Ask Noel

Each week, financial adviser and international best-selling author Noel Whittaker answers your questions. noelwhit@gmail.com.

Is it true that there's no annual or total limit on withdrawals from a SMSF in the accumulation phase provided I am over 60 and not working? I have been told that you can only withdraw a maximum of $150,000. Also, please confirm that if I start a pension in parallel with an accumulation account, only the pension fund will be assessed as an asset by Centrelink up and until I'm 65.

Once you have reached an age where you can access your superannuation, there is no limit on withdrawals. If you do convert part of your account to the pension phase, you are correct in your assumption that only the pension part of your account will be assessed by Centrelink until you reach pensionable age. Talk to your adviser - it may be better to leave the account in the accumulation stage and make withdrawals as necessary.

I am a 61-year-old retired man. I have $500,000 in superannuation, $220,000 in blue-chip high-yielding shares, and $150,000 in cash. However, I don't own a house. If I sell the shares and couple the proceeds with the cash to buy something modest to live in, what, if anything, will Centrelink give me as a pension when I reach 65?

If we assume you use $370,000 to buy a modest house, you will be left with financial assets of $500,000. If your personal effects, such as furniture and a car, are $40,000, you would be entitled to a pension of approximately $251 a fortnight under the assets test. There may be capital gains tax if you sell the shares so a better option may be to withdraw $220,000 tax-free from your super and retain the shares outside super. With respect to the Centrelink incomes test, the level of pension entitlement this produces will depend on a number of factors - most people in your position can structure their affairs so their pension entitlement will be determined by the assets test.

For a retired person aged over 65 who is receiving an "allocated pension" from funds managed by a financial institution, how are these funds treated in assessing the eligibility for an aged pension? Are they assessed as assets or is the pension received assessed as income?

The account balance is assessed under the assets test. The amount of income that's attributed to the income test is your gross annual pension payments minus the Centrelink deductible amount. The Centrelink deductible amount is calculated as follows: purchase price of the pension divided by your life expectancy at the time of purchasing the income stream. Both the assets and income tests are applied to your situation and the test that produces the lowest entitlement is considered the deeming test.

I am 48 and my wife is 51. We run a small business and in a busy year, we forgot to make payments into our SMSF last financial year. Is it too late for us to make the contributions? If not, how much can we contribute as back payment for the past year and this year?

Unfortunately, once June 30 has passed, you cannot make contributions for the past financial year, and there's no provision for catch-up payments.



Reducing interest is the main priority

The explainer

I'm 47, my wife is 36 and our combined income is $105,000. Our home is worth $950,000 and we have built an investment property that is worth $600,000. We owe $1.1 million on the properties. I have $80,000 in super and my wife has $65,000. Can you give some guidance on our next investment - is paying off the family home the best goal at the moment?

I would like to diversify into shares but my wife is very risk-averse, and not keen on shares as a means of wealth creation.

You have built up good equity but you have a high interest bill in relation to your income. At this stage I would ensure the investment loan was interest only and use all your spare resources to reduce your non-deductible housing loan. You could then re-examine your options in a year.