In the 2006 Federal Budget the Government announced significant changes
designed to simplify and streamline superannuation. Some changes took
effect in 2006-07, but most took effect from 1 July 2007. Key
changes in relation to retirement included:
- No tax after age 60 from a taxed superannation fund, regardless of
whether you take your benefit as a lump sum or convert it to an income
stream
- Reasonable Benefit Limits (RBLs) abolished so there’s no longer any
penalties for accumulating large amounts is super
- You can stay in super as long as you like, there’s no longer a
requirement to cash out of super after 65 if you’re no longer working (this
took effect 10 May 2006)
- Tax component changes. If you are able to and choose to access your
super prior to age 60, there may be a tax liability. But now there are only 2
tax components: a Tax free component and a Taxable component.
- Pension minimums are calculated differently and there’s no longer a
maximum. The minimum amount you need to take from your pension product is
generally now calculated as a percentage of your account balanced based on age.
And for most pension products now, there’s no maximum annual payment
limit.
- Death benefits as pensions can only be paid to tax dependants.
- Centrelink changes to pension assets test taper rate. From 20
September 2007, the rate will halve, meaning people previously unable to access
the Age Pension may in fact be able to.
Some changes also occurred to the superannuation system prior to retirement
such as new contribution limits in super, visit our Superannuation
Pages for more information on super in general.
So, talk to your financial planner - it may be worth topping up your super
now.
Why you need financial advice.
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