Superannuation! SMSF? Industry? Institutional?

[JohnK]

Re: Oz Federal Election 2013 - Discussion and Comments

I have never used a financial advisor ...

Anyhoo, if you are happier with 4 funds then so be it, although I severkly doubt the total annual management fees are a mere $300 - given the 1% test, that would only have with a total investment through the four funds as $30K.

I was referring to management fees charged directly by the superannuation fund not the indirect fees charged by each of the investment funds.

I should have gotten rid of AMP long time ago as that lost 50% in first couple of years but I have been hoping it will miraculously come back. Not quite.

I cannot choose between the other 3 so have left them there rightly or wrongly.

 

[ComeFlyWithMe]

Re: Oz Federal Election 2013 - Discussion and Comments

Past experience - multiple employers. All with different compulsory funds.

Of course, everyone circumstances are different, but for me it was a no-brainier to keep it to two or one fund and keep rolling them into each other.

There is no such thing as a compulsory fund any longer. Choice of fund legislation came in around 2005 from memory. Your employer can't force you into their preferred fund unless there is an EBA you're locked into.

 

[ComeFlyWithMe]

Re: Oz Federal Election 2013 - Discussion and Comments

I was referring to management fees charged directly by the superannuation fund not the indirect fees charged by each of the investment funds.

I should have gotten rid of AMP long time ago as that lost 50% in first couple of years but I have been hoping it will miraculously come back. Not quite.

I cannot choose between the other 3 so have left them there rightly or wrongly.

Based on the funds you've listed, you're in some of the most expensive funds in the country. I'd be ditching the lot of them in favour of a low cost industry fund. They will help consolidate them for you also.

 

[coyote25]

Re: Oz Federal Election 2013 - Discussion and Comments

There is no such thing as a compulsory fund any longer. Choice of fund legislation came in around 2005 from memory. Your employer can't force you into their preferred fund unless there is an EBA you're locked into.

That's correct for about 98% of Australians and 2005 was the start year. Judges/Politicans however for example don't have choice of fund (but why wold they choose something else!).

Some employers however can make it very hard to choose (due to costs but that;s why clearing houses having been growing) and a large number of employees don't know or care.

Even Federal public servants have choice of fund. The older ones can choose to leave the define benefit (i.e. no investment risk) and join the accumulation style funds (account balance fluctates on investments).

 

[coyote25]

Re: Oz Federal Election 2013 - Discussion and Comments

A good place to start is SuperSeeker | Australian Taxation Office - you can initiate transfers using that portal once registered.

(Although a transfer of a small Super Co-Pay for SWMBO initiated on June 20th still has not reached the target Fund :evil: - it 'left' the ATO on Jul 20th)

From January 2014 the ATO is suppsed to have a listing of all superannuation fund accounts based on them having to report all accounts on 31 October 2013 (previously funds only reported accounts that received contributions during previous financial year so old accounts without this activity weren't reported unless they become lost).

What this means is that if you have an ATO Individual online account from January in theory you should be able to see all you old and new accounts (with balance) which you have accumulated with different employers. As serfty points out you can then initiate an online transfer and consolidate your accounts. The transfers between non-SMSFs is subject to the 28 day rollover requirements and you shouldn't have to complete paper applications.

The idea is to help people find there accounts and make it a lot easier to rollover and consolidate.

Keep in mind most super funds offer insurance and some are good, consolidating obviously means you lose insurance policy of the accounts you close.

 

[ComeFlyWithMe]

Re: Oz Federal Election 2013 - Discussion and Comments

That's correct for about 98% of Australians and 2005 was the start year. Judges/Politicans however for example don't have choice of fund (but why wold they choose something else!).

Some employers however can make it very hard to choose (due to costs but that;s why clearing houses having been growing) and a large number of employees don't know or care.

Even Federal public servants have choice of fund. The older ones can choose to leave the define benefit (i.e. no investment risk) and join the accumulation style funds (account balance fluctates on investments).

If the employer does not pay to your choice of fund, the employee can report them to the ATO. The same for failure to meet SG deadlines.

The employer would face heavy fines.

Yes, defined benefit (DB) funds are quite different and very favourable to the employee...

Most (decent) funds have a clearing house for employers at no cost.

 

[ComeFlyWithMe]

Re: Oz Federal Election 2013 - Discussion and Comments

From January 2014 the ATO is suppsed to have a listing of all superannuation fund accounts based on them having to report all accounts on 31 October 2013 (previously funds only reported accounts that received contributions during previous financial year so old accounts without this activity weren't reported unless they become lost).

What this means is that if you have an ATO Individual online account from January in theory you should be able to see all you old and new accounts (with balance) which you have accumulated with different employers. As serfty points out you can then initiate an online transfer and consolidate your accounts. The transfers between non-SMSFs is subject to the 28 day rollover requirements and you shouldn't have to complete paper applications.

The idea is to help people find there accounts and make it a lot easier to rollover and consolidate.

Keep in mind most super funds offer insurance and some are good, consolidating obviously means you lose insurance policy of the accounts you close.

This is Super Stream legislation - one of the only decent changes to the industry under the current government. Let's hope it rolls out smoothly!

Up until recently, it was illegal for a fund to use supplied tax file numbers to even identify duplicate accounts in their own systems. Probably a legacy of the Australia Card debacle - which IMO should have gone ahead.

A lot of the funds are tapping into the ATO database already with their own consolidation tools which are also helpful.

 

[JohnK]

Re: Oz Federal Election 2013 - Discussion and Comments

Based on the funds you've listed, you're in some of the most expensive funds in the country. I'd be ditching the lot of them in favour of a low cost industry fund. They will help consolidate them for you also.

I should probably look at them seriously and consolidate.

Just received the AMP statement and I got a shock. The investment returns were ~$550 on a ~$2,700 capital. The funny part is the MLC investment loss of ~$700 was on capital of ~$47,000. Both similar funds although AMP could be a little more aggresive.

 

[cove]

Re: Oz Federal Election 2013 - Discussion and Comments

Yes JohnK we cannot give you financial advice but consolidation could work a treat. As you get towards sixty you should consider reducing the risks of a market collapse. The GFC really adjusted some folks retirement plans as they were 100% invested in volatile shares rather than a mix of investments.

 

[Deleted member]

Re: Oz Federal Election 2013 - Discussion and Comments

I took over running our superannuation fund and the deal we got was $699 per year for the accounting and audit. As a result of that annual cost for the two of us I don't think you need a minimum of $200,000 to go into a SMSF.
We are expecting superannuation changes as no Government can afford to leave a trillion or two untouched.

You don't NEED $200k to start a SMSF
There are plenty of people out there happy to relieve you of your money to set up and run a self managed super plan.
The point is having your own super find means different things to different people. I see some funds set up to house a few shares or even managed funds. Not sure why they bother.
The fact is I have a self managed fund because I house direct property in it.
A good adviser would warn most people against having a SMSF because they won't be materially better off.
Horses for courses.

 

[Deleted member]

Re: Oz Federal Election 2013 - Discussion and Comments

I should probably look at them seriously and consolidate.

Just received the AMP statement and I got a shock. The investment returns were ~$550 on a ~$2,700 capital. The funny part is the MLC investment loss of ~$700 was on capital of ~$47,000. Both similar funds although AMP could be a little more aggresive.

At the risk of stating the obvious. Have you actually considered the asset mix, it's relevance to your risk tolerance ?
And then adjusted accordingly?

 

[Deleted member]

Before everyone gets excited about the automatic consolidation of their super accounts. Consider the following.
1. Are there insurance benefits?
2. Are those benefits able to be insured elsewhere (I.e. are you insurable at standard rates, no exclusions)
3. Which fund allows those benefits to be paid on if you are either not working or not contributing.

There are more loop holes and traps with "cheap" options than most people care to consider.

NB. This does not constitute advice and you should not act on anything I have said without first checking with your own adviser and or super find administrator.

Sorry for the disclaimer but I am only speaking in general terms as everyone will have different needs and circumstances.

 

[JohnK]

Re: Oz Federal Election 2013 - Discussion and Comments

Yes JohnK we cannot give you financial advice but consolidation could work a treat. As you get towards sixty you should consider reducing the risks of a market collapse. The GFC really adjusted some folks retirement plans as they were 100% invested in volatile shares rather than a mix of investments.

Sixty? I am less than fifty and do not plan on having superannuation much longer. I want out as I mentioned earlier. My retirement will be just dandy without superannuation.

Need to remember I am happy travelling economy.

At the risk of stating the obvious. Have you actually considered the asset mix, it's relevance to your risk tolerance ?
And then adjusted accordingly?

Each one of my super funds should be moderate growth not high risk investments.

 

[Austman]

Re: Oz Federal Election 2013 - Discussion and Comments

Sixty? I am less than fifty and do not plan on having superannuation much longer. I want out as I mentioned earlier. My retirement will be just dandy without superannuation.

No "out" until 55 (and then not employed full time) or you leave Australia "permanently".

 

[JohnK]

Re: Oz Federal Election 2013 - Discussion and Comments

No "out" until 55 (and then not employed full time) or you leave Australia "permanently".

Actually for me it is 59 but I want out anyway.

 

[Austman]

Re: Oz Federal Election 2013 - Discussion and Comments

Actually for me it is 59 but I want out anyway.

Oh Yes! It also depends on when you were born! Well ... depart Australia "permanently" (and then realise your error) ? ... but OH NO - the departing Australia "permanently" reason disappeared around 10 years ago!

How do you plan to do it?

 

[JohnK]

Re: Oz Federal Election 2013 - Discussion and Comments

Oh Yes! It also depends on when you were born! Well ... depart Australia "permanently" (and then realise your error) ? ... but OH NO - the departing Australia "permanently" reason disappeared around 10 years ago!

How do you plan to do it?

I have no plan right now. I think I will have to wait until I am 59 unless someone can think of a good reason how I can have my money earlier.

I could possibly borrow on existing investments with interest only loan, spend the money now and then use superannuation to pay off the interest only loan later.

Need to think about it a little more as I am getting close to drawing the curtain.

 

[serfty]

Re: Oz Federal Election 2013 - Discussion and Comments

...

Need to think about it a little more as I am getting close to drawing the curtain.

To draw on superannuation before your preservation age requires much paperwork. (it's not supposed to be easy to go early)

With 4 funds the effort would be exacerbated.

It's relatively simple to amalgamate these days; the ATO makes it easy (still allow a couple of months).

If you amalgamate and eventually wait until your preservation age, I'd suggest you would be at least $5k better off in fees and benefit in saved fees, all other things being equal.

To me it's obvious that you are very unlikely to lose through amalgamation, even in the short run, but I am not you.

 

[JohnK]

Re: Oz Federal Election 2013 - Discussion and Comments

To draw on superannuation before your preservation age requires much paperwork. (it's not supposed to be easy to go early)

Yes that would be a difficult one but could be worth trying.

In fact I could possibly try now and use the excuse of heavy credit card debt and struggling to make repayments.

It's relatively simple to amalgamate these days; the ATO makes it easy (still allow a couple of months).

If you amalgamate and eventually wait until your preservation age, I'd suggest you would be at least $5k better off in fees and benefit in saved fees, all other things being equal.

To me it's obvious that you are very unlikely to lose through amalgamation, even in the short run, but I am not you.

Agreed.

I am having issues deciding on which phone to get for next 24 month contract.

I have enough to worry about without the added hassle of doing the reasearch to choose a super fund unless I choose one of the 4 super funds I have already.

 

[RB]

Re: Oz Federal Election 2013 - Discussion and Comments

Yes that would be a difficult one but could be worth trying.

In fact I could possibly try now and use the excuse of heavy credit card debt and struggling to make repayments.


.

But you are ready to retire at an age well before the majority of Aussies can afford to! Either you jest or it is time to get real & organised