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watch for


watch for

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									Things to
   watch for
when you withdraw
  or roll over.
Super – cashing out or rolling over
If you ‘cash out’ or roll over your superannuation, you could
be affected in a number of ways, including:
W paying tax (if you’re under 60)
W losing your insurance cover
W falling short of your retirement goals, and
W mistiming investment markets.

Paying tax
Generally, if you roll over your superannuation to another
provider, you will not be taxed, but if you make a cash
withdrawal from a superannuation fund, and if you’re
under 60, you may have to pay tax. This withdrawal could
also affect your eligibility for tax offsets and entitlements.
Your financial adviser can help you identify possible ways
to maximise your savings.
If you’re 60 or over, lump sum withdrawals are tax free.

Losing your insurance cover
Many super funds offer insurance to members for Death,
Death and Total & Permanent Disablement or Salary
Continuance cover. If you cash out or transfer your super,
your insurance cover may lapse. Even if you intend to renew
it with a new provider, you will probably need to complete
new application forms and arrange medical examinations.
It is possible that your premiums will substantially increase,
and in some cases you may be denied cover.
Falling short of your retirement goals
Superannuation is a tax-effective way to save for retirement
over the long term due to the favourable tax treatment of
superannuation savings. If you are 60 and over, all super
benefits, both lump sum and pension, are tax free. If you
make a cash withdrawal before you retire, you may not
have enough for retirement and you may also lose any
‘compounding effects’ the lump sum may generate on
your returns over the investment period.

Mistiming investment markets
If you are cashing out or transferring your super because
of disappointing results, you may be leaving the fund at
an inappropriate time. History suggests that although
superannuation balances may fluctuate significantly in the
short term due to adverse market movements, patience and
discipline is usually rewarded over the longer term.

Allocated pension – cashing out or
rolling over
If you ‘cash out’ or roll over your allocated pension benefit,
you could be affected in a number of ways, including:
W paying lump sum tax (if you’re under 60)
W losing other tax benefits (if you’re under 60), and
W losing social security benefits.
Paying lump sum tax
If you’re under 60 and if you convert your pension into a
lump sum, you may have to pay tax. A lump sum benefit
paid from an allocated pension is a superannuation member
benefit. If the benefit is made up of different components,
these components may be taxed at different rates.
If you’re 60 or over, lump sum withdrawals and pension
income payments are tax free.

Losing other tax benefits
You could also lose some, or all, of the various tax offsets
you may have been entitled to.

Losing social security benefits
When you change allocated pension providers or take an
additional income payment, your eligibility for the Age
Pension or other social security payments is re-assessed
under the Income and Assets Tests.
As a result of this re-assessment it is possible that your social
security payments could be affected.

Pensions commenced prior to 1 July 2007
For existing pensions commenced before 1 July 2007, the
current ‘deductible amount’ rules continue to apply for tax
purposes until a trigger event (ie commutation, death or
reaching age 60) activates the proportioning rule. This has
already occurred for those people who were 60 or over on
1 July 2007.
Those people in pensions under age 60 may want to
contact their adviser to see if triggering their pension is
appropriate for them.
Are you confident that
you understand all the
implications of making
a withdrawal from your
superannuation or
allocated pension fund?
Loss of insurance cover, paying tax and the
inability to meet your retirement goals are
just a few things to look out for.

If you’re not sure of the implications of a
cash withdrawal, or a rollover to another
superannuation or allocated pension
provider, read this flyer and talk to your
financial adviser.
Do you have all the information?
Before you make a decision to withdraw, make sure you
understand the effects on your personal financial situation.
Your financial adviser can be invaluable in this process
as they can review your situation and help you:
W assess the effects of the new super rules
W explain what may happen and discuss alternative
  options with you, and
W assist you in balancing your short-term goals with
  your long-term retirement needs.

 Any questions?
 If you have any questions please contact your financial
 adviser or call Investor Services on 13 13 36, Monday
 to Friday, 8am to 7pm, Sydney time.

Colonial First State Investments Limited ABN 98 002 348 352, Australian
Financial Services Licence 232468. This document is not advice. It provides
general information only and does not take into account your individual
objectives, financial situation or needs. You should assess whether the
information is appropriate for you and consider talking with your financial
adviser before making an investment decision. Past performance is no
indication of future performance. Information in this publication which

is taken from sources other than Colonial First State is believed to be
accurate. However, subject to any contrary provision in any applicable law,
neither Colonial First State nor any of its related parties, their employees
or directors, provides any warranty of accuracy or reliability in relation to
such information or accepts any liability to any person who relies on it.

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