A TTR (transfer to retirement) strategy remained valid even if the 2016 Budget proposal to change its tax status became law, Bryan Ashenden, Head of Financial Literacy and Advocacy at BT Financial Group, told the 2016 SMSF Association Technical Conference.
Addressing the topic Pension strategies for the super savvy, he said it was proposed that from 1 July 2017 earnings on assets that support a TTR strategy would have the same tax treatment as funds in the accumulation phase, and as a consequence the value of TTRs was being questioned.
But Ashenden cautioned against speculation that suggested the worth of a TTR strategy was only valid if its tax benefits remained, and said this represented missed opportunities.
“Rather, consideration should be given to the many reasons why a TTR has been, and will remain, a valid option for many members as they reach their preservation age.” This includes:
Ashenden said what needed to be remembered was that from a TTR perspective the only benefits lost were the tax exempt status of the pension earnings and the reduction in the concessional contribution cap. Effectively, the consequences were:
“In fact, the only scenario where there may be cause to consider ceasing to utilise a TTR is where a member is drawing income that is surplus to their needs and would otherwise be recontributing that amount back to their super fund.”
Ashenden said it was imperative that SMSF specialists were cognisant to the proposed change to the TTR strategy, and they needed to ensure their trustee clients were across the issue.
About the SMSF Association
The SMSF Association is the authoritative voice for the self-managed superannuation fund sector. The Association, which represents professionals providing a range of services across various disciplines in the complex area of SMSFs as well as engaging trustees to become better educated and informed. The SMSF Association is an advocate for the highest professional standards and competence to ensure SMSF trustees always receive the best possible advice.
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