CASE STUDY

Jeff turned 60 in March 2009. He earns a salary of $50,000 p.a. and receives annual super guarantee contributions of $4,500. His after tax income is $41,150 and his current super balance is $400,000. On 1 July 2009 Jeff arranged for his employer to begin salary sacrificing $23,000 of his income into super. To supplement his reduced income he established a TTR pension of $16,000 p.a. which, because
he is aged 60, is tax free and non-assessable.

By implementing this strategy Jeff is able to reduce his tax liability by $6,995 (from $8,850 to $1,855) and still receive the same after tax income of $41,145. His net super contributions increase from $3,825 to $23,375 and after taking into account the $16,000 pension withdrawal, there is still a net increase in super savings of $3,550.

This benefit is further enhanced by a reduction in tax paid by the superfund as the majority of the balance is in pension mode where earnings are tax free. Compounding these benefits over the years to full retirement can potentially help boost balances that have been battered over recent times