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  • “The Devil is in the Detail” - Changes to the Age Pension Asset Test to come into effect 1st of January 2017 - 14 Dec 2015

    Earlier this year, legislation to tighten the Age Pension Asset Test passed through the senate. At first glance, it would appear the legislation to tighten the asset test for pensions is a reasonable compromise by increasing the minimum threshold of investment assets you can hold before reducing the Aged Pension. And consequently reducing the maximum threshold of investment assets you can hold before the Aged Pension cuts off. However upon further analysis it would appear part-pensioners and individuals planning for retirement may have reasons to be concerned. Firstly, a recap of the changes: The minimum asset test thresholds will increase and the maximum thresholds will decrease as per the following table. Description New Minimum Threshold New Maximum Single, Homeowner Up to $250,000 Less than $547,000 Couple, Homeowners Up to $375,000 Less than $823,000 Single, Non-Homeowner Up to $450,000 Less than $747,000 Couple, Non-Homeowners Up to $575,000 Less than $1,023,000 Currently, the asset test thresholds for the Age Pension (as at 20th of September 2015) is: Description Minimum Threshold Maximum Threshold Single, Homeowner Up to $205,500 Less than $783,500 Couple, Homeowners Up to $291,500 Less than $1,163,00 Single, Non-Homeowner Up to $354,500 Less than $932,500 Couple, Non-Homeowners Up to $440,500 Less than $1,312,000 2.The taper rate (the rate at which the Age Pension is reduced) will increase from $1.50 to $3 per $1,000 of assets over the minimum threshold. 3.The current policy for pension indexation will remain and previously proposed deeming threshold reductions to$30,000 (singles)and$50,000 (couples)from September 2017 will not proceed. What does this mean for pensioners? For a home-owning couple, from January 1, 2017 the new maximum threshold will reduce from approximately $1.15 million to $823,000. Likewise, for a single home-owner the new maximum threshold will reduce from $775,500 to $547,000. The good news is that minimum thresholds will increase. However, it is the change in the taper rate that is most likely to affect pension payments, particularly for those entering retirement over the next 10 to 15 years. At the moment, $1.50 of a fortnightly pension is lost for each additional $1,000 of assets above the minimum threshold. From 1 January 2017, the taper rate will be $3 per $1,000 of excess assets. As it is the taper rate which governs how much pension payment is lost for every additional $1,000 of assets above the minimum threshold, it is this "devil in the detail" that will create anxiety for many retirees and pre-retirees. Using the government's new thresholds: a retired home-owning couple with $600,000 in deemed assets would receive almost $5,400 a year less in age pension; a single home-owning retiree with $350,000 in deemed assets would receive approximately $2,000 a year less in age pension. It goes without saying our retirees in the above scenarios will need to draw additional funds from other sources in retirement if they wish to retain the same income they enjoyed prior to the changes. Logically, this will be from their superannuation funds in the first instance. If they have planned their strategy based on saving a specific amount of capital at retirement to fund a certain income level throughout retirement, this strategy will now need to be reviewed. The longevity of their capital will be under pressure now due to the loss in Age Pension income. It is important to note that not everyone will be negatively affected by the pension changes. For some, the outcome will be better and for some, there will be no change. However, for many Australians who lie in the 'middle ground' in terms of assessable assets these individuals and/or couples will likely see a reduction in pension benefits.

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  • Preservation age – When can I access my super?? - 25 Jun 2015

    1 July 2015 represents more than just the start of a new financial year!! As most financial advisers would know a client's preservation age depends on their date of birth as per the following table (SIS reg 6.01(2)). Date of Birth Preservation Age Before 1 July 1960 55 1 July 1960 - 30 June 1961 56 1 July 1961 - 30 June 1962 57 1 July 1962 - 30 June 1963 58 1 July 1963 - 30 June 1964 59 After 30 June 1964 60 From 1 July this year, we could see more and more clients being defined under the 'second line' from this table, with their subsequent preservation age increasing to 56 and so on. What are the opportunities and challenges posed by the increasing preservation age?? Talk to one of our advisers about how your preservation age may present tax effective strategies in the lead up to retirement, and most importantly how to plan for your retirement years. At Wakefield Partners our goal is to provide high quality advice to clients in the form of an individually tailored solution that fully addresses each client’s particular situation and needs.

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  • How Much Super is Enough? - 12 Jan 2015

    Many years ago there was a wise old financial adviser who worked in country South Australia. Each year in May and June, he would make the rounds of his clients collecting their super contribution cheques. His clients were mainly farmers or small business operators, dependent on the seasons and commodity prices. Many were asset rich but income poor, so the cheques were generally made out for $3,000, the maximum that could be claimed as a tax deduction at the time. Times were tough on the land and many clients tried to talk down the the level of contribution. Often the adviser was greeted with "Sorry but I haven't got thecash but I suppose I could run to $1,000". These were different times. Super was largely discretionary and many people considered it a low priority. Advisers had to work hard to get the contributions through the door. Undeterred, our wise old adviser had the perfect rejoiner. His simple but effective reply was; "Well, if that is all you are going to contribute to super then you wont be retired for very long!". A cheeky reply, but entirely correct. The art of saving money relies on two factors, mazimizing the amount contributed and maximizing the investment time frame. And as for the question "how much is enough",as one client recently put to me "in relation to money, you can never have too much".

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  • Cash flow in retirement - The name of the game - 28 Nov 2014

    Life expectancy in Australia is at all time high, with a boy born in 2010–2012 expected to live to the age of around 80 years, and a girl expected to live to 84 years. The prospect of having to make your cash last longer to fund your living expenses well into your later years can be a daunting task. As financial adviser’s people often ask, will I have enough money to see through my retirement years??? The key is receiving the right financial advice and implementing a proper investment strategy. At Wakefield Partners we work alongside our clients to ensure their investments are the right mix, carefully selected to maximise cash flow and make the most of the tax concessions available. Remember “cash flow is the name of the game” How do Franked dividends work? and what advantages do they deliver? In times of low interest rates and poor returns in cash and fixed interest products. Investors recognise the value of shares as source of income and capital growth. Dividends received for which Tax has already been paid for by the company, are referred to as Franked Dividends. This means that the company has already paid Tax on the distributed profits at the company tax rate of 30% (fully franked). Effectively this avoids double taxation, and the recipient of the fully franked dividend is eligible to claim a tax credit of 30%, reducing the amount of tax payable. Shares which pay fully franked dividends are tax effective sources of income for clients in a superannuation environment (tax rate of 15%) effectively benefiting from 15% tax credit. They offer an even greater incentive for clients in a pension environment (Tax free), Investors can benefit from the full 30% Tax credit (from a fully franked dividend) and receive the Tax credits in the form of Tax refunds. High Yield stocks With the analysis and backing of Morgans, our selected investment choices include companies which provide greater than average sustainable yield expectations (5%-6%), and have the potential to produce attractive capital growth over medium term. Some of the traditionally high yielding stocks are household names such as the major Banks, Telstra, Wesfarmers, and the APA Group We are also constantly on the look-out for additional stocks which may also offer great buying opportunities, while offering higher than average yields. If you would like to find out how Wakefield Partners can assist in selecting the right investment strategy for you. Contact us via email or talk to us on 08 8333 2488.

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  • Estate Planning is more than just a Will - 05 Feb 2014

    It is never too soon to begin the Estate Planning process. It is much more than simply making a Will. Estate Planning is all about ensuring your assets are distributed to your chosen beneficiaries, distributed according to your wishes in the most financially efficient and tax effective way. Inadequate Estate Planning comes at a cost. The worst case might see the “wrong” people inheriting your estate. Or the cost might be expensive legal or trustee company fees or perhaps heartache for your family and friends. Surprisingly, 60% of Australians do not have a Will. For those who don’t, the law determines who inherits their belongings. Their spouse and children may not automatically be the main beneficiaries. That is why it is so important to regularly review an Estate Plan, particularly if personal circumstances change. If you re-marry, become divorced, commence living in a de-facto relationship, have a blended family (consisting your own children and step children), or have new members in the family..... you should review your Estate Plan. A well constructed Estate Plan can help to avoid unexpected taxes and protect assets from claims and challenges. Our advice is to consider choosing someone to be your Power of Attorney, name someone in your Will to become your children’s legal guardian, list your beneficiaries in your insurance policies and nominate binding beneficiaries in your super fund. Make your Estate Plan easy to administer for your executors. Talk to us to arrange for an Estate Planning Information Kit to identify and organise your estate planning needs. To contactus on(08) 8333 2488 oremail any queries or comments to us.

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