GENERAL OBJECTIVES SUBJECT CONTENT. On completion of this subject, you should be able to:

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1 SUPERANNUATION AND RETIREMENT PLANNING CPA PROGRAM SUBJECT OUTLINE Study guide: First edition Superannuation and Retirement Planning explores the role of the financial adviser when dealing with the complexities of retirement planning and how they can establish credibility and demonstrate value to clients in this area. Key aspects of Australia s retirement income policy will be addressed, including superannuation, income streams, social security and estate planning. This subject will support candidates to develop the knowledge and skills to utilise integrated strategies to assist clients in maximising their retirement income and protecting their assets. Candidates are reminded that you must have completed Financial Planning Fundamentals prior to enrolling in this subject. We strongly recommend that candidates have also completed prior learning in Australian taxation prior to enrolling in this subject. EXAM STRUCTURE The Superannuation and Retirement Planning exam is comprised of a combination of multiple-choice and written response questions. The Superannuation and Retirement Planning exams will be held on two fixed dates in computer-based format only. Candidates must be available to attend an exam on this fixed date and prepared to travel to a computer based exam centre (pdf). Please ensure you read the related rules and regulations before you enrol in this subject. SUBJECT AIMS The aims of this subject are to provide candidates with the required knowledge to: obtain a comprehensive view on superannuation and retirement planning and the regulatory environment in which it operates analyse a client s needs and be able to recommend an appropriate retirement planning strategy advise and educate clients of their eligibility for social security benefits provide appropriate estate planning advice within a financial adviser s role.

2 GENERAL OBJECTIVES On completion of this subject, you should be able to: understand the value of financial planning in the areas of superannuation and retirement planning understand Australia s retirement income policy and analyse the complexities of the superannuation system recommend superannuation types and products which may be appropriate for a client analyse income streams that may be suitable for a clients needs advise appropriate superannuation investment strategies for a client understand when a client may be eligible to access social security and assist clients to maximise their entitlements determine when estate planning may be appropriate for a client and outsource appropriately. SUBJECT CONTENT The subject is divided into six modules. The weighting column in the following table provides an indication of the emphasis placed on each module in the exam, while the proportion of study time column is a guide for you to allocate your study time for each module. Module Recommended proportion of study time (%) Weighting (%) 1. Retirement planning overview Types of superannuation funds Accumulation Withdrawals Pension and social security benefits Estate planning A brief outline of each module is provided below.

3 Module 1: Retirement planning overview This module provides an introduction to the Australia s superannuation and retirement planning environment and the various regulations which affect upon the provision of advice given to clients in this area. The module initially explores the history of superannuation and retirement income in Australia and moves on to current government policy. Government policy is contrasted against present day client needs in retirement, including the amounts clients are likely to need to retire, transitioning into retirement, non-financial needs and the aged care system. The module outlines key legislation and regulations relevant to superannuation and the government agencies responsible for enforcing the law. Superannuation fund compliance requirements are introduced in this section providing a basis for understanding the framework within which superannuation funds must operate. The module concludes by reviewing the financial planning process in the context of providing superannuation and retirement planning advice. This includes the licensing requirements placed on those who wish to provide advice in this area, the potential roles they may play and best interest duties. Module 2: Types of superannuation funds This module explores the Superannuation Industry (Supervision) Act 1993 (SIS Act) in further detail and examines the structure and operation of superannuation funds. The module focuses on the trust structure under which all superannuation funds operate and examines the trust deed, the different types of trustee structures, the role of the trustee and trustee obligations. The module also provides comparisons of the features, benefits, compliance and costs of different superannuation funds, and what insurance covers are available in each. Insurance is covered briefly as part of the discussion of the types of superannuation funds in the market today. In the context of legislation, the module provides candidates with an opportunity to familiarise themselves with several important sections of the SIS Act, and be able to interpret and apply legislation as it affects the implementation of superannuation advice. Other legislation having an impact on the superannuation system will also be examined including the Corporations Act 2001 (Cwlth) and the Income Tax Assessment Acts(1936 and 1997) (Cwlth). Finally, the module applies the theoretical knowledge learnt about the different types of superannuation funds to case studies that requires an analysis of client needs and an evaluation of appropriate superannuation strategies. Issues are considered in light of the best interest duty that financial advisers have an obligation to adhere to. Module 3: Accumulation This module explores in detail the accumulation phase of building wealth within the superannuation environment, using two methods: 1. Understanding the different types of contributions able to be made to a superannuation fund and their tax consequences; and 2. The investment returns generated within the superannuation environment in the context of the client s risk profile.

4 The module will also examine in detail the rules and regulations that must be adhered to in order to make contributions to superannuation, as well as the restrictions on investments and investment strategies within superannuation. Tax on the different types of contributions and investment earnings within the superannuation environment is discussed in the module, and examined with respect to the investment options and asset classes which build capital for retirement. As part of determining the taxable income of a superannuation fund and the calculation of net tax payable, a consideration of the taxation implications of insurance policies within superannuation will be made. While superannuation is one structure that can be used for building wealth for retirement, alternatives are discussed as well as contemplating what might be in a client s retirement plan, and the role a financial adviser has in assisting a client for this phase of their life. Module 4: Withdrawals The module provides an introduction to the superannuation withdrawal rules and the various forms of income streams and products available to support a person s income needs in retirement. It covers the various methods of withdrawing funds from superannuation as well as the tax rules applicable to each type of withdrawal. The characteristics of different types of retirement income streams are discussed as is information on how income stream payments are calculated and taxed. The module explores factors to consider when providing advice to clients about withdrawing funds from the superannuation environment as well as a consideration of the tax consequences of receiving insurance benefits from the superannuation system. Information on various retirement planning strategies and investment strategies when retiring is also covered. Module 5: Pension and social security benefits This module discusses the main social security benefits encountered by financial advisers, with a focus on the benefits provided by the Departments of Human Services and Veterans' Affairs. In addition, this module outlines the means testing requirements (income and assets tests) as it applies to determining eligibility for social security entitlements, as well as any exclusion and waiting periods that may apply before a client receives a benefit. There will be a focus on the importance of strategic advice provided to a client in retirement including issues associated with age pension entitlements and access to aged care facilities. The module finishes off by examining a range of other strategies that may be utilised within the retirement phase to enhance a client's retirement benefits.

5 Module 6: Estate planning This module explores estate planning in the context of a holistic financial planning process, and identifies common client scenarios and events which are likely to create a need for estate planning advice. The key estate planning instruments are discussed in detail, including the purpose of each, the legal requirements, considerations for their use and implementation of the instruments. The module outlines the elements of an effective estate plan, examines the consequences which can arise from inadequate or poorly-prepared estate planning provisions, and outlines a number of strategies to mitigate and avoid unexpected outcomes. The taxation aspects of estate planning are discussed in detail with reference to deceased estates and superannuation in particular. The module also discusses the role and limitations of the financial adviser with regards to estate planning advice and the way in which the responsibilities and obligations interact and intersect with those of other advice professionals involved in estate planning, such as solicitors and accountants.