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Alan is planning to retire at 65. In the meantime, he wants to maximise his super savings – but not at the expense of his current lifestyle. He wants to continue enjoying his hobby of collecting and restoring vintage motorcycles.
- 58 years old
- Earns $127,000 p.a.
- Defined Benefit Division member
- Makes 7% standard member contributions
- Contributes an additional $360 per fortnight from his after-tax salary
Currently, Alan is making additional voluntary contributions of $360 per fortnight from his after-tax salary. Alan isn’t sure if this is the best way to boost his super. He’s also starting to wonder whether the investment decisions he made 20 years ago still make sense.
Recently, Alan attended a super seminar at his campus. The presenter mentioned that UniSuper offers financial advice for a fixed fee, which can be deducted from a member’s super account in many cases. Alan is fairly confident that he’s on track for a comfortable retirement, but thinks it would be prudent to get an expert to review his arrangements.
Alan makes an appointment with UniSuper’s telephone advice service. During the initial call with his adviser, Alan describes his financial situation and goals. He also answers some questions about his investment objectives and preferences.
After the call, the adviser prepares a Statement of Advice, which is emailed to Alan. During a second call, the adviser and Alan discuss the advice. The adviser suggests that Alan start making both his standard and voluntary contributions from his before-tax income. This would reduce the amount of tax Alan pays each financial year because the tax on salary-sacrificed super contributions is lower than his marginal income tax rate.
The adviser also explains that Alan is an ‘Assertive’ investor, and suggests that Alan move his accumulation super from the Balanced and Cash investment options to two pre-mixed options. This would help spread investment risk while maximising Alan’s potential investment return.
Alan takes the recommended actions. He also decides to check in with a UniSuper adviser every year. He wants to stay on top of his super.
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|How Alan came out $2,6632 ahead in the first year
+ $2,226 in additional (net) super contributions
+ $947 in additional take-home pay
= $3,173 in tax savings
Alan’s adviser recommended he:
- Change his 7% after-tax contributions to 8.25% before-tax contributions.
- Continue his voluntary after-tax contributions of $360 per fortnight.
- Start making voluntary before-tax contributions of $100 per fortnight.
|- $510 fee for advice on two issues (contributions and investment strategy). A face-to-face meeting may be available at an additional cost of $120.
||The fee for advice was deducted from Alan’s super because it was superannuation-related.
1. Alan is a hypothetical member, but the relevant facts are based on a real member. 2. All figures provided, including this figure, are based on the specific factual circumstances detailed in this scenario. The amounts are not guaranteed and will vary depending on your specific circumstances. Figures may be rounded. 3. These calculations are based on legislation applicable in the 2018-19 tax year.
The information contained in this case study is not legal, taxation or accounting advice. It is intended to provide general information only. It has been prepared without taking into account your objectives, financial situation or personal needs. Prior to making any investment decisions, you should speak with a financial adviser to consider whether this information is appropriate for your needs, objectives and circumstances. You should also obtain a copy of the relevant product disclosure statement (PDS) prior to making a decision regarding any investment in any financial product. Whilst care has been taken in the preparation of this information, the accuracy or completeness of the information is not guaranteed. This case study was prepared and issued by UniSuper Management Pty Ltd ABN 91 006 961 799, AFSL No: 235907, which is also the administrator of, and wholly owned by, the UniSuper Superannuation fund (ABN 91 385 943 850). UniSuper Limited (ABN 54 006 027 121) is the trustee of the fund. UniSuper Advice is operated by UniSuper Management Pty Ltd, which is licensed to provide financial product advice to members.