I work for a superannuation fund. Ask me anything. A large industry fund. Have been there 11 years in the trustee services area with a good view of most business areas of the fund. Also worked for a bank owned fund for 5 years.
Any advice is general advice. Consult your financial adviser.
Low cost fund with an appropriate investment mix. Also consider a spouse contribution if eligible. Gives a $3000 contribution to your wifes fund and a $540 tax offset to you.
What are the eligibility criteria?
I might have missed something, but the last time I look at this it's just more of splitting your super fund so that you won't reach the limit of 1.6mil (which unlikely i will hit at any point in time). I didn't know about the $540 offset. Is it the after tax contribution or before tax contribution?
May the force be with you in the future
are past responses an indication of future responses?
No, and read the PDS.
you should also disclose that any advice is general advice and if you want personal advice please see a financial planner!
Good point
Also worked for a bank owned fund for 5 years.
Have you ever charged a dead person fees.
Not personally, no.
Of course you can't personally charge a dead person, unless you happen to stumble across their body and take cash out of their wallet. ;)
great thread!
I've always nominated my spouse for the binding death benefit nomination, but after having my wills done the lawyers suggested putting 'legal personal representative' instead, if something happens to both of us at the same time. Just wondered what you think of this approach from the point of view of the super fund - pros/cons?
Check out beneficiary tax on super funds, if paid to a non-dependent then the proceeds are subject to tax. There are strategies to help minimize the amount of tax a beneficiary would pay on your funds, depending on your age/ met a condition of release.
Consult your financial adviser
thats some of the worst advice right there, 96.353% of financial advisers are crooks
Consult your financial adviser
thats some of the worst advice right there
He did say that Any advice is a general advice. It includes that phrase as well đ
Do you think the First home super saver scheme is worth it, or should I stick to a high interest long term bank account?
I would say if your effective tax rate is more than ~18% but less than ~30% (because you will be paying 15% tax in super) then you could save some on your taxes. I would do it.
Also, your future effective tax rate (when withdrawing) if become more than 30% then soon those tax savings would deminsh.
If my wife is not working and has nothing in super of her own, is it worth contributing to a fund for her or just focusing on making mine large enough for the both of us?
I was trying to find out how much tax I personally pay on my superannuation earnings within the accumulation account in the fund. It was not written anywhere on my statement - I just get a Nett amount (after fees by the fund). The only tax shown is the amount withheld by the employer when they deposit the superannuation guarantee. When I called, the superfund couldn't tell me how much I individually had to pay, as they said the superfund pays the tax altogether. Is this the way all superannuation funds operate? Surely there is a way to check how much tax each member is contributing to the whole? I thought that my superannuation earnings (within the fund) would become taxfree when I start a pension from my account (after age 60) but maybe I am wrong with that? Hope you can shed some light on this.
Tax on earnings is 15%. The fund fees your referring to would be itemised under a heading such as indirect cost ratio or indirect investment fees. Those fees are often estimated because they're charged on the whole investment pool (paid by everyone) of which a small portion belongs to you. The charges are deducted before the unit prices are struck it's difficult to work out at a member level.
Also, the amount under "Investment Earnings" is often calculated by subtracting the transactional values from the difference between your Opening balance and Closing balance. It becomes a balancing item rather than an actual earnings calculation.
Thanks bobbified.
Just to clarify, if I convert my accumulation account, which currently pays 15% tax on earnings, into an income account (over 60yrs), from then on the 15% tax that the superfund pays on my behalf through the whole investment pool - would be refunded back to my income account?
You may or may not see a separate transaction itemising the tax refund depending on your own fund.
Often, they'll have specific investment options available for pension accounts only. Asset-allocation wise, they'll be structured similarly to the options available for members who have accumulation-phase accounts, but the 0% taxes will be reflected in the unit prices. In this case, you won't see separate transactions on your statement.
If you compare the unit prices with the equivalent accumulation-phase option, you can see the difference in prices/earnings rate.
@bobbified: I am so glad I asked you here, about that. It is so much clearer. Thanks heaps bobbified.
Do you think it would be a good move to move super investments into "conservative" for the near future instead of "growth" or "balanced" options?
Heard some some talk about how some big investment names like Goldman are going conservative with investments because they expect markets to be bearish for a while.
You will risk locking in your losses. But on the other hand you may avoid future losses.
How would i be locking in losses?
If the share prices take a dive and you take your money out of there, you're effectively locking in (aka "realising") that loss.
A lot of beginner investors panic and withdraw their money as soon as they see a drop.
If you don't take the funds out, the "loss" is only on paper until either the price continues to drop or it recovers. If it does eventually recover back to what it was, then nothing has been lost.
Whether or not it could continue to drop is something an investor needs to think about at the time and make a decision on. This is where it is important to understand someone's risk profile and how comfortable they are with these risks before deciding on the type of investment. Generally, the higher the risks, the higher the return.
Super for most people is a long term investment and needs the be treated as such.
Hi OP,
I am currently in my parents SMSF through Macquarie (there is 3 of us) and we've recently checked to see an 'Advisory fee' of anywhere between $180 and $200 every month being debited from our account. Would this be generally be an average/reasonable amount?
I am planning to split and get my own fund so am just interested for interests sake
Thanks!
Are they getting any advice?
If not and that's the only problem you have, I would suggest contacting Macquarie and asking to turn off the Advisory fee. It may be a product that they can't do that but help out the parents and ask. For a couple of grand a year they should be getting an annual review with a planner as it looks like they are paying for one. If they are getting an annual review with a planner its fairly normal an amount and then a personal decision whether they think it is worth it or not.
They get a mass-mailed newsletter a couple of times a year - I'll let them know and they can follow up! Thanks friend!!
does your company have any 'wolf of wall street' style end of year parties
No
What do you think of self-managed funds?
I'm thinking of pulling my $425,000 from a fund and managing it myself. Thinking of buying an investment property/s.
I am 48.
This is something I can't get my head around. Why would a person do SMSF unless you want highly geared investment? Having invested in shares for the last few years, I find it extremely difficult to beat the super fund. I personally think let the professional do their job instead of trying to be a fund manager yourself.
Professionals barely manage to beat indexes, an SMSF investing in index etfs in different markets along with some fixed income etfs, seems like a pretty safe bet. Its only when you try to beat the market with day trading/leveraged investments and the like that you stand to loose. That said though .. you can do all this through a low fee paying super like SunSuper/HostPlus- its a lot less hassle at end of financial year.
ETF's have fees and you have to pay brokerage as well.
Depending on which etf you pick, the fees can be up to .3% or .4% adding the cost of auditing, you will pay more than super fund indirect fees which is around .3 to .7%. And your investment is not diversified enough because it is only on share market. The superfund is still far superior compared to SMSF. They have good blend of cash, properties, unlisted assets. So yeah no poiny to do smsf unless you want to borrow/leverage which defeating the whole purpose of superfund
Not unless you love you do compliance paperwork and expect your IP is going to beat the sharemarket for the next 10-15 years.
You can pull out and direct invest in shares too.
The one advantage to SMSF is that you're able to leverage against it - the OPiuM strategy.
I'm a permanent resident contemplating moving back home. What would you recommend I do with my super (10 years of contributions)? Are there any negatives about using a low cost super fund?
This is what backpackers do after a working holiday in Australia. They cash in their employer contributions and spend it throughout Asia on the way home.
Australians should be proud of this form of "foreign aid".
Yes, but that's because they're here on a temp visa. Australia recently relaxed the conditions on these working holiday visas because they need more backpackers: it's good for our economy! So giving back their super contributions is hardly foreign aid, it's doing the right thing, to compensate for a super system that doesn't understand the difference between visitors and permanent workers.
Why do all the industry super funds spend heaps on TV advertising?
Wouldn't it be better to save that money on advertising and give it to members?
This is what put me off the industry super funds.
Then retailers would advertise and workers world be worse off further by going with retailers.
How are they going to attract new members if they don't advertise? Word of mouth?? I don't know about you but most people don't talk about their super funds much or at all.
What are your thoughts on funds that allow you to allocate your super between aka "Balanced" "High Risk" "Australian Shares" "Conservative" "Defensive" etc
Is it best to just go with balanced??
Do you have the feeling that the whole Superannuation is a big scam?
For anyone who's retiring in > 5 years' time - how do you have confidence that the rules and fees will still resemble today's?
Also, the feeling that super fees and rules were deliberately made complicated, so that financial planners can make some quick bucks
Not taxed after retirement if in pension phase.
After retirement age withdrawals are tax free
At what age should a young person move the from low admin fee super account to high return super account ?
ASAP - young=aggressive, old=conservative
in your opinion, who is the best CIO in Australia?
Which super fund has the best value insurance?
What qualifications do you have?
How is your salary calculated and what sort of range is it in?
Thanks!
What do you think about putting some extra super in that you can then withdraw to put a deposit for your first house?
What is your take on âSpaceshipâ as a fund?
Would you advise switching strategies based on economy
e.g. go from Growth to conservative when market down and switch the otherway when market up.
(i.e. try follow a momentum strategy with your super)
Are you upset that ASFA no longer have their annual trivia night?
Hi JB - thanks for this thread.
I am considering early retirement at 45. I have about 230k in super and my super fund calculator with the provider I am with estimates that it would be worth approx 600k in 20 years even if I don't intend to add to it over this time. Does this seam reasonable or possible error in their calculator. The fund grew 10% last year.
It is a bank fund and the cost each year is .0075% is this reasonable or are there better options.
Thx in advance
10% annual return is a bit high. Super fund aim for cpi + 4%.
0.0075% is a bit low for management fees. That is probably the admin fee only, which is usually around $6/month, the indirect fee is usually between .3-1% depending on strategy and super fund.
What's your role in your current workplace and what is your salary?
Why do different products (especially the high risk high yield) have hidden fees that only get clumped together as (additional fees) on the annual report?
Why canât superannuation funds be transparent about the fees incurred for products (not regular management fees)?
Why do different products (especially the high risk high yield) have hidden fees
The funds that are actively managed have higher fees for obvious reasons. Whether they actually outperform the less-actively managed funds or not is a different story.
Why canât superannuation funds be transparent about the fees incurred for products (not regular management fees)?
The fees are paid at all different levels by the various fund managers. The fees are not easy to quantify at a member level. Hence the amount is often "estimated".
@JB686868, chime in if you have more to add. I hope you don't feel like I'm trying to hijack your thread. :p
Thanks Bobbified (at least you're not bobbitted).
I fully understand the need for higher fees, what I would like to know is why there is a lack of transparency.
What Mercer (which I am with) does is they just say there are fees worth of $XXX that have not been explicitly quantified. However, I am spread across 5 different products, and I'd like to know which fees come from which products at least.
Furthermore, I would think it should be fair to have a good estimate of the fees BEFORE the product is selected, for example, what good is a product that yields 13% per annum if the fees end up being 10%? An extreme exaggeration, but to emphasize my point.
they just say there are fees worth of $XXX that have not been explicitly quantified. However, I am spread across 5 different products,
For many years, the disclosure of fees were not required and the systems were not built with that kind of functionality in mind. When the requirement was introduced to report the fees to members, there was no functionality to get the exact fee that the members have paid. The industry settled on an estimate.
What they currently do now is they have a list of investment options in the back of the system with the approximate % fee for each. So depending on which investments members have, a calculation is done to estimate the fees that have likely been paid.
It would be easier if there was a single opening balance, no contributions or deductions, then just a closing balance. The difficulty comes from the contributions/deductions that come in at weekly, monthly or irregular intervals where the money hasn't been in the account for the whole period.
They would need a major overhaul of the system in order to calculate the exact fee - and you know what that means.. it'll cost some major $$$$. Guess who the costs will eventually get passed to?
Furthermore, I would think it should be fair to have a good estimate of the fees BEFORE the product is selected, for example, what good is a product that yields 13% per annum if the fees end up being 10%?
That information should be in the Investment Guide that's available for each super fund. It goes through each investment option. If it's not detailed enough there, you may need to look at the information specific individual fund managers.
@bobbified: For fees for products, is it fair to say it will be around a % of its growth (XXX fees are 0.01% of the growth of the product), or will it end up being some sort of flat rate (eg, XXX growth fund spends XX million on managers)?
@schwinn: I wont pretend to be an expert when it comes to how things work on the fund manager's side, but I would expect there to be scaling fees or "performance bonuses" in the mix somewhere. It'll never be a no-win, no-fee type arrangement. The fund managers will get their money one way or another!
I've got two old funds that are no longer operating. One was Tower, the other I think was ARF. Both had positive balances last time I looked. How can I track them down and get funds transferred to my current super provider? Thanks.
Edit: neither appear under MyGov.
If you can't get in contact with the superfund then you could try your states revenue office (or similar) - e.g. NSW is https://www.revenue.nsw.gov.au/ucm/search
What was the average return during your bad old days in the retail fund?
Why do they call it an "industry" fund instead of a union fund? My understanding is the industry funds are simply those that are run by unions so why not call a spade a spade?
Half on the board of "union" funds are employers.
Thanks for being so generous with your time JB686868. We are a UK couple, living in Australia for 5 years and now citizens. We are moving back to the UK for an extended period of time (3 - 5 years or more).
If we won't be making any contributions to super while we are away, what should we do? We will have a decent amount in our supers before we leave, so want to make sure it grows and doesnât get eaten up by fees. Should we cancel our insurance to minimise fee erosion (as we don't have any kids or debts and unsure when we will return to AU)? We are currently with AusSuper, 100% in balanced fund.
Sounds reasonable - if you're not getting an Australian income and would likely have the equivalent cover back in the UK then stopping insurances and getting the lowest fees possible would be a good start
Where is OP?
Hi,
I am an Australian Citizen but thinking of moving back home (overseas) in next few years. I like to keep the Australian citizenship. But what happens to my super ? When and how do i access this fund ?
Cheers
Active or Passive?
Why is government PSS super annuation so good? What's the hype?
Do you believe the "First home super saver scheme" is worth it?
https://www.ato.gov.au/Individuals/Super/Super-housing-measuâŚ
From what I heard even the ATO / various Superfunds don't even know how the scheme even works…..
Everytime I see a billboard advertisement for First State Super I get disheartened knowing they've wasted some money on advertising. For what? Why would a not-for-profit fund want to increase member base? Waste of money. I'm actually in charge of our company's payroll so I can choose to switch our default fund to something more sensible like one of the industry super funds. I might if I see a few more billboards.
If I go overseas to live permanently,how much of my superannuation funds can I claim? What are the effective tax rates over my claim?
P.s. I'm not a citizen nor a permanent resident.
I'm considering leaving Australia to live and work abroad. I don't have a significant amount of super, as I've only been working full time for about 5 years. How should I park my money to make sure it doesn't get eaten away by fees?
OP IS MIA. I WOULDN'T BOTHER ASKING ANYMORE!
I am 34 years old, have about 40k in super and an self employed with a $800k mortgage. No kids yet Currently with MLC. Any suggestions on super funds? I think I need to be looking for one with good insurances that don't exclude me from cover for having had depression in the past. It gets complicated eh. Thanks in advance
Hello.
When does your superfund send out replies to âIntention to claim a tax deduction formsâ. I can see the 15% tax has been paid out of the fund but have not received the letter (which of course is needed next year when I do the return).
It seems to me that if you intend to go to accumulation to pension stage then it is always best to choose the investment option (typically growth) which has the highest long term return and never change it. (Reasoning if the growth was negative one year…. as you keep the money in you will eventually receive the longer term rate). This begs the question…. are other options just marketing ?
Just before my death, if able, I could transfer all my super (pension phase available as a lump sum) into my bank account and thus allow my Will to distribute my money (not the trustees of the super fund) which may have less tax implications and allow me more control. Right?
The rules of a superfund has non-binding and binding beneficiaries. The non-binding person has to be a spouse, dependant or executor of the Will. However the old rules allowed other categories of non-binding people such as sisters. What standing would such a non-binding old-rule nomination have?
Thanks.
Maccas or KFC
Spend it on yourself and put your wife back to work.