Financial Planner Superannuation

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Superannuation is basically a savings account for your retirement. People looking to invest in this type of account are doing so as an investment for retirement or because they don’t have a need to access their funds until retired.

How does it all work?

Financial planners recommend investing in superannuation and rollover funds since they are exempted from tax. These long-term investments provide a benefit upon retirement, usually in the form of a lump sum. A rollover fund is a superannuation fund that allows investors to roll-in benefits from preceding superannuation investments. By combining all your superannuation in to one fund you can gain greater control and reduce your financial planner fees. Superannuation investors are able to pick from an array of investment portfolios with different asset ties and risk/return profiles.

Financial Advisers can help you decide which type of investment best suits your needs.

When can I withdraw my money?

Your financial planner might have already informed you about the changes made in the law after 1st July 1999. Unlike before, non-preserved contributions will now be considered as preserved and withdrawals will no longer be permitted. You cannot withdraw preserved contributions until you reach 55, or depending on your date of birth 60. However, as your financial planner will point out, there are specific instances where you would be allowed to use your preserved contributions before retirement age. These can be, if you suffer from a total and permanent disability, by showing there is financial hardship, die or on other compassionate grounds.

What is severe financial hardship?

Your financial planner would explain that you have to meet two requirements to be considered as having a financial hardship.

1) You have to be receiving a social security pension or benefits for the last 26 weeks.

2) You must prove that you are unable to meet reasonable and immediate family expenses.

The Australian Prudential Regulation Authority has empowered fund trustees to decide on the second and have produced guidelines that the trustees are required to follow.

What are compassionate reasons?

As defined in the regulations, compassionate reasons are where you have expenses for your self or a dependant these expenses should be to:

1. Receive medical treatment not available through the public health system for a life threatening illness, acute or chronic pain.

2. Provide medical transport if required for the conditions mentioned above.

3. Do required modifications to the family car or home to meet the needs of a disabled dependent.

4. Cover Palliative care or funeral expenses.

For these reasons to be considered you must first apply to the Australian Prudential Regulation Authority. You must also meet any specific requirements of the fund.

How is it paid?

After retirement, there are two ways you can withdraw money from your superannuation fund. You can choose to receive the whole amount as a lump sum or in the form of a regular pension. If you opt to receive a pension, your accumulated contributions left in the fund will be reinvested and the fund will pay you regular pension like payments.