Lump Sum My Retirement

Transcription

1 Lump Sum My Retirement

2 General advice warning The schemes administered by Super SA are exempt public sector schemes and therefore we are not required to hold an Australian Financial Services licence to provide advice on our products. The information given in this presentation by Super SA is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. Super SA strongly recommends that you refer to the relevant Product Disclosure Statement (PDS) and seek independent financial advice before making any financial decisions. If you intend to invest in the Super SA Income Stream or Flexible Rollover Product, please refer to the relevant PDS for details of your cooling off rights.

3 About Super SA As the SA public sector super provider, Super SA is not for profit. That means we re here solely for the benefit of our members. You! Only run to benefit our members Exclusive to SA public sector employees More than 209,000 members Aggregate account balances exceeding $21 billion*. * Funds under management as at March 2015

4 About the Lump Sum Scheme All about the Lump Sum Scheme Established under the Superannuation Act 1988 Closed to new members on 3 May 1994 Hybrid scheme (part accumulation, part defined benefit) Basic entitlement is a refund of the member s contributions with investment returns plus a defined multiple of final salary Standard contribution rate is 6%.

5 Your entitlement On retirement from age 55 Member Account plus: Employer component based on Entitlements Superannuation Salary (ESS) (annual full-time equivalent) PSESS Account (if any) Rollover Account (if any) Co-contribution Account plus Salary Sacrifice Account (if any, paid into Triple S).

6 Your entitlement The definition for Entitlements Superannuation Salary (ESS)* Full-time employees Part-time employees Higher duties / some allowances Section 4(4) Salary (reduction of classification) 5 year fixed term appointment fact sheet on website. * Some exceptions (agencies and executives). Must be made at the time of reduction in salary. * Some exceptions (agency or executives).

7 Your entitlement Example of entitlement: Member Account $45,000 Employer component 2.00 x ESS (annual full-time equivalent) Gross fortnightly salary $1,750 PSESS Account (if any) $17,000

8 Your entitlement Example of entitlement: Annual salary = $1,750 x 313/12 = $45,645 gross Employer component = 2.00 x $45,645 = $91,291 gross

9 Your entitlement Example of entitlement: Total gross lump sum entitlement = Member Account $ 45,000 + Employer component $ 91,291 + PSESS Account $ 17,000 Total gross entitlement $153,291 Triple S entitlements must be claimed separately

10 Investment Choice Options: High Growth Growth default option Socially Responsible Balanced Moderate Conservative Capital Defensive Cash.

11 Investment Choice Super is a long-term investment and one of the keys to a comfortable retirement lifestyle Switch investment options at any time One switch per financial year is free Additional switches are $20 Unit price at time of switch is subject to change Read the Investment fact sheet and gain clarification before making investment choices Read the Member Declaration on Investment Choice form thoroughly before signing.

12 Transition to Retirement Transition to Retirement Long service leave can be taken on a single day basis even over an ongoing period of time as a means of phasing into retirement* This has no impact on your super. * Subject to department approval.

13 Transition to Retirement Transition to Retirement Employees who enter into a transition to retirement employment arrangement with their employer are able to access part of their accrued super as they reduce their hours of employment* Any super accessed before full retirement must be taken as an income stream (no lump sums). * Subject to department approval.

14 Early Access to Super Who s eligible for a Super SA Income Stream? Members must have a balance of $30,000 or more Members must have reached their Commonwealth Government preservation age Triple S members do not need to reduce their hours or enter into a Transition to Retirement (TTR) agreement with their agency Early Access benefit must be at least $30,000 No more than one Early Access payment being taken out in any 12 month period.

15 Growing Super Lump Sum Scheme members can salary sacrifice into Triple S Must maintain standard contributions from after-tax salary Salary sacrifice contributions will be paid into Triple S Members have investment choice in Triple S Administration fee deducted weekly from Triple S Members can access Triple S Death and TPD Insurance up to $1.5M.

16 Growing Super Salary sacrifice means contributing from before-tax income Sacrifice up to 100% of salary under an arrangement * Any percentage over 50% must be sacrificed to super Salary sacrifice into Triple S through payroll May reduce taxable income Consider seeking advice.

17 Taxation Taxation on entitlements Super SA untaxed schemes Refer to Tax fact sheet on website. Visit the Super SA website

18 Taxation Lump sum divided into three components based on member s continuous service in SA public sector: Tax free (includes non-concessional contributions since 1/7/83 and pre 83 amounts) Taxable (untaxed) Taxable (taxed) from rollover.

19 Taxation Commonwealth Government preservation age Date of Birth Before 30 June July 1960 to 30 June July 1961 to 30 June July 1962 to 30 June July 1963 to 30 June After 1 July Commonwealth Preservation Age

20 Taxation Taxation on entitlements Under Commonwealth Preservation Age Commonwealth Preservation Age - 59 Taxed 20% Untaxed 30%* Up to $195,000 Taxed - 0% Untaxed 15%* Over $195,000 Taxed 15% Untaxed 30%* 60+ Taxed 0% Untaxed 15%* + 2% Medicare Levy if paid as a lump sum * Subject to $1,395,000 untaxed cap From 1 July 2012 individuals whose income and relevant concessionally taxed super contributions exceed $300,000 pa will pay 15% tax on the amount of relevant concessional contributions that exceed the $300,000. More information is available in the Division 293 Tax Fact Sheet.

21 Taxation Taxation on a lump sum example Assumptions: William is aged over Commonwealth Government preservation age William retires during the current financial year Total lump sum entitlement is $150,000 (including non-concessional contributions $35,000) William s continuous service 1/3 pre 1983, 2/3 post 1983 No Rollover Account.

22 Taxation Taxation on a lump sum example Tax free component: Non-concessional contributions (since 1983) $35,000 Tax free (Pre 83 + non-concessional contributions) $50,000 + $35,000 = $85,000

23 Taxation Taxation on a lump sum example Total Tax free = Taxable (untaxed) $150,000 - $85,000 = $65,000 As this is under the threshold limit of $195,000 the Taxable (untaxed) amount is taxed at 17% (see the Tax Fact Sheet for more information) $11,050 total tax deducted by Super SA Net cheque of $138,950 paid to member Or net amount of $140,250 if member is rolling over to Super SA Income Stream or Flexible Rollover Product.

24 Taxation Taxation on a lump sum example If William didn t commence continuous service until after 1/7/83 his tax-free component would be $35,000.

25 Taxation Taxation on a lump sum example Total Tax free = Taxable (untaxed) $150,000 - $35,000= $115,000 As this is under the threshold limit of $195,000 the Taxable (untaxed) amount is taxed at 17% (see the Tax Fact Sheet for more information) $19,550 total tax deducted by Super SA Net cheque of $130,450 paid to member Or net amount of $132,750 if member is rolling over to Super SA Income Stream or Flexible Rollover Product.

26 Taxation Rollover portability If you roll over a lump sum to another complying super fund, the fund will deduct 15% contributions tax on arrival. (If you were to take it as a lump sum you would also have to pay the 2% Medicare levy.)

27 Taxation Untaxed cap If the Taxable (untaxed) amount paid is greater than $1,395,000 the excess will be taxed at the top marginal rate. This applies to the taxable component and not the total payment. Proportioning The tax components for all partial payments must contain the tax components in the same proportion they appear in the total benefit.

28 Options Members of a Super SA scheme can access: Super SA Income Stream Super SA Flexible Rollover Product

29 Important points to consider Retirement from age 55 onwards: Recommend that you seek financial advice Provide Super SA with your Tax File Number (TFN) prior to retirement You must claim your entitlement from Super SA You must not recommence employment with the SA public sector within one month of resignation date List your super in your Will. In the event of death, super is paid out to the spouse/putative spouse including same sex partner (if any), or Estate Super SA forms available from website.

30 Industry Fund Services (IFS) The financial planners at IFS can advise you about the options available to SA public sector employees. The initial meeting is free and if you decide not to proceed with a plan there s no cost. No advice is given at your first meeting as it s a fact-finding appointment. Services include: Fixed up front fee for service Flexible payment options Can deduct fee from your Triple S or Super SA Flexible Rollover Product account.

31 Industry Fund Services (IFS) Can help you with a wide range of topics: Super and retirement planning Centrelink benefits Investment strategies and wealth creation Taxation and Estate planning. To arrange an appointment contact IFS on

32 At your service

33 Any Questions? You might be interested in attending one of these seminars: Post Retirement Products Early Access to Super Targeted Voluntary Separation Package. For more information go to the Super SA website at and click on seminars.