Nick Bruining Q+A: WA’s GoldState superannuation is safe as houses so be careful before you shake it up

Question I am a single female in my early 60s and I’m expecting to work for some time. I was a teacher in the public sector, moving to a private school two years ago. I have a little over $820,000 in WA’s GoldState scheme. I salary-sacrificed heavily after my mortgage was paid off, resulting in $180,000 in WestState. I have another $50,000 conservative super fund, which is my employer’s scheme, and I live comfortably with about $125,000 in bank accounts. Recently, I went to see a financial planner to obtain pre-retirement advice that was simple, but fundamentally safe. The advice included transferring all super accounts to a fund they use, saying the returns should be greater and the fund was more flexible. I am concerned about the investment “mix”, with 70 per cent of all my super invested. I am sure it is OK but am interested what you think. Answer With the information provided in your email, I am deeply concerned about the advice from a risk perspective, particularly as the recommendations appear at odds with what you asked for. Your GoldState super is effectively a risk-free investment with a government-guaranteed return of the Perth consumer price index, plus one or 2 per cent — depending on age — no matter what investment markets do. I consider the proposed level of exposure to shares risky, along with transferring it all in one hit. And this at a time when all-time market records are tested daily. Trust your instincts and consider using another adviser. Use the moneysmart.gov.au website to help provide useful tools to pick a suitable person. Question My wife and I are both 64, and retired in 2021 — each with about $1.55 million in superannuation — and started account-based pensions. Early last year we decided to downsize by buying a block of land and building a new home. Our financial adviser recommended that rather than borrow the money to build the new home, we could withdraw the $930,000 from our ABPs to pay for the build and landscaping. Then, when our existing home was sold, recontribute the money back into super as both a super downsizer contribution and a non-concessional contribution, making use of the bring-forward rules and then restart our ABPs. We decided to proceed and the adviser arranged for the withdrawal, processed as an additional pension payment. We have just been advised by our super fund that we cannot restore the ABPs because of the way the payment of the $930,000 was made. We are devastated and wonder if there is any way of getting the money back into our super fund? Answer The adviser appears to have made a critical error in the way the payment was recorded, ignoring transfer balance cap issues. TBCs are a limit on the amount that can be moved from accumulation to retirement phase. Once you hit your TBC, the number is fixed for life, and a number of restrictions apply. It seems very likely your TBCs were fixed at $1.6m each. Your TBCs now prohibit any more money moving from accumulation to retirement phase. Had the $930,000 withdrawal come through as a commutation or part “cashing-out” from your pension funds instead, your TBC balance would have been reduced by the value of the withdrawals. If your current total superannuation balance — which includes money in both accumulation and retirement phase — is close to your TBC, you will also be limited on the amount of non-concessional contributions you can make. Fortunately, you should still be able to make use of the super downsizer contributions because these do not come under any of the cap rules. This will allow each of you to make a $300,000 downsizer contribution back into super, but make sure you fully understand and follow the rules exactly. You should have a frank discussion with the adviser and endeavour to quantify how much this error is likely to cost you. There may be scope for compensation under the circumstances. Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association