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In this edition

Quantitative Easing
Reversionary Pensions
Paid Parental Leave
After the Deluge

Article brought by Dr Jim Taggart OAM

Dr Jim Taggart OAM

Jim's career began as a Teacher and a Deputy Principal of a Catholic High School. Since entering the field of financial planning in 1987, he has successfully developed his business to service nearly 6,000 clients in which his organisations provides advice on Financial Planning, General Insurance, Finance & Leasing. The Taggart Group Pty Ltd runs the General Insurance business, and hold an AFS Licence as General Insurane Brokers. Taggart Nominees Pty Ltd is an AFS Licensee and runs the Financial Planning and Life Insurance Broker business.

Also during this time Jim has completed another Masters Degree in Commerce, majoring in Financial Planning to add to his other qualifications of Diploma of Teaching, Bachelor of Arts and a Master of Arts from Macquarie University. Jim had completed his Doctorate in Business Administration, and also holds the FChFP designation awarded by the Association of Financial Advisers.

In the field of writing Jim has written two books while he was teaching with his senior geography text winning a geography award. In recent times Jim has written many articles for industry publications as well as newsletter articles for various networking associations.

Jim became a CFP with the Financial Planning Association of Australia in 2002, a desingation he still holds. Jim is also QPIB qualified, being the highest in his profession for General Insurance in Australia. Jim is the recent past National President of the Association of Financial Advisers [AFA] ending his tenure in October 2010, and was the NSW/ACT Director from 2006 - 2008. 

Jim has lived in the hills area at Kellyville for over 28 years. Jim has been actively involved in community activities such as: -

  • Salvation Army
  • Vice President of Regional Chamber of Commerce 1999 - 2000
  • Past board member of Gilroy College and Marion College
  • Past Chairperson and current member of the Hills Excellence in Business Committee 355 Management Committee
  • Past Chairman of the Advisory Council for TAFE NSW Western Sydney Institute

Jim is married with four children, and conducts a very active and preferred insurance/finance and financial planning practice.

For many years Jim has performed community services in diverse areas and was Chairman for the Red Shield Appeal in Western Sydney(past 7 years). Jim was the Chairman for the Olympic Fundraising Committee for the Western Region.

Jim has been fortunate to speak at offshore conferences in the areas of Financial Planning and Motivation in such countries as Switzerland, New Zealand and U.S.A.

In November 2005 Jim was awarded the 2005 Zurich / Association of Financial Advisers [AFA] Adviser of the Year Award. In January 2006 Jim was presented with the 2006 Baulkham Hills Shire Australia Day Community Service Award.  In January 2010 Jim was awarded the Medal of the Order of Australia in the 2010 Australia Day Honours.

 

Contact details

Website
The Taggart Report
Phone
02 9894 9155
Fax
02 9894 8599
Email
Email us

Reversionary Pensions

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When a superannuation pensioner dies, their pension usually ceases. Their dependants may receive the resultant death benefit in the form of a pension, often called a Death Benefit Pension. It is, however, a new pension, not a continuation of the existing pension.

Many public-offer pension funds provide the option of nominating a reversionary pension beneficiary (RPB) when the pension is started. An RPB cannot be nominated later. When a person with a reversionary pension dies, the pension continues to be paid, but goes to the named beneficiary instead.

If the RPB is a child, the reversionary pension must cease when the child reaches age 18 or, if still financially dependant, age 25. Children who are permanently disabled can continue to receive the pension for life.

 Note that the conditions that applied to the original pensioner will continue to apply to the RPB for the remainder of the financial year in which the original pensioner died. For ensuing years, the minimum pension required to be paid and the Pay As You Go tax provisions will be based on the age of the RPB.

When a pension reverts to an RPB, it will automatically become an Account-Based Pension because the original pensioner satisfied a Condition of Release allowing access to all preserved and restricted benefits. Because it has not ceased, the tax-free percentage of each pension payment will not change and will apply upon the death of the reversionary pensioner.

As a result, it is possible that an RPB may receive two pension payments – one a reversionary pension and the other their own pension (either an account-based or a transition to retirement pension), each having different provisions.

In a Self-Managed Super Fund (SMSF), the trust deed must be checked to see if it will permit a reversionary pension to be established. There is a great deal more flexibility in an SMSF for stopping and starting a pension. If there is a compelling need for a reversionary pension beneficiary to be nominated, it would be possible to stop any existing pension and start a new one with an RPB nominated. However, this only applies if it is not a life-expectancy or term-allocated pension commenced before the prohibition on establishing such pensions in an SMSF.

If only the member and spouse are in the fund and there are no specific provisions as to what will happen on the death of a pensioner, a reversionary pension nomination will not achieve a significantly different outcome for the remaining member. This is because the original pensioner’s benefit could be paid to the surviving spouse in any event.

If there are one or more dependent children involved (and especially if they are disabled), a reversionary pension nomination in favour of the child or children may provide more flexibility than either non-binding nominations or binding nominations, or provisions of the pensioner’s legal will.

A Binding Death Benefit Nomination should only be necessary if there is no reversionary pension direction in place and the member wants to direct where their benefits go after death, or if the member wishes his or her benefit to be split among a number of dependent, non-dependent or estate beneficiaries.

Establishing a reversionary pension nomination should be done in conjunction with a comprehensive estate-planning review.

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