Book Review > SUPER STRATEGIES for the 21st Century

Daryl Dixon is a former executive with the International Monetary Fund, Federal Treasury and Department of Finance who currently writes regularly for The Bulletin on superannuation-related topics. As well he is an active investor who manages his family self-managed super fund. All this background serves him well as he tackles the complexity of our superannuation system.

In this book Dixon addresses all aspects of super from the accumulation phase to the retirement income stream phase, for both private and business superannuation. He includes consideration of death and disability insurance strategies within the super fund (which makes them very affordable).

This is a no-frills book which explains all the various aspects of superannuation and suggests 92 strategies to avoid the traps in the highly complex and confusing superannuation regime. Among other things this book explains:

• the taxation of super contributions, fund earnings, lump sum withdrawals and allocated and complying pension payments
• the Reasonable Benefit Limit
• the rules of compulsory superannuation
• how and why to salary sacrifice super contributions
• small business super options
• spouse superannuation
• self-managed super funds
• rollovers, allocated pensions, complying pensions
• redundancy and superannuation
• superannuation surcharge
• death and disability insurance within a super fund.

As well as explaining each of these matters, Dixon suggests a number of strategeis for dealing with each.

Here are two examples of such strategies to give you a sense of his suggestions:

"Wherever possible, avoid contributing personal after-tax dollars to superannuation. You should concentrate on receiving additional employer contributions paid out of pre-tax dollars."

"Young people can profit from cashing out existing unpreserved rollover and superannuation benefits when changing jobs, paying the relevant tax and using the money to pay off debts."

As I was reading this book I kept saying �give me an example, show me what you mean�. There are only a few occasions on which the explanations are enriched with examples, and this for me was one of two weaknesses in an otherwise very good coverage of superannuation. Examples make real the abstract. Take the two strategies above as an example of what I am saying.

It would have been quite straight forward for Dixon to show with examples the advantage of paying for superannuation contributions out of pre-tax dollars rather than post-tax, and that this advantage will be reduced for tax-payers with a gross salary less than \$50,000 as of 1 July. In the second strategy above (cashing out to pay off some of the mortgage), examples are more complex but in fact, more useful. Show us the effect of cashing out \$20,000 and reducing the mortgage by this amount compared with retaining the amount in super until retirement, and indicate what compensating amounts need to be added in the last few years before that retirement.

The second weakness for me was the absence of case studies illustrating the application of a number of strategies in situations with might match our own. Some examples of what I mean:

• young couple (he will have 30 years and she more likely 20 years of SGC) - what super they will need to accumulate to sustain a retirement income of \$30,000 pa, how and when they might contribute to their own fund to accomplish this
• public servant retiring with \$500,000 and spouse with no super - how to maximise possibility of \$35,000 pa for lifetimes
• small business owner with business worth \$1 million - how best to convert into super assets with an income of \$45,00pa for life
• and so on.

These criticisms aside this is an excellent book of explanations of superannuation rules and their taxation implications. It covers the territory well and focuses attention on the 92 specific strategies. From this point of view it is well worth its price (RRP \$24.95). It is due for release in May 2000. My suggestion to readers is that they take the trouble to apply each strategy to their own situation. This will help to make the abstract strategies much more real.