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Forward Thinking Magazine : December 2010
23 MAStech Written by Stephanie Lee, MAStech Case study - Marc Take the case of Marc who is aged 55, has $350,000 in a super accumulation account (100 per cent taxable component) in his fund and is receiving a gross salary package of $100,000 including Superannuation Guarantee contributions of $8,257. Mark’s after-tax cashflow is $68,472 in year 1. We compare maintaining his current position with: STrATeGy 1: a basic transition to retirement/ salary sacrifice strategy involving maximising salary sacrifice while drawing on a TTR pension to maintain the same net cashflow, and STrATeGy 2: as for Strategy 1 with the additional step of using the Macquarie Pension Manager Pension Update facility on an annual basis – that is, commute the TTR pension, combine the accumulation balance and the pension balances, and commence a new pension at the end of each income year. New ‘Pension Update’ facility As mentioned earlier, the SIS Regulations generally prohibit additions of capital to an existing pension. Technically, if a client wishes to transfer and consolidate further funds into an existing pension, a commutation of their existing pension is required and a new pension must be commenced. A new facility has been introduced into Macquarie Pension Manager to allow clients to fully commute an existing pension, add new contributions/rollovers and commence a new pension while maintaining the same account number and account transaction history. Previously, a new account had to be established to commence a new pension. This may benefit clients who wish to consolidate their accumulation or pension account balances into an existing pension account to commence a single pension. For example, those clients who use a salary sacrifice / TTR pension strategy may wish to combine the build up in their accumulation account with their TTR pension from time to time. From the client’s point of view, the new pension will generally appear to be the same pension, apart from the potential for a higher pension payment due to a recalculation of the minimum annual payment in accordance with the SIS Regulations. The Pension Update facility is supported by the MAStech Transition to Retirement (TTR) Model. The model compares leaving superannuation funds in the accumulation phase to using a TTR pension/ superannuation contribution strategy and allows you to model the effects of an annual transfer of an accumulation balance to pension phase. The MAStech TTR model is available to those with access to the MAStech Technical Library.