Can I set up a pension fund for my retirement? I am getting a voluntary redundancy payment and would like to know if putting it in a pension fund or adding it to my super fund is best for tax purposes. I am 58 and I don't plan to fully retire after I am made redundant.
Andrew - Keilor, Vic
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Thanks for the question - there are two parts to your question.
First is around setting up of pension funds for my retirement. To answer this is yes, subject to meeting the preservation age (this will depend on your Date of birth). A Transition to Retirment income stream (TRIS) can be used to top up your income as you ease back on the hours you work and you can also be used to give your super a boost before your retire.
You can withdraw a minimum of 4% and a maximum of 10% of the account balance from a TRIS income stream each year. Drawing down from your super could mean there is less to access when you fully retire.
The second part of your question is around the Redundancy package whether to add to your super. This will depend on the several factors and considerations such as date of payment, break-up of the payment such as taxable and tax-free limit and your taxable income in the relevant financial year of the payment. Also, a consideration is your current super balance and your ability to add to super.
We need to weight up all these considerations and look at the advantage and disadvantage of each strategy in your best interest.
With any recommendation, we need to ascertain the complete picture and full details. To provide appropriate tax-effective pre-retirement planning strategies. You as an individual need to understand what these strategies mean for your long-term outcomes and goals.
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