MARKET LINKED PENSION

These pensions can receive funds from a Complying Lifetime pension, which may have failed the acturial test for being able to support future payments at the prescribed amount as set at the start of a Lifetime pension. Many of these issues came about as a consequence of the Global Financial Crisis (GFC).

Features Market Linked Pensions:-  

  • pension can start at age 55
  • flexible terms of Life expectancy, or minus 5 years or spouse LE
  • Spouse LE can be used 
  • Upon passing benefits can be paid to beneficiary (not if Spouse LE used)

Dis advantage Market Linked Pensions:- 

  • lump sums cannot be commuted after 6 months, only to another complying income stream
  • If Spouse LE used then pension must continue to spouse
  • 50% maybe asset test exempt from centrelink asset test 

TERM ALLOCATED PENSION (TAPS)

These types of pensions are flexible as you can have access to investment choice, and you can choose various payment frequencies in addition to varying the payments each year by 10% once established.

Features TAP:-  

  • Vary pension payments each year by 10%
  • name a reversionary to receive payments after your passing
  • choose your own asset classes 
  • choose frequency of payments
  • Earnings are non taxable
  • rebate is available to offset tax payments 

Dis advantage TAP:- 

  • lump sums cannot be commuted
  • poor investment returns may impact term of TAP

ALLOCATED PENSION

In the last few years Allocated Pensions have had tremendous growth in popularity, because they are very flexible ways to receive a payment from a superannuation fund.
Below we have out lined some of the features and benefits of an Allocated Pension, this is by no means a comprehensive list. Although quite simple in concept they need to be set up by a qualified Financial Planner. The history of your superannuation needs to be assessed at the time of implementation calculating things like your undeducted purchase price, deductible amount, pension valuation factor and numerous other funny names.
For Centrelink purpose these types of Income streams are classed as Tier two income streams, non complying. This essentially means they will be assessed as an asset when applying for the age pension and the income will be assessed as well.
 

Minumum & Maximum Payments:- Payments from an allocated pension can be paid monthly quarterly half yearly or yearly. A payment has to be received at least once a year. It's usually upto you which payment frequency suits you.
Each year when receiving payments you can vary the amount and the frequency received for the next year. Usually the institution will ask by way of an election each July.
 

Reversionary Pension Payment:- A reversionary payment is a payment that reverts to the surviving spouse when the person in receipt of the primary payment dies. 

Pension Rebate:- The rebate can be upto a maximum of 15% and used to offset other taxable income related to your income stream. This rebate can help reduce your tax each year considerably, quite often to zero, but of course depending on your other sources of income. Commutations The income recipient may at any time withdraw part or all of the allocated pension balance (i.e. commute their pension). The maximum commutation value will be based on the account balance at the time of the withdrawal. As an allocated income stream is purchased with ETP or superannuation monies, the commutation will be paid as an ETP and taxed accordingly. If only part of the allocated pension or allocated annuity is commuted, any deductible amount for the remaining income stream would have to be recalculated. 

Beneficiaries of your Assets:- Upon the death of the principal and any reversionary income recipients, the market value of the remaining account balance (less fees) is payable to the beneficiaries of the last remaining income recipient.
Your personal will needs to reflect the nominated beneficiary of your allocated pension account, because this will help in the administration of your estate. The reason for this is that the trustee only has adiscretion to act in the wishes of the last remaining pension recipient. If this wish is contested, the trustee may be left in a dilemma, if your personal will does not reflect the same beneficiaries.
 

Binding Nominations These nominations are like a will in the fact that when signing the application and nominating the beneficiaries of your account proceeds, you will need two unrelated persons to witness your signature.
The institution where your pension is paid from will ask you to review your nomination every three years.