Question 1

Hi Craig, thank you for the information in your column. My question is: My total super balance at the end of last fianancial year was $1,890,280. It has increased to $1,979,418.

Should I withdraw some and possibly put it into my wife’s super account to bring my balance down under $1,900,000 – and if I don’t what will be the tax implications? Or is another option available?

My wife has $1,496,102 total in her super. We have not made any contributions for the current financial year and we have both been retired for five years.

Cheers, Ian.

Hi Ian,

There are a few things to consider in your situation.

If you have a Total Super Balance of more than $1.9 million, there is no additional tax payable. The consequences are:

• You cannot make any after tax non-concessional contributions
• When you start a pension with your super you can only commence with an amount you add to the Transfer Balance Cap. The TBC is the same as the TSB, i.e. $1.9 million (this is due to be indexed to $2 million on July 1, 2025).

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Therefore, if you have a partner, it is generally a good idea for those with high super account balances to even them up.

As you are retired, I assume you both have access to your super. But to get money (back) into super via after tax non-concessional contributions, you must be under age 75.

For TSB purposes, the only balance that matters is the balance as at June 30 each year (see below table).

As an example, even though yours is greater than $1.9 million, you could still contribute $120,000 because your balance was below $1.9 million at June 30, 2024.

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Before deciding on how much to withdraw and re-contribute, you should consider what you want to do with these funds. Are you intending to start pensions with all/some of them, leave it in super, or something else?

Now would be a good time to speak with your super fund or financial adviser to confirm your goals and strategies to match.

Question 2

Hi Craig, my question relates to choosing the appropriate investment options after retirement.

I have a defined benefit pension paying $72,000 a year and I am about to start an income stream with another $700,000 (drawing down the minimum 4 per cent), while another $300,000 would remain in my accumulation account. 

I own a property, which is my only other significant asset.

I am 60 and am hopeful of living at least into my mid 90s (as both my parents have done). 

My plan is to split the investment options for the income account – 70 per cent balanced to 30 per cent high growth – with payments to be sourced from the option with the higher balance.

For the accumulation account, I am thinking to reverse the proportions to 30 per cent balanced and 70 per cent high growth.

Do these splits seem appropriate given my goal is to have a steady(ish) income from the balanced side of the income account while aiming for some extra longer-term growth with the funds in the high-growth options? 

I didn’t go for 100 per cent high growth with the accumulation account because I may want to do a partial lump sum withdrawal at some point in the next few years.

Can I choose such a withdrawal to come from the balanced portion of the account? 

Cheers,  AJ

Hi AJ,

It sounds like you are in a strong position. There are a couple of ways you could approach this.

First, as those options would invest in a majority of growth assets, they are likely to achieve higher long-term returns but also would be subject to high ups and downs in value, especially over short periods. You must be comfortable with this and be prepared to stay invested while it happens.

If that is the case, then what you have outlined sounds appropriate. You can draw down from just the balanced option first. But this also means your pension will become even more aggressive over time (i.e. as your balanced option is drawn out and growth option is growing), meaning you could be left with a very aggressive approach to investing your income account.

You should consider either regular rebalancing or drawing down funds on a proportional basis.

An alternative approach is to consider what investment return you need to achieve your objectives. Your objectives could be a mixture of:

• regular income
• lump sums to cover large expenses
• the length of time you need the funds to last
• any estate planning wishes (i.e. leaving behind money)

You may find that you could take a more conservative investment approach and still meet all of your objectives.

A good financial adviser can help you set objectives and model out some appropriate scenarios and strategies.

Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.