Financial Advisers For Veterans

This is typically the first big election that a veteran faces, and it is the one with the longest financial aftereffects. The lump sum puts money in your hands now. The pension provides a regular income stream for the remainder of your life, and it’s tax-free.

The correct answer depends on your age, other sources of income, your debts, and what you plan to do next. For instance, a 32-year-old veteran with a mortgage and a family to feed is a far cry from a 55-year-old veteran who is nearing retirement. We model two scenarios based on your actual numbers, giving you a chance to see the long-term effects before you act. For veterans nearing retirement, it is also important to understand how a lump sum or pension plays into your overall plan, and our retirement planning advisers in Brisbane can assist you with that.

While the special rate disability pension (TPI) and the incapacity payment have different purposes and requirements for eligibility, many veterans are confused about how these two benefits are affected by choosing one over the other. The special rate disability pension is tax-free and payable to those whose disability prevents them from working more than eight hours a week. The incapacity payment, on the other hand, provides income support to top up your earning capacity while you are still capable of working.

What’s important from a financial planning perspective is how each of those payments fits into your overall income picture. The process for assessing a TPI claim is different from an incapacity claim, and the implications for Family Tax Benefit and Commonwealth Rent Assistance, and so on, can be quite different. We run you through all that so that the choice you make is the one that actually matches your goals rather than the one that just looks the biggest on paper.

This is where many veterans are caught off guard. DVA compensation payments are not in isolation. The type of payment you receive and the choice you make can have a direct impact on your entitlement to the Service Pension and your income test through Services Australia, and even your partner’s entitlement.

For instance, some DVA pensions are exempt from the Centrelink income test, while others are assessed dollar for dollar. By electing to take a lump sum, your asset test may breach the asset limit for the Age Pension or Service Pension, effectively cancelling out your entitlement to a pension. In cases where your partner also receives their own pension, your decision may have a flow-on effect.

We build a complete picture of how your DVA payments, your superannuation, and your other income and entitlements interact. Once we understand the interaction of all these payments and entitlements in your life, the advice we provide to you is not generic or a rule of thumb, it is specific to your household circumstances.

Military super schemes have unique features that most civilian financial planners have never seen before. Defined benefit structures, reversionary pensions, invalidity classifications, and productivity contributions from employers are not part of the normal industry super fund. Getting the strategy wrong, be it an unrequired rollover or a premature consolidation, can cost you tens of thousands over a retirement period that may stretch out for 30 to 40 years.

If you were a member of the ADF before 2016, then you are likely to be in the MilitarySuper scheme, also known as the MSBS, which has both a defined benefit component and an accumulation component. Your defined benefit component is based on your years of service and your final salary, and this is quite different from a normal accumulation fund, where the amount in your account simply represents your contributions and investment earnings.

ADF Super, which replaced MSBS for new members from 2016, is a pure accumulation fund managed by the Commonwealth Superannuation Corporation. While ADF Super works more like a standard industry fund, it still has its own set of rules when it comes to insurance, contribution limits, investment options, and default settings.

When working with ADF members and ex-serving members, the first things we consider are what scheme you’re in and what your benefit structure looks like, and then whether your current investment allocation is appropriate for your timeframe. If you’re interested in learning more about what our approach to super strategy looks like in more depth, then our superannuation advice services provide all the details.

One of the questions that many veterans have is whether or not they should consider rolling their Commonwealth Superannuation Corporation account into another superannuation account. There may be times when it makes sense to do so, but there may also be times when it would mean forgoing a defined benefit pension that is substantially more than the lump sum that they would receive from the transfer.

We check your CSC statement, determine what your defined benefit is actually worth, and compare it to what you can potentially earn by rolling it into an accumulation fund and investing it yourself. If you have other superannuation accounts from civilian employment, we also assess consolidation options to minimise fees without compromising insurance and benefit entitlements. If you are looking to compare different types of superannuation funds and their investment options, our guide to superannuation investment options is a good place to start.

The strategy for contributing is also important. Your age and income level may be such that there is room for making more concessional or non-concessional contributions that minimise your tax now and maximise your retirement balance in the future.

The gap between your ADF income and your civilian income is likely to be greater than you think. Housing costs are obvious, particularly if you were living in Defence Housing Australia properties or receiving rental assistance. Other costs may be smaller but can soon mount up: private health insurance, dental, servicing costs if you were previously covered or subsidised, and increased costs if you’re no longer living on base.

We help you build a realistic post-service budget based on your actual civilian income and your actual expenses. This may sound like the basics, but getting this right early in your transition can avoid the slow drain of your finances, which many people experience in the first two to three years out of the ADF. Once we have your budget in place, we can then create a cash flow plan to ensure your expenses are being met while your goals are also being achieved.

While you were in service, the ADF provided life cover, income protection, medical cover, and dental cover for free. Once you leave the ADF, all these benefits are gone. If you don’t make your own arrangements, you are leaving yourself vulnerable to potential financial disaster in case something goes wrong.

Life insurance and income protection fall into your domain of responsibility. This again varies depending on your age, health, and occupation, and the level of cover you require, and for veterans, this is a very complex area, especially if you have service-related conditions, and some companies will not cover pre-existing conditions at all, or charge you more for them.

We determine what cover you had in service and what is now lacking, and then locate replacement cover to suit your unique circumstances. If you have a superannuation fund with default insurance, we also check to see if it is actually adequate, as default insurance is often limited and unsuitable for veterans with families or mortgages to pay off. Our life insurance advisers in Brisbane specialise in providing you with the right level of cover to suit your circumstances, including dealing with the intricacies of service-related conditions.

Your risk profile isn’t just a questionnaire score. It’s your age, your income stability, your investment horizon, the percentage of your wealth you can afford to lose in a market downturn, and how you behave when the market declines. A veteran living on his TPI pension, with no debt and many years to spend his money, has a completely different risk capacity to someone with a mortgage to pay and only one income.

We create investment portfolios based on this complete picture. Asset allocation and diversification among industries and regions provide the foundation, combined with cost-effective investment vehicles. We do not focus on returns or complex investments. Our focus is to provide a portfolio that you can maintain through a complete investment cycle, one that provides steady growth in your wealth and the income you need when you need it. You can learn more about our approach to this in our investment management services.

Receiving a lump sum, whether it’s from DVA, a super withdrawal, inheritance, or insurance money, is one of the most dangerous times in anyone’s financial life. The desire to make big-ticket purchases or pay off debts all at once often results in spending the money quicker than you would have thought.

We help you by developing a structured drawdown or investment plan for lump sum payments, not six months later, when a portion of it has already been spent or eroded due to inflation, sitting in a savings account earning next to nothing. The plan takes into consideration your expenses, debts to pay off, tax situation, and what the money is actually required to achieve in five, ten, and twenty years’ time. For veterans who have inherited sudden wealth from their super, our advice on inheritance and sudden wealth outlines the principles and pitfalls, which are relevant to lump sum management in general.