3 hours ago
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March 4, 2026 — 5:02am
I am a self-funded retiree considering the purchase of a new car priced between $70,000 and $100,000. From a financial point of view, is it generally better to pay cash from my pension account or to borrow and leave the money invested in super? My super fund is Hostplus Balanced and my bank is BankVic, which currently offers car loans at a fixed rate of 8.99 per cent. If I borrow, I would take a three-year term.
Hostplus Balanced returned about 10.5 per cent last year, which is about the long-term average for good super funds. If you borrowed $80,000 over three years at about 9 per cent, the total interest cost would be roughly $11,600.
Leaving that $80,000 invested in super earning 9 per cent a year should produce about $22,000 over the same period. On the numbers alone, borrowing wins, provided you are comfortable meeting repayments of about $2500 a month from your existing pension, and you understand that fixed-rate loans may carry penalties for early repayment.
Recently you wrote: “I strongly believe that your superannuation should be preserved until you retire.” This was in the context of people considering moving their funds into a transition-to-retirement (TTR) pension once they reach their preservation age, as I have. I understood your comment to mean that it may be better to leave super in its current form, rather than moving it into a TTR arrangement. I would appreciate some clarification, as TTR has been explained to me as a suitable option because of potential tax savings.
A transition-to-retirement pension gives you limited access to your super before full retirement but it also means you are drawing down your balance, reducing the amount available when you eventually stop work. That is why I am cautious about encouraging people to access super earlier than necessary, even when it is permitted.
The potential tax benefit comes from withdrawing money under a TTR pension and re-contributing it as a deductible contribution, which can reduce personal income tax and may generate a refund that can also be re-contributed. While this can work in some cases, it should not be seen as automatic and needs to be weighed against the long-term impact on your super balance.
I wondered whether the following sort of arrangement might be permissible. We would have our home valued by a registered valuer at, say, $1.6 million. So that we can continue living in the home, we would then sell it to our two sons for $1.2 million, allowing them to raise the finance without having to put in any of their own money. Under the arrangement, they would pay their sister $200,000 after we have both died, as set out in our wills. Meanwhile, we would pay rent to our two sons and continue living in the house for as long as we are able. The boys would attend to maintenance, possibly with some contribution from us, perhaps $10,000 a year.
Regan Welburn of My Pension Manager says that selling a home below market value would trigger Centrelink’s deprivation (gifting) rules. On the figures provided, about $390,000 would be treated as excess gifting and counted for five years.
Following the sale the couple would be treated as non-home owners and, with $1.2 million in sale proceeds plus the excess gifting amount, would be well above the assets test limits and therefore ineligible for the age pension.
One possible alternative is transferring the title of the property to the sons under a life-interest arrangement. In that case the parents would continue to be treated as home owners but they would not be eligible for rent assistance.
The main risk with this strategy arises if aged care is required within the next five years, as Centrelink may still apply the deprivation rules, potentially reducing or eliminating entitlements. This is the sort of arrangement where it is essential to obtain personalised legal and financial advice before proceeding.
In your Wills, Death & Taxes book you touch on the concept of beneficiaries being “presently entitled”. My sister and I are executors and beneficiaries of mum’s estate. There is no super or shares, only money in the bank, which includes a return of RAD and her home sale, which will be settled this week. All proceeds are in an estate account, into which we finally gave the credit union the OK to transfer funds after a long process getting a TFN from the ATO.
My question is: how long can the estate account stay active and continue to be taxed as an estate – and therefore be entitled to the individual tax thresholds – before the beneficiaries are regarded as being presently entitled, once everything is finalised? I have Googled the question and found conflicting answers.
Julie Hartman of Ban Tacs says that while it is attractive to delay finalising the estate for the first three financial years after death because the first $18,200 of income each year will not be taxed, it becomes hard to argue that the beneficiaries are not presently entitled once all the affairs are sorted, all bills are paid and the estate consists only of cash.
If income has been paid to the beneficiaries during the year, or there is nothing more to do in the estate other than hand out the distribution, then the income will pass through the estate tax return into the individual beneficiaries’ tax returns. The three years of $18,200 not being taxed is not a given if the estate is kept open purely for the tax benefit.
Noel Whittaker is author of Retirement Made Simple and other books on personal finance. Questions to: [email protected]
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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