• Video transcript – Planning for retirement

    A few years before retirement, you should plan ahead so your fund is ready to make super payments. If you don’t, you could run into trouble!

    You need to decide what type of super payments your fund will make - income streams or lump sum payments?

    You should review fund investments to make sure your fund will have enough cash or liquid assets to make super payments to members.

    If you pay an income stream - there are minimum annual amounts that must be paid. If your fund can’t pay them, it will not qualify for tax benefits.

    Meet Kelly. Kelly is retired and her income stream is paid from the fund’s investment returns.

    The investments didn’t do so well this year and her fund couldn’t make the minimum payment.

    So the fund doesn’t qualify for tax benefits, and Kelly will have to cancel that holiday she planned.

    She should have planned ahead to have more cash available in her SMSF.

    A fund can also make a lump sum payment. This can be paid in cash or a non-cash form such as property or shares.

    Bob and Greg have an SMSF, which has only invested in property.

    Greg is retiring and needs a lump sum payment for his retirement plans. The fund has to sell some property.

    The market is in a slump and the property sells for well under the asking price. Now Greg has less money for his retirement - and Bob has to work longer to re-build his super!

    If they had planned ahead they could have sold the property earlier when the market was stronger!

    Trustees should have a meeting to plan for future super payments. Meeting minutes must be kept on file.

    Otherwise, you could be fined thousands of dollars which you have to pay out of your own pocket.

    An SMSF professional can help you plan ahead to get the best out of your retirement.

    For more SMSF information take a look at our other videos – or visit the ATO website at ato.gov.au

      Last modified: 12 Nov 2015QC 39855