Question: Could you provide your opinion please as I have had conflicting advice.

I intend to withdraw $80,000 of pension payments during the 15/16 FY. The payments are to be lump sum payments, taxed using the low rate cap. The partial commutation payments would be counted towards, and meet, the minimum pension requirements of 4% of the pension account. The reason for this request is so I can earn $20,000 as a casual employee (then 100% salary sacrifice further income) and still have the pension payments as a tax free lump sum using my low rate cap.

If I am now classed as TRIP and no longer fully retired, I should still satisfy the “condition of release” as having sufficient “unrestricted non-preserved” benefits in the account-based pension.

Answer (by Tony Negline): Overall, I don’t see a problem with what you wish to achieve.

Some provisos in relation to that view:

1. Pension documentation is up-to-date and permits full or partial commutation from a TRIP.
2. The super fund still has your unrestricted non-preserved amounts recorded as such.
3. You haven’t used any low cap amounts in previous financial years.
4. Lump sums are properly documented including reducing your unrestricted benefits.
5. The minimum and maximum pension income payments have been determined using market value of assets.
6. The proposed pension payments do not exceed the allowed 10% maximum.
7. It may not be the most tax efficient exercise to only take $20,000 salary. Salary sacrifice super contributions will be taxed at 15% and you won’t be paying anything like that on your income from employment. Ask your advisers/accountant to work out when you will pay an average (not the same as your marginal rate) of 15% tax on income and then go from there.

Question: Not so long ago Charlie Aitken was expounding the virtues of Telstra and a $7 + share price, as of today the share has dropped to $5.30. We haven’t heard much from Charlie subsequently on the direction of TLS. Your view on TLS would be appreciated.

Answer (by Paul Rickard): I, like Charlie, have been wrong recently on Telstra. I wrote back on 17 August to hang on to your Telstra and buy more in dips (see here). Since then, the price performance has been pretty disappointing.

Your email prompted me to go back and have another close look – and I still can’t see any real reason to change this view. I will be writing about this in Monday’s Switzer Super Report.So, I am hanging on to mine – and in dips – looking to add.

PS. I haven’t checked in with Charlie yet. I don’t think they would be in his portfolio, as his focus is on growth – not low risk, tax advantaged income.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.