Superannuation Discussion + market volatility

[Buzzard]

This thread has made me think about my superannuation position as I have recently decreased my workload.
I came across this site and am very pleased that the fund I have chosen remains in the top 10 performers.
Returns

And the No.1, fund which I happen to be in courtesy of professional paid advice received, is also a fund that has the lowest fees. Fees can chew up a lot of your earnings. And no, I'm not giving advice as to which fund is best for you.

 

[cove]

Thanks QF WP for your update.
There are so many changes going on as our successive Governments keep messing us around.
Have you all signed a binding death benefit form? If so will the funds be going to the correct person(s)?
i had better show my wife a bit more of our financial position.
We did have a talk with our 2 adult sons too. Now that didn't go exactly as we had imagined but quite worthwhile.

 

[QF WP]

So from the first super stats, 70% on Govt pensions, and I note the ASFA standards are nearly met by couples age pension - here's the DHS stats (also note DSP HAS REDUCED significantly in recent years)

View attachment 98562

The ASFA standard for "modest" is almost met by the Age Pension, certainly not the "comfortable" one...and I don't know many people that truly want to live on the "modest" option. Both clients I saw yesterday and today scoffed at such a low figure. Thankfully, both will be well above the "comfortable" amount due to good planning

Uptake of DSP has significantly reduced due to the DHS continuing to make it more difficult to access. The demerit (impairment) points system was overhauled.

Also this chart is to 31 December 2016, so the numbers on most pensions will have decreased with the changes that came into effect on 1 January 2017. As it also will have decreased from 1 Jan 2015 when the last big overhaul of the Centrelink system was done (for account based pensions).

 

[QF WP]

This thread has made me think about my superannuation position as I have recently decreased my workload.
I came across this site and am very pleased that the fund I have chosen remains in the top 10 performers.
Returns

I guess it is reassuring that your fund is there but he reality is that 3 yr return history doesn't reflect much? Also it is rare that a persons total holdings will be exactly the same as the quoted options. I guess they did at least state "Past performance is not a reliable indicator of future performance."

Have to agree with RB, 3 year returns (even for a "balanced" fund) is barely enough time to assess the performance of the individual sectors (particularly shares and property). The returns will only be the same if they invested exactly 3 years previous. Note that each of those funds will have had differing percentages in each asset sector over that time period, so you aren't comparing like-for-like funds.

Still, so long as you are happy with the return (after factoring in inflation to assess the real rate of return), then you are at peace, because it has met your expectations when taking into account the risks.

 

[QF WP]

And the No.1, fund which I happen to be in courtesy of professional paid advice received, is also a fund that has the lowest fees. Fees can chew up a lot of your earnings. And no, I'm not giving advice as to which fund is best for you.

In the Morningstar research report, an interesting (high) asset allocation in both unlisted (direct) commercial property and "other" - that is probably infrastructure or other non-grouped investments. Performance against the benchmarks (index and category) show reasonable out-performance against the category, but not the index. YMMV.

Changing the time period to 5 years shows a different set of managers (not unsurprisingly) but nice to see HostPlus still up there as number 1: http://www.superratings.com.au/top-...anced (60-76)&dataset1[Return_Period1]=5 year

However, diversified options are not the only types out there...but are perfect for those that don't want to make active decisions themselves (and are happy for the investment manager to do so)

 

[casanovawa]

Hmmm, work in WA govt and when i did a financial health check with my bank a few years ago and told them I'm in GESB she said she couldn't advise me to go into any other Super provider (at least maybe that that bank was spruiking) as i think we get taxed 0% on all funds we put in and taxed 15% on the way out ( I assume this is a better deal but need to sit down in a retirement seminar sometime to find out more about it)...

At 44 now, a few years ago i did start putting a bit extra into super each fortnight, but then building a new house and first year moving in with extra costs i stopped... should get back to it i guess... Already averaging 2 months of travel a year the last several years but want a few bucks during retirement... I have seen a few people do that transition to retirement of working say 3 days a week for several years than going cold turkey which seems like an ok idea....

Have the 3rd level (balanced i think) out of the four plans on offer but have mulled over going to the top growth plan with more risk but some of these doubts about China's economy has stopped me switching over although i think its a pretty quick process to switch back down to a less risky plan...

But yes who knows what the future holds economy wise or govt super policy wise....

 

[QF WP]

Thanks QF WP for your update.

My pleasure. It is nice to see a range of education amongst the contributors here and both those with retail, wholesale and SMSF.

Have you all signed a binding death benefit form? If so will the funds be going to the correct person(s)?

Whilst binding nomination were the best of breed at the time, everybody should check to see whether their super fund offers non-lapsing binding nominations - a relatively new option. It doesn't mean that you can never change it (as you can at any time), but some binding nominations in retail or wholesale super funds lapse after a period of time. I've already seen the issues that it creates when the superannuation member loses capacity after the binding nomination has lapsed {thus it becomes non-binding} and (the EPoA) is unable to validly make a new nomination [even to the previous beneficiary(ies) - particularly if it is themselves]. A legal minefield may ensue...

i had better show my wife a bit more of our financial position.
We did have a talk with our 2 adult sons too. Now that didn't go exactly as we had imagined but quite worthwhile.

The most important thing is to advise ones spouse and children of ones current position, future plans and explain to them the context of Will/EPoA/AHD. My father has been doing this for years and we all know the position.

 

[Pushka]

My pleasure. It is nice to see a range of education amongst the contributors here and both those with retail, wholesale and SMSF.

Indeed. Who needs a financial planner after all

 

[QF WP]

Hmmm, work in WA govt and when i did a financial health check with my bank a few years ago and told them I'm in GESB she said she couldn't advise me to go into any other Super provider (at least maybe that that bank was spruiking) as i think we get taxed 0% on all funds we put in and taxed 15% on the way out ( I assume this is a better deal but need to sit down in a retirement seminar sometime to find out more about it)...

Hmmm, not sure you are correct from my reading of the website - you are in a taxed fund (WA Govt are paying contributions) - but there are un-taxed funds (no contributions made, taken out of consolidated revenue at time of retirement/payment so tax will be payable on the way out - like West State Super). Yep. absolutely sure here that you are paying tax on contributions being made: https://www.gesb.wa.gov.au/members/super/accounts-and-features/gesb-super#1439. Contrast that against WestState: https://www.gesb.wa.gov.au/members/super/accounts-and-features/west-state-super

At 44 now, a few years ago i did start putting a bit extra into super each fortnight, but then building a new house and first year moving in with extra costs i stopped... should get back to it i guess... Already averaging 2 months of travel a year the last several years but want a few bucks during retirement... I have seen a few people do that transition to retirement of working say 3 days a week for several years than going cold turkey which seems like an ok idea....

Have the 3rd level (balanced i think) out of the four plans on offer but have mulled over going to the top growth plan with more risk but some of these doubts about China's economy has stopped me switching over although i think its a pretty quick process to switch back down to a less risky plan...

But yes who knows what the future holds economy wise or govt super policy wise....

Good to see you actively considering these options

 

[tgh]

Great thread, just had a long meeting with our finance pro's this arvo so it's all quite topical for my little world.

 

[cove]

We convinced our 2 adult sons to go 20% contribution rate when they started working. I had better check to see they haven't changed back......
If you think you can live your life without any advice /advisor you may be wrong.
The problem comes when that advisor retires and you keep going.
Because land tax is a wealth tax it isn't always the best idea to own real estate jointly. If you go on from that yes you will be wanting to have not only a will but also an enduring power of attorney so both death and incapacity are handled.

 

[casanovawa]

Hmmm, not sure you are correct from my reading of the website - you are in a taxed fund (WA Govt are paying contributions) - but there are un-taxed funds (no contributions made, taken out of consolidated revenue at time of retirement/payment so tax will be payable on the way out - like West State Super). Yep. absolutely sure here that you are paying tax on contributions being made: https://www.gesb.wa.gov.au/members/super/accounts-and-features/gesb-super#1439. Contrast that against WestState: https://www.gesb.wa.gov.au/members/super/accounts-and-features/west-state-super

Yeah I'm a West State Super member... So is that untaxed or taxed?

 

[QF WP]

Yeah I'm a West State Super member... So is that untaxed or taxed?

An untaxed fund according to the link I posted above. Scroll down to the tabs and select "tax"

 

[QF WP]

The problem comes when that advisor retires and you keep going.

Can be a problem if your strategy needs to change but one can never tell that in advance with our Governments. Hopefully your adviser gives you plenty of notice and the changeover is handled well to the next adviser

Because land tax is a wealth tax it isn't always the best idea to own real estate jointly. If you go on from that yes you will be wanting to have not only a will but also an enduring power of attorney so both death and incapacity are handled.

You forgot an Advanced Health Directive

 

[serfty]

An untaxed fund according to the link I posted above. Scroll down to the tabs and select "tax"

That is not what you were indicating ...

Hmmm, not sure you are correct from my reading of the website - you are in a taxed fund ...

Shows what a minefield superannuation is ....

 

[cove]

Yes our Advanced Health Directive has been done by both of us and we have our two sons know we have done this.
It was a bit of a surprise when my accountant retired at 65.

 

[QF WP]

That is not what you were indicating ...

With respect, I disagree as I had posted

Contrast that against WestState: https://www.gesb.wa.gov.au/members/super/accounts-and-features/west-state-super

I have had clients in GESB and knew there are multiple funds so needed clarification from casanovawa as to which he may have thus posting both the main fund link as well as giving the WestState link.

Shows what a minefield superannuation is ....

No more so than other industries - just got to get accurate information with which to research all strategies and give appropriate advice.

 

[serfty]

True in that it was not clear as GESB and untaxed were both mentioned.

 

[CaptJCool]

Also this chart is to 31 December 2016, so the numbers on most pensions will have decreased with the changes that came into effect on 1 January 2017. As it also will have decreased from 1 Jan 2015 when the last big overhaul of the Centrelink system was done (for account based pensions).

yea, the charts run about 3 months and a week behind so I'd expect the next lot out around 7 July.

the Govt figures don't bear out the hypothesis (went up about 23,000) and neither was there any blip from 1 Jan 2016 when 10% cap on defined benefit schemes were introduced.

https://data.gov.au/dataset/dss-payment-demographic-data

 

[QF WP]

the Govt figures don't bear out the hypothesis (went up about 23,000)

No. I'm looking specifically at those on part pension (based on Assets Test applying) - see tab "payment by rate"

December 2015: Part rate assets test was 454,542
March 2016: Part rate assets test dropped to 445,675 (2% drop)

It was only a momentary statistical change, as more people now (468K) are on the part pension (asset tested).

and neither was there any blip from 1 Jan 2016 when 10% cap on defined benefit schemes were introduced.

https://data.gov.au/dataset/dss-payment-demographic-data

Statistically, I would have thought a small sample size (compared to those on Age Pension) so with ins and outs being counted net in the same period, I doubt it rated a mention. But then again, I have no clients with Defined Benefit Schemes so wouldn't have paid any attention to those changes.