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Andrew from Vista Financial

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Andrew from Vista Financial last won the day on January 20 2017

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About Andrew from Vista Financial

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    Financial (Pensions) Adviser

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  1. Sources of Income in Retirement

    Switching from earning an income through employment to generating an income in retirement can require some careful planning. Often income will come from many different sources and the combination that works for you will depend on your individual circumstances. It pays to seek financial advice to help determine which sources of income will best meet your needs and living costs and support you through your retirement.
  2. Superannuation - Moving from Australia to England Indefinitely

    Hi Darren Unfortunately not I'm afraid. I assume you are age 35/36 based on your username? The earliest you will be able to access the monies under retirement rules is age 60/65. Regards Andy
  3. Uk Private pension

    Hello again LM Yes you are correct in that if a UK transfer takes place (from March 2017) to an Australian QROPS and that person ceases to become an Australian Resident (within 5 full UK tax years from date of transfer) then the person could be liable to the 25% Overseas Tax Charge: https://www.gov.uk/government/publications/qualifying-recognised-overseas-pension-schemes-charge-on-transfers/the-overseas-transfer-charge-guidance#eel-chapt2 Therefore it of course means that an Australian Resident considering a transfer should be very confident that they will remain an Australian Resident for that period of time. That said.....depending on the age of a person that may not be such an issue because if a person has transferred a UK pension to Australia and decides to return to the UK it may be possible to withdraw all of the money from the QROPS (tax-free) before moving back. Obviously this may have implications as then the lump sum of money would have investment income/interest generated and become assessable for tax, this therefore may or may not be a higher tax rate than it would otherwise have been as pension income. So it seems in your situation this is a big consideration. Moving on to your next comments. Yes absolutely there are guarantees with final salary schemes that could be lost as you will be giving these up with your current provider however they could well be bought back in some form, I will cover this later. It used to be that a move out of a final salary scheme was a complete no go however over the last few years this is less so with transfer values at a point where for some members it has to be given serious contemplation (for example a lady I spoke with 2 weeks ago whose value this year was £784,000 up £200,000 from last year and £30,000 annual pension, age 49). Also in relation to my point above about the loss of guarantees (an income for life and widows pension), Australia also offer Annuities and the rates here are higher than the UK so someone could purchase at retirement a lifetime income with a Spouse benefit added as an option (which will be tax-free in Australia). Again this may lead to a better or similar outcome. However most Australian (and UK) retirees nowadays do not use their pension or super monies at retirement to purchase an Annuity as prefer to have a lump sum for drawdown and available for withdrawals as and when they wish. I’m not suggesting that this is the right or wrong thing but purely giving stats. A UK Defined Benefit Scheme is simply an Annuity however the income is assessable for tax and there will be continuous exchange rate fluctuations to contend with (if resident here of course). As said earlier Transfer values for final salary schemes are currently very high historically to the point where the investment return required to match the pension benefits are generally very realistic (even after factoring in fees). Also to note that the balance of a person’s Super is never lost as is paid out on the members death (DB Spouse pensions are typically 50% sometime up to 66%) again this may or may not be a better outcome however if a person’s Spouse pre-deceases them typically that’s the end of a defined benefit scheme on the members death whereas the pot of money in Super would still be paid to the members beneficiary/estate. So you can see there is definitely not an absolute right or wrong on this, so much comes down to individual situation and goals and objectives. It may also be in some cases still appropriate to move out of a DB Scheme to a DC Scheme (SIPP) without the tax and exchange rate issues ie if someone were in the UK or moving back to the UK (amongst other things IF the value was right). My suggestion to you would be in the very first instance to request a Cash Equivalent Transfer Value (CETV) this then may allow you in your own mind to either forgot the whole thing OR to explore further. If you wish to explore further when they come through then happy to chat through the process of what is involved. Hope this helps. Andy
  4. Uk Private pension

    Hello LM Yes any foreign superannuation lump sum is assessed for tax here in Australia regardless of it being tax-free in the UK. I understand that if the lump sum is taken with the remaining pot subsequently providing an income for life then it is just the lump sum amount that is assessed as opposed to the whole pot. The assessment is based on the growth of that lump sum typically between date of residence and receipt of lump sum. Have you considered a transfer of the pension to an Australia QROPS Super? Withdrawals from Australian Super tend to be more tax efficient and offer more flexibility. Regards Andy
  5. What is a Managed Fund?

  6. What is an investment (insurance) bond?

    When investment strategies are implemented to build and maintain wealth, they are centred on an understanding of your financial situation, goals and objectives. The utilisation of superannuation is often a major component of this due to reasons such as the variety of investment options available and the favourable tax treatment of income and capital gains in both the accumulation and pension phase. Depending on your personal circumstances, there may be situations where it’s also beneficial for you to grow and hold a portion of your wealth outside of superannuation. Reasons that can prompt this may include: Savings for future expenses that will be incurred in the medium to long-term, but prior to your ability to gain access to superannuation. These expenses may comprise such things as saving for a long-stay overseas holiday or your child’s education or wedding. Alternatively, you may find that you wish to continue building wealth, however you are unable to make further contributions to superannuation due to reasons such as your age and employment situation, or having exceeded your contributions cap limits. Due to the above considerations, you may find that an investment bond (also commonly referred to as an insurance bond) forms a component of your overall investment portfolio. What is an investment bond? An investment bond is a non-superannuation investment vehicle commonly offered by insurance companies and friendly societies. It has similar features to a managed fund (e.g. your money is pooled with other investors and is managed by fund managers) combined with an insurance policy (e.g. with a life insured and a nominated beneficiary). This type of investment has been around for some time now, and it’s one way to build wealth outside of superannuation in a tax effective manner if the relevant investment bond rules governing contributions and withdrawals are followed and the strategy is appropriate to your financial situation, goals and objectives. Below we have provided you with some of the key points surrounding investment bonds. Investment options As with any investment, your risk profile is an important consideration. Although investment options may vary between bond issuers, generally an investment bond gives you the ability to invest in a variety of different investments and construct a portfolio that has asset weightings appropriate to your risk profile. For example, you may have the choice to invest in conservative assets (such as cash and fixed interest), growth assets (such as shares and property), or a diversified mixture of both. Tax treatment Investment bonds are tax paid investments. This means that tax is paid by the bond issuer and not you as the investor. The maximum tax paid on earnings is 30% before being reinvested back into the investment bond; however, depending on the underlying investments in the investment bond, you may find that franking credits and other offsets may further reduce this effective tax rate. In addition, generally you do not need to declare earnings in your tax return. As such, investing in an investment bond may be of benefit to you if your marginal tax rate is higher than 30%. In terms of withdrawals, if you decide to redeem your investment after 10 years, subject to the 125% rule (discussed below), then there is no additional tax payable on earnings; however, if this is done within the first 10 years, then the following rules apply. Investment bond - Tax treatment of earnings upon withdrawal Withdrawal made Tax treatment Within the first 8 years 100% of earnings assessed at your marginal tax rate (MTR)* In year 9 Two-thirds of earnings assessed at your MTR* In year 10 One-third of earnings assessed at your MTR* After 10 years No additional tax payable on earnings *Less a 30 tax offset. Given the tax treatment on earnings when making a withdrawal, you will typically find that this type of investment is generally held for the long-term, namely, more than 10 years. Initial contribution and future contributions (the 125% rule) When it comes to investing in an investment bond, there is no cap on your initial contribution, however some bond issuers may require a minimum initial investment amount. Furthermore, you can usually make additional contributions in future years. Provided these additional contributions are no more than 125% of the previous year’s contributions, they are treated for tax purposes as if they were made in the first year. For example, if you make total investments of $2,000 in the first year, your future contributions could increase each year as shown below, without breaching the 125% rule: Investment bond - 125% rule Years Contributions 1 $2,000 2 $2,500 3 $3,125 4 $3,906 5 $4,883 5 $6,104 7 $7,629 8 $9,537 9 $11,921 10 $14,901 However, there are two important things to consider regarding contributions and the 125% rule: If you make contributions that exceed 125% of the previous year's investment, the start date of the 10 year period will reset to the start of the investment year in which the excess contributions were made. If you don’t make a contribution to the investment bond in one year, any contributions in following years will reset the start date of the 10 year period. Fees payable The fees applicable to the investment bond will depend on the relevant bond issuer and the investment options that you have chosen; however, common fees that you may pay can include establishment fees, contribution fees, withdrawal fees, management fees, switching fees and adviser service fees. Estate planning An investment bond may provide estate planning opportunities. For example: Death benefits from an investment bond can be directed to a nominated beneficiary tax-free regardless of who receives the benefit or how long it has been held. You can invest for the benefit of a child, with the option to have the ownership transferred automatically to them once they reach a nominated age. Furthermore, the 10 year period generally doesn’t reset upon the transfer of ownership. Moving forward As you can see, an investment bond may be an important consideration in situations where it’s also beneficial for you to grow and hold a portion of your wealth outside of superannuation in a tax effective manner; however, the use of an investment bond will be based on your financial situation, goals and objectives. Consequently, depending on your personal circumstances and the reason for growing and holding wealth outside of superannuation, alternatives to investment bonds that may also be considered are direct shares, managed funds, online savings accounts or mortgage reduction (and then withdrawing the required amount when needed via a redraw facility). If you have any questions about investment bonds then please contact us.
  7. Paying NI contributions

    Hi We now get our clients to send payment by cheque as paying by bank transfer seemed to prove too messy and we have been doing it this way for many years. Regards Andy
  8. Pension transfer

    No problem deanblb. I've just realised that the articles on our knowledge centre (highlighted links in my previous post) were locked, I've changed these now to public access so you are able to read them without logging in/signing up. Regards Andy
  9. The Pension Protection Fund

    The Pension Protection Fund (PPF) protects millions of people throughout the UK who belong to defined benefit, eg final salary, pension schemes. If their employers go bust, and their pension scheme can't afford to pay what they promised, the PPF will pay compensation for their lost pensions.
  10. Pension transfer

    Hi deanblb A bit difficult to say what is the best thing to do on a forum but is the strategy you are suggesting based on maximising tax relief (up to limits) on your contributions? Yes super withdrawals are tax-free over age 60 in OZ but it is also possible to get tax deductions on contributions here as well again up to certain contribution amounts. There are also rules around how much can be accessed from super and when so ensure you understand these if you are planning on accessing the money soon after you get here. Hope this helps. Regards Andy
  11. Transferring funds form house sale to Australia

    Hello Matthew Regards transferring money then typically using a forex company is the way to go John from Moneycorp would be worth chatting too about your options here. With regards to your Financial Planner, if you want a second opinion on their advice then happy to assist, just let me know. Regards Andy
  12. Running the retirement planning race

    For those who have taken part in a marathon or other endurance sport, you’ll already know that to reach the finish line you need: 1. Preparation, 2. Flexibility, 3. And, perseverance. In many ways, retirement planning is quite similar. Below we take a look at some of the key considerations. Getting clear on why you’re doing it and making the commitment When it comes to taking that first step, one of the biggest obstacles to retirement planning is shifting one’s mindset. Understandably, it can be hard to engage with the topic of retirement, especially if it’s far off and you have competing priorities right now. One place to start is by considering what kind of lifestyle you’d like to lead in retirement and how you might fund it. The Age Pension is a safety net for those who don’t have enough superannuation or other financial resources behind them to generate a reasonable minimum retirement income. The maximum Age Pension alone allows for a very basic lifestyle – the current full payment rate (including the pension supplement and energy supplement) is $23,096 pa for singles and $17,410 pa each for couples. From 1 July 2017, those at least 65.5 years may qualify, however the age is set to increase by 6 months every 2 years and will be 67 years by 1 July 2023. If you are striving towards a better lifestyle in retirement and/or want to retire before the Age Pension kicks in you will need to build your own personal financial fitness, to either supplement the Age Pension or self-fund your retirement. This may involve ramping up your debt repayments and/or savings. For example, paying off your home and growing your superannuation (over and above your employer’s Superannuation Guarantee contributions) and/or other investments outside of superannuation to reach your goal. Taking a proactive approach to retirement planning earlier, means you can benefit from the power of compounding and give yourself flexibility if things change along the way. This may enable you to move towards your goal at a more comfortable pace. If you leave retirement planning for later, you may find yourself under more pressure to reach the same goal or your expectations for retirement may need to be revised. See our article “It’s Never Too Early or Too Late To Save For Retirement" for a good example of this. Here, we show how much money you need to set aside each month (assuming a 6% return pa) to reach $1 million by age 65 if you start at different ages during your lifetime. For example: Age 20 = $361.04 pm Age 30 = $698.41 pm Age 40 = $1,435.83 pm Age 50 = $3,421.46 pm Building your support team, assessing your existing situation and cross-training An important part of retirement planning is building a team of relevant people around you. For example, your financial adviser is here to help you map out an appropriate path and support you on your journey. This will initially be based on an assessment of your baseline financial fitness and the establishment of a plan that focuses on the steps that need to be taken to achieve your goal. Depending on your circumstances, the plan can encompass many areas of your personal finances. For example: Creating a budget and monitoring your cash inflows and outflows Managing your debt levels and making extra debt repayments Saving and investing for the long-term Reviewing the use of superannuation as a vehicle for wealth accumulation Establishing a contingency plan with personal insurances. Together these things can help you reach your goal. For example, budgeting can help you tap into surplus income, which can then be used to pay down debt faster. The extinguishment of debt, frees up further income, which you may choose to contribute into superannuation and/or build other investments outside of superannuation. Having appropriate personal insurances in place can help you stay on track to reach your goal when an unexpected event such as a sickness or injury occurs. Milestones, reassessing your progress and blasting through the wall Retirement planning is not a sprint. It’s a long-distance run. So, working towards smaller milestones, reassessing your progress and making adjustments where needed along the way can help you stay motivated and keep on track to achieving your goal. A milestone can be extinguishing debt by a certain date, reassessing your progress can include an annual review of your financial situation, whilst making adjustments can involve tweaking your plan to cater for changes in legislation over time. Nevertheless, at a certain stage in your race whether it be at the beginning, halfway through or nearing the finish line, you may find yourself hitting a “wall”. This may be due to one or a combination of factors, for example, competing priorities and/or unexpected events. To manage your way through this, it’s important to assess the situation with your support team, make adjustments where required, and then refocus your attention to the goal at hand. Digging deep, crossing the finish line and post-planning Nearing the finish line, may be the point in your life where you have paid off your debts, accumulated a reasonable superannuation account balance, have additional investments outside of super and are in the highest income earning years of your career. This is where you can start to think about building on what you have already achieved to date. For example, by doubling down to further boost your superannuation in the time remaining, which may involve maximising your concessional and non-concessional contributions whilst still considering the limits. Crossing the finish line is often accompanied by a feeling of relief and accomplishment. Your preparation, flexibility and perseverance has culminated into your goal becoming a reality. At this stage, it’s time to reassess your current situation and manage your recovery and relaxation. The next chapter of your life is upon you, although it may not be as physically and mentally demanding, it’s still important to stay on top of your new baseline financial fitness. We hope you have enjoyed our look at some of the parallels between retirement planning and running a marathon. If you need help with your retirement planning, remember we are here to help you map out an appropriate path and support you along the way. Access this and many more articles and videos like this here: Vista Financial Knowledge Centre
  13. What is a Managed Fund?

    When it comes to investing, there are various investment methods available to build and maintain wealth over the long-term. For example, depending on your circumstances, you may invest directly (e.g. share portfolio), indirectly (e.g. managed fund), or a combination of these. Managed funds are professionally managed investment vehicles that allow investors to pool their money together to invest. They may differ in the way they invest (e.g. asset allocation, investment philosophy, risk tolerance and investment time horizon) and the fees and charges attached to them can differ.
  14. UK Pension - Tax Free Lump Sum - Australian Tax Penalty

    Hi Carol Assuming that you are PR the ATO will make an assessment on the lump sum for tax. Is it a defined benefit or defined contribution scheme? Andy
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