The two biggest and most common questions that we get from our clients are around the pension changes. The change to tax free amount that investors are able to access once they retire. The $1.6 million cap that came in means there is a limit to tax free earnings that a super fund can generate.
It created a little bit of confusion, particularly for those that are approaching retirement or who are in retirement. But at the end of the day it’s still fairly fair.
With the $1.6 million tax free, if you are earning 4 per cent income, it’s around $60,000-$65,000 a year if you can generate a 4 per cent return out of your super fund. Between a couple that’s around $120,000 tax free. People shouldn’t necessarily be too upset about that. And anything beyond that is still only taxed at a very low 15 per cent, so it’s not the end of the world.