For many years, Craig Sankey has helped thousands of readers navigate questions about superannuation, retirement and broader financial planning.

While Craig has stepped away from the column, the commitment to providing practical and accessible financial information remains unchanged.

Ask the Expert will now be answered by Craig’s former colleagues at Industry Fund Services’ Trusted Advice Network.

You may see different names appearing in the byline from time to time, but the aim remains the same – helping readers better understand the financial issues that affect everyday Australians.

The IFS advisers will continue answering your questions on retirement planning, superannuation and all the other fianncial topics that arise during different stages of life.

Most important, we’ll still focus on providing clear, practical guidance to help readers make more informed financial decisions.

Question 1

My partner (68) receives an allocated pension, which was mostly funded from her superannuation. Can I add funds to the amount remaining?

The short answer is yes, but not directly.

Once an account-based pension (new name for an allocated pension) has been established, additional money can’t simply be deposited into that existing pension account.

However, it might be possible to contribute additional funds to super and then use those funds to increase the amount supporting her retirement income.

Typically, the process involves three steps:

1. Making a contribution into a superannuation accumulation account.
2. Allowing that contribution to be received and processed by the fund.
3. Starting a new account-based pension with those funds, or stopping and restarting your account-based pension with the total balance.

Many retirees are surprised to learn they can still contribute to super after retirement.

Provided your partner is under the age of 75, voluntary contributions can generally still be made, subject to the contribution caps.

The current annual concessional (before-tax) contribution cap is $32,500 and the non-concessional (after-tax) contribution cap is $130,000 a year. Depending on eligibility, it may also be possible to bring forward up to three years of non-concessional contributions ($390,000).

Eligibility to contribute, contribution caps and the most appropriate strategy will depend on individual circumstances, and readers should consider obtaining personal financial advice before taking action.

Many people choose to add money to super later in life because it provides a familiar and administratively simple way to hold and invest retirement savings.

For example, some retirees make contributions after downsizing the family home, receiving an inheritance, selling investments or simply accumulating surplus cash outside super.

Others prefer to keep a larger proportion of their savings within the superannuation system because they’re comfortable with the investment options, reporting and retirement income features already available through their fund.

The good news is that while you generally can’t add money directly to an existing allocated pension, there are established pathways that allow additional savings to be moved into super and ultimately support your retirement income.

Paul Johnston is a financial adviser within the IFS Trusted Advice Network.

Question 2

My wife and I have an self managed super fund and I am thinking about minimising costs when we pass on and our children inherit the assets.

The assets in our super fund are mainly real estate (houses) and some cash. Should we bring our children into the fund?

Whether adding adult children as members of an SMSF is appropriate will depend on the particular circumstances of the fund and its members.

Generally speaking, while doing so may assist with fund continuity and administration, it does not necessarily address all issues associated with passing superannuation benefits to the next generation.

One of the most common misconceptions is that, if children become members of the SMSF, the assets can simply remain in the fund indefinitely after their parents pass away.

In reality, superannuation benefits generally need to be paid to beneficiaries following a member’s death. If your children are adults who are not financially dependent on you, they will usually be treated as non-tax dependants under the tax law.

In many cases, this means death benefits must ultimately be paid out of the superannuation system rather than remaining attached to your member balances.

This can create practical challenges where the SMSF’s assets are concentrated in property.

For example, if the fund holds one or more residential properties and there isn’t sufficient cash available to pay death benefits, the trustees may need to sell assets or otherwise restructure investments to facilitate those payments.

While it may be possible for assets to be transferred in-specie in some circumstances, the fund still needs to ensure death benefits are paid in accordance with superannuation and tax requirements.

Adding your children as members can also introduce other considerations including shared control of the fund, investment decision-making, relationship breakdowns, creditor issues and differing views about the future management of family assets.

For many SMSFs, the more important question is not whether children should be added as members, but whether estate planning arrangements have been properly considered.

This includes reviewing the trust deed, trustee structure, death benefit nominations and ensuring there is sufficient liquidity within the fund to deal with future benefit payments.

Reducing future administration costs is certainly worth considering, but it’s equally important to understand how death benefits will actually be paid and who will control those decisions when the time comes.

Linda Panaszek is a financial adviser within the IFS Trusted Advice Network.

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.