Transition to Retirement Strategy

By redirecting a client's income through a pension, and salary sacrificing employment income as concessional superannuation contributions, you can provide a continuation of the client's level of income while increasing their superannuation balance.

1. Remove 15% tax on superannuation by transferring it to a pension
2. Increase the amount of salary sacrifice to super without changing the client's net income.

How is this achieved?

Before the age of 60, the pension income may have a tax-free component resulting from non-concessional contributions and the client will also receive a 15% rebate which pays the first 15c of tax on all remaining pension income.

For anyone aged 60 or over this pension is entirely tax-free, and will not even be factored into their taxable income. This further reduces the tax they will pay on any other income such as wages or investment income.

All superannuation money which is in the pension no longer pays tax on earnings or capital gains. This represents a significant tax saving on the 15% rate that normal superannuation pays.

Transition to Retirement Example

A client aged 55 with a total salary of $100,000 and a superannuation balance of $300,000 can realise an additional $74,000 of retirement savings without changing their net income.