Question 1. A TTR account has to be given over to a retirement fund once you turn 65, but the government expects me to continue working until I’m 67. With that being the case, how much will I be disadvantaged?

Why does this legislation relating to the financials of retirement funds not correlate with employment expectations of the federal government?

Superannuation and age pension rules and ages do not always align.

As you have said, a transition to retirement (TTR) pension automatically ‘converts’ to a regular pension at age 65.

However, this is generally a good thing, from a tax perspective, as it means the internal earnings of a pension are tax free, whereas TTR internal earnings, like a regular super fund, are taxed at 15 per cent.

As I have said before, Australia does not have an official ‘retirement age’. We have an ‘age pension age’ and an age when you can ‘access your super’ and for better or worse the rules around these are set separately.

I do think there is some scope to better align them so they can complement each other. However, I also think it’s a good idea to allow access to superannuation prior to having to wait until age pension age.

Unfortunately, there is still no legislated purpose of superannuation and therefore rules do get changed semi-regularly as there is no legislated guiding principles.

Question 2. I am 67 and my wife is 76. I finished full-time work in February. I have funds in my superannuation accumulation account and I also have funds in an offset account to reduce my interest payable on my mortgage account. I do not plan to use these funds for a few years. Am I better off with all funds in the super account or all in offset account or a combination?

Without knowing all of your details, including the value of your loan, offset account and super, it’s a hard question to answer.

Is there any reason you simply don’t repay your home loan?

Given your age super does make a lot of sense – you could transfer your funds to pension phase where all earnings are tax free, all payments are tax free, and you can invest in a wide range of investment options, so at a high level I would keep most funds in that environment.

Question 3. If I sell my investment property with the intention of using the proceeds to buy my principal home, how will this affect my pension?

If you are already on the age pension, your investment property will be counted in the asset test, less any loan so long as it’s secured against the investment property. And rental income will be counted in the income test.

As a principal place of home is not counted in the asset or income test, selling your investment property to purchase a home to live in could boost your age pension if you are not already on the maximum rate.

Question 4. I am 69 and my husband 75, both retired with a small super pension and his DVA allowance. We have surplus cash at bank after a house sale three years ago. Can we add to the super balance invested with this cash money?

As you are under 75, yes, you can make further non-concessional (after tax) contributions to super. You can contribute up to $330,000 if your balance is under $1,480,000 (and can contribute a smaller amount if your balance is under $1,700,000).

The funds will have to go into the accumulation phase of super.

If your other funds are already in pension phase (such as an account based or allocated pension) then you can either transfer them back to the accumulation phase and add them together, or simply start a second pension with the new amount.

Craig Sankey is a licensed financial adviser and head of Technical Services & Advice Enablement at Industry Fund Services

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives. 

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