Most of us missed it, but the Federal Government has literally ended retirement as we know it, with the Assistant Treasurer's recent changes to superannuation laws.
Most of us missed it, but the Federal Government has literally ended retirement as we know it, with the Assistant Treasurer's recent changes to superannuation laws.
According to Theo Marinis of Wealth By Design, Minister Brough has brought in new rules which means from 1 July 2005, workers over 55 can access some of their super by instalments - and keep working.
"This change is great news for those who have been diligent in making super savings because it means they can access up to ten and a half per cent of their super money in a year without needing to retire.
"Such workers will be able to, for example, cut back to three days a week work, but maintain their lifestyle by accessing super money to top up their wages. They can also elect to transfer just part of their super savings to this environment, leaving the rest accumulating.
"Also, those eligible could use this money to assist their families, for example paying school fees, assisting with a mortgage, or they could take an overseas holiday and remain contributing to society as tax paying employees.
"This regulatory change will lead to a fundamental shift in the role of the financial adviser. They need to be lifestyle experts, not just retirement planners," said Mr Marinis.
The new regulations come into place on 1 July 2005 and affect those who will turn 55 before 1 July 2015, when the preservation age progressively increases to 60 under the current rules.
Mr Marinis said in order to access super funds while still working a person was required to acquire an allocated pension that has been designed to make these part-cashing instalments.
"There are a number of funds that are working to have this facility in place by 1 July 2005. The Navigator platform has indicated it will have this facility in place through its Personal Retirement Plan, Super Solutions and Growth Pension products.
"One of the exciting things about this new rule is its flexibility. For example, should a person decide they would like to stop their allocated pension after withdrawing some money, they can do so, it's called 'commuting it' and their pension will return to the accumulation phase!
"One of the great 'strings' around the superannuation bundle has been undone. It is now even more user friendly than it has ever been," said Mr Marinis.
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Notes to editors:
- Globally, Aviva Australia is part of Aviva plc, the world's fifth largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
- Aviva is a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$78 billion, and more than A$624 billion of assets under management (as at 1 July 2004). The group has more than 56,000 employees and 30 million customers worldwide. Aviva is a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$78 billion, and more than A$624 billion of assets under management (as at 1 July 2004). The group has more than 56,000 employees and 30 million customers worldwide.
- The information in this document reflects Norwich Union Life Australia Limited's (NULAL) and NULIS Nominees (Australia) Limited's ('NULIS') understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information given in this document is of a general nature and has not taken into account the investment objectives, financial situation or particular needs of any particular person and it is not a substitute for professional advice. Applications to invest in a financial product issued by Aviva, or any of its related entities, must be made by completing the application form attached to the applicable Product Disclosure Statement ("PDS"). A PDS is available from Aviva or your financial adviser. Before making an investment decision on the basis of the information above, a prospective investor needs to consider, with or without the assistance of a professional adviser whether the information is appropriate in the light of their particular investment needs, objectives and financial circumstances.