Why you shouldn't put it all in super


The days of pumping all your savings into your superannuation fund to receive a tax-free pension are over.

The federal budget will change the tax regime for older, wealthier Australians with high balances from July 1, 2017.

If the legislation is passed, the best strategy will be to have a multiple-portfolio approach, according to Rice Warner's latest report.

retirement nest egg super superannuation federal budget

For decades the investment mantra from financial planners for high income earners has been to put all their clients' money in super.

Thanks to the tax benefits it was the most generous of all savings vehicles. But this straightforward, single-minded strategy needs a rethink.

Rice Warner says a retiree over the super preservation age would now be better served by having at least three portfolios: an account-based pension (or a transition to retirement pension if they are still working); a super accumulation account; and at least one non-super portfolio. It says each one can take advantage of the different tax regimes.

"There seems little doubt that more retirees in future will hold multiple super and non-super portfolios using strategies to ensure the portfolios operate smoothly together.

The degree of possible flexibility and innovation from such an approach may surprise some retirees," says the report.

What will this look like?

Pension account:

For (non-working) retirees aged over 56 with funds in a pension, the investment earnings are tax free.

When they hit 60, the income is also tax free.

But under the new rules, amounts above $1.6 million will have to be swept into an accumulation account or out of super.

Accumulation account:

The amount over $1.6 million that goes into the accumulation fund will be taxed at 15%.

But Rice Warner says that accumulation funds are still attractive because there is no ceiling on how much you can hold in them. You can contribute up to the age of 74 without meeting a work test.

"Retirees can potentially keep building up their accumulation accounts into old age and would be able to make concessional contributions of up to $25,000 by claiming personal tax deductions against their non-super investment income," explains Rice Warner.

Non-super investments:

Retirees can have an investment with no onerous rules by placing it outside super.

When you reach 65, take advantage of the standard $18,200 tax-free threshold, the senior Australians and pensioners tax offset (SAPTO) and the low income tax offset (LITO).

This means that an eligible couple can receive an income of up to $57,948 without paying income tax.



Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.
Faye Mason
July 5, 2016 9.58am

I have money to invest after selling my house to gain money to live on as the pension is my only source of income. I have purchased a cheaper home and have $290000 to invest.
I have discovered that many financial advisors are not interested
unless I have more money to invest. I'm trying to find a balanced fund without excessive fees. Online funds might be the answer. Would you have any suggestions.

July 5, 2016 1.49pm

Hi there,

Would you be interested in being featured in our Ask the Experts column?

Unfortunately we can't offer you any advice, but we can find some licensed professionals to help you if you're willing to appear in the magazine.

If you're interested, please send through your details to


Money team

D Rounsevell
January 3, 2017 12.05pm

Tradie with bad back would like to retire early born Dec/62 home paid off on north coast Sydney investment house owe $300'k income is $860 per week
self manager super fund invested in beachfront house no debt income $760 per week &
Small factory unit owe $180'k income is $1,000 plus gst per month
Have $60,000 cash in super and Some shares would like to keep all and live off rent will I pay tax on sydney income rent once Iam over 58 years if I retire

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