If you’ve already retired, you may think that the changes to superannuation taking effect from 1 July 2017 will have little effect on your retirement income. However, there may be a few changes that you will need to make, depending upon your individual circumstances.
Here are the most relevant changes and what they may mean for you in retirement.
$1.6 million transfer balance cap
If you’ve transferred your super into a retirement income account, which is tax free, then you will need to check if your balance is in excess of $1.6 million (across all accounts held). Any money held in retirement income accounts that is in excess of $1.6 million will need to be withdrawn. You have the option to invest the excess through other means, spend it or deposit it in a superannuation account in the accumulation phase. If you choose the latter option, it will be subject to a 15 per cent earnings tax. Earnings on the $1.6 million balance after 1 July 2017 will not be required to be withdrawn. In subsequent years, the cap will be indexed in line with the consumer price index.
Reduction of non-concessional contributions cap
If you are over the age of 65, then the reduction of the non-concessional contribution cap may have an effect on any lump sum that you are looking to contribute to superannuation. You will only be able to make non-concessional contributions of $100,000 per annum – the cap until 30 June 2017 is $180,000.
If you’re already retired, superannuation is only one component of your retirement income. If you are currently accessing the Government Age Pension, or plan to, it’s important to understand how superannuation is assessed when applying for an Age Pension.
Being already in retirement doesn’t necessarily mean that your plan should be simply put in place and then forgotten about. Changes to superannuation, the Age Pension rules and of course, your own individual circumstances mean that regular reviews of your financial arrangements are as important for you now as when you were planning for your retirement.
To learn more about the changes to super, and how you can plan for what’s ahead, read the latest YourLifeChoices eGuide How will July super changes affect you? sponsored by AustralianSuper.
This article has been sponsored by AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, the Trustee of AustralianSuper ABN 65 714 394 898. The views expressed are those of YourLifeChoices and not necessarily the views of AustralianSuper. The article contains general information and you should consider your personal financial situation before making a decision