Avoiding super funds

_Bruce_ on 22/02/2012 - 10:50

I have had a bad run with super funds and (for now at least) just want to put my super in a high interest account. I don't care if I don't have access to the money, but I want to stop the super funds from throwing it away.

My limited research has suggested there is a lot of paperwork in this and I will need to get an accountant to sign off on everything. Has anyone does this? Does anyone know of an accountant that will charge a minimal amount to just say 'yes, all the money is in account X'. I'm not looking at running my own investments in shares/houses or anything like that.

Financial

Comments

retiredfeline on 22/02/2012 - 10:58

One simple way would be to select the fixed interest investment strategy that your super fund offers.
- _Bruce_ on 22/02/2012 - 11:11
  
  … it doesn't. Can you recommend one that does?
  - retiredfeline on 22/02/2012 - 11:18
    
    Pick one of the public sector or industry funds if you qualify, they do better than the retail ones.
    - Cheeper on 23/02/2012 - 08:59
      
      I hear the OP… some super funds are outright pathetic and it is a wonder the govt has not got onto them… (carbon tax and gay marriage are more important?).
      
      Anyway… there are good industry super funds… take a look at this one to start with… http://www.auscoalsuper.com.au/
jc8 on 22/02/2012 - 11:07

You're making it hard for yourself. Just get a wrap and buy a Term Deposit. Or invest in defensive/income assets such as fixed interest.
- _Bruce_ on 22/02/2012 - 11:12
  
  'a wrap'? Also, how does this solve the paperwork issue. Where I put the money is not the problem, meeting the legal requirements is.
  - jc8 on 22/02/2012 - 11:29
    
    It's just an application form, it's not going to be as much paperwork as your suggested option.
    
    Where you put the money IS the problem due to legal requirements. If you're not very experienced then use a platform because as I said, you're making it hard for yourself.
    - _Bruce_ on 22/02/2012 - 11:30
      
      +1
      
      Sorry, I still don't follow you. If I put money in a term deposit, don't I still need an accountant to go over everything? Or are you talking about a service which combines these two tasks? Can you provide an example?
    - jc8 on 22/02/2012 - 12:00
      
      As in investing in a term deposit within a super fund / super wrap. Lots of platforms allow this but you will find there will be some form of cost component for being on the platform.
scotty on 22/02/2012 - 11:17

Where do you keep your superfund? I thought it's just like buying the regular managed funds — your super fund provider would probably give you an online portal site that lets you choose your risk profile and lets you decide where the incoming fund should be allocated to. Even if the fund manager does not have an online site, it would just be a matter of forms updating where the fund should go?

I can't see how accountant should be involved.
- _Bruce_ on 22/02/2012 - 11:23
  
  My super fund lets me change the risk level between making almost nothing and then paying more on fees, or just loosing money and charging feed. I'm currently with Australian Super and from their site:
  
  strong long-term investment returns – the Balanced option has credited an average return of 9.64% pa since inception (August 1985) to 30 June 2011*
  
  Because data from 1985(!!!) is really a good way to say how well they've done the last 5 years. More to the point Australian Super didn't exist back then, they are using data from a fund they bought out.
  
  Frankly I'm sick of the whole rort and just want a standard return with no fees.
  - rack on 22/02/2012 - 11:28
    
    Mate i am with AUS SUPER as well and they do have the cash option. I chose the fixed interest cash option for myself. I didn't see a hike in fees when i changed from balanced to fixed interest.
  - scotty on 22/02/2012 - 11:32
    
    Australian Super is probably one of the cheaper ones around already, and they do have Cash as pre-mix option?
    
    http://www.australiansuper.com/investments-and-performance/s…
    
    The fee is outlined here:
    
    http://www.australiansuper.com/investments-and-performance/i…
    
    That's 0.11% for just cash fund. I do not think you can get a managed fund that has absolutely no fee — unless you go with the SMSF option which can be a part-time job by itself. If that's the case, then yes accountants are recommended and there's quite a bit of setup as well.
    - _Bruce_ on 22/02/2012 - 11:35
      
      I guess I might give up and do that, but I am very annoyed that they are not competitive with almost any standard high interest no fee account (ing, etc).
    - scotty on 22/02/2012 - 11:44
      
      Yes I understand what you are saying. You'll think putting the money into term deposit account would require no management. Anyway I am not a fund manager so I have no idea about whether there's any complication behind that.
      
      Well, I am also not a financial adviser and cannot legally give financial advice. However you can "shop around" and there are places with lower fee — just like you need to shop around to find the cheapest place to buy something.
    - tanoshiiki on 22/02/2012 - 12:40
      
      You will find even if you go with an SMSF, there will be restrictions as to what you can invest and you may find that some Online Savings Accounts will not let SMSF invest in them. "Standard high interest no fee accounts" are not considered as stable as low interest rate long-term term deposits, which is what super funds will usually choose for the Cash investment option. Disclaimer: I'm not in the super industry nor have been involved. Also, I am not a financial adviser.
      
      Does AustralianSuper offer a free financial/super advice consultant service? You should really make an appointment. Super is a pretty complex issue (when you delve into it), even trickier if you want to start managing it yourself.
  - retiredfeline on 22/02/2012 - 11:50
    
    You won't find any absolutely no fee funds. But you can find low fee ones. You would have to pay tax at your marginal rate on interest from a "high interest no fee account". With super you pay tax at 15%, so you are already ahead.
    - _Bruce_ on 22/02/2012 - 11:52
      
      Why wouldn't the same tax rate apply, it is still super?
    - retiredfeline on 22/02/2012 - 11:56
      
      Super gets special tax treatment, that's why financial planners recommend you salary sacrifice into super after you have paid off debts. A search should find you a description of the tax rate on super.
    - marklee84 on 22/02/2012 - 12:03
      
      As long as it's super (whether invested through SMSF or through a superfund) same contribution tax of 15% is charged.
      
      Everything we do will have fees, if going through SMSF, there will be a need to pay audit, accounting and not to mention the cost of your time. If you're looking for a safer capital-protected option, I do recommend that you read this AustralianSuper factsheet (http://www.australiansuper.com/layouts/Download.aspx?ID=bc63…) on the various funds and pay attention to page 18 and 19 relating to Fixed Income. I would particularly pay attention to the little thermometer charts showing experienced annual performance - this will act as a guide to how risky the fund is.
    - jc8 on 22/02/2012 - 12:23
      
      Keep in mind though that once these funds are contributed into super you would need to reach your preservation age to access your funds.
tanoshiiki on 22/02/2012 - 11:22

Yes, most superfunds have investment options and should have a cash option, which is just deposited in relatively low-interest rate deposits, but the return is stable. This can usually be done online with most of the popular super funds.

Otherwise, you'd have to go through a SMSF system, which requires a lot of paperwork with returns and (possible?) audits yearly.
Cheap Steve on 22/02/2012 - 12:18

Just want to add to these comments that there is a BIG difference between a "fixed interest" fund and a "cash" fund if you are looking for a defensive investment. If you want absolutely no falls in capital value then you must stick with a cash fund. Fixed interest funds can fall in capital value quite significantly if we go into a rising interest rate environment. This is because when interest rates rise bond capital values fall. Given that US, UK and European interest rates are at historically low (some at zero) levels I am not confident that you will find the safety that you are seeking.
teekay on 22/02/2012 - 12:41

We set up a self managed super fund last year and rolled all of our available work super funds into a westpac deposit account specifically for smsf's which pays a reasonable level of interest. It also comes with a transaction account if you want to be able to invest in shares. However - you have to go to the expense of having an accountant set up a super fund - register a name so you have an abn and draw up a trust deed. It can be quite expensive and not worth the effort if you don't have at least $200k in super. If you're not looking to manage the fund yourself I'd say look at which options your super fund can offer in the way of defensive (more heavily weighted to cash) rather than the risker growth options.
- _Bruce_ on 22/02/2012 - 12:45
  
  Thanks teekay, do you mind giving an idea of the accounting costs you incur?
  - Michaelz101 on 22/02/2012 - 14:03
    
    Depends on what you have in your SMSF, the fees will incur is a approx $145 SMSF levy charged by the ATO, Accountancy and audit fees. The fees vary entirely and you have to shop around, usually the smaller the firm the better the prices get.
    
    To setup a SMSF initially you might also have to pay roughly $600 to a company like ReckonDocs( who establishes all the legal documents for you) please visit here: http://www.reckon.com.au/
    
    however if you get a accountant to set it up..they might charge you $1000 for simply filling out a few pages and they themselves also use companies like Reckon.
  - Michaelz101 on 22/02/2012 - 14:07
    
    generally, I have seen fees range from $900 to over $3000 for similar jobs. Audit fees usually fall in the same range. Again this totally depends on how much work is involved and how neat you are, if the accountant spends half a day trying to locate all your documents…thats money they charge you. if you are organised and give them summaries and all the legal documents then generally it will relate to a cheaper fee. Again, shop around first and get some quotes from them if this is the path you want to take.
  - teekay on 22/02/2012 - 14:11
    
    Sorry, I've checked my records but can't locate the invoice for the set up. I'm sure it would have been somewhere around $2k. The ongoing cost is at least $1k each year as you need to have a tax return prepared and an independant audit completed.
chloden on 22/02/2012 - 14:11

http://www.ubank.com.au/ub/web/smsf/smsf-overview

http://www.ingdirect.com.au/savings/savings_products/diy_sup…

http://www.esuperfund.com.au/Home/Home.aspx

Esuper are very easy to deal with and they will help you set up a self managed super fund. When my husband set his up it was free and they charge a yearly fee of around $550. Once you have your SMSF Ubank and ING both offer accounts with reasonable rates. Maybe you should look into things a bit more and I really don't know that Ozbargain is a great place to be seeking financial advise.
- _Bruce_ on 22/02/2012 - 14:24
  
  Thank you. I looked into ING and ubank, but they appear to not do any of the SMSF work, they just provide a place you can put your money. Esuper fund looks like exactly what I was after, which is how to do this without paying large accountant fees (rather than financial advice as such).
  - chloden on 22/02/2012 - 15:27
    
    Once you have set up the SMSF through Esuper then you can use Ubank and ING. I have spent a lot of time looking for the highest rate and I do believe that Ubank is the highest.
cintamami on 22/02/2012 - 15:22
Hi Bruce

I am a CA qualified and well versed in SMSF matter.

Most industry funds will put your money into a pool and invest it accordingly to your risk profile, although I think AMP or some other funds offer a pool where all the money is being invested in govt bonds and term deposits when I was looking to invest in managed funds.

However whether you are able to instruct them to or whether they have such products for superfund purposes, I do not know.

If you are dead set on setting up a SMSF:

I would not recommend a SMSF with a balance of less than $200,000 (Assuming investing diversely), of course unless you know something (e.g. speculative shares) is going to go crazy.

Fees related to setup:

set up smsf - $275 (cost to set up smsf) + $50 (accountants time)

Corporate trustee - $624 + $75 as above.

This is quite cheap as I will be doing it myself, if you go to an accountants office, it will be between $1,400-$2,000.

Yearly fees:

SMSF Levy $180

Financial statement prep ($400-450+GST, assuming only bank deposits in the funds).

Audit of financial statement $300+GST (assuming yours only have bank deposits).

So the cost does add up. I would be able to offer you a more personalised recommendation/advise upon knowing you better.

If you have any further questions, free of charge of course until the actual set up/works.
Cheers,
- Michaelz101 on 22/02/2012 - 15:43
  
  your fees are pretty competitive. But you would have issues with independence as an auditor. This is only assuming you are doing the audit as well. But if you can resolve this issue, then yea that's cheap.
  - cintamami on 22/02/2012 - 17:12
    
    Of course I will send the audit off to a qualified s/fund auditor…. hahaha.
- _Bruce_ on 23/02/2012 - 11:10
  
  Thanks for the offer I may contact you once I've sorted some things out.
coolsteps on 15/05/2012 - 17:21

qsuper and virgin super used to have low fees just shop arround and transfer to one. ive transfered a few times a few $1 just to get their promo offers like amp gift card then virgin $200 and btlife super. its probably a lot harder now and need to show id but its your right to change.
martinj on 10/06/2012 - 18:31

Plenty of super funds offer term deposits that pay a decent interest rate. Even Australian Super offers them:

http://www.australiansuper.com/investments-and-performance/s…

Avoiding super funds

Comments

New Forum Topics