New Centrelink rules:affecting Government age pensions and other benefitsOn 1 January 2015, Centrelink income test rules are changing to be less favourable for account- based pensions. However, clients who receive a Centrelink benefit and have an allocated or account-based pension in place before then will maintain their current favourable income test treatment.

Do you need to take action now?If you are over 55 and potentially eligible for a Centrelink benefit, you need to read this. You may need to take action.

• New rules are coming on 1 January 2015 that could reduce your Centrelink benefits. These rules change the way that superannuation-based pensions will affect entitlements to Centrelink benefits that are subject to an income test (such as the age pension).

• The new rules will only affect those who start receiving their Centrelink benefits after 1 January 2015, or who start or change their superannuation- based pensions after that date.

• If you may be eligible for both a Centrelink benefit and a superannuation-based pension next year, you may need to

AspirationsLive the life you desire now and in the future

As the mining boom slows and many Australian businesses struggle to remain competitive in a global market, cost cutting and retrenchments have become a normal part of being in the workforce. Being made redundant is never an easy experience, but if it’s handled well it can be financially and personally rewarding.

Australia’s unemployment rate edged up to 5.8 per cent in August and is forecast to reach 6.2 per cent in 2014.1 In a tough economic environment, even well established businesses are cutting costs by introducing labour-saving new technologies and outsourcing. But the news is not all bad.

The strongest job marketsAccording to the latest CommSec State of the States report, Western Australia still has the best performing economy but the strongest job markets are NSW, Victoria and the ACT.2 As new investment in mining and engineering falls, commercial and residential construction activity is picking up in all states and territories except Tasmania.3

Public sector positions grew the most in the year to August, although the new federal government is promising cutbacks. Other sectors providing job growth are transport, wholesale trade, education and training as well as health and community services.4

Lower interest rates are also expected to provide a boost for retailers.

Employment is shrinking in the agricultural and manufacturing industries, although both industries still employ more people than the mining sector.

The ever-changing workplaceWhen redundancy strikes, the important thing is not to take it personally. Redundancy is not a reflection of the worker but the constantly changing nature of the workplace. The challenge is to make the most of your situation financially.

What you do with your payout will depend on your age and stage of life. If you are close to retirement and in a good financial position, a large payout can help feather your retirement nest. If you are young and have a job to go to, a large payout can be a windfall. But if your future employment is uncertain, you need to proceed with caution.

Whatever your circumstances, it’s vital to get as much out of your payout as possible. The first thing you should do when you are made redundant or considering voluntary redundancy is to check the details of your payment. Your adviser can help with this and work with you to prepare a financial strategy.

As you take stock of your financial position you need to know what government assistance you may be entitled to.

Redundancy – it’s not personal

continued next page

December 2013

www.fwagroup.com.au

enquiries@fwagroup.com.au

Fax 03 6244 8810

Phone 03 6244 8822

ROSNY PARK TAS 7018

PO Box 717

ROSNY PARK TAS 7018

30 Bayfield Street

Mark Hudson

Stuart Bale

Corporate Authorised Representative

Genesys Weath Advisers

AspirationsLive the life you desire now and in the future

As the mining boom slows and many Australian businesses struggle to remain competitive in a global market, cost cutting and retrenchments have become a normal part of being in the workforce. Being made redundant is never an easy experience, but if it’s handled well it can be financially and personally rewarding.

Australia’s unemployment rate edged up to 5.8 per cent in August and is forecast to reach 6.2 per cent in 2014.1 In a tough economic environment, even well established businesses are cutting costs by introducing labour-saving new technologies and outsourcing. But the news is not all bad.

The strongest job marketsAccording to the latest CommSec State of the States report, Western Australia still has the best performing economy but the strongest job markets are NSW, Victoria and the ACT.2 As new investment in mining and engineering falls, commercial and residential construction activity is picking up in all states and territories except Tasmania.3

Public sector positions grew the most in the year to August, although the new federal government is promising cutbacks. Other sectors providing job growth are transport, wholesale trade, education and training as well as health and community services.4

Lower interest rates are also expected to provide a boost for retailers.

Employment is shrinking in the agricultural and manufacturing industries, although both industries still employ more people than the mining sector.

The ever-changing workplaceWhen redundancy strikes, the important thing is not to take it personally. Redundancy is not a reflection of the worker but the constantly changing nature of the workplace. The challenge is to make the most of your situation financially.

What you do with your payout will depend on your age and stage of life. If you are close to retirement and in a good financial position, a large payout can help feather your retirement nest. If you are young and have a job to go to, a large payout can be a windfall. But if your future employment is uncertain, you need to proceed with caution.

Whatever your circumstances, it’s vital to get as much out of your payout as possible. The first thing you should do when you are made redundant or considering voluntary redundancy is to check the details of your payment. Your adviser can help with this and work with you to prepare a financial strategy.

As you take stock of your financial position you need to know what government assistance you may be entitled to.

Redundancy – it’s not personal

continued next page

December 2013

www.fwagroup.com.au

enquiries@fwagroup.com.au

Fax 03 6244 8810

Phone 03 6244 8822

ROSNY PARK TAS 7018

PO Box 717

ROSNY PARK TAS 7018

30 Bayfield Street

Mark Hudson

Stuart Bale

Corporate Authorised Representative

Genesys Weath Advisers

financial snapshot

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New Centrelink rules: affecting Government age pensions and other benefits continued

take action this year to maximise your Centrelink benefits in the future. It’s important to consider your own situation before you decide what to do.

• Your financial adviser can give you a personalised recommendation to help you consider whether to: – Start a new superannuation-based

pension now; or – Make changes to an existing

superannuation-based pension before the deadline; or

– Apply for Centrelink entitlements that you are not receiving.

These things take time, so it’s important you act now

Will the changes reduce the amount you receive?From 1 January 2015 new Centrelink rules could affect your government age pension entitlements for the rest of your life. It pays to be aware that if you receive a government age pension and set up or make changes to an account-based pension after 1 January 2015, you may be worse off. Use the time before the end of this year to work out whether reviewing or setting-up an account-based pension before 1 January 2015 will help you—and put your plan in place.

What will the changes mean for you?All account-based pensions - including allocated pensions—set-up after 1 January 2015 will be assessed the same way as other financial assets. So if you’re receiving a government age pension it may be reduced as a result. This also applies to those account-based pensions set up before this date that are not eligible to preserve the old rules.

If you’re eligible, it’s not too late to set up an account-based pension before 1 January 2015 under the current rules. In fact, doing so may preserve your government age pension entitlements.

Are you eligible?If you have money in super but you haven’t set up an account-based pension yet, you may be able to preserve or maybe even increase your government pension entitlements if you are:• Aged over 65 at 31 December 2014• Receiving a government age pension

by 1 January 2015.

What if you make changes to your existing account-based pension?Any changes you make to your account-based pension after 1 January 2015 could make your account-based pension assessable under the new rules— for example, if you:• Change your account-based pension

provider;• Combine multiple account-based pensions

or consolidate super into your account-based pensions;

• Add or remove a reversionary beneficiary (a person you have nominated to receive your pension income when you die);

• Cease receipt of a government payment Start a death benefit pension for anyone other than a reversionary beneficiary.

It’s important to speak with your financial adviser about whether setting up or reviewing your account-based pension now will help you preserve any age pension entitlements you may have. Now might also be a good time to review your estate plan.

ExampleLet’s take a look at Jane and Michael’s situation.

If Jane and Michael, both aged 65, retired with a combined super fund balance of $273,000 and minimal other assets, they would currently be entitled to a full Government age pension under the assets test, and if they start an account-based

pension prior to 1 January 2015, they would also be entitled to the full Government age pension under the income test (depending on level of income drawings).

If they transferred the $273,000 to an account-based pension after 1 January 2015, then deemed income of $8,361 pa would be counted towards their income test, which would reduce their combined age pension by about $19 per fortnight ($494 pa). At current levels of 2% and 3.5%, deeming rates are comparatively low. In the event that the deeming rate increased to, say, 6% pa, their age pension would be reduced by a total of $173 per fortnight ($4,498 pa).

If they transferred the $273,000 to an account-based pension before 1 January 2015, they could draw an annual income of up to $20,011 before their age pension would reduce under the income test (assuming Jane is an automatic reversionary on Michael’s account-based pension).

What you need to knowThe above example is illustrative only and is not an estimate of the investment returns you will receive or fees and costs you will incur. This example is based on the following assumptions (a) Rates used are valid up to 30 June 2015 (includes maximum pension supplement and clean energy supplement). (b) No other income or assets have been factored into the calculation (e.g. lifestyle assets and/or any other investments). (c) Deeming rates are 2% up to $79,600 for a couple, and 3.5% for amounts above this figure.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

Top destinations to make your dollar travel further A falling Australian dollar may mean that overseas travel becomes more expensive, but just how much of a difference does it really make to your travel plans?

If the dollar were still at parity against the greenback then a trip to the US would match dollar for dollar. At current levels of exchange in the low US90 cents, it will still only cost you less than $100 extra for every $1000 you spend.

However, Reserve Bank governor Glenn Stevens recently warned that the Australian dollar is still way too high, which suggests it may have further to fall.i

Clearly, if the dollar were to drop to US80c this would have a greater impact on your travel budget – and, of course, the bigger your budget, the greater the extra cost.

So if the US appears more expensive as a holiday destination this year, what are the top hot spots where your money will travel further?

Japan tops the listAccording to Expedia’s latest annual survey the top two countries where your dollar will drive further are Japan and Indonesia.

In 2013 the Australian dollar rose 2.3 per cent against the yen and that appreciation has continued during 2014. A reasonably

close destination, Japan can prove exciting whether it’s geishas, cherry blossoms or bullet trains that capture your imagination.ii

Next on the Expedia list was Indonesia where the Australian currency rose 7 per cent against the rupiah during 2013, a trend that also continued into the current year. Indonesia has always been a great favourite for Australians, particularly Bali with its mystical temples, surf, yoga retreats and picturesque rice paddies.

But it’s not just the exchange rate that can make a difference to the price of a holiday. The cost of living in your holiday destination is also a significant factor.

Expedia’s list of top destinations based on purchasing power rank Brazil, Canada and Thailand as the next three places after Japan and Indonesia. Brazil could be a perfect destination to cross off your bucket list now that the World Cup is over as the infrastructure to cater for tourists has been established.

Canada, equally, has much to offer from skiing in Whistler to the French-influenced Quebec province.

Thailand has the additional advantage of being close to Australia.

Cruises are also worth considering. Not only do you get the benefit of visiting a range of countries but you only have to deal with the one exchange rate on board.

Strategies to stretch your dollarWherever you choose, there are strategies you can put in place to minimise the impact of an exchange rate moving against you.

For example, if you believe Glenn Stevens’ prediction that rates will fall significantly lower, then why not load a prepaid card with the foreign currency of your destination now, so that it is locked in?iii

Also consider paying your accommodation and other charges ahead of time while the dollar is still above US90c.

Another strategy is to use cash rather than credit cards while you are away as the exchange rate used on the cards may not always favour you.

A falling dollar shouldn’t mean that you have to shelve your holiday plans. Unless you are planning on spending hundreds of thousands of dollars, the changes in exchange rates may not be as big as you fear.

i. http://www.smh.com.au/business/markets/currencies/rbas-glenn-stevens-warns-on-aussie-dollar-sydney-house-prices-20140703-zsud8.html

ii. http://press.expedia.com.au/travel-inspiration/2014-expedia-foreign-exchange-index-points-aussie-travellers-asia-178

iii. http://www.news.com.au/travel/travel-advice/travel-money-cards-offer-financial-security-says-canstar/story-e6frfqfr-1226674131717

To sell or not to sell?For many Australians, the family home is their largest asset. And if you’re planning to wind down from work, you may be considering what you’ll do with yours.

Like many people, you may have worked for a lifetime to build the value you hold in your family home. While selling your home may not be your first choice, if your super balance is low this may be one way to release funds to help pay for your retirement. Or the idea of selling may be liberating— you may be ready to move and keen for a new adventure.

Either way there are financial, practical and emotional factors to consider first. Many people who sell up and move expect to have more money left than they end up with.

Things to considerIf you’re thinking of moving to release money from your home, planning ahead can help you feel more in control and provide greater peace of mind.

Consider:

1. Making a wish-list before looking for a new place. Buying the right home means you’re less likely to need to move again. Think hard about what features

you need in your new home and what you can live without, as the more proceeds you have leftover can help fund your retirement.

2. The best location for now and the future. Remember you may need to access services and community support down the track so you may not want something which is too isolated.

3. Selling your existing home

before buying another, although this may not be necessary if you can afford to hold two properties. Make sure you consider any potential capital gains tax implications if you own more than one property. While you don’t have to pay capital gains tax on the sale of your primary residence, this is not the case for an investment property and you can’t have more than one primary residence.

4. The costs of moving. For example stamp duty, real estate agent fees and property styling.

5. The impact of selling your home on any

pension entitlements you may have.

6. Renting or house-sitting before buying in an area that’s new to you.

7. Investing conservatively while you are house hunting so you give yourself some flexibility as you learn more about the choices and trade-offs involved in choosing the right property.

It’s never too late to explore your options. And if time is on your side then planning ahead can help you to:

• uncover the opportunities available to you

• consider keeping your home and perhaps using it to generate income

• tidying up your key asset before selling so you can maximise its value

• manage your money from the sale—your home may be exempt from the assets test but a rise in your bank balance could reduce pension entitlements

• explore new locations that you may not have considered in the past

Regardless of your timing, it’s always a good idea to speak with your financial adviser about the options for uncovering value in your home and creating a better retirement.

This information is provided by Genesys Wealth Advisers Limited ABN 20 060 778 216 AFSL 232 686 Tel: 1800 066 577, a wholly owned subsidiary of AMP and a member of the AMP Group. Any advice contained in this document is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Before making any decision, you should consider the appropriateness of the advice with regard to those matters. If you decide to purchase or vary a financial product, your advisers, Genesys Wealth Advisers Limited, its associates and other companies within the AMP Group may receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details. If you no longer wish to receive direct marketing from us please call your adviser and if you prefer not to receive services information from AMP, you may opt out by contacting AMP on 1300 157 173. To view our privacy policy visit www.genesyswealth.com.au