Escolar Documentos
Profissional Documentos
Cultura Documentos
Statement of Advice
Mr Paul & Mrs Pauline Xuereb
Date of advice 16 February 2015
Prepared by Kristine Spiteri
Representative of Equip Financial Planning
Equipsuper Financial Planning Pty Ltd (ABN 84 124 491 078)
AFSL 455010
Ph 1800 065 753
Equipsuper Financial Planning Pty Ltd (ABN 84 124 491 078, AFSL 455010) is licensed to provide financial
planning services to retail and wholesale clients. Equipsuper Financial Planning is owned on behalf of
Equipsuper Pty Ltd (ABN 64 006 964 049, AFSL 246383) as the Trustee of the Equipsuper Superannuation Fund
(ABN 33 813 823 017). Equipsuper Financial Planning Pty Ltd is responsible for any advisory services your
financial planner provides.
TABLE OF CONTENTS
Table of contents .................................................................................................................................. 4
Executive Summary............................................................................................................................... 6
Lifestyle and Financial Objectives ......................................................................................................... 6
Strategy Recommendation Summary ................................................................................................... 7
Scope of Advice ..................................................................................................................................... 8
Warnings ............................................................................................................................................... 8
What we know about you ..................................................................................................................... 9
Personal Information ............................................................................................................................ 9
Personal Details .................................................................................................................................... 9
Estate Planning...................................................................................................................................... 9
Personal Superannuation.................................................................................................................... 10
Current Personal Risk Insurance ......................................................................................................... 11
Assets & Liabilities .............................................................................................................................. 11
Risk Profile........................................................................................................................................... 12
Recommendations - Superannuation ................................................................................................. 13
Superannuation Rollovers................................................................................................................... 15
Non-Concessional Contributions ........................................................................................................ 18
Equip Transition to Retirement Pensions (TRPs) ................................................................................ 19
Investment Choice .............................................................................................................................. 21
Recommendations - Estate Planning .................................................................................................. 23
Wills..................................................................................................................................................... 23
Powers of Attorney ............................................................................................................................. 23
Binding Death Nominations ................................................................................................................ 23
Estate Planning- General..................................................................................................................... 23
Alternative and Possible Future Strategies ......................................................................................... 24
Alternative Strategies Considered ...................................................................................................... 24
Possible Future Strategies................................................................................................................... 24
Current Asset Allocation ..................................................................................................................... 26
Proposed Asset Allocation .................................................................................................................. 27
Projected Key Results.......................................................................................................................... 28
Projected Long-term Outcome ........................................................................................................... 28
Replacement of Product Information ................................................................................................. 31
What you will pay and what we will receive ...................................................................................... 34
Disclaimers .......................................................................................................................................... 37
Where to from here? .......................................................................................................................... 39
Relevant Paperwork ............................................................................................................................ 39
Authority to Proceed........................................................................................................................... 40
Financial Modelling ............................................................................................................................. 42
Summary of Assumptions ................................................................................................................... 42
Appendix ............................................................................................................................................. 53
The Investment Asset Classes ............................................................................................................. 53
The Risk/Return Trade Off .................................................................................................................. 54
General Information ........................................................................................................................... 55
Superannuation - Introduction ........................................................................................................... 55
Superannuation Guarantee Contributions (SGC)................................................................................ 55
Salary Sacrifice .................................................................................................................................... 55
Government Co-contribution ............................................................................................................. 56
Non-Concessional Contribution .......................................................................................................... 57
Statement of Advice for Mr Paul & Mrs Pauline Xuereb
Page 4 of 69
Page 5 of 69
EXECUTIVE SUMMARY
This Statement of Advice (SoA) is a record of the personal financial advice provided to you and
includes information on the basis on which this advice is given, information about remuneration
including fees, commissions, any other benefits and any interests, relationships or associations
which might influence the making of the advice.
If this advice includes a recommendation to you to acquire a particular financial product (other
than securities) or an offer to issue or arrange the issue of a financial product to you, we will
also provide you with a Product Disclosure Statement (PDS) containing information about the
particular product to help you make an informed decision about that product.
The purpose of this Executive Summary is to provide a snapshot of our advice to you. For more
detailed information you should read the relevant section of this SoA.
Paul and Pauline, you require a review of your existing superannuation investments to
ensure they are appropriate to your needs and they are well positioned to meet your
objectives.
You wish to review your financial situation with a focus on maximising your wealth prior
to retirement and how best to structure your investments throughout your retirement.
You wish to build your wealth within the superannuation environment for retirement
planning purposes.
You wish to go on holiday in November 2015 at an estimated cost of $15,000. You also
plan to maintain regular overseas and domestic holidays to visit family in the UK and in
Melbourne.
You wish to retain ongoing cash reserves of at least $50,000 in order to meet any
unexpected large expenditures.
You wish to ensure you have appropriate estate planning strategies in place,
incorporating Wills and Powers of Attorney, and beneficiary nominations for super and
Account Based Pensions.
Please review the advice and make your own judgement or provide the additional details to me
for further analysis.
Page 6 of 69
Paul, we recommend you rollover the balance of your Colonial First State
superannuation account to your existing Equip Personal accumulation account at your
earliest convenience.
Paul, we recommend that you change the investment selection within your Equip
Personal accumulation account prior to the recommended rollover so that future
contributions are invested in the Cash option.
Pauline, we recommend that you rollover the balance of your Colonial First State
Pension account into a newly established Equip Transition to Retirement Pension (TRP)
at your earliest convenience.
Pauline, we recommend you salary sacrifice 100% of your income between now and 30
June 2015 (approximately $15,715), and salary sacrifice a total of $20,500 to super in
the 2015-16 financial year. We further recommend you continue to make salary
sacrifice contributions to super until retirement such that your income tax liabilities
each financial year are minimised.
Paul, after rolling your Colonial First State account over to your existing Equip account,
we recommend you transfer all but $5,000 of the balance of your Equip accumulation
account into an Equip TRP. We recommend you draw the minimum pension as a
fortnightly income stream to assist in funding your lifestyle.
Paul and Pauline, we recommend you each make reversionary beneficiary nominations
within your respective Equip TRPs.
Paul and Pauline, we recommend you invest your Equip TRPs with a time horizons
(bucket) approach in line with your Balanced investor risk profile.
Paul and Pauline, we recommend that your pension payments are drawn from the Cash
investment option. In addition, we recommend reviewing your investment strategy
every year to ensure your asset allocation is in line with your risk profile.
Paul, after commencing your TRP we recommend that you alter the investment
selection within your Equip Personal accumulation account so that the remaining
balance and all future contributions are invested in the Balanced investment option.
Pauline, we recommend you review the investment choice within your QSuper account
to ensure your accumulation assets are invested is in line with your Balanced investor
risk profile.
Page 7 of 69
Paul and Pauline, we recommend that with the help of your solicitor you establish Wills
to reflect your current financial situation at your earliest convenience, if you have not
already done so.
Paul and Pauline, we recommend that with the assistance of your solicitor you establish
Enduring Powers of Attorney at your earliest convenience, if you have not already done
so.
Pauline, we recommend you put in place a binding death benefit nomination within
your QSuper account, if you have not already done so.
Scope of Advice
This Statement of Advice is limited to:
Superannuation
Retirement Planning
Estate Planning
Social Security
The overall suitability of Pauline's QSuper fund as you did not request a review of this
account and indicated you want to retain this account for receipt of ongoing employer
and personal super contributions. We have made general strategy recommendations
involving superannuation, and also included the balance of this account for financial
modelling purposes. Please note however that as you did not want this fund reviewed,
we cannot comment on its suitability for you.
The treatment of any unused leave entitlements you may have at retirement. For
financial modelling purposes we have assumed all leave entitlements are utilised prior
to retirement (rather than being received as a lump sum payout).
Your CBA shares, which you indicated you want to maintain. This holding has been
incorporated for financial modelling purposes.
Your instructions to us have been to provide limited advice; the following areas will not be
addressed:
Wealth Creation
Gearing
Self-Managed Superannuation
Personal Protection
Warnings
You did not provide a specific expenditure goal that you wish to achieve in retirement. As a
result, for financial modelling purposes we have assumed you maintain living expenses in
retirement of $50,000 p.a., which includes all travel expenditure (assumed to be $15,000 p.a.).
As the financial modelling indicates you should be able to achieve this lifestyle comfortably, we
have conducted further financial modelling to ascertain the highest level of spending you may
be able to achieve throughout retirement. Please note that these financial modelling scenarios
are based on a set of assumptions that may not accurately represent future investment
performance, or unforeseeable changes to Government legislation; however they do provide a
robust general guide.
Please see the Financial Modelling and Projected Key Results sections for more detail on your
projected future financial situation, and the assumptions used in creating these projections.
Statement of Advice for Mr Paul & Mrs Pauline Xuereb
Page 8 of 69
Personal Information
Personal Details
Date of Birth
Paul
Pauline
Postal Address
(if applicable)
10 HOLLOWAY STREET
BIRKDALE, QLD, 4159
Home Phone
07 3207 1510
Home E-mail
squabby@optusnet.com.au
Not Provided
Mobile
Preferred Contact
07 3207 1510
Dependants
Paul and Pauline, you have indicated that you do not have any financial dependants.
Employment
Paul
Pauline
Employment Status:
Employer Name:
Job Title:
Gardener
Salary:
$25,000 p.a.
$40,394 p.a.
21 October 2018
06 April 2017
60
67
Estate Planning
Paul
Pauline
Will Exists?
Not Disclosed
Not Disclosed
Power of Attorney?
Not Disclosed
Not Disclosed
Page 9 of 69
Personal Superannuation
Paul
Fund Name
Balance
Nominated beneficiaries
Fund Name
Equip (Accumulation)
Balance
Nominated beneficiaries
N/A
Salary Sacrifice?
Nil
Non-Concessional Contributions
Fund Name
Balance
Nominated beneficiaries
None
Pauline
Fund Name
QSuper
Balance
Nominated beneficiaries
Not Disclosed
Salary Sacrifice?
Nil
Non-Concessional contributions
Nil
Page 10 of 69
Owner
Value
Linked to Debt?
Lifestyle Assets
Primary Residence
Joint
$490,000
No
Household Contents
Joint
$100,000
No
Motor Vehicles
Paul
Pauline
$18,000
$20,000
No
Business Assets
Paul
$15,000
No
$643,000
Investment Assets
Superannuation Investments
Superannuation/Pension Investments
Bank Account
CBA Shares
Total Investment Assets
Total Liabilities*
NET ASSETS
Paul
$780,512
No
Pauline
$228,952
No
Joint
$78,000
No
Pauline
$30,000
No
$1,117,464
($0*)
$1,760,464
*your only financial liability is your credit card (current balance $15,300) which you stated you
use for day-to-day living expenses and repay in full each month, so we have not included this in
your net asset position.
Page 11 of 69
RISK PROFILE
Your Risk Profile
Your risk profile is a measure of how comfortable you are investing your funds across each of
the asset classes. The combination of these asset classes provides us with an asset allocation
that will be used to determine an appropriate investment strategy for you. There are various
types of risk profiles, differentiated by their overall allocation to income and growth assets.
During our meetings we have discussed your reasons for seeking advice, what sort of returns
you are expecting, how you would like to manage your investments and what your short,
medium and long term goals are, and how you feel about potential capital growth and
investment security. These discussions have assisted us to measure how comfortable you are
with different investment types and investments across different asset classes.
From these discussions and based on the results of your Risk Profile Questionnaire, Pauls risk
profile was identified as Balanced, while Pauline your risk profile was identified as Conservative.
However, after discussing your attitude to investment risk further, we agreed that you are most
comfortable being assessed as a Balanced investor also moving forward.
Page 12 of 69
Self-employed
Income
Existing Equip
Accumulation
Account
Bank Account
Equip Transition to
Retirement Pension
*approximate values
Page 13 of 69
Non-Equip
Superannuation
Fund of your Choice
New Equip
Transition to
Retirement Pension
Bank Account
*approximate values
Paul and Pauline, the flowcharts above represent the recommendations that are to be
implemented now. You will both continue to make personal deductible, salary sacrifice
contributions (respectively) to your respective Equip accumulation accounts in future financial
years. Please see the subsequent Recommendations sections for Superannuation and Estate
Planning for more detailed discussion on the recommendations we have made for you both.
Page 14 of 69
RECOMMENDATIONS - SUPERANNUATION
Superannuation Rollovers
Paul, we recommend you rollover the balance of your Colonial First State superannuation
account to your existing Equip Personal accumulation account at your earliest convenience.
Pauline, we recommend that you rollover the balance of your Colonial First State Pension
account into a newly established Equip Transition to Retirement Pension at your earliest
convenience (full Transition to Retirement Pension recommendations detailed separately).
Benefits of our advice
Paul and Pauline, this will simplify administration as you will both hold the large
majority of your superannuation savings with Equip (Pauline you wish to maintain your
QSuper account).
Paul, consolidating your superannuation savings with Equip will facilitate the investment
of these funds into an Equip Transition to Retirement Pension (recommendation
detailed separately).
Paul, consolidating your superannuation accounts with Equip and then commencing an
Equip Transition to Retirement Pension (recommendation detailed separately) should
reduce your overall superannuation fees by approximately $710 p.a.
Risks and Implications
Pauline, rolling over the balance of your Colonial First State pension account to an Equip
Transition to Retirement Pension may increase your overall fees by approximately $711
p.a. Please note however that the large majority of your Colonial First State pension
funds are invested in the FirstRate Saver option ($170,679 of the total balance as at 20
Jan 2015), which is a cash option and has no investment management fee. Such a
predominant investment in a cash-based option means your superannuation assets are
not invested in line with your Balanced investor risk profile. If you were to align your
investment options with your Balanced risk profile within your Colonial account, it is
likely your total account fees would increase substantially. For instance, the FirstChoice
Wholesale Balanced option has an investment fee of 1.01% p.a. If you were to be
invested 100% in this option your total Colonial First State fees would be approximately
$2,884 p.a., which is $1,695 p.a. more than what you are paying now.
By rolling over your Colonial First State accounts, you will no longer have access to the
investment options or other fund-specific features offered through these accounts.
Paul and Pauline, please see the Replacement of Product Information section for more detail
on the fees you are currently paying, and the fees you will be paying after implementing our
recommendations.
Page 15 of 69
Paul, as you are self-employed you are able to make personal deductible contributions
to super, which will be fully tax deductible to you. They are essentially the same as
salary sacrifice contributions.
Whilst these personal deductible and salary sacrifice contributions will incur
contributions tax of 15%, this is less than your respective marginal tax rates and should
therefore provide immediate tax savings. Paul, while your current taxable income is
quite low (approximately $25,000 p.a.), this will increase once you commence the
recommended Transition to Retirement Pension (recommendation detailed separately),
resulting in a greater need for salary sacrifice contributions from a tax minimisation
perspective.
Paul and Pauline, we estimate that these personal deductible and salary sacrifice
contributions should help to ensure that you generate a total overall combined tax
saving of approximately $2,389 for the 2014-15 financial year as illustrated by the below
tables:
Paul
No Personal Deductible
Contributions
Recommended Personal
Deductible Contributions
$2,394
$571
$0
$1,350
$2,394
$1,921
$473
Page 16 of 69
Pauline
No Salary Sacrifice
Contributions
Recommended Salary
Sacrifice Contributions
$5,524
$1,251
$0
$2,357
$5,524
$3,608
$1,916
We estimate that salary sacrificing at this level should also ensure that you remain
below the $35,000 p.a. concessional contribution limit for the current and following
financial years. We estimate that your concessional contributions for the 2014-15 and
2015-16 financial years will be as follows:
Paul
Amount of
Contribution
(2014-15)
Amount of
Contribution
(2015-16)
N/A
N/A
$0
N/A
$9,000
$16,000
$9,000
$16,000
Amount of
Contribution
(2014-15)
Amount of
Contribution
(2015-16)
$3,837
$3,953
$0
$0
$15,715
$20,500
$19,552
$24,453
Type of contribution
Employer Superannuation Guarantee payment
Personal deductible contributions already this financial year
Pauline
Type of contribution
Employer Superannuation Guarantee payment
Salary sacrifice contributions already this financial year
Contributions are generally preserved until you meet a condition of release (i.e.
retirement or reaching age 65).
Page 17 of 69
Contributions tax of 15% applies to all salary sacrifice and personal deductible
contributions to superannuation.
These contributions will reduce your disposable income and may affect your ability to
meet your required living expenses. This risk is mitigated by the recommended
Transition to Retirement Pension income which is providing you with surplus cash flow.
Pauline, your employer may base your Superannuation Guarantee (SG) entitlement on
your adjusted salary (salary after salary sacrificing) rather than your gross salary. This
will lower the amount of SG your employer pays to you. Please check with your
employer before commencing salary sacrifice contributions.
Non-Concessional Contributions
Pauline, we recommend you make a non-concessional contribution of $1,000 p.a. into
superannuation in the current financial year, and each subsequent financial year until
retirement. These contributions can be funded from current cashflow (earned income or
pension income) or from existing cash reserves.
Benefits of this advice
These funds will be exposed to investment risk (in line with the inherent risk of your
chosen superannuation investments).
These contributions will reduce your disposable income and may affect your ability to
meet your required living expenses. This risk is mitigated by the recommended
Transition to Retirement Pension income which is providing you with surplus cash flow.
Legislation may change such that you are no longer eligible to receive a Government cocontribution.
Page 18 of 69
Individuals aged 65 and over can only make non-concessional contributions during a
financial year provided the work test is satisfied. The work test requires you to be
gainfully employed for at least 40 hours within a consecutive 30-day period within the
financial year of the contribution. Pauline, as we only recommend you continue to make
these non-concessional contributions while you are working, you will meet the work
test.
Pauline, as you are over age 60, pension payments are tax-free.
Paul, your pension payments prior to age 60 are tax-efficient. Based on your current tax
components, approximately 8% of your pension payments will be tax-free and 92% will
be taxable. The taxable component of your pension payments attracts a 15% tax rebate.
Once you are over age 60, pension payments are tax-free.
The Transition to Retirement Pensions payments will assist you to meet your income
needs in the lead up to retirement, as you make salary sacrifice and personal deductible
contributions to super which will reduce your take-home pay considerably.
Paul, the administration fee is capped at an account balance of $450,000. Therefore the
overall percentage fees reduce as the account balance increases .
Paul, investment earnings within a Transition to Retirement Pensions are tax-free. The
superannuation tax saving is estimated to be $8,934 assuming a 7.68% p.a. return for a
Balanced investor, as illustrated in the following table:
Page 19 of 69
Accumulation
Pension
Balance
$775,512
$775,512
$59,559
$59,559
$8,934
$0
$8,934
Tax Saving
You can choose the frequency of your pension payments (e.g. monthly, quarterly, half
yearly or annually).
Pauline, the funds we recommend you rollover from Colonial First State are already held
in the earnings tax-free pension environment.
Paul, maintaining a small balance in your Equip accumulation account will facilitate the
recommended personal deductible contributions.
For an analysis of the fees and charges please refer to the Disclosures section of this
Statement of Advice.
Pauline, while lump sums cannot be drawn from a Transition to Retirement Pension,
once you turn 65 your TRP will automatically become an Account Based Pension. At this
point 100% of your pension and accumulation funds will become unrestricted nonpreserved, and there will be no restrictions on how much you can draw from your
pension (and accumulation account), and all withdrawals will be tax-free.
Paul, administration fees are higher in an Equip pension than in an Equip accumulation
account. This will result in a $597 increase in administration fees per year. Pauline,
please see the Product Replacement section for information on the fees you are
currently paying and what you will pay within your Equip TRP.
Drawing income which exceeds the earnings of your fund will increase the risk of you
exhausting your capital prematurely.
You must take the minimum pension payment each financial year. Based on your age
your minimum pension payments will be calculated on 4% of the 1 July account balance
(pro-rated in the year of commencement). Pauline, from 1 July 2015 you will be
required to draw at least 5% of the 1 July account balance, as you will be age 65 at 1 July
2015.
Paul and Pauline, you cannot draw more than 10% of the 1 July account balance from
your Transition to Retirement Pension as regular pension payments. Pauline this 10%
maximum income payment will no longer exist for you at your 65th birthday, when your
Transition to Retirement Pension converts to an Account Based Pension.
You are unable to withdraw lump sums from your Transition to Retirement Pensions.
You can take up to 10% of the 1 July balance as a single annual payment however.
The balance of your pensions may reduce to a level which is insufficient to meet your
income needs later in life, depending upon the performance of the underlying
investments and the level of income and capital you draw over time.
Page 20 of 69
Paul, pension payments from your Transition to Retirement Pension are taxable at your
marginal tax rate (less a 15% tax rebate) while you are under 60 years of age.
Investment Choice
Paul, we recommend that you change the investment selection within your Equip Personal
accumulation account prior to the recommended rollover so that future contributions are
invested in the Cash option.
Paul and Pauline, we recommend you invest your Equip TRPs with a time horizons (bucket)
approach. This involves investing your short to medium term income needs to cash and other
lower risk investments, with the remainder of funds invested in options that have higher growth
asset exposure. This strategy ultimately creates a portfolio in line with your Balanced investor
risk profile, as shown in the following tables:
Paul
Investment Choice
Weighting
Amount (approx.)
Cash
4%
$35,000
Conservative
48%
$370,256
Balanced Growth
48%
$370,256
TOTAL
100%
$775,512
Weighting
Amount (approx.)
5%
$10,000
Conservative
47.5%
$94,474
Balanced Growth
47.5%
$94,474
TOTAL
100%
$198,948
Pauline
Investment Choice
Cash
We recommend that your pension payments are drawn from the Cash investment option. In
addition, we recommend reviewing your investment strategy every year to ensure your asset
allocation is in line with your risk profile.
Paul, after commencing your TRP we recommend that you alter the investment selection within
your Equip Personal accumulation account so that the remaining balance and all future
contributions are invested in the Balanced investment option.
Pauline, we recommend you review the investment choice within your QSuper account to
ensure your accumulation assets are invested is in line with your Balanced investor risk profile.
You did not wish for us to review this account so we cannot make further comment on its
suitability for you. You intend on maintaining this account as your current employer
(Queensland government) contributes to this superannuation fund.
Page 21 of 69
Paul, changing your future contributions investment election to Cash prior to the
recommended rollover will mean no buy/sell costs are incurred as part of the rollover.
Investing your pension portfolios with time horizons (bucket) strategies and drawing
your pension payments from the Cash option will allow the market-linked options to
move in line with investment fluctuations without impacting your immediate cashflow
needs. You will therefore not need to sell down on growth assets prior to their
recommended investment timeframes in order to fund your pension payments.
Assist to increase the value of your superannuation assets over time by increasing
exposure to growth assets and also assist to negate the impact of inflation.
The income and growth expected from investing in this portfolio will build your
superannuation and assist you to meet and maintain your income needs in retirement.
A regular review of your risk profile will assist to ensure the appropriate diversification
across all appropriate asset classes, and to ensure sufficient liquidity and capital growth
for your financial circumstances.
Risks and Implications
As you will be drawing your pension payments from the cash investment option, over
time the proportion of your pension held in growth asset such as shares and property is
likely to increase and potentially fall outside of your risk profile. We therefore
recommend you review your asset allocation on an annual basis and if necessary
rebalance your portfolio to ensure that this does not occur.
Increasing exposure to growth assets will expose your portfolio to increased risk and
therefore higher short-term market volatility.
Failure of the investment options to perform as expected may result in your desired
level of income in retirement not being met. Diversification across asset classes can help
to temper some of the fluctuations.
Paul, a small buy/sell cost of approximately $17 will be incurred when you make the
recommended investment switch within your Equip accumulation account (after
commencing your TRP). The switching fee will be deducted from your superannuation
benefits.
Page 22 of 69
Powers of Attorney
Paul and Pauline, you did not disclose whether you have Enduring Powers of Attorney in place.
We recommend that with the assistance of your solicitor you establish Enduring Powers of
Attorney at your earliest convenience, if you have not already done so.
Page 23 of 69
Earnings on funds held in accumulation phase are taxed at up to 15%. Earnings on funds
held in pension phase are tax-free.
Accumulation accounts do not provide a regular income to meet your ongoing needs as
your take home pay reduces as a result of the recommended personal deductible and
salary sacrifice contributions for yourself and Pauline (respectively). The TRP income will
help you meet your ongoing income needs in the lead up to retirement.
Page 24 of 69
Consolidate TRP and Accumulation Accounts into an Account Based Pension - Paul
Paul, at retirement you will no longer have need for an accumulation account. You may
therefore wish to consider consolidating your accumulation and TRP accounts into a new
Account Based Pension. An Account Based Pension has the same benefits and risks as the
recommended TRP, with the additional benefit of unlimited withdrawals at any time.
Cash out Super and Pension and add to Pauls super at Pauls retirement Pauline
Pauline, this may be advantageous to reduce administration costs for your combined retirement
savings.
These and any other strategies that may become appropriate can be reviewed in future.
Page 25 of 69
Overall, you have a combined asset allocation of approximately 43% growth assets and 57% income
generating assets which is within the parameters of a Balanced investor risk profile.
Please note, while your overall asset allocation is in line with your Balanced investor risk profile, you
are currently overweighted to domestic cash, due to your considerable cash reserves outside of
super (of which you wish to maintain approximately $50,000), and significant cash investments in
Paulines Colonial First State Pension.
Please also note that the above graph does not include Paulines QSuper investments, as details on
how this account is invested were not provided.
Page 26 of 69
By implementing the recommendations in this Statement of Advice, we estimate that your overall
asset allocation will alter to 46% exposure to growth assets and 54% exposure to income generating
assets which is within the parameters of your Balanced investor risk profile.
We have assumed $20,000 of existing cash reserves has been used to fund your planned travel in
2015 ($15,000) as well as your home renovations ($5,000).
This benchmark asset allocation is an indicative allocation only. Over time, your portfolios actual
asset allocation will fluctuate depending on economic conditions, anticipated market movements
and the performance of the investments in your profile. If you are not prepared to accept the
associated investment risk of our recommended investment portfolio (asset allocation), it would
be essential that you review your stated goals and objectives and specified time frames.
Page 27 of 69
Page 28 of 69
The above graph illustrates what sources will provide the funding for your desired retirement income. The following graph illustrates the present value of
your retirement assets over time which allows you to fund your desired retirement lifestyle.
Detailed modelling projections in relation to the above can be found in the Financial Modelling section of this Statement of Advice. Please also refer to the
Disclaimers section for the limitations of financial projections.
Potential for More Comfortable Retirement Lifestyle - $90,000 p.a. Retirement Expenditure
Paul & Pauline, the primary financial modelling for which we have assumed you maintain living expenses of $50,000 p.a. in retirement (including travel
expenditure) indicates that you may achieve this level of expenditure comfortably. As a result we have conducted further financial modelling to analyse the
highest level of spending your assets may allow you to maintain in retirement. Our projections indicate you may have the capacity to fully fund an
expenditure level of $90,000 p.a. throughout retirement.
For this alternative scenario, all assumptions remain the same (as the primary modelling), except for the higher level of spending in retirement. Again, it is
important to note that these assumptions may not accurately reflect your retirement position and therefore should be used as a guide only.
Page 29 of 69
The above graph illustrates what sources will provide the funding for this higher level of retirement spending. The following graph illustrates the present
value of your retirement assets over time which allows you to fund this more comfortable retirement lifestyle.
Page 30 of 69
RECOMMENDED
Equip Personal
Superannuation
Equip Personal
Superannuation
Equip Transition to
Retirement Pension
$108,866
$671,645
$5,000
$775,512
Nil
N/A
N/A
N/A
CFS Cash
Equip MySuper
Balanced
Mixed (overall
Balanced)
0 / 100 (approx.)
60 / 40 (approx.)
50 / 50 (approx.)
48 / 52 (approx.)
Yes
Yes
Yes
Yes
Current Insurance
Nil
Nil
Nil
N/A
Nil
$78
$78
Nil
Nil
$1,437 (0.21%)
$14 (0.28%)
$2,196 (0.28%)
Investment Fees
$1,241 (1.14%)
$4,366 (0.65%)
$29 (0.57%)
$4,094 (0.53%)
$1,241 (1.14%)
$5,881 (0.88%)
$121 (2.41%)
$6,289 (0.81%)
Account Balance
Exit Fees (if applicable)
Ongoing Fees
Paul, you also pay a 4% contribution fee on all contributions into your Colonial First State account.
Pauline - Rollover your Colonial First State pension to an Equip Transition to Retirement Pension
CURRENT
RECOMMENDED
$198,948
$198,948
Nil
Nil
Mixed
14 / 86 (approx.)
48 / 52 (approx.)
Yes
Yes
Current Insurance
N/A
N/A
Nil
Nil
Nil
$855 (0.43%)
Investment Fees
$318 (0.16%)
$1,054 (0.53%)
Adviser Fee
$875 (0.44%)
Nil
$1,193 (0.60%)
$1909 (0.96)
Account Balance
Exit Fees (if applicable)
Ongoing Fees
Page 31 of 69
Pauline, please note that while your superannuation fees will increase by approximately $711 p.a. by
rolling over to an Equip TRP, the large majority of your Colonial First State funds are invested in the
FirstRate Saver option ($170,679 of the total balance as at 20 Jan 2015), which is a cash option and
has no investment management fee. Such a heavy investment in a cash option means you are not
invested in line with your Balanced investor risk profile. If you were to align your investment options
with your Balanced risk profile within your Colonial account, it is likely your total account fees would
increase substantially. For instance, the FirstChoice Wholesale Balanced option has an investment
fee of 1.01% p.a. If you were to be invested 100% in this option your total Colonial First State fees
would be approximately $2,884 p.a.
Please see the earlier Superannuation Rollovers section for further information on the associated
benefits and risks involved with these recommended transactions.
Page 32 of 69
All these factors are subject to change and these changes may have significant impact on the
suitability of your portfolio. Equipsuper Financial Planning Pty Ltd recommends ongoing reporting
and advisory services as this will enable you to review your financial strategy regularly and to alter
your portfolio as required.
Recommended Review Service
We recommend that you sign on to our annual review service which entitles you to:
Your own personalised review document each year outlining your financial plans. This
document may contain for example updates to recommendations such as salary sacrifice
amounts, investment choice, pension rebalancing, optimising Centrelink entitlements, and
any other relevant recommendations.
The cost of the annual review service is $550 p.a. (inclusive of GST). Remember that any costs
associated with your annual review fee can be deducted from your Equip account where the advice
provided relates mainly to your account with Equip.
Please note, if you do not participate in an annual review, previously implemented strategies may
not continue to be appropriate to your changing needs and circumstances.
Time Horizons (Bucket) Approach
A time horizons (bucket) approach can be adopted with respect to your superannuation/pension
assets. This is a dynamic strategy involving investment in multiple options and is recommended to
ensure the risk of crystallising any short-term market losses is minimised as you draw a regular
retirement income, while maintaining an overall portfolio that reflects your Balanced risk profile.
By the very nature of this strategy, your growth asset allocation may increase beyond an acceptable
level for a Balanced investor as you draw your income from the less risky options. It therefore could
become important for you to seek an annual review of your portfolio to ensure your portfolio aligns
to your risk profile.
Page 33 of 69
DISCLOSURES
It is important that you understand the costs payable by you for the financial services we have
provided. This section outlines the costs payable by you and will also detail the fees and benefits
that Equipsuper Financial Planning Pty Ltd are entitled to receive for providing these services.
In addition to the fees paid to us, the investment and/or insurance products we recommend to you
may also charge fees. Please refer to the appropriate Product Disclosure Statement (PDS) for further
information.
$1,100
Total
$1,100
$550 p.a.
*This entitles you to an annual review appointment and an updated advice document issued
following your appointment as well as ad-hoc access to your financial planner throughout the year.
Should you choose not to sign up to the recommended review service, additional financial planning
services including review appointments and updated advice will be charged at $143 per hour.
Investment Fees
Pauls Equip Personal Accumulation Account
Investment
Amount
Invested
$
Average
Administration/
Trustee Fee (pa)
%
Investment
management fees
%
Total (pa)
%
$78
$
$78
$5,000
0.20%
$10
0.57%
$29
0.77%
$39
Balance
0.08%
$4
0.00%
$0
0.08%
$4
$5,000
1.84%
$92
0.57%
$29
2.41%
$121
Page 34 of 69
Amount
Invested
Average
Administration/
Trustee Fee (pa)
Investment
management fees
Total (pa)
Cash
$35,000
0.20%
$71
0.06%
$21
0.26%
$92
Conservative
$370,256
0.20%
$752
0.45%
$1,666
0.65%
$2,418
Balanced Growth
$370,256
0.20%
$752
0.65%
$2,407
0.85%
$3,159
Special Charge
Balance
0.08%
$620
0.00%
$0
0.08%
$620
TOTAL
$775,512
0.28%
$2,195
0.53%
$4,094
0.81%
$6,289
Amount
Invested
Average
Administration/
Trustee Fee (pa)
Investment
management fees
Total (pa)
Cash
$10,000
0.35%
$35
0.06%
$6
0.41%
$41
Conservative
$94,474
0.35%
$331
0.45%
$425
0.80%
$756
Balanced Growth
$94,474
0.35%
$331
0.65%
$614
1.00%
$945
Special Charge
Balance
0.08%
$159
0.00%
$0
0.08%
$159
TOTAL
$198,948
0.43%
$855
0.53%
$1,045
0.96%
$1,901
Fee Notes
Equip Accumulation
Paul, the investment amount is based on the $5,000 we recommend you maintain in your Equip
accumulation account when you commence an Equip Transition to Retirement Pension.
All fees are paid to Equipsuper Pty Ltd as trustee for the Equip Superannuation Fund.
Investment management fee (IMF) is calculated at the percentage rate shown based on the
investment amount shown. The dollar amount of the IMF will change depending on movements in
your account. The IMF is deducted monthly from fund assets before investment returns are
calculated.
Administration fee: $1.50 per week plus 0.20% per annum up to a maximum account balance of
$450,000, plus 0.08% per annum*. The 0.20% is calculated and deducted from your account
effective on the last day of every month. The 0.08% is deducted from the underlying asset value and
reflected in the daily unit prices applied to your account.
The actual dollar amount of the Administration fee will change depending on movements in your
account.
Buy and Sell costs reflect the brokerage and transaction cost incurred. It is charged through a
differential between the buy and sell price of units.
*The administration fee includes a 0.08% per annum provision to build Equips reserves, to cover
operational risks and expenses incurred in running the Fund.
Page 35 of 69
Equip Pensions
Paul, the investment amount is based on the combined balances of your Equip accumulation
account and your Colonial First State accumulation account at 9 February and 15 January 2015
(respectively), less the $5,000 we recommend you maintain in your Equip accumulation account.
Pauline, the investment amount is based on the balance of your Colonial First State pension account
as at 15 January 2015.
All fees are paid to Equipsuper Pty Ltd as trustee for the Equip Superannuation Fund.
Investment management fee (IMF) ranges from 0.06% to 0.75% p.a. and is calculated at the
percentage rate shown based on the investment amount shown. The dollar amount of the IMF will
change depending on movements in your account. The IMF is deducted from the gross investment
return and included in the daily unit price calculation.
Administration Fee: 0.35% per annum up to a maximum account balance of $450,000, plus 0.08%
per annum*. The 0.35% is calculated and deducted from your account effective on the last day of
every month. The 0.08% is deducted from the underlying asset value and reflected in the daily unit
prices applied to your account.
The actual dollar amount of the Administration fee will change depending on movements in your
account.
Buy and Sell costs reflect the brokerage and transaction cost incurred. It is charged through a
differential between the buy and sell price of units.
*The administration fee includes a 0.08% per annum provision to build Equips reserves, to cover
operational risks and expenses incurred in running the Fund.
Page 36 of 69
DISCLAIMERS
Appropriateness and Suitability
Generally, section 961B of the Corporations Act 2001 (Cth) requires that we must act in your best
interests. Our recommendations to you must have a reasonable basis and be appropriate for you
considering your relevant personal circumstances and our reasonable inquiries.
In preparing this advice we have relied on the information you have supplied being accurate and
complete and if this is not the case, you should contact us or make your own assessment of the
appropriateness of the advice before acting upon our recommendations.
We ask you to read the recommendations and supplementary information provided to you including
the Product Disclosure Statements and ensure you fully understand the contents. Where you have
any queries, please consult your adviser before proceeding.
This advice has been prepared solely for your use and should not be used as a guide by any other
person, to whom Equipsuper Financial Planning Pty Ltd or any of its Representatives do not accept
any liability.
Time Limitation
The recommendations in this advice are based on your current personal circumstances, lifestyle and
financial goals, current economic, investment and legislative conditions. The recommendations in
this advice only remain current for a period of thirty (30) days from the date of this advice. If you
wish to implement these recommendations after this time period you must contact us prior to acting
to ensure that none of the above factors have changed and that the recommendations remain
appropriate to you.
Page 37 of 69
Limitation of Liability
In the event that any advice or other services rendered by Equipsuper Financial Planning Pty Ltd
constitute a supply of services to a consumer under the Competition and Consumers Act 2010 (as
amended) or the Australian Securities and Investments Commission Act 2001, then the liability of
Equipsuper Financial Planning Pty Ltd for any breach of any conditions or warranties implied under
the Act shall not be excluded but will be limited to the cost of having the advice or services supplied
again.
Subject to the above paragraph, nothing in any paragraph of this disclosure affects any rights or
remedies to which you may be entitled under the Competition and Consumers Act 2010 (as
amended) or under the Australian Securities and Investments Commission Act 2001 or under the
Corporations Act 2001 (Cth) as a consequence of services being rendered by Equipsuper Financial
Planning Pty Ltd.
Each paragraph of this disclaimer shall be deemed to be separate and severable from each other. If
any paragraph is found to be illegal, prohibited or unenforceable, then this shall not invalidate any
other paragraphs.
Page 38 of 69
Relevant Paperwork
Below is a summary of the relevant paperwork required for you to complete in order to implement
the recommendations:
Relevant Recommendation
Action
Please note that we are able to assist you to complete any of the above forms.
Relevant Recommendation
Required Documents
Original bank statement for the account you would like the
pension payment to be paid into.
Page 39 of 69
AUTHORITY TO PROCEED
Upon receiving the advice dated 16 February 2015 and reading the strategy and recommendations
contained within, we confirm the following:
Accordingly, we wish to proceed with the implementation of the strategy and recommendations and
authorise Equipsuper Financial Planning Pty Ltd to implement these. Where there are variations
these are noted below:
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
Page 40 of 69
Signed:
Signed:
Date:
Date:
Accepted for and on behalf of Equipsuper Financial Planning Pty Ltd by:
Signed:
Name: Kristine Spiteri
Date:
Page 41 of 69
FINANCIAL MODELLING
To assist you to understand the effects of the recommendations made in this Statement of Advice,
we have prepared projections of your personal and financial circumstances.
Please note that all projections provided should be used as a guide only, and do not constitute a
guarantee of future investment performance or of your financial position at any point in time.
Projections are based on current legislation, tax rates and Centrelink procedures where applicable.
Summary of Assumptions
Paul, you continue working until retirement at 21 October 2018. Your current gross income of
$25,000 p.a. increases at 3% p.a.
Pauline, you continue working until retirement at 2018. Your current gross income of $40,394
p.a. increases at 3% p.a.
We have assumed living expenses of $35,000 p.a. between now and 1 July 2016 (Paulines
approximate net income, as you stated you are currently living solely off Paulines income). We
have included a separate amount of $15,000 in the 2015-16 financial year for your planned
overseas travel. From 1 July 2016 we have assumed living expenses of $50,000 p.a., which
includes allowance of $15,000 p.a. for ongoing domestic and international travel. You meet the
cost of your planned 2015 travel with funds held in Pauls business account, after which your
ongoing travel expenses are absorbed by your various inflows (earned income and pension
income).
You each continue to make $1,000 non-concessional contributions to super until your respective
retirements, to be eligible to receive the Government co-contribution. You withdraw $2,000 to
fund these contributions in the current financial year, after which they are funded from ongoing
employment income.
You both also continue to make personal deductible and salary sacrifice contributions to super
until your respective retirements, such that your personal income tax liabilities are minimised.
Provision has also been made for your planned home renovations in the 2015-16 financial year
at a cost of $5,000.
We have not included your credit card debt in the financial modelling (currently $15,300 as this
is used for day-too-day living expenses and you stated that you repay the balance in full each
month.
You both consolidate your pension and accumulation accounts into a new Account Based
Pension at your respective retirements.
Your super and pension assets earn a Balanced rate of return of 7.68% p.a. This rate of return is
net of fees.
Your bank accounts earn interest of 4% p.a. All interest generated is reinvested (as opposed to
being received as income).
Your shares earn 6% growth and 4% income, with 70% of the income franked. All dividends
generated from your shares are received as income (as opposed to being reinvested).
Page 42 of 69
Cashflow
Date
Age - Paul
Age - Pauline
Income
Self-employed Income - Paul
Gross Income - Pauline
Pension Income
TRP/ABP Income - Paul
TRP/ABP Income - Pauline
Cash Withdrawals
Superannuation
Lump Sum Withdrawals (Govt Payments)
Total Inflow
Expenditure
Living Expenses (including travel from 1/7/16)
Travel
Renovations
Taxation
Paul
Pauline
Superannuation Contributions
Salary Sacrifice Pauline
Deductible Contributions - Paul
Non-Concessional Contributions - Paul
Non-Concessional Contributions - Pauline
Total Outflow
Net Cashflow
9 Feb 15
56.3
64.8
1 Jul 15
56.7
65.2
1 Jul 16
57.7
66.2
6 Apr 17
58.5
67.0
1 Jul 17
58.7
67.2
1 Jul 18
59.7
68.2
21 Oct 18
60.0
68.5
1 Jul 19
60.7
69.2
1 Jul 20
61.7
70.2
1 Jul 21
62.7
71.2
9,726
15,715
25,750
41,606
20,273
32,757
6,249
0
27,318
0
8,634
0
0
0
0
0
0
0
0
0
12,068
3,096
2,000
31,465
10,090
20,000
24,956
7,922
0
7,692
3,594
0
33,878
15,350
0
10,786
4,838
0
28,348
10,930
0
41,972
16,198
0
43,429
16,639
0
44,937
17,092
0
924
500
42,605
128,910
85,909
17,536
77,470
24,259
39,277
58,670
60,068
62,029
13,616
0
0
36,050
15,000
5,000
40,547
0
0
12,498
0
0
54,636
0
0
17,268
0
0
39,007
0
0
57,964
0
0
59,703
0
0
61,494
0
0
560
726
806
39
0
0
819
-6
734
-453
0
0
0
-356
0
-550
0
-604
0
-665
15,715
9,000
1,000
1,000
41,618
20,500
16,000
1,000
1,000
95,396
14,000
0
1,000
1,000
56,547
0
18,000
0
0
31,311
0
20,000
1,000
0
75,918
0
0
1,000
0
18,268
0
0
0
0
38,651
0
0
0
0
57,414
0
0
0
0
59,098
0
0
0
0
60,829
988
33,515
15,586
1,552
6,617
1,256
970
1,200
Page 43 of 69
Page 43 of 69
Tax (Paul)
Date
Age - Paul
Age - Pauline
1 Jul 14
55.7
64.2
1 Jul 15
56.7
65.2
1 Jul 16
57.7
66.2
6 Apr 17
58.5
67.0
1 Jul 17
58.7
67.2
1 Jul 18
59.7
68.2
21 Oct 18
60.0
68.5
1 Jul 19
60.7
69.2
1 Jul 20
61.7
70.2
1 Jul 21
62.7
71.2
Income
Self-employed Income
Superannuation Income Streams Taxed Element
Investment Earning
Total Assessable Income
25,000
11,166
1,369
37,534
25,750
29,101
1,473
56,324
20,273
23,081
1,683
0
6,249
7,115
535
58,936
27,318
31,333
2,602
61,254
8,634
9,976
840
0
0
79
1,921
21,450
0
0
2,980
2,980
0
0
3,125
3,125
0
0
3,269
3,269
9,000
9,000
16,000
16,000
0
0
18,000
18,000
20,000
20,000
0
0
0
0
0
0
0
0
0
0
28,534
40,324
40,936
41,254
21,450
2,980
3,125
3,269
1,964
4,441
4,643
4,748
389
445
1,675
2,120
267
4,365
4,632
0
0
0
272
4,529
4,801
280
4,700
4,980
0
0
0
300
1,508
1,808
300
0
300
300
0
300
300
0
300
571
806
819
734
571
1.52%
19.00%
806
1.43%
33.00%
0
0.00%
0.00%
819
1.39%
33.00%
734
1.20%
33.00%
0
0.00%
0.00%
0
0.00%
19.00%
0
0.00%
0.00%
0
0.00%
0.00%
0
0.00%
0.00%
Deductions
Self-employed Deductible Contributions
Total Deductions
Taxable Income
Tax Payable
Levies
Medicare Levy
Net Tax Payable
Average Tax Rate
Marginal Rate (excl Medicare)
Page 44 of 69
Page 44 of 69
Tax (Pauline)
Date
Age - Paul
Age - Pauline
1 Jul 14
55.7
64.2
1 Jul 15
56.7
65.2
1 Jul 16
57.7
66.2
6 Apr 17
58.5
67.0
1 Jul 17
58.7
67.2
1 Jul 18
59.7
68.2
21 Oct 18
60.0
68.5
1 Jul 19
60.7
69.2
1 Jul 20
61.7
70.2
1 Jul 21
62.7
71.2
Income
Gross Income
Investment Earning
Franking Credits
less Salary Sacrifice Contributions
Total Assessable Income
40,394
2,693
397
15,715
27,769
41,606
2,710
374
20,500
24,190
32,757
2,724
314
14,000
0
0
880
104
0
22,780
0
4,103
453
0
4,557
0
1,347
153
0
0
0
3,101
356
0
4,957
0
4,801
550
0
5,351
0
5,128
604
0
5,733
0
5,474
665
0
6,139
Taxable Income
27,769
24,190
22,780
4,557
4,957
5,351
5,733
6,139
1,818
910
642
397
397
374
374
314
0
104
104
453
453
153
0
356
356
550
550
604
604
665
665
445
0
500
945
300
0
500
800
0
0
0
0
300
681
500
1,481
300
1,602
0
1,902
0
0
0
0
300
1,602
0
1,902
300
1,602
0
1,902
300
1,602
0
1,902
300
1,602
0
1,902
Tax Payable
696
-264
-104
-453
-356
-550
-604
-665
Levies
Medicare Levy
555
303
99
1,251
4.51%
19.00%
39
0.16%
19.00%
0
0.00%
0.00%
-6
-0.02%
19.00%
-453
-9.95%
0.00%
0
0.00%
0.00%
-356
-7.19%
0.00%
-550
-10.27%
0.00%
-604
-10.54%
0.00%
-665
-10.83%
0.00%
Page 45 of 69
Page 45 of 69
Superannuation (Paul)
Date
Age - Paul
Age - Pauline
9 Feb 15
56.3
64.8
1 Jul 15
56.7
65.2
1 Jul 16
57.7
66.2
6 Apr 17
58.5
67.0
1 Jul 17
58.7
67.2
1 Jul 18
59.7
68.2
21 Oct 18
60.0
68.5
1 Jul 19
60.7
69.2
1 Jul 20
61.7
70.2
1 Jul 21
62.7
71.2
780,512
14,999
31,898
34,576
50,930
73,845
76,351
500
0
775,512
0
8,650
9,000
1,000
1,350
399
500
500
49
500
14,999
0
0
0
14,600
16,000
1,000
2,400
2,273
306
306
281
0
31,898
0
0
0
1,000
0
1,000
0
1,914
0
0
236
0
34,576
0
0
0
15,300
18,000
0
2,700
877
285
285
108
0
50,930
0
0
0
18,000
20,000
1,000
3,000
5,294
275
275
654
0
73,845
0
0
0
1,000
0
1,000
0
1,719
0
0
212
0
76,351
888,699
965,051
0
0
0
0
0
0
500
500
0
0
500
0
0
500
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
ACCUMULATION FUND
Investment Profile: Balanced
Growth: 2.96% pa (100% taxable)
Income: 4.72% pa (11.9% Franked)
Opening Value
Transactions (SOP)
> Rollover from Pension
> Rollover To Pension
> Lump Sum Withdrawals
Other Contributions after Tax (SOP)
> Self-employed Contributions
> Non-Concessional Contributions
> less Withheld Contribution Tax
Earnings
Contributions (EOP)
> Govt Co-contribution*
Tax Payable (EOP)
Low Income Super Contribution
Closing Value
*Paul, please note that due to recent changes to Government legislation, you may not be eligible to receive the Government Co-contributions shown above. These contributions will not have
a significant impact on the long term outcomes illustrated in the financial modelling and the associated long-term income and assets graphs (see earlier Projected Key Results section).
Page 46 of 69
Page 46 of 69
Superannuation (Pauline)
Date
Age - Paul
Age - Pauline
9 Feb 15
56.3
64.8
1 Jul 15
56.7
65.2
1 Jul 16
57.7
66.2
6 Apr 17
58.5
67.0
1 Jul 17
58.7
67.2
1 Jul 18
59.7
68.2
21 Oct 18
60.0
68.5
1 Jul 19
60.7
69.2
1 Jul 20
61.7
70.2
1 Jul 21
62.7
71.2
228,952
47,046
73,511
93,532
924
0
198,948
0
14,358
15,715
1,000
0
2,357
1,269
1,493
224
1,314
263
263
162
0
47,046
0
0
0
18,425
20,500
1,000
0
3,075
3,360
3,953
593
5,157
160
160
637
0
73,511
0
0
0
12,900
14,000
1,000
0
2,100
2,645
3,112
467
5,105
0
0
630
0
93,532
211,569
305,100
0
0
0
0
0
0
0
0
0
0
424
424
0
500
924
0
0
924
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
ACCUMULATION FUND
Investment Profile: Balanced
Growth: 2.96% pa (100% taxable)
Income: 4.72% pa (11.9% Franked)
Opening Value
Transactions (SOP)
> Rollover from Pension
> Rollover To Pension
> Lump Sum Withdrawals
Other Contributions after Tax (SOP)
> Salary Sacrifice Contributions
> Personal Contributions
> Spouse Contributions
> less Withheld Contribution Tax
Contributions after Tax (MOP)
> Employer Contributions
> less Withheld Contribution Tax
Earnings
Contributions (EOP)
> Govt Co-contribution
Tax Payable (EOP)
Low Income Super Contribution
Closing Value
Page 47 of 69
Page 47 of 69
Assets
Date
Age - Paul
Age - Pauline
9 Feb 15
56.3
64.8
1 Jul 15
56.7
65.2
1 Jul 16
57.7
66.2
6 Apr 17
58.5
67.0
1 Jul 17
58.7
67.2
1 Jul 18
59.7
68.2
21 Oct 18
60.0
68.5
1 Jul 19
60.7
69.2
1 Jul 20
61.7
70.2
1 Jul 21
62.7
71.2
Business Account
Superannuation
Transition to Retirement Pension
15,000
13,650
775,512
233
29,599
786,618
243
32,898
816,207
250
49,876
839,481
253
68,930
846,944
263
74,845
878,802
266
0
0
273
0
0
284
0
0
296
0
0
Total
804,162
816,451
849,348
889,607
916,126
953,909
965,317
988,581
1,023,231
1,059,110
30,000
44,362
198,948
0
273,310
31,167
65,471
201,797
0
298,435
34,284
86,411
207,290
0
327,985
36,904
0
0
305,100
342,005
37,774
0
0
307,007
344,781
41,551
0
0
315,363
356,915
42,826
0
0
317,936
360,762
45,795
0
0
323,964
369,759
50,374
0
0
332,782
383,157
55,412
0
0
341,840
397,252
76,000
490,000
566,000
73,170
497,625
570,796
109,612
517,530
627,142
112,963
533,354
646,317
129,614
538,381
667,995
136,351
559,916
696,267
138,025
566,788
704,813
148,469
582,503
730,972
155,664
605,803
761,467
162,860
630,035
792,895
1,643,472
1,643,472
1,685,682
1,636,584
1,804,475
1,700,891
1,877,929
1,770,128
1,928,902
1,765,218
2,007,091
1,783,274
2,030,892
1,804,421
2,089,312
1,802,259
2,167,855
1,815,544
2,249,258
1,828,852
Page 48 of 69
Page 48 of 69
9 Feb 15
56.3
64.8
1 Jul 15
56.7
65.2
1 Jul 16
57.7
66.2
6 Apr 17
58.5
67.0
1 Jul 17
58.7
67.2
1 Jul 18
59.7
68.2
21 Oct 18
60.0
68.5
1 Jul 19
60.7
69.2
1 Jul 20
61.7
70.2
1 Jul 21
62.7
71.2
775,512
786,618
816,207
839,481
846,944
878,802
888,699
0
12,068
12,068
77,551
11,162
907
23,175
786,618
0
31,465
31,465
78,662
29,101
2,364
61,053
816,207
0
24,956
24,956
81,621
23,081
1,875
48,230
839,481
0
7,692
7,692
56,665
7,115
578
15,155
846,944
0
33,878
33,878
84,694
31,333
2,545
65,736
878,802
0
10,786
10,786
87,880
9,976
810
20,684
888,699
888,699
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
965,051
28,348
26,757
965,051
79
28,269
51,605
988,308
988,308
41,972
39,532
988,308
0
41,972
76,611
1,022,947
1,022,947
43,429
40,918
1,022,947
0
43,429
79,297
1,058,815
1,058,815
44,937
42,353
1,058,815
0
44,937
82,078
1,095,956
Page 49 of 69
Page 49 of 69
Page 50 of 69
Page 50 of 69
9 Feb 15
56.3
64.8
1 Jul 15
56.7
65.2
1 Jul 16
57.7
66.2
6 Apr 17
58.5
67.0
1 Jul 17
58.7
67.2
1 Jul 18
59.7
68.2
21 Oct 18
60.0
68.5
1 Jul 19
60.7
69.2
1 Jul 20
61.7
70.2
1 Jul 21
62.7
71.2
198,948
201,797
207,290
211,569
0
3,096
3,096
19,895
3,096
5,945
201,797
0
10,090
10,090
201,797
10,090
15,583
207,290
0
7,922
7,922
207,290
7,922
12,201
211,569
211,569
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
305,100
3,594
3,594
305,100
3,594
5,501
307,007
307,007
15,350
15,350
307,007
15,350
23,707
315,363
315,363
4,838
4,838
315,363
4,838
7,411
317,936
317,936
10,930
10,930
310,525
10,930
16,958
323,964
323,964
16,198
16,198
323,964
16,198
25,016
332,782
332,782
16,639
16,639
332,782
16,639
25,697
341,840
341,840
17,092
17,092
341,840
17,092
26,397
351,145
Page 51 of 69
Page 51 of 69
Page 52 of 69
Page 52 of 69
APPENDIX
These appendices provide more technical detail to the subjects that have been referred to within
this Statement of Advice. They are included to give you more detail about the topics discussed. They
are not intended to be comprehensive in the information that you may require. You should seek
professional advice from your taxation and/or legal adviser, Centrelink or the relevant Government
authorities.
Cash Considered the safest asset class, cash funds are available at short notice and have
low risk of capital loss. The cost of this low level of risk is that cash funds generally offer
very low rates of return with no tax benefits.
Fixed Interest Although a range of fixed interest securities are available most have the
same core characteristics, including a fixed investment term, regular interest payments
(higher than cash funds) and a low level of capital loss.
Property Considered to be a growth asset due to higher long term returns, property
investments can provide a combination of income (via rental payments) and capital growth
(via increases in property values).
Shares Provide investors with part ownership of a company and the associated benefits (eg
dividend income, share price increases) and risks (eg capital volatility, economic downturns).
The table below compares the returns of each of the above asset classes, and demonstrates the
volatility of returns:
Page 53 of 69
Mismatch risk the chosen investment may not be suitable for your needs, goals and
circumstances
Inflation risk the real purchasing power of your invested funds may not keep pace with
inflation
Reinvestment risk if you rely on fixed rate investments you may have to reinvest maturing
money at a lower rate of interest
Market risk movements in the market mean the value of your investment can go down as
well as up and sometimes suddenly
Timing risk trying to time entry to and exit from markets can expose you to potentially
greater short-term volatility
Risk of not diversifying if you put all of your capital into one market a fall in that market
will adversely affect all of your capital
Liquidity risk you may not be able to access your money as quickly as you need to without
suffering a fall in value
Credit risk the institution you have invested with may not be able to make the required
interest payments or repay your funds
Value risk you may pay too much for the investment or sell it too cheaply
Manager risk the personnel or ownership of the fund manager may change so that the
manager no longer has access to the skills or attitudes that contributed to earlier
performance levels
Currency risk investments in assets located in other countries may rise or fall in value due
to the relative value of the Australian currency.
Page 54 of 69
GENERAL INFORMATION
Superannuation - Introduction
Superannuation is a tax effective vehicle for accumulating wealth for your retirement.
Superannuation investments are eligible for special tax concessions that are not available to other
types of investments.
Benefits you should be aware of when considering investing in the superannuation environment are:
You receive significant tax concessions on your investment earnings. Income and
capital gains derived from your superannuation investments are taxed at a
maximum rate of 15% (capital gains are taxed at 10% where investments have been
held for longer than one year).
You can add to your investment on a regular basis.
You may be eligible to receive a tax deduction for your superannuation
contributions.
Your access to your superannuation capital is restricted. Your superannuation
capital can only be accessed once you meet a condition of release (this generally
occurs at retirement after preservation age or at age 65). However, there is also an
opportunity to access your superannuation benefits prior to retirement via a
Transition to Retirement strategy.
Your superannuation benefits can be used to commence a tax effective income
stream in retirement.
Salary Sacrifice
Salary Sacrificing involves establishing an arrangement with your employer where you forego pre-tax
salary income to make additional contributions to superannuation. The contributions are taxed at
15% when entering your superannuation fund compared with being taxed at your marginal tax rate.
Salary sacrifice contributions are classified as Concessional Contributions. Concessional
Contributions are currently limited to $30,000 per annum for those under 50 years of age and
$35,000 for those over age 50 on the last day of the financial year. This amount includes any
Superannuation Guarantee payments made by your employer.
Page 55 of 69
Government Co-contribution
In order to qualify for the Government co-contribution, there are three tests that must be met to
qualify:
Page 56 of 69
Non-Concessional Contribution
A Non-Concessional Contribution is a contribution made to your superannuation fund for which a tax
deduction is not claimed.
Non-concessional contributions do not attract a contributions tax when entering your
superannuation fund and are received tax free when withdrawn or used to commence an income
stream.
Non-Concessional Contributions do not include:
Government Co-Contributions
Contributions from the disposal of small business assets (up to $1.1 million indexed as at 1 July
2009)
Contributions paid out as a super benefit in the same year that they are contributed as an
untaxed element (this would generally apply to untaxed schemes)
Amounts that are specifically excluded from a fund's assessable income because they are
included in the Concessional Contributions cap.
Contributions made directly by a taxpayer into their spouse's account as these will be counted
against the receiving spouse's Non-Concessional Contribution cap.
Non-Concessional Contributions are capped at $180,000 a year. Individuals aged less than 65 at any
time during the financial year can contribute up to $540,000 by bringing forward two years of
contributions.
Contributions in excess of the cap are taxed at 46.5% (including Medicare levy).
Page 57 of 69
60 and over
Tax free
60 and over
Preservation
Generally, when making a contribution to super your funds become preserved, meaning you cant
access the funds.
Preserved monies are required to be held within the superannuation environment until:
You retire after reaching preservation age. If less than 60 years of age, a condition of release is only
met where the trustee is satisfied you have no intention to ever again become gainfully employed
(you need to make a declaration to this effect).
You cease an employment arrangement after reaching 60 years of age (including changing from one
employment contract to another)
The preservation age differs according to when you were born, as shown in the following table:
Year born
Preservation age
55
56
57
58
59
60
Page 58 of 69
Once preservation age is reached, members also have the option of accessing their preserved
superannuation monies via a non-commutable income stream prior to meeting a condition of
release.
There are other conditions of release that cater for total and permanent disablement and financial
hardship, which are not aged based and may allow earlier release of superannuation benefits.
Transition to Retirement
Transition to Retirement refers to the opportunity for people who have reached their preservation
age to continue working on a part-time or full time basis and supplement their salary with a regular
income from their superannuation savings via a non-commutable income stream
Transition to Retirement strategies provide the following opportunities:
You can increase your income prior to retirement.
You can reduce your hours of work and receive a similar level of income.
You can reduce your tax payable prior to retirement.
You can increase your retirement savings.
You can move your superannuation assets into the pension phase where earnings are tax free
(compared with paying a tax of up to 15% within the accumulation phase).
Salary Sacrifice
Salary Sacrificing involves foregoing salary income and making pre-tax contributions through an
arrangement with your employer, thereby reducing the amount of tax payable on your income.
The benefit from Salary Sacrifice comes from the difference between the income tax that would
have been paid on the income amount, and the rate of tax (either contributions tax or fringe
benefits tax) payable on the item under the Salary Sacrifice arrangement.
Concessionally taxed contributions to superannuation are currently limited to $30,000 per annum
for those under 49 years of age and $35,000 for those over age 50 on the last day of the financial
year. This amount includes any Superannuation Guarantee payments made by your employer.
Where the ATO identifies that a persons concessional contributions have exceeded the cap, the
amount in excess will be taxed at the persons marginal tax rate, plus a Government interest charge.
Page 59 of 69
Payments made to individuals less than 60 years of age are taxable but receive tax concessions. The
pension drawn, less any tax free amount, is taxed at your marginal tax rate. A 15% tax rebate applies
to the difference, which is taxable income. The tax rebate can be used to reduce an income tax
liability arising from this pension as well as other income sources.
When you retire or reach 65 years of age your TRP becomes unrestricted non preserved, meaning
you can access your capital (the income stream in no longer non-commutable).
The benefits of commencing a Transition to Retirement Pension are:
The income received from your TRP will assist in meeting your cost of living requirements.
Pension payments are tax effective.
Your Account Based Pension fund pays no tax on earnings or capital gains on investments in the fund
(based on current legislation).
You have the flexibility to adjust your pension payment between the minimum and maximum limits.
Upon rollover of your accumulated superannuation benefits to an Account Based Pension, there is
generally no lump sum tax payable.
The pension is paid as regularly as you require to enable you to manage your cashflow, eg: monthly,
quarterly, half yearly or annually and can be credited to your nominated bank account, building
society, credit union or paid to you by cheque.
The risks associated with commencing a Transition to Retirement Pension are:
If the income drawn from your TRP exceeds the level of superannuation contributions you will
accelerate the depletion of your retirement capital.
You are restricted from making commutations from your TRP. There are however exceptions which
include, but are not limited to, the following:
Unrestricted Non Preserved funds can be accessed.
Capital is being rolled back into the accumulation phase.
You meet a full condition of release (this will be achieved at retirement).
You use the proceeds to purchase another non-commutable income stream.
Page 60 of 69
Age
55 64
4%
4%
65 74
5%
5%
75 79
6%
6%
80 84
7%
7%
85 89
9%
9%
90 94
11%
11%
95+
14%
14%
Account Based Pension payments are tax free for individuals over 60 years of age and do not have to
be included in tax returns.
Payments made to individuals less than 60 years of age are taxable but receive tax concessions. The
pension drawn, less any tax free amount, is taxed at your marginal tax rate. A 15% tax rebate applies
to the difference, which is taxable income. The tax rebate can be used to reduce an income tax
liability arising from this pension as well as other income sources.
You receive a regular income stream to assist in meeting your retirement income needs.
You receive tax concessions on your Account Based Pension income via a tax deductible amount
and a 15% tax offset prior to age 60. Once you reach 60 years of age your pension payments will
be tax free.
You can choose the frequency of your pension payments (e.g. monthly, quarterly, half yearly or
annually) and payments can be credited to your nominated bank account or paid to you by
cheque.
Your Account Based Pension fund pays no tax on income or capital gains generated within the
fund.
Upon rollover of your superannuation benefits to an Account Based Pension, there is generally
no lump sum tax payable.
Your Account Based Pension portfolio will be invested in accordance with your risk profile. This
would not be possible through non-account based retirement income streams such as Annuities.
You have the option of nominating a reversionary beneficiary (usually a spouse) who will receive
the pension in the event of death.
There is no guarantee you will receive income from your Account Based Pension for your
lifetime.
The account balance of your Account Based Pension may reduce to a level which is insufficient
to meet your income needs later in life, depending upon the performance of the underlying
investments and the level of income and capital you draw over time.
Page 61 of 69
Age Pension
The Age Pension is a government support payment which assists Australian residents to achieve an
adequate level of income when they reach Age Pension age. The amount payable is based on your
age, home ownership and marital status as well as the Income and Assets tests.
To qualify for the Age Pension the following requirements must be met:
65
66
66
67
Your income and assets are tested against minimum and maximum limits.
Under the Income test, a couples combined income from all sources (including income from
overseas)is used and applied against the Income test formulas to determine a rate of payment.
The Income test thresholds are outlined below.
Shade out threshold
(per fortnight)
$
Single
$160.00
$1,868.60
Couple (combined)
$284.00
$2,860.00
$284.00
$3,701.20
Illness
separated
combined)
(couple
The shade out threshold is the maximum assessable income from other sources where a
pensioner remains entitled to the full pension. The pension reduces by 50c for each dollar of
assessable income for a single person and 25c for each dollar of assessable income for couples
earning in excess of the shade out threshold.
The cut out threshold is the level of assessable income at which there is no entitlement to a
pension.
Note: The amount of income you can earn before your payment reduces to $0 may be higher if
you are eligible for Rent Assistance.
Under the Assets test, a person may own a certain level of assessable assets (including overseas
assets) before their pension is reduced. The value of a persons home is an exempt asset.
Page 62 of 69
Homeowner
Single
$202,000
$771,750
Couple
$286,500
$1,145,500
$286,500
$1,426,000
Single
$348,500
$918,250
Couple
$433,000
$1,292,000
$433,000
$1,572,500
Illness
Separated
combined)
(couple
Non-Homeowner
Illness
Separated
combined)
(couple
The shade out threshold is the maximum assessable assets where a pensioner remains entitled
to the full pension. The pension reduces by $1.50 per fortnight (single person or couple
combined) for each $1,000 of assessable assets in excess of the shade out threshold.
The cut out threshold is the level of assessable assets at which there is no entitlement to a
pension.
Both the Income and the Assets test are calculated to determine a rate of payment. The one that
results in the lowest amount of benefit is applied.
The current rates of pension are outlined below:
Maximum pension rates
(per fortnight)
$
Single
$776.70
Couple (each)
$585.50
$776.70
Single
$51,500
Couple (combined)
$82,400
$103,000
$639.60
Page 63 of 69
You may also be entitled to extra concessions from state and local government authorities.
Concessions from state and local government authorities may include:
One or more free rail journeys within the state each year.
Various state and local government concessions, including reduced property and water
rates, reduced energy bills, reduced public transport costs and reduced motor vehicle
registration charges.
Single
$524.00
$4,192.00
Couple (combined)
$906.00
$7,248.00
$906.00
$7,248.00
$34.00
$272.00
The HCC is automatically issued to recipients of certain Centrelink benefits irrespective of income
levels, including Newstart Allowance, Partner Allowance, maximum rate Family Tax Benefit (A) and
Parenting Payment.
Page 64 of 69
Estate Planning
Estate planning is the planning and documentation of your wishes for the distribution of your wealth
following death, including assets you own personally as well as assets you control.
Estate planning is a specialist area and it is therefore important you obtain professional legal advice
in relation to all areas of your estate plan. However we outline below some of the issues you should
consider in designing your estate plan.
Wills
A Will is the first step in ensuring the distribution of your estate is actioned in accordance with your
wishes. Without a Will upon your death a court controls the distribution of your estate and the
persons to whom your estate is distributed to, which may result in delays in asset distribution.
It is important to ensure that your Will:
Nominates executors (and successor executors) for your estate who are likely to
survive you and who clearly understand your wishes.
Nominates beneficiaries in relation to the whole or part of your estate and nominates
second choice beneficiaries, should your first choice predecease you.
Bequeaths monetary value or a percentage of your estate rather than a specific asset,
as there is the risk that an asset may not be in existence at the time of distribution of the
estate.
Nominates assets to be held in Trust for beneficiaries under 18 years of age. For
example you can provide funds for your childrens or grandchildrens education.
Power of Attorney
This element of your estate plan is designed to be implemented prior to your death so that your
affairs can be conducted appropriately.
There are three types of Power of Attorney:
1. General Power of Attorney
A general Power of Attorney appoints another party to act on your behalf to make decisions in
respect of your legal and financial affairs. Subject to its terms, such a document remains in force
until you cancel it. However, a general Power of Attorney is automatically terminated when you die,
become bankrupt or, become incapable of making reasonable judgments due to disability.
2. Enduring Power of Attorney
In contrast, an enduring Power of Attorney is not terminated if you become legally incapable of
making your own decisions due to disability. Therefore, this type of document is particularly
important if you were to lose mental capacity and required someone else to manage your affairs.
Without an attorney, your family would have to apply to a State authority to have an administrator
appointed to manage your affairs. This may mean that your assets are frozen for a lengthy period of
time and that the subsequent decisions about them may not accord with your familys overall best
interests and wishes.
In granting an enduring Power of Attorney, you are giving wide powers to another person to act
unfettered on your behalf. In essence, your attorney can conduct any legal and financial affairs that
you can. It is essential, therefore, that you take great care in choosing your attorney and that you
choose someone you implicitly trust to act in your best interests.
Statement of Advice for Mr Paul & Mrs Pauline Xuereb
Page 65 of 69
Non-Binding Nominations
Many death benefit nominations made by members of superannuation funds are not binding on the
superannuation fund trustee. This means that the trustee of the super fund may exercise a
discretionary power to determine how the benefit is distributed and to whom.
Binding Nominations
Nominations may also be binding subject to the rules of the trust deed. Recently the Superannuation
Industry (Supervision) Regulations were amended so that trustees may, subject to the deed, accept
binding nominations. A death benefit will be binding on the trustees if:
The nomination form includes the name of each person(s), or class(es) of person (e.g.
spouse), and the allocation of the death benefit amongst nominees is clear;
The nomination form is dated and signed by the member in the presence of two adult
witnesses, neither of whom is a nominee named in the notice;
The nomination form contains a declaration by the witnesses, stating that the member
has signed and dated the nomination form in their presence; and
The nomination is only valid for 3 years, therefore a new nomination form needs to be provided to
the trustee every 3 years to ensure that your nomination is valid. You may also change your
nomination anytime within the 3 year period. It would be prudent for you to ensure that your
nomination is updated.
Regular Review
It is important to review death benefit nominations regularly and to include full details of your
beneficiaries including their relationship to you, their full name and their address.
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Keeping you superfund trustee informed of any changes to your beneficiaries or changes to their
personal details will make the task of distributing your super much less complex for all involved.
Death benefits will have tax implications for the receiving beneficiary, so you should discuss your
intentions with your solicitor. You can then ensure your Will fully reflects your intentions as well as
make an informed decision on whether to make binding or non-binding nominations.
Few Exceptions
When a fund member dies, subject to the trust deed, his or her superannuation may only be paid to:
The beneficiaries you nominate when you join a fund are only a guide, meaning the trustees of your
fund will have the ultimate discretion as to who will receive your super. They will take into
consideration any nomination of beneficiaries that you have made, but are not bound by your
request.
The only exception is where your super fund allows you to make a "binding death benefit
nomination". This is a nomination that the trustees are obliged to follow. You may only nominate a
spouse, child, financial dependant, or your estate as a beneficiary.
If you want someone else, such as a friend or a charity, to receive your savings, you should consider
nominating your estate as the preferred beneficiary of your superannuation entitlements.
Your super will then be distributed according to the terms of your Will. You will need to nominate
the non-dependants as beneficiaries of your Will.
The members spouse including de-facto partners but does not include previous spouse.
The members children including adopted children, step-children and children born outside
marriage.
Any person who was financially dependent on the deceased at the date of death; and
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A person with whom the member has an interdependency relationship (s.10A of the SIS
Act).
One or each of them provides the other with financial support; and
One or each of them provides the other with domestic support and personal care.
As a lump sum to the members children (both adult and minor children).
As a lump sum to any person who is financially dependent on the member at the date of
his/her death.
As a lump sum to a person with whom the member has an interdependency relationship at
the date of his/her death.
As a pension to any of the above persons. However, in the case of a dependent child, when
the child turns 25 the balance in the fund will have to be paid as lump sum (tax free) unless
the child is permanently disabled.
A pension is not able to be reverted to a non-dependant on death. Death benefit payments to nondependants have to be made as a lump sum.
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Income stream
Any age
Below age 60
Income stream
Under age 60
Income stream
Any age
* Medicare levy also applies, where applicable. Tax free component is tax free.
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