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Transitioning into retirement: What you should know

Deciding on your retirement funding options comes down to personal choice.

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If you’re close to retirement, chances are you’ve already spent time thinking about how to tap into your superannuation when you retire.

Broadly speaking, you have a few options when you retire, as long as you’ve reached the minimum ‘preservation age’ when you’re allowed to access your super.

If you were born after 1 July 1964, your super access age is 60.

You can check out your personal preservation age on the Australian Tax Office website.

Deciding on your retirement funding options comes down to what makes the most sense for you.


Leaving your super alone

There’s actually no legislation that says you must start drawing out your super savings when you retire.

In fact, if you don’t need your super to fund your living expenses, you can simply leave it where it is.

You can keep investing your super, and even add money into your account if you pick up some work income, and make concessional contributions up to the annual limit (which are taxed at 15%), or personal non-concessional contributions up to the annual limit using after-tax money.

You can make voluntary contributions into your super up until age 75 (excluding a home downsizer contribution), while employer contributions can be contributed at any time, regardless of age. 

By not starting a pension you’re not forced by the government to start withdrawing regular payments.

The government also allows people aged 55 and over to to add up to $300,000 into their super account if they sell their principal place of residence, subject to a range of conditions. 

Keep in mind that if you do leave your money in a super accumulation account, all investment earnings will continue to be taxed at the 15% rate.

But that rate is still likely to be lower than what you would pay if you decided to withdraw your super and invest it into another asset, such as an investment property, where the rental income would be taxed at your full marginal tax rate.

Leaving all your money in super after you’ve retired means you can’t withdraw money as a regular pension income stream. To do that you generally need to roll at least some of it over into an account-based pension.

However most super funds will let you withdraw lumps sums whenever you like if you’ve met all release conditions and have the money transferred into your bank account. A minimum amount of $6,000 generally must be left in your account.

You should also be mindful that if you leave money in your super account or account-based pension and die that there may be tax consequences for non-dependant beneficiaries (see below).


Starting a pension stream

On the other hand, if you want to use all of your super to have a regular income stream once you retire, you’ll need to roll it over into a pension account.

You’ll need to contact your super fund manager to do this or, in the case of a self-managed super fund, ensure the trust deed allows for the payment of a pension income stream.

Your basic options are to either roll your super over into a pension product offered by your current super fund or to transfer it over to another pension product provider.

Most account-based pension products enable monthly, quarterly, half-yearly or annual payments, which will continue until your account balance runs out.

Be aware that once you start up a pension you’re required to withdraw a set percentage of your account balance every financial year, which increases as you age.

The minimum pension account withdrawal amounts are shown on the ATO’s website.

There are a range of advantages from setting up a pension income stream versus keeping your super money in accumulation mode.

Most importantly, if you’re aged over 60 and retired, your pension payments are tax-free and so are any investment earnings generated inside your pension account.

You can use your own pension income stream to supplement the government Age Pension if you’re eligible to receive it. And you’re also able to withdraw lump sums from your pension account at any time.

Upon your death, non-dependents who receive money left in a pension account will need to pay tax on the taxable component. The amount of tax payable may be reduced by tax offsets. 


Doing both

If you’re wanting total financial flexibility in retirement, you could consider leaving part of your money in super, rolling over some of it into an account-based pension, and also withdrawing lump sums whenever you need to.

There are a range of benefits from adopting a combination of your options, although there may also be potential tax consequences for both you and your beneficiaries.

Managing the combination of a super accumulation account, an account-based pension, an Age Pension entitlement (if eligible), potential investment earnings outside of super, and irregular lump sum payments, can be highly complex.

Using the services of a licensed financial adviser is a worthwhile consideration as you weigh up all of your retirement options.

 

Important information and general advice warning

Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee of Vanguard Super (ABN 27923449966) and the issuer of Vanguard Super products. The Trustee has contracted Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) to provide some services to members of Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc. (collectively, "Vanguard"). The retirement savings tips provided above are general in nature and don’t take into account your personal financial objectives, situation or needs. You should consider your objectives, financial situation or needs, and the Product Disclosure Statement (PDS) and Target Market Determination (TMD) before making any decision about Vanguard Super. The PDS and TMD can also be accessed free of charge by calling 1300 655 101. Before you make any financial decision regarding Vanguard Super, you may wish to seek professional advice from a suitably qualified adviser. Any past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. The information above is current as at time of publication and was prepared in good faith and we accept no liability for any errors or omissions.

 

 

Tony Kaye, Senior Personal Finance Writer
May 2024
vanguard.com.au

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About this policy

METRISCOPE Financial Pty Ltd (METRISCOPE) recognises the importance of privacy and is committed to protecting the privacy of individuals when handling their personal information.

This Privacy Policy explains in an open and transparent manner how METRISCOPE will collect, hold, use, disclose, protect and otherwise handle your personal information in accordance with the Australian Privacy Principles contained in the Privacy Act 1988 (Cth).

When you provide METRISCOPE with personal information you consent to its use, disclosure and handling of your personal information in accordance with this Privacy Policy as amended from time to time.

Your Personal Information METRISCOPE collects and holds

METRISCOPE will collect and hold your personal information for the purposes of providing our investment services and products to you.

The kinds of personal information that we may collect and hold include your name, date of birth, tax file number, email address, home address, phone number and bank account details.

Where you do not provide us with all or some of your personal information that we request then we may not be able to provide you with our services.

Personal information collected and held

METRISCOPE collects your personal information directly from you and through our intermediaries when you complete fund application forms. METRISCOPE may also collect data from its registry services.

Other ways METRISCOPE may collect your personal information includes in person or by telephone, letter, facsimile or email.

METRISCOPE may hold personal information collected in both physical and electronic storage facilities including paper-based files and computer databases.

How METRISCOPE uses and discloses personal information

METRISCOPE may use and disclose personal information collected and stored to enable us to provide the financial services and products to you and for other related legal purposes.

For example, we may use and/or disclose your personal information to:

  1. verify your identity;
  2. administer your accounts, investments and the services we provide to you;
  3. comply with laws, regulations, rules, directions or requests from METRISCOPE’s regulatory bodies and/or other government agencies;
  4. comply with METRISCOPE’s own internal policies and procedures.

Where it is legal and necessary to do so, METRISCOPE may disclose your personal information for the purposes described above to our suppliers, contractors, professional advisers, government agencies and regulators or parties involved in the management of your account.

These third parties may be in other countries where laws in relation to the processing of personal information are not consistent with the Australian Privacy Principles or the Privacy Act.

While METRISCOPE may take steps to try and ensure that these third parties do not breach the Australian Privacy Principles in relation to your personal information, the overseas recipient may breach the Privacy Act and/or the Privacy Principles and this may be due to that countries own laws.

By providing us with your personal information you accept that we may make disclosures to overseas recipients on this basis.

METRISCOPE will protect your personal information

METRISCOPE will take all reasonable steps to protect your personal information it holds from misuse, interference and loss, and from unauthorised access, modification or disclosure using both physical and electronic security measures.

By providing us with your personal information over the Internet you accept that such information will be transmitted at your own risk as the security of such information cannot be guaranteed.

METRISCOPE will not retain your personal information, unless required by law, if it is no longer needed for any purpose for which we may lawfully use or disclose it.

Access, correction and complaints regarding your personal information

You may request METRISCOPE to provide you with access to any of your personal information held by us. You should promptly notify METRISCOPE if you become aware that any of your personal information held is inaccurate, out-of-date, incomplete, irrelevant or misleading.

If you have any concerns about whether METRISCOPE has complied with this Privacy Policy or the Privacy Act you can raise your concerns with our Compliance Manager.

You can contact our Compliance Manager via email, fax, telephone or by post on the details set out below. Our Compliance Manager will investigate your complaint and advise you of the outcome.

If you are not satisfied with our response you can complain to the Office of the Australian Information Commissioner.

You can contact our Compliance Manager using the contact details below:

Compliance Manager

compliance@metriscope.com.au

Phone: 02 9659 3955

Fax: 02 9659 4912

Address: PO Box 2036, Castle Hill NSW 1765

We will acknowledge receipt of a complaint within 1 business day, however, where this is not possible, acknowledgement will be made as soon as practicable. We will then investigate the complaint and respond to you within 30 days. Some complex matters may require an extension to thoroughly investigate the complaint and bring it to resolution. If additional time is required, we will advise you in writing.

If you are not fully satisfied with our response, you can contact an external body. In cases of privacy related complaints, this is generally the Office of the Australian Information Commissioner (OAIC).

The contact details for OAIC are:

Mail GPO box 5218 Sydney NSW 2001

Phone 1300 363 992

Email enquiries@oaic.gov.au

Online www.oaic.gov.au

You may also direct privacy complaints related to financial advice to the Australian Financial Complaints Authority (AFCA). The contact details for AFCA are:

Mail GPO Box 3, Melbourne, VIC 3001

Phone 1800 931 678 (free call)

Email info@afca.org.au

Online www.afca.org.au

Privacy Policy updates

We may update this Privacy Policy from time to time to take into account changes in our practices for the handling of personal information by publishing an amended Privacy Policy. You should regularly review the most recent version of this Privacy Policy.

Complaints Policy

Complaints Resolution

If you have a complaint we would like you to tell us so that we can address the matter. We are committed to the efficient and fair resolution of complaints.

How you can lodge a complaint

If you wish to make a complaint, please contact our Compliance Manager on the information below:

Compliance Manager
compliance@metriscope.com.au
Phone: 02 9659 3955
Fax: 02 9659 4912
Address: PO Box 2036, Castle Hill NSW 1765

Our complaint process is free of charge to you. Your complaint does not need to be in writing. If you require any assistance to lodge your complaint, please let us know. You may also choose to authorise a representative to make a complaint on your behalf.

We are bound by the Privacy Act, and we manage and protect your personal information in accordance with the Australian Privacy Principles.

How we will deal with your complaint

We will respond to your complaint in a timely and flexible manner. Our goal is to ensure the earliest possible resolution and we will try to resolve your complaint wherever possible at the first point of contact. Where your complaint is urgent it will be prioritised.

We will ensure you have the opportunity to explain your complaint. To this end we ask that where possible, that you provide the following information about your complaint:

We will address your complaint fairly and consistently, treating each complaint in an un-biased manner, and ensuring all allegations are investigated thoroughly. We will inform the financial adviser or mortgage broker involved about your complaint and ask them to respond to us.

Once your complaint is resolved any agreed outcomes will be implemented in a timely manner.

How and when we will communicate with you about your complaint

We will acknowledge the receipt of your complaint within 1 business day verbally or in writing.

Where this is not possible, acknowledgement will be made as soon as possible.

We will investigate your complaint promptly and respond to you within 30 calendar days. Our response will include:

If we are able to resolve the complaint to your complete satisfaction within 5 business days, we may not provide a written response unless you request a response in writing.

Some complex matters may require additional time to thoroughly investigate the complaint and bring it to a resolution. Where additional time is required, we will advise you in writing within 30 calendar days of receiving the complaint. We will explain the reasons for the delay.

We will communicate openly throughout the process.

If you are not satisfied with the resolution of your complaint, you can lodge a complaint with the Australian Financial Complaints Authority (AFCA).

Your right to lodge a complaint with AFCA

If an issue has not been resolved to your satisfaction, you can lodge a complaint with AFCA. AFCA provides fair and independent complaint resolution that is free to consumers. The contact details for AFCA are:

Mail GPO Box 3, Melbourne VIC 3001
Phone 1800 931 678 (free of charge)
Email info@afca.org.au
Online www.afca.org.au

About this Policy

We may amend or update our Complaints Policy as required by law or as our business processes changes.