Transitioning to Retirement

You’ve been working hard to save into your super with a view to an enjoyable retirement; but as retirement approaches, or you approach the preservation age, how do you actually transition to retirement? What are the options available to you?

Once you get access to your super, you have these options in the Goldman Sachs & JBWere Superannuation Fund ('Fund'):

1. Start a pension account and receive a regular income.
2. Leave it where it is in an accumulation account in the Fund for a little longer.
3. Withdraw it as cash, all at once, or in stages.

To make the right decision, it’s important that you understand what your expectations for retirement mean for your finances. It can be tempting to cash it out as one lump sum to fund that once-in-a-lifetime trip or landscape your garden, but there are other options available to you.

Remember the money you’ve saved over your working life may have to last you 20 years or longer. One option is to transfer all or some of your funds into a suitable pension account.

(Please note that if you would like to commence what is known as a ‘transition to retirement pension’ while you continue to work, that is not offered within the Fund, but you could rollover your Fund benefit to another fund to access such a pension if you would like to.)

WHAT’S MY PRESERVATION AGE?

Your preservation age is the age you can access your super if you are retired.

If you were born 1 July 1964 or later, your preservation age is 60. If you are born before this date, you will have already received your preservation age.

LET YOUR MONEY WORK FOR YOU

Opening a pension account means you can set yourself up to receive a flexible and potentially tax-effective income to fund your lifestyle whilst your money keeps earning an investment return. Here are just a few reasons why it’s a good idea:

• tax-free income payments once you reach age 60
• tax-free income earnings in a pension account
• adjustable regular payment frequency and value
• keeps your funds invested for your future
• could help make funds last longer.

ACCOUNT BASED PENSIONS

If you have an Account Based Pension you are paid a regular income until the balance of your account reduces to zero (or you close the account or you die). You choose your level of income, subject to being paid a minimum amount per year as specified by legislation.

As your age and account balance change each year, your minimum amount will be reviewed and recalculated each year.

You can start an Account Based Pension if you are an existing Fund member who has retired from employment and you meet the requirements for payment of a cash lump sum benefit under the preservation rules.

Once your Account Based Pension starts, you cannot make further contributions into your account, so it may be best to combine all your superannuation monies (e.g. from other funds) before beginning an Account Based Pension.

Eligible spouse members can also elect to receive an Account Based Pension. Pension payments are deducted from your account (as well as any fees), and the account is adjusted for investment earnings (positive or negative) in accordance with the Fund’s crediting rate.

You can withdraw lump sums from your account at any time by contacting the Helpline. However, lump sum withdrawals reduce the balance in your account, meaning that either or both the income you receive will reduce and the period of time for which the pension payments are made will reduce.

Ultimately, it’s important to understand the options available to you for your individual situation and speaking to a financial adviser is a great place to start. They can recommend strategies to get the best from your super in your retirement. GSJBW members can speak to a Mercer Financial Adviser by calling 1800 025 026 to arrange an appointment.

HOW DO I ELECT TO RECEIVE A PENSION?

When you retire, you will receive a Payment Instructions form enabling you to select how you want to receive your benefit from the Fund. You will have the option of choosing a lump sum payment, pension benefits or a combination of the two. If you would like to receive an Account Based Pension from the Fund (and are eligible to receive such a pension), you can download an application form or call the Helpline and request an application form.