Home' Australian Ageing Agenda : AAA Mar-Apl 2015 Contents Thinking about
life after work?
Many people approaching retirement age are interested in accessing their super before retirement to either
top up their super balance or reduce their working hours. This strategy is called transition to retirement (TTR).
If you've reached 'preservation age'
(age 55 if you were born before 1 July
1960) and have money in a super
account, you can transfer part, or all,
of your super into a TTR income stream.
This is subject to legislative requirements
and fund rules. Your maximum yearly
drawdown is 10% of your balance. The
money is also non commutable, which
means lump sums cannot be withdrawn
until you fully retire or reach age 65.
Income received from an income stream is
concessionally taxed. This means, if you're
under 60, income is taxed at the marginal
rate with a 15% tax offset. After age 60,
the income is tax free! There is also no
tax paid on the investment earnings. This
means you could have more cash available
to either reduce your working hours by
supplementing your income, or increase
your super savings through salary sacrifice.
To find out more about how we can help
you transition to retirement, attend
the next HESTA presentation at your
workplace, visit hesta.com.au for a copy of
our Super strategies in your 50s and 60s
fact sheet and the HESTA Income Stream
Product Disclosure Statement (PDS) or
call 1800 813 327 to arrange a consultation
with a HESTA Superannuation Adviser.
With more than 25 years of
experience and $29 billion in
assets, more people in health
and community services choose
HESTA for their super.
transparency in the negotiation
process around what providers
wanted consumers to pay versus
how much consumers could
afford to pay, says Yates.
that My Aged Care is helpful
to consumers as it provides
information on facilities in their
area, as well as their amenities
"The calculator can be
dangerous," he cautions.
"People can put the wrong
information in and get the wrong
Ryan says that while the
government is attempting to
explain the fees via My Aged
Care, "the consumer needs to
dig into the legislation and to
construct an array of financial
models to see how it will all work."
While My Aged Care provides
a lot of general information and
in that sense is a "great step",
people are still confused about
the financial aspects, he says.
"There is this great unknown; the
sums of money are vast. I don't
think the My Aged Care website
GOING IT ALONE
Arguably a big test of the
transparency of the system will
be the extent to which consumers
can navigate it themselves
-- without turning to financial
advisors for help.
Ryan says that all the
necessary information is publicly
available, but he concedes
consumers are faced with "really
challenging concepts to get their
Swanborough says My Aged
Care is a good starting point, "but
I wouldn't use it as the only tool...
If you have time, maybe, but most
people are time poor."
Yates says: "For vast bulk of
people it ought to be possible in
the end to do it yourself because,
you can go and do a basic run
through of the assets and the
income test on My Aged Care."
However, he adds that
there will be people who have a
collection of assets and income
that is unusual and they might
find self-assessment a challenge.
COTA is advising consumers
that if they think they may need
to access aged care, they should
start thinking about the financials
in advance, so as to avoid
making decisions at time of crisis.
Yates says this was why COTA
had fought so hard on the Future of
Financial Advice (FOFA) reforms.
"Because we actually want to be
able to elevate a financial planning
profession, so people say [the
financial advice] might cost money
but you get the value for it, you get
a good service and the service
actually saves you money."
Another emerging talking
point is the 28-day rule, the
designated period within the
new system for a resident to
decide how they will pay for
In a blog post, Ryan argues
this is a challenging timeframe
for providers, "who quite
reasonably seek some certainty
as to how residents will pay for
Ryan believes the issue is
"likely to be tested in 2015 as
providers consider ways they
can lock in resident contracts in
"For the resident this should
not be a problem - as long as
they are clear in the decisions
they make. It will be interesting
to see if the DSS will need
to step in and clarify what is
acceptable," he says.
Yates says he hears
individual providers complain
about the 28-day rule, but that
the industry hasn't raised the
issue with COTA.
"At the moment we think it's
a good thing because people
actually need in a time of crisis
a little bit of time to figure
out the options... In terms of
access, the 28-day rule gives
consumers more time to think
through their circumstances,"
he says. n
"...the reforms also sought
to create a system where
the framework for paying for
aged care would be more
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