When it comes to retirement planning, timing and structure matter. But for members of GESB Gold State and West State Super the difference can be huge. This case study about our clients Gloria and Ken showcases how tailored advice that leverages GESB’s unique features can deliver life-changing results.
The challenge
Ken is a long serving public sector worker with benefits in both GESB Gold State and West State Super. Gloria worked in administration and held a mix of retail super accounts and a small GESB super balance. Gloria recently retired and Ken is looking to retire in the near future. Their goals are:
- To retire completely debt-free
- Maintain their current lifestyle — costs of $76,000 per annum
- Fund regular $50,000 holidays
- Maximise Centrelink Age Pension entitlements
- Make the most of their GESB benefits
Like many GESB members, Ken and Gloria were unsure how to fully leverage the unique features of their West State and Gold State accounts. Their cashflow was positive, but inefficient. And their investment strategy lacked the structure and diversity needed for long-term income generation.
The strategy
We built a tailored financial plan centred on GESB rules and opportunities, resulting in an integrated strategy across superannuation, tax, pensions and property. Here are some of the strategies we implemented:
- Leveraging pre-1983 service in GESB West State Super
Ken had 24.22% pre-1983 service recorded with his GESB West State Super, a rare feature that provides significant tax advantages.
- We advised directing his potential $120,000 redundancy into GESB West State as a non-concessional contribution, making part of his benefit tax-free.
- We also recommended withdrawing up to $360,000 from his existing account based pension and contributing it back into West State Super to further reduce the taxable portion of his benefit.
Strategy highlight: This recontribution strategy, implemented either side of the new financial year, saved over $19,500 in benefits tax and created a more tax-effective estate for any potential adult beneficiaries.
- Transition to retirement using GESB Gold State Super
Ken’s GESB Gold State Super offered more value if kept open while employed. However, by partially rolling over his balance to an account based pension, he could start a Transition to Retirement (TTR) strategy that provides a tax-free income.
- We left a small amount ($1,500) in Gold State to keep the account open and continue accumulating his defined benefit entitlements.
- Meanwhile, with a small rental income in addition to his salary, the TTR income allowed Ken to salary sacrifice most of his salary into his West State super, converting taxable income into concessional contributions.
Strategy highlight: Maintaining the GESB Gold State account while drawing down a pension from another account kept the defined benefit entitlements growing.
Strategy highlight: Because Ken is a member of West State Super, which allows uncapped concessional contributions, he could salary sacrifice most or all his salary without breaching standard concessional limits, creating tax savings of over $17,000.
- Using GESB West State for future CGT mitigation
Ken and Gloria owned a jointly held investment property with his sister in Fremantle. Rather than sell it immediately, we advised holding off until Ken’s retirement.
- Upon sale, Ken could contribute the property sale proceeds into his GESB West State as a non-concessional contribution, further reducing his benefits tax
- Waiting until retirement and having no assessable income would reduce assessable capital gains and minimise CGT from the sale.
Strategy highlight: The unique attributes of West State Super allows you to reduce CGT events late in life.
- Pension phase planning: Timing and GESB interactions
When Ken fully retires, we advise:
- Rolling over both GESB West State and Gold State Super into a new account based pension.
- Rolling these funds to another account rather than withdrawing them avoids the 2% Medicare levy
- This moves the assets into a pension phase, where earnings are tax-free, saving up to $400,000 in tax on investment earnings over retirement.
- As Gloria is younger than Ken, her assets and income are not included in Ken’s Centrelink Aged Pension assessment. As such, Gloria would then receive a $480,000 contribution from Ken either side of the new financial year at his Age Pension age to exclude these funds from Ken’s Centrelink’s asset test.
Strategy highlight: Timing Ken’s retirement around Age Pension thresholds and contribution windows will unlock an additional $67,000 in Age Pension entitlements.
- Clearing debt
Once Ken ceases work, a lump sum withdrawal from his pension account will be used to eliminate the remaining home loan. By retirement, they will be completely debt-free — one of their top priorities.
Outcomes
BenefitValueIncome tax savings~$70,000Superannuation earnings tax saved in pension phase~$400,000Benefits tax saved (West State pre-1983 +recontributions)~$19,000Age pension entitlements gained~$67,000
The GESB advantage
GESB funds offer feature most other super funds simply don’t, pre-1983 tax treatment, lifetime untaxed caps and unique structuring opportunities for redundancy, pension and retirement income. But these benefits are only unlocked with specialist advice that understands how and when to act.
Finally
For Ken and Gloria, aligning their retirement strategy around their GESB entitlements meant more than just tax savings. It means confidence and flexibility.
If you’re a GESB member approaching retirement or redundancy, it’s worth asking: are you making the most of your fund’s unique features?
Book a consultation with one of our GESB specialists and let us help you turn your entitlements into real outcomes.