Superannuation Discussion + market volatility

[SYD]

That is how MSBS works (Military - closed to new members in 2016).

5% mandatory contribution which may be increased to 10%. Defined benefit is based on final average salary over the last three years.

If you convert to a pension that is only from the defined benefit. Member contributions are treated like normal super - can't be converted to a pension.

Very good deal though (pension conversion rate is usually /12 I believe) - understandable why they changed it. It however did penalise those who weren't lifers.

That’s what I have. Took my contributions before they got fully preserved (and reinvested elsewhere and haven’t looked back).

I now also have a modest pension (spending money)! Although taxed until I reach preservation age. But even then, it might still be taxed a bit despite the nominal value going against my TBC. Thus leaving a lower remaining figure I can convert to a tax free pension stream in due course.

 

[Pushka]

So just checking. Once the fund is created as a pension fund from the accumulation fund, its most likely that lump sum withdrawals can't be done?

 

[Cossie]

So just checking. Once the fund is created as a pension fund from the accumulation fund, its most likely that lump sum withdrawals can't be done?

In our case we can but only from our Aussuper private fund. Obviously not from our PSS fund as we both converted that to cpi pension.

A friend that we visited in Buderim got caught up in the Dixon debacle, she will probably loose the lot. They were once the 4th biggest smsf provider in Australia.

 

[MARTINE]

So just checking. Once the fund is created as a pension fund from the accumulation fund, its most likely that lump sum withdrawals can't be done?

Regarding PSS ONLY of which I am familiar
once you have MADE your choice because
- you have retired/reached preservation age or been made redundant
- pension/lump sum/or mix

You cannot undo.

I understand there are some technical issues if you rejoin the public service (unlikely given the circumstances above) but they are unique requiring specialist advice.

The pension is linked to CPI and usually the best as it is for life which far exceeds what you put in. If you die early remainder goes into your estate.

@Cossie - I am unfamiliar w the Dixon situation. Is this an ACT company

 

[get me outta here]

Regarding PSS ONLY of which I am familiar
once you have MADE your choice because
- you have retired/reached preservation age or been made redundant
- pension/lump sum/or mix

You cannot undo.

I understand there are some technical issues if you rejoin the public service (unlikely given the circumstances above) but they are unique requiring specialist advice.

The pension is linked to CPI and usually the best as it is for life which far exceeds what you put in. If you die early remainder goes into your estate.

@Cossie - I am unfamiliar w the Dixon situation. Is this an ACT company

How early do you have to die to get remainder into an estate?

 

[Cossie]

Regarding PSS ONLY of which I am familiar
once you have MADE your choice because
- you have retired/reached preservation age or been made redundant
- pension/lump sum/or mix

You cannot undo.

I understand there are some technical issues if you rejoin the public service (unlikely given the circumstances above) but they are unique requiring specialist advice.

The pension is linked to CPI and usually the best as it is for life which far exceeds what you put in. If you die early remainder goes into your estate.

@Cossie - I am unfamiliar w the Dixon situation. Is this an ACT company

Dixon Advisory, started by Daryl and his wife here in Canberra, then their son Alan took over in 2001. about that time I actually got some advise from him when I rejoined the PS from IBM.

It makes for very nasty reading, looks like he (Alan) allegedly managed to get out it with about $17,000,000 before it all went belly up.

Alan Dixon sold out eight days before ASIC case

Marvellously good timing for Dixon, if not for poor old Tony Pitt at 360 Capital.

www.afr.com

Our friend will be lucky if she gets anything back from the various class actions happening.

Financial Advice experts - Dixon Advisory 22-256MR Dixon Advisory penalised $7.2 million for breaches of best interest obligations | ASIC

Quite a few articles on the sordid affair on AFR, some paywalled, but 12 foot gets over that.

ASIC sues former director of Dixon Advisory

The corporate regulator is suing a former director of collapsed wealth firm Dixon Advisory for allegedly failing to properly consider the interests of creditors, including thousands of clients.

www.afr.com

Company | ED1 | Evans Dixon Limited News, Analysis, Announcements and Results | Australian Financial Review

The latest Evans Dixon Limited news, articles, data and analysis from the Australian Financial Review

www.afr.com

 

[MARTINE]

Dixon Advisory, started by Daryl and his wife here in Canberra, then their son Alan took over in 2001. about that time I actually got some advise from him when I rejoined the PS from IBM.

It makes for very nasty reading, looks like he (Alan) allegedly managed to get out it with about 17 million shares before it all went belly up.

Alan Dixon sold out eight days before ASIC case

Marvellously good timing for Dixon, if not for poor old Tony Pitt at 360 Capital.

www.afr.com

Our friend will be lucky if she gets anything back from the various class actions happening.

Financial Advice experts - Dixon Advisory 22-256MR Dixon Advisory penalised $7.2 million for breaches of best interest obligations | ASIC

Quite a few articles on the sordid affair on AFR, some paywalled, but 12 foot gets over that.

ASIC sues former director of Dixon Advisory

The corporate regulator is suing a former director of collapsed wealth firm Dixon Advisory for allegedly failing to properly consider the interests of creditors, including thousands of clients.

www.afr.com

Company | ED1 | Evans Dixon Limited News, Analysis, Announcements and Results | Australian Financial Review

The latest Evans Dixon Limited news, articles, data and analysis from the Australian Financial Review

www.afr.com

Thanks @Cossie
I hope your friend has lots of support
These actions can ruin people’s lives.
Dreadful

 

[MARTINE]

How early do you have to die to get remainder into an estate?

Your pension is calculated based on your final salary and multiples thereof depending how much you put in/how long etc etc

This figure is divided by a factor

Age 55 = 12
60 = 11
65 = 10

Therefore if you are 65 and live more than 10 years you are getting back more than you put in.

If someone dies for example 2 years into their pension the estate will get whatever is left in the pot (if a lump sum) or pension at a reduced rate will revert to spouse/dependent (or estate if none)

For example
Obviously $1mill at 65 is a greater weekly pension than aged 55 based on the factors. It is for life and CPI linked.

What you get back is either when you are alive or to your survivors if not.

This is very simple, not the full picture, get your own advice and freely available on PSS website.

 

[CaptJCool]

Your pension is calculated based on your final salary and multiples thereof depending how much you put in/how long etc etc

This figure is divided by a factor

Age 55 = 12
60 = 11
65 = 10

Therefore if you are 65 and live more than 10 years you are getting back more than you put in.

the rough rule of thumb is that your remainder exhausts in around 10-11 years

of course with reversionary pensions to spouses and children under 25 who are studying this could drag on a lot longer

after all the last Civil war pension was paid in 2020!

Irene Triplett, last person to collect an American civil war pension, dies at 90

Daughter of private who fought for both sides and had children in his 80s lived for years in a North Carolina nursing home

www.theguardian.com

 

[cove]

With retirement getting closer by the day I am starting to think about contributing to our SMSF as a final hurrah. We will be consultants.

 

[SYD]

With retirement getting closer by the day I am starting to think about contributing to our SMSF as a final hurrah. We will be consultants.

Anyone “Downsizing” should seriously look at this - you can still top up if you’ve reached your contributions cap.

Downsizer super contributions | Australian Taxation Office

Check if and how you can contribute money from the sale of your home into your super fund via a downsizing contribution.

www.ato.gov.au

You don’t even need to downsize, just meet the home sale criteria and have upto $300k spare to top up super!

It used to be age 65 but now only 55 yo.

90 days to contribute. A bit like a QF LB!

 

[Gremlin]

Anyone “Downsizing” should seriously look at this - you can still top up if you’ve reached your contributions cap.

Downsizer super contributions | Australian Taxation Office

Check if and how you can contribute money from the sale of your home into your super fund via a downsizing contribution.

www.ato.gov.au

You don’t even need to downsize, just meet the home sale criteria and have upto $300k spare to top up super!

It used to be age 65 but now only 55 yo.

90 days to contribute. A bit like a QF LB!

This was introduced to encourage empty-nesters to downsize and free up family homes for the next generation.

However we get impacted by unintended consequences. When our youngest, LittleMissG, leaves the nest in a couple of years, MrsG and I will be short of the 55 year old threshold by a couple of years. We would love to take advantage of this as we downsize (2 x $300k extra into super at our age would be very worthwhile), but in order to do so we probably end up having to stay in our far-too-big-for-two-people house until we turn 55. Therefore this acts as a disincentive for us to downsize at the time that's right for us.

 

[SYD]

This was introduced to encourage empty-nesters to downsize and free up family homes for the next generation.

However we get impacted by unintended consequences. When our youngest, LittleMissG, leaves the nest in a couple of years, MrsG and I will be short of the 55 year old threshold by a couple of years. We would love to take advantage of this as we downsize (2 x $300k extra into super at our age would be very worthwhile), but in order to do so we probably end up having to stay in our far-too-big-for-two-people house until we turn 55. Therefore this acts as a disincentive for us to downsize at the time that's right for us.

The upside is it’s now 55 and not still 65!

The recent change means we can now sell our place and both contribute (probably flog off the investment properties while we’re at it) but we just need to find some non travelling time to tart the place up!

 

[CaptJCool]

The upside is it’s now 55 and not still 65!

The recent change means we can now sell our place and both contribute (probably flog off the investment properties while we’re at it) but we just need to find some non travelling time to tart the place up!

seeing you got investment properties, you gotta good grab at the tax concession as you can move into one of them!

a friend of a friend sold his house just as the last run of massive price uplifts was about to happen before he had bought the new place so his idea to run the $300,000 into superannuation fell over as he needed to use the capital to buy the next place to live in. worse was the place was smaller (fair on this because that's the point of downsizing), further out and in far less appealing suburb with no garage (so he decided to spend the cash to add one on!) and then there's stamp duty and moving costs - no wonder people are demolishing and rebuilding or renovating...

 

[SYD]

seeing you got investment properties, you gotta good grab at the tax concession as you can move into one of them!

a friend of a friend sold his house just as the last run of massive price uplifts was about to happen before he had bought the new place so his idea to run the $300,000 into superannuation fell over as he needed to use the capital to buy the next place to live in. worse was the place was smaller (fair on this because that's the point of downsizing), further out and in far less appealing suburb with no garage (so he decided to spend the cash to add one on!) and then there's stamp duty and moving costs - no wonder people are demolishing and rebuilding or renovating...

Fortunately we own our place outright but couldn’t / wouldn’t live in either investment property. Ideally buy a decent inner city apartment that we can lock up. Plus a small London apartment - that would save a small fortune over time! (and ideally still have $300k ea to pop into super).

 

[Gremlin]

Stamp duty on the 'new' place is the killer. Ideally we'd be looking at a smaller, but potentially more expensive, place when we downsize. Insane amount of stamp duty payable. Again, it's actually a disincentive to moving.

 

[tgh]

I sometimes have a quiet smile when folks wax lyrical about "quick" profits on Real Estate
Stamp duty, interest (real or equivalent) , general transaction costs AND the personal income tax on the profit.
All that without placing a value on the risk…..

 

[SYD]

Stamp duty on the 'new' place is the killer. Ideally we'd be looking at a smaller, but potentially more expensive, place when we downsize. Insane amount of stamp duty payable. Again, it's actually a disincentive to moving.

Yes, blame the now defunct Democrats for that….

But I guess it’s all relative. If you’ve owned your home for 10 to 20+ years, the CGT free gain can be substantial. Yes, it might seem a lot to then fork out on SD for a new place but it’s still the same percent it was 20 yrs ago?

I sometimes have a quiet smile when folks wax lyrical about "quick" profits on Real Estate
Stamp duty, interest (real or equivalent) , general transaction costs AND the personal income tax on the profit.
All that without placing a value on the risk…..

Really no such thing on a “quick” profit on Real Estate! Well, unless maybe someone inherits and spends a few dollars before selling again (within the CG free period).

 

[Gremlin]

It’s not the same percent. Stamp duty taxes are progressive, meaning that you pay a higher percentage as the value of your home increases.

In the 18 years I have been in my current home the value has increased by 2.5 times. Stamp duty at the new value is 4.2 times higher than what I paid

 

[cove]

I had to fast forward my life after having a heart operation about 29 years ago.i invested in great cardiologists and listened to them.
We would not invest in Victoria until the current state premier is gone.
There are no fun taxes in Australia and stamp duty can be a killer for you when you want to make a change.