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Client Profile
Jeremy is a long-serving WA public sector employee and a member of GESB Gold State Super. He started work on 1 July 1981, giving him two years of service before 1 July 1983. Jeremy retired at age 60 on 1 July 2021 with a final Gold State benefit of $600,000, calculated under the defined benefit formula.
- Name: Jeremy
- Age: 64
- Occupation: WA public sector
- Superannuation: $600,000 GESB Gold State Super
The Opportunity
Because Jeremy’s service began before 1 July 1983, part of his benefit qualifies as a tax-free component under the pre-1983 rules. This amount is calculated using the formula:
Pre-1983 Tax-Free Amount = Total Benefit x (Pre-1983 Service Years/Total Service Years)
For Jeremy:
Total Service: 43 years
Pre-1983 Service: 2 years
Benefit: $600,000
Tax Free Component = 600,000 x (2/43) = ~$27,900
This $27,900 becomes tax-free, reducing the taxable portion of his lump sum and lowering his tax bill significantly.
The Strategy
Profusion Planning advised Jeremy to delay crystallisation until retirement to maximise the benefit calculation, make additional contributions before triggering a crystallisation event (such as a withdrawal or rollover) to increase the overall benefit and the tax-free proportion, and plan withdrawals strategically to optimise both tax outcomes and estate planning.
The Result
By leveraging his pre-1983 service and implementing the right strategy, Jeremy reduced his untaxed component and saved thousands in tax, created a more tax-effective estate for his beneficiaries, and maximised the unique advantages of his Gold State membership.
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