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Ask the Expert: Topping up pension accounts and income stream comparisons

Having a long-term strategy with your pension super account can result in significant tax savings.

Having a long-term strategy with your pension super account can result in significant tax savings.

Question 1

  • I am receiving a pension from my super fund and have previously removed $300,000 from my pension super account, then opened another pension account and resubmitted the money to that account to remove the taxable component on that amount. My three years are up now. Am I allowed to do that with my remaining $330,000 to remove the taxable component on that amount?

Yes, after three years you would be eligible to make further after-tax, non-concessional contributions.

Once contributed these funds go to the ‘tax-free’ component of super.

But there are conditions.

You need to be under 75 and have a total super balance as at the previous June 30 below a certain amount to be eligible to contribute.

Note that the $110,000 annual non-concessional cap ($330,000 bring-forward cap) is being indexed to $120,000 ($360,000 bring-forward cap) from July 1, 2024.

The amount you can contribute is also dependant on your ‘Total Super Balance’.

The following table summarises the Total Super Balance (TSB) thresholds and maximum non-concessional contribution (NCC) caps for 2023-24 and 2024-25.

Question 2

  • Hi Craig, Thanks for your weekly Q&A. My wife and I are comparing both super and income stream products from various funds. 
  • Part A: myGov/ATO YourSuper tool compares MySuper products only. How would you advise comparing the other products from funds for both super and income stream/pension? Are there any online tools or sites that you recommend?
  • Part B: Are funds required to show returns and fees in a standard way for easy comparison? Are the figures independently verified? Thanks for your help

This is a good call out. It is a lot harder to compare super income streams/pensions than regular super accumulation accounts.

There has been much more focus on this area recently by the government, so let’s hope the MyGov/ATO tool is updated to make these comparisons possible and easy.

When comparing returns, the income stream investment options and accumulation investment options are normally the same, so the investment return comparisons from MyGov may still be relevant.

However, the fees and features may be very different.

The super funds are required to disclose the fees and returns in a standard way so they are easy to compare, however, comparing manually can be time consuming.

In the interim you may want to look at some consumer or research websites.

SuperRatings is a research and ratings business that rates superannuation funds.

Its website allows you to see the current ratings and awards for more than 250 different superannuation products, including pension products.

It also has a range of award categories you can filter for, including retirement fund of the year nominees and winners.

Question 3

  • Does ‘unrestricted non-preserved’ mean concessional or non-concessional?

Those terms are not related.

Concessional (pre-tax contributions) and non-concessional (after-tax contributions) are in relation to money being contributed into super.

‘Unrestricted non-preserved’ means the money that is in super can be accessed at any time without any restrictions.

They can be a mixture of concessional and non-concessional contributions.

Typically, to have your super benefits classified as unrestricted non-preserved, you need to:

  • Change jobs since turning 60. At which point your existing balance would be classified as ‘unrestricted non-preserved’ but all new contributions and earnings would be preserved
  • Reach age 60 or above and retire
  • Reach age 65.

There are a few other ways in which your funds can be classified as unrestricted non-preserved, but these are less common and/or are no longer available.

Your super fund can tell you whether you have any unrestricted non-preserved benefits.

Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.

The New Daily is owned by Industry Super Holdings

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