Making the right choices

Griffin Financial Services director, Ray Griffin, says he has eschewed annuities since the 90s when rates became less favourable.

He prefers to go direct to market to create self-managed super funds with a blend of allocated pensions, TAPs and non-super assets.

“For typical mum and dad retirees, I would run an allocated pension out of super and provide a non-super income stream which is split down the middle to get tax credits. This would include a mix of direct shares, hybrids, listed property trusts, direct mortgage and a small international component,” he says.

“The only time we would use a platform is for clients with superannuation balances that are too low for a self-managed super fund.”

Cameron Walshe principal financial adviser, Paul Moran, uses both Asgard eWRAP and Macquarie Super & Pension manager, both wrap style products that enable the purchase of direct shares with superannuation funds.

Moran believes a blend of growth and income assets is important in any retirement portfolio and he generally looks for income within super.

“For example, CBA shares pay a grossed up dividend of 7 per cent. If you are looking for an income of 6 per cent, whether the investment goes up or down, you don’t need to sell down shares.

“BHP pays a grossed up dividend of 1 per cent, so even if they have gone up, you would still need to sell down 5 per cent of them to cover your income needs,” he says.

Generally, Moran aims to meet income needs by an allocated pension, drawing down the minimum amount, so a client who needs an income of $50,000 per year would need $750,000 in an allocated pension.

“Anything else I would put outside of super and manage the tax. With the shares I would probably have CBA inside super and BHP outside,” he says.

Mercer Wealth Solutions financial planner Stephen Simioni says at present most super funds that offer transition to retirement will probably offer allocated pensions that cannot be released as lump sum payments.

“If you are considering the transition to retirement option, you need to think about lifestyle and financial issues,” he says.

“Are you ready to change to part-time? Can you afford to reduce your hours of work and your salaried income and contribution to superannuation? How much income can you obtain from your allocated pension?”