Sometimes, achieving greater gains from your superannuation can be as simple as just doing things a little differently. One such example is the option for working Australians over 55 years of age to purchase a non-commutable allocated pension (NCAP), also known as a transition to retirement allocated pension (TRAP). This strategy can help you save tax and boost your retirement savings – so it might be in your best interests to learn more about it.
What is an NCAP?

A non-commutable allocated pension (NCAP) is an income stream that allows access to both your preserved and your non-preserved superannuation benefits after reaching your preservation age (normally 55) without having to retire.
When can you get one?

You can obtain a NCAP, by rolling your superannuation benefits, anytime after you have reached preservation age. If you were born before 1 July 1960, your preservation age is 55 (this age gradually increases to 60 for those born between 1 July 1960 and 1 July 1964). Be aware that some employer super funds may not allow access to benefits while you still work for the employer, so it’s best to check with your employer.
The NCAP advantage

An important feature of an NCAP strategy is that it is possible to implement it without impacting on your current take-home income. Simply by restructuring your superannuation contributions and purchasing a non-commutable allocated pension it's possible to boost your retirement savings and save tax.

In a nutshell, an NCAP advantage emerges because of the lower rates of taxation generally applied to superannuation, compared with the marginal tax rates on income. This advantage is further increased because any investment earnings within an NCAP will be tax-free.

Importantly, NCAPs do not require you to change your current work hours. So they’re the perfect retirement strategy for non-retiring types. However, they can also assist you to progressively transition towards retirement (say, work part-time and draw down on your super) if desired.

Boost your savings and pay less tax. What’s the catch?

NCAPs don't work for everyone but where do, they can effectively boost your savings. The NCAP strategy is a good example of why it pays to get the right advice when it comes to planning for retirement. That way you’ll find out the smart strategies, like NCAPs, that can help you save tax and boost your retirement savings.

For more information on how using an NCAP might help you strike superannuation gold, call ipac on 1800 626 881 today for a no-obligation appointment with a professional financial adviser.