Welcome toLUCRF Super School Topic: LUCRF Pensions An online learning series
Pensions• LUCRF Pensions allow you to use your super (and any other savings) to create a source of income.• LUCRF Super offer two types of pensions:• Transition Pension (TP), and• Retirement Pension (RP).
Transition Pension (TP)• Can be utilised by members over the age of 55 who are still working.• The strategy involves rolling over part of your super to a TP which will then pay you an income.• This strategy can also be combined with salary sacrifice. This will help you save tax and grow your wealth more quickly.
About Transition Pensionincome streams• The pension income must be between 2% and 10% of the pension balance for the 2010/11 financial year.• The pension income is tax free if you are over the age of 60.• A tax offset of 15% applies if you are aged between 55 and 59.
Advantages of having aTransition Pension• More take home pay as you are receiving some of your super (concessionally taxed or tax free depending on age) whilst you are still working.• Less personal income tax when a TP strategy is combined with a salary sacrifice strategy.AND
Advantages of having aTransition Pension• Growing your retirement nest egg – all pension fund investment earnings are tax free which means your money works harder for you.
Retirement Pension (RP)• Designed for members who have fully retired from the workforce or have reached the age of 65.• This strategy involves placing your retirement savings (super and non-super) into a Retirement Pension (RP).
Retirement Pension (RP)• The RP allows you to draw an income stream (regular pension payment) that has a minimum limit with no maximum.• All income received is tax free over the age of 60, with a 15% tax offset applying to those between the age of 55 and 59.
Advantages of having aRetirement Pension• Provides a regular income for your retirement, making it easier for you to plan and budget• Greater potential to qualify for the Government Age Pension, as Centrelink exempts part of a pension income stream under the income test• Pension funds (just like TP) continue to be invested with no tax on earnings.
Case study• David is a 65 year old, single, retiree, who owns his home.• He has $150,000 in super, $10,000 in a bank account and $20,000 in personal assets (includes home contents of $10,000 and a motor vehicle valued at $10,000).
Case study: Assets test• Under the Government Age Pension ‘assets test’ David qualifies for a full age pension of $701.10 per fortnight (or $18,228 per year) as his total assessable assets (super, bank account and personal assets) are below the single, homeowner lower limit threshold of $181,750• Note: David’s owner-occupied home is excluded from the assets test.
Case study: Income test• Under the Government Age Pension ‘income test’, if David converts his super into a Retirement Pension (regular income), he will still receive the maximum Age Pension.• If David were to keep his money in an accumulation super fund, drawing a yearly lump sum, he would only receive a part Age Pension.• Let us show you how…
Case study: Receiving maximum Age Pension $10,000 taken as $10,000 taken as yearly lump sum from yearly income from RP superIncome counted by $6,570 $2,210CentrelinkCentrelink Age $16,841 $18,228 (maximum)Pension receivedPlease note: The table above uses Centrelink rates and thresholds effective from 1 July2010. These may change from time to time, which can alter the outcome shown.
How long will a LUCRF Pensionlast?It all depends on:• Investment performance• Level of income payments, and• Money drawn from your account (e.g. lump sums etc)
LUCRF Pension features &benefits• Regular payments to boost or replace your salary• Choice of payment frequencies• Market-leading products• No commissions• Low fees and no start-up or exit fees, and• Personal and professional service
Find out more about LUCRFPensionsGet professional advice• LUCRF Super offers personal financial advice you can trust.• Simple advice on super or pensions is generally free.