Background

Jenn is age 62 and is considering retiring permanently from the workforce however she is concerned that she may become bored in retirement. She has come in to discuss issues around taking a pension from her superannuation account which is currently in accumulation phase.

She has sought your advice regarding some superannuation issues she is unsure about.

Answer Jenn's queries in a way that will be both clear to her and also comprehensive.

Question:

A. Explain to Jenn how the tax treatment of her super investments will be different if she retires permanently from the workforce and then commences a retirement phase income stream (pension).

B. Explain to Jenn, in detail, the difference between the tax-free component of her super and the taxable component of her super. Note that the taxable component comes from a taxed fund. You should mention what is included in each of the components.

C. If Jen was able to withdraw money from her super fund, explain how each component would be treated from a tax perspective