The new rules for superannuation and pension Transfer Balance Caps will reshape the way some Defined Benefit Pensioners approach their personal superannuation contributions and overall superannuation entitlements. Some will even have the right to make personal contributions to superannuation taken away from them forever!
The Government has chosen to use a very large multiple to apply to Defined Benefit Pensions when determining the amount recorded against the Transfer Balance Cap. Some consider the multiple used is extravagant and when other pension and superannuation accounts are included it is quite easy for Defined Benefit Pensioners to reach and breach the $1.6m Transfer Balance Cap. Some senior executives will breach the $1.6m Transfer Balance Cap with only their Defined Benefit Pension and tax penalties will apply.
More than ever before, current and former Defined Benefit Pension recipients (such as CSS, PSS, DFRDB, MSBS and many others) need to look carefully at their situation when it comes to contributions, superannuation accounts and entitlements but they should not leave it until the last minute if they are likely to be affected. The new rules take effect on 1 July 2017 and penalties can apply for breaches but fortunately there are strategies to be considered to improve the situation.
The Government and Australian Taxation Office are expecting affected Defined Benefit Pensioners to take all necessary actions with all of their superannuation entitlements before 1 July 2017 to avoid financial penalties.
If you are a current or former member of the CSS, PSS, DFRDB or MSBS who is not sure what the latest superannuation Transfer Balance Cap changes might mean to you and all of your superannuation entitlements, you should consider contacting us. New client places are strictly limited but to get things started, we can offer a very cost effective Financial Advice Health Check discussion to ensure you can potentially access our experience to understand all of your future superannuation investment strategy options.
HOT TIP: The need for honest, transparent and practical financial planning advice has never been greater, so contact The Financial Advice Shop without delay to see how we can help you.
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