1. Allocated pensions - all you need to know
Colonial First State Investments

2. What is an allocated pension?
A regular income stream paid from an account held in your own name within a super fund

3. What is an allocated pension?
Flexible income payments between prescribed min and max levels
vary the frequency of payments
Earnings tax is 0%
Defer lump sum tax

4. What does Allocated mean?
Invested Capital is held in your name
Access capital at any time (subject to tax)
continues until account is exhausted
spouse gets balance on death
These features are not available with lifetime products

5. Allocated Pool
Unallocated Pool
Mr Smith
Ms Jones
Mr Davis
Mr Smith
Mr Davis
Ms Jones

6. Type of fund Two types of investment structures to meet your needs
Do-it-yourself fund - investing in either direct or professionally managed investments
Public offer funds - where the assets are professionally managed

7. Who can invest? Retired over 55 over 65
those with unpreserved rollovers
cannot use non-ETP monies (must be super monies)

8. Are there any restrictions?
Only on a pension paid each year
must be within Gov’t set min and max levels
calculated each year based on age and account balance as at 1 July

9. Can I access my money? Can currently commute all or part of account
Gov’t may restrict in the future

10. Flexibility Pension can be varied lump sum withdrawals anytime
account balance paid on death
can nominate ‘reversionary pensioner’
How long will it last?

11. Account balance
Taking MAX pension

12. Account balance
Taking MIN pension

13. Tax benefits Investment earnings are not subject to tax
Lump sum tax deferred by rolling over
Pension income is taxed in a similar way to your salary (ie PAYG tax held)
pension payments
tax rebate
part tax free
no provisional tax / instalment activity statement

14. Taxation of Allocated Pensions
Gross Income - Deductible amount = Taxable Income
Deductible Amount (purchase after 1/7/94)
CGT Exempt component + Invalidity + Undeducted Contributions
Longest Life Expectancy
Rebate
Taxable income x 15% x Rebateable proportion

15. How does Centrelink treatment them?
Assets test
100% of your account balance will be counted.
Incomes test
Only a portion of your income will be counted
Gross income - deductible amount (DA)
DA = Purchase price
Life expectancy factor
Allocated pensions are said to be income test friendly.

16. Case study
Social Security
Allocated Pensions are Income Test friendly if the Minimum pension payment is drawn.
Example: Barry invests $100,000
The Account Balance is assessed under the Assets Test

17. How can they maximise my benefits?
Undeducted contributions (UDCs)
These are after tax monies you contribute to super where you have not claimed a tax deduction
The more UDCs you have in super the more tax free income you will receive when you commence an allocated pension

18. How can they maximise my benefits?
Spouse contributions
Can be made on behalf of your spouse
No work test requirement
The receiving spouse must be under 65
For tax purposes they are treated as UDCs & are included in the calculation of your tax free amount

19. What do you need? Right mix of income right underlying investments
right tax advice

20. Disclaimer
This information has been prepared without taking into account your particular financial situation. Before making an investment decision based on this advice, you should assess your own position, and if appropriate, seek the assistance of your financial adviser.