Allocated pension merger

Craig Hall of the National Information Centre for Retirement Investments INC (NICRI) has some advice for member Cecilia about the merging of her allocated penision provider with another provider.

Q. Cecilia
I’m aged 63 and I have an allocated pension with AGEST. It is the process of merging with AustralianSuper, which supplies my husband’s allocated pension (he’s aged 64). This means that both of our allocated pensions will soon be in the same basket.  If I choose not to proceed with the merger to AustralianSuper, will government legislation allow me to freely roll over my AGEST allocated pension to another institution without too much hassle?  Please advise.

A. Provided by Craig Hall, NICRI

I refer to your question regarding your allocated pension and the ability to roll it over to another provider. Using a mix of assets within your chosen asset allocation provides diversification and the use of another provider can further this objective. However, it may also be beneficial to look at the options available within Australian Super as they may satisfy your desire in achieving your needs and objectives. Either way it is possible to ‘rollover’ your pension to another provider at any time but there are some issues you may need to consider.

Firstly, you will need to specify to your present fund that you want the benefit ‘transferred’ or ‘rolled over’. This will avoid the funds being ‘cashed out’ of the superannuation environment and will therefore not be subject to contribution caps.

From a taxation point of view the proposed action would not change due to you being over age 60. Therefore the earnings generated, as well as the funds upon receipt, would remain tax-free. If you (or your husband) are in receipt of any Government Income Support (GIS) payments (pensions or allowances) the department will recalculate the ‘deductible amount’ based on the new fund amount and your current life expectancy. This only applies if you already receive GIS.

Another issue you should consider is the nomination of beneficiaries for the payment of a death benefit. It would be prudent to review this upon application to the new fund to ensure your wishes are clearly outlined.

The final issue to consider is the selection of the asset allocation with the new fund. This should match your future needs and objectives and most funds will offer you a choice of asset allocation.

I hope that this information has been helpful and if you have any further questions please don’t hesitate in contacting NICRI on 1800 020110 or via email at [email protected].

It is important to note that the National Information Centre on Retirement Investments Inc (NICRI) does not provide or imply financial advice. Any information provided is on our understanding of legislation and we suggest that you confirm details with relevant government departments and seek professional advice before proceeding.

Written by craigha



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