your path to retirement

Transcription

1 1

2 your path to retirement 2018

3 3 you need to know about Copyright H.E.S.T. Australia Limited 2017 This information is issued by H.E.S.T. Australia Limited ABN AFSL No , Trustee of Health Employees Superannuation Trust Australia ABN ( HESTA ). Investments may go up or down. Past performance is not a reliable indicator of future performance. This information is of a general nature. It does not take into account your objectives, financial situation or specific needs so you should look at your own financial position and requirements before making a decision. You may wish to consult an adviser when doing this. HESTA Financial Planners are Authorised Representatives of Industry Fund Services Limited (IFS) ABN AFSL IFS are responsible for the advice given by its representatives. H.E.S.T. Australia Ltd has shares in the company that owns IFS, but does not receive any commissions as a result of members using their services. HESTA Associate Superannuation Advisers and HESTA Superannuation Advisers are representatives of H.E.S.T. Australia Limited. Product ratings are only one factor to be considered when making a decision. See hesta.com.au for more information. Before making a decision about HESTA products you should read the relevant Product Disclosure Statement (call or visit hesta.com.au for a copy), and consider any relevant risks (hesta.com.au/understandingrisk).

4 4 HESTA acknowledges Aboriginal and Torres Strait Islander peoples as the Traditional Custodians of all Lands on which we come together. At HESTA, we know that Aboriginal and Torres Strait Islander cultures enrich this nation and we pay our respects to Elders, past and present. HESTA acknowledges the important contribution Aboriginal and Torres Strait Islander peoples make in creating a strong and vibrant Australian society.

5 5 about HESTA $46b+ in assets more than 850,000 members H.E.S.T. Australia Ltd ABN AFSL , the Trustee of Health Employees Superannuation Trust Australia ABN (HESTA).

6 6 what we re about Health and community services Our members Responsible long term investing

7 7 I want to do what I want, when I want. I want to to be able to catch up with family and friends. achieve the future you want I want to be off the clock. I d like to rediscover my hobbies and try new things.

8 Growing your super comes down to what you put in and earning interest over time 8

9 9 know your limits Before-tax contributions $25,000 p.a. After-tax contributions $100,000 p.a. Please note: there is a $1.6 million cap on Super balances as at 1 July See more at

10 new ways to save in super firsthome super saver scheme downsizer Contribute up to $15k each year Contribute up to $300k each** Contribution limits apply* Tax free Up to $30k can be withdrawn 65+ at time of contribution Access from 1 July 2018^ From house sales after 1 July 2018 *Contribution limits apply $25,000 before tax; $100,000 after-tax ^Withdrawals taxed at marginal tax rate less 30% offset ** From sale of primary residence held 10 years or more in the past and sold after 1 July Funds must be contributed within 90 days of settlement

11 11 first home super saver scheme Contribute $15k a year into super Max $30,000 total Saving in super means only 15% tax on investment earnings Salary sacrifice (before-tax) up to $25k* and/or After tax up to $100k** Not owned property before Over 18 when you withdraw Saving for your home Types of contributions Are you eligible? Salary Sacrifice contributions into Super limited to $25,000 per financial year and include all before tax contributions (e.g. 9.50% SG and deductible contributions) **Non concessional cap $100,000 per financial year. Please note: the Government intends to review the scheme in 18 months.

12 12 about downsizer contributions You can contribute up to $300,000 each into super from the sale of your home Sale of contract to be signed after 1 July 2018* No tax on contributions Savings from your home Impact on Centrelink benefits Income stream transfer balance cap Investment options that work best for you Things to consider 65+ when you contribute No work test Primary residence for more than 10 years (in the past) Lodge funds within 90 days of settlement Are you eligible? * The proceeds from the sale must be either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT rather than a pre-cgt (acquired before 20 September 1985) asset.

13 know the difference? salary package (outside super) before tax (into super) Tax free Tax 15% Limits per annum* Limits per annum Up to $9,010 or $15,900 $25,000 * Salary Package (outside Super) limits differ pending employer status based on 17/18 FBT Year ** Salary Sacrifice (into Super) limits include all before tax contributions (e.g. 9.50% SG) # Individuals age as at 30 June 2018 Both will impact eligibility for some Government Benefits e.g. Co-contribution

14 14 what s the difference super tax vs marginal tax? 45% 15% Up to $250,000 income 32.5% 37% 19% 2018/19 INCOME RANGE 0% 0-18,201 18,201-37,000 37,001-90,000 90, , ,001+

15 15 Earn less than $37,000 p.a? good news LISTO Your partner puts money into your super Your partner claims an offset Your future gets a boost The Government will refund up to $500 contributions tax to your super if you re eligible. They can contribute as much as suits you both, but for amounts up to $3,000 there will be a tax benefit for them. The offset is capped at $540 based on a $3,000 contribution. That extra money into your super now starts working straight away to brighten your future

16 16 super top up from the government $1 from you 50c potentially from the government more for your super

17 17 about government co-contributions If you earn under $52,000 you could be eligible for a government co-contribution This is where the government could top up 50c for every dollar you put in, up to $1,000 After tax contributions One of the major benefits of making after-tax contributions is that you could also receive a bonus super top up from the government. Good for your super Paid employment in the financial year Super fund has your Tax file number Lodge Tax Return Not be on temporary visa Under age 71 At least 10% of income from employment or running a business Are you eligible?

18 18 one story this is tom, today Aged 45 What will Tom potentially have when he retires at age 67? salary $60,000 super $50,000 current estimate *$309,000 *Calculation based on SG 9.5% indexation 2.5% earnings 6.5% net.

19 19 one story this is future tom If Tom adds $40 extra per fortnight as a pre tax contribution, at age 67 he could potentially have *$31,000 more *Calculation based on pre tax contributions $40 per fortnight SG 9.5% indexation 2.5% earnings 6.5% net.

20 20 what type of investor are you? Risk assessment Low Moderate High

21 21 risk vs return history tells a story Past performance is not a reliable indicator of future performance % Annual returns for the past 10 years Core Pool Cash Australian Shares International Shares

22 22 HESTA provides 3 types of insurance Death TPD IP

23 23 The HESTA income stream has two options Transition to retirement with an Income Stream while you re still working Retirement stay with HESTA when you finish work

24 things to consider if a TTR income stream suits you Have you reached your preservation age? Do you have money in your super account? Under 60 or over? Are you receiving Centrelink payments or benefits?

25 25 how can a Transition to Retirement income stream potentially work for you? Boost your super while working Reduce your hours, not your income Tax-free payments after age 60

26 Your income 26 Plan your retirement while working Take a portion of your income and put it into your super. You ll pay 15% tax on this amount, instead of your income tax rate. Your super

27 Your income 27 You can potentially then take some of your super to top up your income. Payments from super are generally taxed less than your income. Your super

28 Your income 28 Boost your super Continue to work full-time Take advantage of a lower tax rate Your super

29 29 stop working and draw an income Your income Your benefits and entitlements Your super

30 30 case study work full time until age 67 sharon Aged 60 and works full time Earns $60,000 p.a. ($2,308 a fortnight) $146,500 in super Wants same net income

31 31 TTR effect Age 60 Start TTR No change in Net Income Receive regular payments (you can drawdown min 4% and max 10% of the Income Stream balance) Employer + Salary Sacrifice up to $25,000 pa a potential boost of *$26,000 at retirement! * Based on drawdown of 8%

32 32 example Sharon s strategy $25,000 contributions cap $5,700 Employer contributions 9.5% 15% tax applied Super $1,500 Income Stream $145,000 Tax-free income $12,571 Less income tax of $4,888 on new gross of $40,700 Take-home pay $48,383 Salary Sacrifice $19,300 Sharon will increase her net contributions to her super by $3,834 this financial year through implementing a TTR strategy

33 33 case study reduce working hours Dom Aged 57 and works full time Earns $42,000 p.a. ($1,615 a fortnight) $146,500 in super He wants to work part-time until age 66

34 34 TTR effect SG 9.5% only Receive regular payments (min 4% and max 10% of the Income Stream balance that you can draw down from) Under age 60 so payments may attract tax no change in net income Starts to use his super

35 35 your income in retirement HESTA Income Stream Other Income Aged Pension

36 36 how much will you need? age pension singles $1,645 * per fortnight for a comfortable retirement $ ** per fortnight couples $2,318 * per fortnight for a comfortable retirement $1, * per fortnight *Source: ASFA Retirement Living Standard March Quarter 2018 household expenditure for retired singles and couples who own their own home. Visit for more details. ** Approximate age pension for singles and couples (as at 1 July 2018). It is subject to asset and income tests.

37 37 beneficiary nominations Select where you want your super directed to when you pass away.

38 38 about death benefit nominations preferred (non-binding) binding reversionary Super does not form part of your Estate You can nominate your preferred beneficiaries (this is not binding on the trustee and they may pay it to someone else You can nominate your binding beneficiaries (must be a dependant and trustee must pay to those nominated) Notes: Children include step and adopted Like all estate planning matters, we recommend you discuss beneficiary options with your legal professional. Couples have the option of ensuring the income steam continues to be paid to their partner, by nominating them as the reversionary beneficiary. The income stream will revert to their name on your passing. They have the option of continuing with the income stream or taking a lump sum.

39 39 why access advice? Build confidence Demystify super Make the right decisions

40 play AND get advice calculators at home, work or when it suits 40

41 41 HESTA Advice team here for good for you Phone Video conference Face to face HESTA-related topics

42 42 HESTA Financial Planning You can access personalised advice outside of super non-super investments advice for couples super comparisons centrelink strategies estate planning aged care options ongoing review service wealth protection

43 43 next steps Contact us: hesta.com.au general enquiries