Welcome to the Your Gold State Super Webinar

Transcription

1 Welcome to the Your Gold State Super Webinar Presented by: Steve Scott & Paul Vassallo Audio Announcement: Audio will be delivered using your computer s microphone and speaker system (VoIP). You will hear silence until we begin at the advertised start time. November 2012

2 Disclaimer 2012 GESB The information contained in this presentation is of a general nature and does not constitute legal, taxation or personal financial advice. In providing the information GESB has not taken into account your investment objectives, financial situation or needs. GESB is not licensed to provide personal financial product advice. While every care has been taken to ensure the accuracy of the information contained in this presentation you should read the relevant Product Information Booklet and consider seeking professional advice from a suitably qualified adviser to ascertain whether the information is appropriate for you. To the extent permitted by law GESB accepts no liability for any loss or damage caused directly or indirectly in connection with the use of information in this presentation. 2

3 Who are we? Industry leader Largest WA-based super provider Over $13.5 billion FuM Expertise Over 70 years experience Expert on the issues associated with super and retirement Competitive One of the best value for money funds in Australia Low fees Strong investment returns 3

4 In this session Gold State Super Tax Transition to retirement 4

5 GESB product structure Receives 9% SG Market linked Taxed scheme Pension Scheme Gold State Super West State Super GESB Super Retirement Income Member offered transfer to Gold State Super in 1987 and again in 1990 Defined benefit scheme Untaxed scheme Closed to new members 29 Dec1995 Receives 9% SG Market linked from 1 July 2001 Untaxed scheme 1987 to 15 April 2007 Transition to Retirement Allocated Pension 5

6 Gold State Super Gold State Super is a defined benefit scheme, now closed to new members Certain factors are used to determine your benefit within Gold State Super: 1. Your final remuneration the average of your annual salary over the last two years of your Gold State Super membership. 2. The average contribution you make into Gold State Super (max 5%) 3. Your time of membership, accumulated as completed months of service 6

7 Your Gold State Super statement contains a wealth of information Bob Sample???????? Image: photostock / FreeDigitalPhotos.net

8 Bob Sample???????? Final remuneration

9 Final Remuneration Is the average of your annual salary over the last two years of your Gold State Super membership. Three key dates are used: The date you stop working, and The Selection Dates for the previous two years Note: The Selection Date is the date two months prior to your birthday. Either the 1 st if your birthday is early in the month or 16 th if your birthday is late in the month. 9

10 Final Remuneration Bob s date of birth 14 November 1954 Selection date 1 September Retirement date 31 December Sept Dec 09 1 Sept Dec days 365 days 122 days $86,075 x 243/365 = $57,305 $89,957 x 365/365 = $89, $91,917 x 122/365 = $30,723 = $177,985 Divided by 2 = Final remuneration of $88,992 Date Salary 31 Dec 2011 $91,917 1 Sep 2011 $89,957 1 Sep 2010 $86,075 10

11 Contribution Rate Gold State Super members make contributions based on their gross salary, these contributions determine what their employer pays for them into Gold State Super The maximum average contribution rate is 5% of your gross salary over your total membership. The rate you contribute can vary from 3% - 7% Check your member statement to ensure your average contribution rate is at 5% 11

12 Bob Sample???????? 1. Check Average Contribution Rate 2. Before or after tax?

13 How Bob s service multiple grows Image: photostock / FreeDigitalPhotos.net 13

14 Membership in Gold State Super Membership is calculated based on your months of good service Full Time Employment Part FTE 10 years = 120 months 10 years = 60 months What constitutes good service: Employment within the WA State Public Sector Recognised Leave Without Pay is also taken as good service 14

15 How is Bob s benefit calculated? 15 Image: photostock / FreeDigitalPhotos.net

16 Reverting to part-time Equivalent full-time Final Remuneration is used to calculate Gold State Super benefit A switch to part-time work only reduces the service components when calculating benefits 16 Image: photostock / FreeDigitalPhotos.net

17 Case Study Bob transferred to part-time work (0.5FTE) in January 2011 Average Contribution Rate = 5% Final Remuneration = $88,975 Retirement date = 31 December 2011 Gold State Super Service = 188 months 17

18 Case Study Bob s Final Benefit Example: Contributory Service Benefit 188 months x 20% x $88,975 = $278, Compared to a full-time benefit of 194 months x 20% x $88,975 = $287, Difference is = $8, Image: photostock / FreeDigitalPhotos.net

19 Gold State Super Member Statement (page two) Insurance at no cost to you 19

20 Bob s member statement (page two) Insured component paid in addition to benefit Cover can be: - Standard - Limited - Minimum 20

21 Calculation of an Insurance Benefit Your insured benefit is payable in addition to your Gold State Super account balance How is it calculated? Years to age 60 (from date of death or disability) X 20% X Final Remuneration at time of death or disability Assumes Standard Insurance Cover and 5% Average Contribution Rate 21

22 Salary Maintenance What if my salary is reduced? Members who voluntarily regress to a lower salary may apply to the GESB for salary maintenance Contributions are calculated on the higher (or maintained) salary Members must ask the GESB for this feature to be activated at the time of salary regression 22

23 Resignation and your Gold State Super What happens to my Gold State Super if I resign from WA State Public Sector? Unlike West State Super, Gold State Super is not portable, so it can t be rolled over to another super fund Your Contributory Service Benefits will be preserved in the GES Fund and will grow at consumer price index (CPI) plus 1% until preservation age. After preservation age the interest rate rises to CPI + 2% 23

24 Gold State Super and Retrenchment How does Retrenchment affect my Gold State Super? Same options as resignation, or you can roll over to another complying super fund If rolled over, Contributory Service Benefit is subject to 1.75% discount per year until preservation age 24

25 How lump sum tax works on rollover? Component Tax-free Taxable Untaxed Description Non concessional contributions (After-tax contributions and Pre- 83 amount) Concessional contributions (includes Employer SG and salary sacrifice contributions) Tax rate on rollover Nil 15% The portion of a benefit attributable to Pre- 83 service is tax-free Untaxed plan cap $1.255m for 2012/13 (indexed) applicable to untaxed element of benefit payments from West State Super or Gold State Super. Any amount over the cap is taxed at the top marginal rate. 25

26 Bob s start service date is 6 January 1975 How will that impact his lump sum tax? Image: photostock / FreeDigitalPhotos.net 26

27 Calculating Pre 83 component 13,509 days 6/1/75 1/7/83 31/12/11 3,098 days 10,411 days Bob s balance at 31 December 2011 $287,760 Tax Pre- 83 = (3,098/13,509 x $287,760) $65,992 nil Non concessional contributions $20,000 nil Taxable component (what s left over!) $201,768 $30,265 Without a Pre- 83 component, Bob s tax would have been $40,164 27

28 Maximising the value of Pre July 1983 Your Pre July 1983 component will be crystallised when you roll over your benefit to a taxed fund. Hence, you should consider doing some of the following: Rolling over other super funds into WSS if they have pre July 1983 ESDs (but be aware of any potential disadvantages eg exit fees, loss of insurance), Making extra non-concessional contributions (eg from cash, sale of assets etc), and Making extra salary sacrifice (concessional) contributions 28

29 Concessional contribution caps Concessional contributions = employer and/or salary sacrifice contributions Concessional contribution made to West State Super or Gold State Super does NOT count towards an individuals concessional contributions cap Concessional contribution cap for taxed schemes All ages $25,000 pa until 01 July 2014 Excess above caps taxed at 31.5% (in addition to 15% contributions tax) Untaxed plan cap $1.255m for 2012/13 (indexed) applicable to untaxed element of benefit payments from West State Super or Gold State Super. 29

30 Non-concessional contribution caps Non-concessional contributions include after-tax contributions to super All non-concessional are counted towards the nonconcessional cap, including non-concessional contributions made to West State Super and Gold State Super Non-concessional contribution cap Under age 65 $150,000 pa or $450,000 over a three year period Between age 65 and age 74 $150,000 pa (subject to the work test) Excess attracts 46.5% tax rate 30

31 Transition to Retirement Image: photostock / FreeDigitalPhotos.net 31

32 Transition to Retirement Access super whilst still working Need to reach your Preservation Age generally age 55 Minimum and maximum drawdown limits apply Use super drawdown to: 1. Supplement part-time income 2. Increase overall income 3. Salary sacrifice more income into super 32

33 Bob is over age 60 Transition to retirement Gold State Super untaxed West State Super untaxed 15% Tax on untaxed component 15% Tax on untaxed component Transition To Retirement Allocated Pension Tax free 3. Bob can increase salary sacrifice West State Super Image: photostock / FreeDigitalPhotos.net and/or Bob can use the super drawdown to: 1. Supplement part-time income 2. Increase overall income 33

34 Considerations - Gold State Super members Transferring your Gold State Super benefit to Transition to Retirement (TTR) will proportionally reduce the benefit multiple Amount transferred to TTR from Gold State Super is calculated using your current final remuneration You CANNOT roll money back into Gold State Super You are moving from a guaranteed environment to market linked environment (could be 100% cash) Your new account will incur fees 34

35 Tax benefits of allocated pensions Earnings and capital gains within the pension account are not taxed If age 60 or above pensions are tax free Preservation age or above and under age 60 Pensions are generally taxable A portion may be tax free Taxable amount is eligible for 15% tax offset 35

36 Retirement planning day Every month 9am to 3.30pm Our full day seminars cover topics such as Superannuation issues GESB super schemes Retirement Options Centrelink 36

37 Financial literacy journey TOOLS AND SERVICES Retirement Options Service Simple Advice Level of personal service Member Services Call Centre Member Education Seminars Online Calculators Website Free of charge 37

38 Useful links ASFA FPA SuperRatings Morningstar Moneysmart Ask plenty of questions 38