Kerrie was born in June 1964, is looking to retire next year when she turns age 59. She has $450,000 invested in an "accumulation account superannuation fund" and a range of other investments outside of super consisting of a $180,000 term deposit paying a 1.5% return, and $220,000 invested in a share portfolio which pays fully franked shares of 4% p.a. Kerrie is self-employed as an architect and earns assessable income from her business of $140,000. For the past 35 years, she also lectured in architecture at a University on a casual basis and in the current year earned a salary of $15,000. She has just found out that the University has in place a defined benefit superannuation scheme in place, and she has been a member of this fund since she commenced employment in 1987.

 

Q3 Part (a) Kerrie has heard of the three pillars (tiers) policy when superannuation has been discussed. Briefly identify and explain the main characteristics each of the three pillars.        

Q3 Part (b) Kerrie would like you to explain the differences between her accumulation superannuation fund and a defined benefit superannuation fund.             

 (c) Would you advise Kerrie to sell the term deposit and share portfolio and transfer funds into her superannuation account as a contribution? What tax issues should Kerrie consider before making the decision?

(d) When is the earliest time that Kerrie can access her superannuation funds?