957,500, when you would then receive no Age Pension. The pension is reduced by $1.50 pf for each $1,000 of assets over the lower limit.
- Once again There are thresholds from when you could expect to receive the full pension down through part-pension and the final cut out threshold where you would not expect to receive any pension. The pension is reduced by 50c for every $1 earned above the threshold.
- (OUR OPPORTUNITY TO ‘SELL’ AvSuper!) I know you are all very keen to know the detail of AvSuper’s investment performance, so we will cover this as the first part of the presentation. Having the investment mix that’s right for you, for your superannuation money, is as important as getting your money into superannuation in the first place. With your AvSuper fund you have a range of choices, other than the default fund Growth, that might be more appropriate for you. (next slide)
- What’s important with superannuation and long-term investing, you must always concentrate on the long term results as your guide. It’s also important to understand that past performance is never a guarantee of future performance. It is only a guide to help you understand levels of volatility between different assets classes and the difference between short and long term investing. Weekly returns and unit prices are posted on the website each month – in both graphical and tabular form
- Go through this slowly!!! To give an indication of what might be required we have statistics from ASFA and Westpac ASFA is the Association of Superannuation Funds of Australia Limited. Together with Westpac they have provided detailed annual budgets for both Modest and Comfortable retirement living standards for Australians. Go through figures Single/Couple Modest – Single/Couple Comfortable Modest = able to pay the bills and have basic necessities Comfortable = eating out, wine, better clothes, improved quality whitegoods, private health insurance, a better car, occasional overseas holiday &apos;Older women currently comprise 60.8% of age pension recipients and most are dependent upon government pensions for most of their income, ___________________________________________________________________ The figures are based on couples and female singles, aged 70 who are homeowners. The reason they used females is because they traditionally live longer, hence would require more funds in retirement. .
- So here are the different ways you can get your money into your AvSuper superannuation fund…. We will go through scenarios using these different contribution types but just on the spouse contribution… If your assessable income + reportable fringe benefits is $10,800 or less, your spouse can make a contribution to your fund up to $3,000 and receive an 18% rebate (capped at $540pa). It phases out once your income reaches 13,800. (treated as a non-concessional contribution – no tax going in and tax free coming out) The good thing about this type of contribution is that all of the money contributed by your spouse to your fund goes in – no tax on entering the fund. (tax free on withdrawal too, as like voluntary/after-tax conts) (next slide)
- Tonight we will address these issues as we work through case studies. Stress – first two case studies will be about boosting your retirement lump sum.
- Transition to retirement gives people between 55 and 65 and still working, more flexibility with their work by utilising their superannuation. It essentially allows you to reduce your working hours without reducing your income (if that’s something you would like to do). It allows you to access your funds via an income stream arrangement. However, you cannot access a lump sum until a condition of release is met (e.g. retired from the workforce or reached age 65). No work test means anyone under 65 can contribute to superannuation. However if you are over 65 the work test must be met at some point in the financial year in order to make member contributions, which is being gainfully employed (employed or self employed) for at least 40 hours in a period of not more than 30 consecutive days. (born before 1 July 1960 preservation age 55 Born after 1 July 1964 preservation age 60)
- Our AvSuper members wanted a AvSuper income stream product that they could use…and here it is. The AvSuper Income Stream product comprises two different types of income streams – the Transitions to Retirement income stream and the Retirement income stream. If you had set up a Transition to Retirement income stream and later on retire, you can ‘convert’ your Transition to Retirement income stream to a Retirement income stream within AvSuper. Remember that once you have retired, you can also access lump sums. If this money is left to a spouse or dependant child it is tax free, however for others tax will apply. As with any superannuation investments, returns cannot be guaranteed. 100% counted towards Asset Test, the income however is not ‘deemed’ and therefore more Pension friendly under the Income Test
- One application form Need to prove id Worth considering rolling money into AvSuper first to consolidate
- Amelia – on track for a retirement income well above a modest level. Her goal – to get as close as possible to comfortable level. Reason: GIVE HER MORE CHOICES GIVE HER MORE ASPECTS OF A COMFORTABLE LIFESTYLE
- NB – NO CHANGE TO HER AFTER TAX INCOME She could reduce her after tax income prior to retirement and save even more – but this example shows how to use TtR to boost retirement income without reducing your income before retirement.
- More capital in retirement will give more choices!