1 - The tax-deductible contribution for Senior’s has increased from $25,000 to $35,000.

 

2 - Superannuation Guarantee has increased from 9.00% to 9.25%.

 

3 - Financial advisers are no longer able to charge commission on investment products within Superannuation.

 

4 - SuperStream has been introduced to increase the ease of back-office functions such as consolidating your super.

 

5 - It is not compulsory for employers to make super guarantee payments to workers over the age of 70.

 

6 - ASIC now has increased power to investigate and act on complaints within Superannuation.

 

7 - It is now compulsory for all financial advisers to act in the best interest of their clients, previously this was not a legal requirement.

 

8 - Penalties have been removed for exceeding contribution caps.

 

9 - Reduced superannuation tax benefits for high income earners (300K +).

 

10 - Financial advisers and all super funds now have to offer basic advice at no cost.

As of 1 July Australia’s senior population will now be able to contribute an additional $10,000 tax-deductible into their superannuation fund.

 

The concessional contribution cap has increased from $25,000 to $35,000. This is a great benefit to those over the age of 60 as it allows them to put more money away for their impending retirement.

 

As of July 2014 the increase to $35,000 will not only be available to those over the age of 60 but also to those over the age of 50.

As the 2014 financial year begins so does an increase to our superannuation, which has been introduced by our Government. The increase will see superannuation guarantee contributions rise to 9.25% from the previous 9%.

 

The question you might be asking is ‘who is going to pay for this increase in superannuation’. The answer to this might in fact be you.

 

Depending on your employment contract you might in fact be funding your own superannuation increase. It has been found that 44% of employers are contracting their staff on a total package remuneration. This therefore means that you will be receiving 0.25% less of your base salary in your bank account each pay day. One third of employers are contracting their staff on a base salary plus superannuation package. This means that the amount you receive in your bank account each pay day will remain unchanged and you will be receiving the additional 0.25% in your superannuation.  The other 22 per cent of employers are using a combination of both remuneration systems.

 

For those staff employed under a total package remuneration, there is no obligation for your employer to increase your salary to allow you to receive the same pay in your bank account as you did last financial year.

 

With Election Day looming, Superannuation is once again on the political agenda. Rumour has it that Gillard is planning to change the structure of Superannuation tax concessions particularly for the high income earners.

The director of Chan & Naylor, one of Australia’s leading accounting and financial planning firms, claims older Australians with more than $1 million in retirement savings are under the greatest threat. He goes on to state that unfairly, those most successful in setting aside their own monies for independent retirement are at greatest risk of being hit with harsher tax penalties.

Once considered a more than comfortable sum to retire on, $1 million may no longer be adequate given the ongoing rise in medical and aged care costs. Chan & Naylor believe that $2.5 million in retirement savings will be required in 30 years’ time.

With this in mind, it’s even more surprising to hear of the government’s plans to penalise the high income earners and successful savers.

In a recent announcement the ATO have advised that from 31st May 2013 they will be taking over inactive and untouched super funds with balances of up to $2000, this is an increase from the $200 threshold which the ATO previously worked off.

 

There are 2.8 million unclaimed super funds and 3.4 million lost super funds with a staggering $887 million of lost money.

 

People who have changed their job, address or name may have lost superannuation as for people who are eligible to withdraw their superannuation and their fund is unable to get in contact with them may have unclaimed super.

 

By the ATO claiming your lost or unclaimed super you will lose all insurance policies written into the super fund.

 

The process to find and consolidate your lost and inactive super funds is an easy one and should be acted upon to avoid losing money towards your retirement.

The average Australian is expected to lose one third of their superannuation savings to fees over their working life.

 

Research shows that we are paying an average of $2000 per year in fees. This highlights the need for Australian’s to gain control of their superannuation and consolidate multiple funds where possible to avoid paying multiple sets of fees.

 

The fees can eat up to one third of your superannuation savings leaving you short when it comes to retirement. By taking control of your superannuation and ensuring that you are with a fund that has low fees you can reduce the amount to one fifth of your savings over your working life.

 

It is unfortunate that a large number of Australians do not pay enough attention to their superannuation fund and therefore are paying unnecessarily large fees. The fee structure of the majority of funds will see the fees get higher and higher the older you get. A person under the  age of 35 can expect to pay an average $445 of fees per year however that number jumps substantially the older you are. A person who is between 60 and 65 years of age can expect to pay $3682 in fees per year.

 

It is urged for all Australia’s to actively get to know their superannuation fund to ensure that their fees and investment options are right for them.

 

A recent survey conducted found that out of 800 participants aged between 18-64 years old, 50% of the participants were still selecting ‘low risk’ investment options for their superannuation funds.

 

By selecting low risk investment options many young people may not be earning much more than the current inflation rate and could actually end up $170,000 shorter at retirement than an a superannuation fund with an investment option labelled ‘medium to high risk’

 

Younger participants surveyed were unsure what it means to be in a ‘low risk’ fund and only one quarter of the participants were able to identify volatility and inflation as risks within superannuation savings.

 

When selecting your investment strategy you must consider how soon you will anticipate retiring as this will impact the best strategy for your current super savings needs. James Coyle, General Manager of Australian Super said that someone who is around 55 years old and is not likely to have their super invested in their retirement may be suited to a low volatility options as per a person of 25 years old is likely to have another 40 years of saving and choosing the low volatility option may be detrimental to their retirement.

When compared with the retirement schemes set up by other major developed nations, Australia’s Superannuation scheme doesn’t come up to scratch. A recent report by Mercer consulting found that the outcome for Australian retirees was worse off than the Canadian, British, Dutch, Swiss and US. In fact when compared with the net retirement benefits of an average Canadian worker, Australian retirees are close to 20% worse off.

Compared with 9 other nations surveyed in the report, Australia is the only country not to offer employee tax deductible contributions and charges a tax rates on employer contributions, at 15%.  Given Australia heads to the polls in September of this year, it will be interesting to see how the opposing Governments plan to improve the Superannuation scheme.

In a recent submission regarding the Federal Budget, the Financial Planning Association (FPA) said the Government needed to consider a longer-term outlook that went beyond the current election campaign and expressed their concern in relation to the potential changes to the superannuation system in the 2013 budget.

 

As a means to increase the cap, the FPA  encouraged the Government to consider a flexible and realistic way to deal with surplus concessional contributions. For all Australian’s over the age of 50, the FPA is urging the cap on superannuation contributions to be increased to $50,000 from the existing $25,000 cap.

 

The issues relating to Australian’s developing a saving culture and improving the transition into retirement were addressed by the FPA in the recommendations.

 

The recommendations also discussed the necessity for Australian’s in need of assistance to be able to gain better access to financial advice.

 

The FPA strongly urges that changes to the budget are designed in a way to support Australian’s gain control of the superannuation and retirement.

Recent studies conducted by Mercer have indicated that Australia’s superannuation system is not as generous as those in other countries.

 

The typical British worker’s net retirement benefit has an average of 16.4 per cent or $43,534, higher  than their Australian counterpart.

 

The study compares the top eight countries who are deemed to have the best pension system in place against Australia.

 

Out of the 9 countries in comparison, Australia is the only country which charges a 15 per cent tax rate on employer contributions and the only country that does not offer employee tax deductible contributions.

 

Alongside Denmark and Sweden, Australia also has a obligatory tax rate on investment income.

 

According to Mercer this has a direct impact on the final benefit received by retirees, and in many cases increases the likelihood of people receiving an age pension.

There’s been much debate between Tony Abbott, the leader of the opposition party and Prime Minister Julia Gillard over plans to change Australia’s Superannuation scheme.

 

Each party is being placed under pressure to provide a public announcement stating their proposed changes to the Australian retirement savings scheme. According to Ms Gillard, Abbott’s claims that there will be no adverse and unexpected changes is a "fudge", due to the coalition’s plans to do away with the mining tax which in fact  funds a tax break on superannuation for 3.6 million people earning under $36,000 a year.

 

Superannuation Minister Bill Shorten is adamant that Labour’s Super scheme is “better than the coalition's alternative."  Ms Gillard went on to assure parliament that Labour would "never remove tax-free superannuation payments for the over-60s", including lump sums and pensions.

 

Although Abbott has been quoted as saying that “we've got to get taxes down, not up," the leak of a draft discussion paper titled Developing Northern Australia - a 2030 Vision came under much scrutiny as the paper highlights the room for additional taxes to support the development of the "tremendous potential" in northern Queensland, the NT and Western Australia.

 

The election campaign is still in its early days, the issue of Australian Superannuation is bound to resurface and create ongoing debate …..

A recent reports commissioned by AustralianSuper showed that while 43% of Australians are unsure of their Super balance, close to 50% know exactly how many friends they have on Facebook. This problem is even greater for those aged between 18 to 24 years of age, with only 36% in the know when it came to their Super balance and up to 63% in the know with regards to the number of Facebook friends they had.

 

With the ongoing push to simplify Superannuation and provide all Australians with the ability to choose their fund and savings options, it’s concerning to hear so many Australians, particularly those of Gen Y have very little knowledge or interest in their Super savings.

 

It’s important Australians are aware of the importance of Super and that even a small amount of Super can in the long run, make a substantial difference. If nothing else, it’s critical to have just the 1 Super account, to avoid wasting money on numerous and unnecessary administration fees. Keep in mind that these days, the large majority of super funds offer a range of services that aim to simplify Super, these include online tools and advisors. So take the time, to consider your future and Superannuation

Consolidating one’s multiple Super funds into the 1 account has many advantages; these include less paperwork, less headaches and less administration fess. Sounds like a win, win situation doesn’t it? Well there can be a downside they may result in the loss of insurance benefits or worse still, leave you in the position where you are unable to reinsure yourself.

How does this happen you ask? Well, in more cases than not, fund members are completely unaware that their current superannuation cover includes insurance. The minority of fund members who choose to consolidate their funds and are aware of their insurance cover generally opt to move their super according to fund performance, rather than insurance cover.

The additional problem is that when a fund member realises they are no longer insured and seek to regain insurance cover, their medical situation may have changed and they will be forced to fork out higher premiums as a consequence of their ‘newly’ acquired penalties.

 

So when you take the generally very positive move to consolidate your multiple super funds, it’s important you determine if insurance cover is incorporated into your current super and ask what will happen to that cover once your funds have been consolidated.

Alarming figures recently released by REST Industry Super showed that as much as 86% of baby boomers feel financially unprepared for retirement and only 1 in 7 actually believe their savings will provide for a comfortable retirement. Research further indicated that a large proportion of baby boomers were uncertain of the costs associated with retirement, thereby making planning for retirement a difficult task. This is further backed up by the fact that 70% of baby boomers never sought financial advice when planning for their retirement.

The latest prediction by the Association of Superannuation Funds of Australia estimated the cost of retirement per couple per year was as much as $56,236. This figure is slightly less for singles coming in at $41,090 per year.

Given the uncertainty expressed by many individuals, it’s advisable to seek professional advice. Take the time to seek the expert advice of a financial adviser or contact your Super fund.

Thanks to improvements in the economy and the share-market, Australian Superannuation funds are showing signs of good growth.  In fact, independent superannuation research and consultancy firm Chant West found the average investor, in an average, balanced growth fund would have received annual returns of about 6.3% over the last 10 year period. Analysis also indicated the industry funds generated 5.1% growth, corporate funds 4.8% and retail funds 3.4% on a yearly basis.

The greatest performers were the staff superannuation funds at Goldman Sachs which generated annual return of 9.%, Commonwealth Bank of Australia 7.8% and Worsley Aluminia 7.5%.

Probably the largest of all the changes made to Australian Superannuation is the increase in the Superannuation Guarantee (SG), instead of remaining at 9%, it will increase in small increments to 9.25% from July 1st 2013 and then as high as 12% by 2019-2020.

With a steady increase in the SG, account holders must determine if their usual superannuation contributions will exceed the $25,000 cap. If it does, they will be slugged with unfavourable tax penalty.

Another major change to Australian Superannuation is the removal of the super guarantee age restriction by July 2013. This means employees aged 70 years or greater will be eligible to receive the SG for the first time.

As of July 1st 2013, all Super funds will be required to offer MySuper products. MySuper is designed as an easy to use, low-cost super product that will replace existing default funds. It will be ideal for those who are have little interest in following their super and will make comparison of super funds much easier

Following a strong push from Australian Super Funds and their members to commence consolidating their Superannuation accounts, the latest figures from the Australian Prudential Regulation Authority show a reduction in the number of member accounts from 32.1 million in June 2010 to 30.5 million in June 2011.
At last, Australians have taken note of the benefits of consolidating their multiple Super accounts. These benefits include reduced paperwork and reduced administration fees, as each Super account has its own set of administration fees.
According to the research, the retail funds experienced the greatest reduction in member numbers, falling by 1.73 million, while the numbers for the public sector funds grew by 242,000. The Australian Taxation Office (ATO) continued to see a rise in the number of Self Managed Super Funds.
ERFs also known as Eligible Rollover Funds hold Super accounts of members who cannot be contacted. As of 2013, ERFs are required to transfer any Super account worth up to $2000 to the ATO. The ATO will take on the responsibility of locating and contacting the individuals so that they may be reuniting with their lost funds. This essentially means that Super accounts with small balances won’t be eroded by fees. Instead, their balances will have the opportunity to increase in-line with the rate of inflation.

According to the research group DEXX&R; Australia’s Superannuation funds will experience an average growth of 9.1% over the next 10 years. As such, the Australian Superannuation pool is expected to grow from its current level of $1350 billion to $3234 billion by half way through 2022.
This forecasted growth is in part based on the known fact that the superannuation guarantee will rise over the next 10-year period to as much as 12% by 2020, but also on the strong belief that superannuation investments will continue to show steady growth

Despite underperforming for the past 5 years, it wasn’t until the Global Financial Crisis hit that the majority of Australians became acutely aware of their monetary losses from their Super funds. On a more positive note, recent data suggests Super funds have regained their form, with many now performing at their pre Global Financial Crisis levels. In fact, research shows that since 2009, the median balanced funds have grown as much as 35%.
Whilst many Super funds have shown a marked improvement, not all Super funds perform equally. For this reason, it pays to keep an eye on your Super and regularly check their investment options. As Superannuation should be viewed as a long term savings strategy, we encourage seeking the advice of a financial planner to ensure your retirement goals are met. Advisers can help monitor your fund and the market to ensure your savings are maximized

BT Super funds have been aiding Australians with their Superannuation, Insurance and Investment strategies for over 43 years. BT superannuation funds operate under the financial planning sector of Westpac Banking Corporation and currently have over $90 billion in total investments. This makes it Australia’s largest administrator of superannuation, investments and retirement.
With this in mind, it should come as no surprise that the BT financial group has approximately 550,000 plan members and currently manages corporate superannuation plans for over 23,000 employers across Australia.
BT super has a range of products on offer to assist Australians in savings for their retirement. These include:
• BT Lifetime Personal Super
• BT SolarWrap
• BT Asset Choice
• BT Asset Link
• BT SuperWrap
• BT SuperWrap Essentials
Employers who offer a default BT superannuation fund generally offer the following 2 plans:
• BT Lifetime Super Employer Plan
• BT Business Super
Two Super products of particular interest are:
• BT SuperWrap
• BT SuperWrap Essentials
Both products provides 24/7 online access to a wide range of sector specific managed, diversified managed and sector specific direct investment strategies to select from. Whilst BT Super Wrap Essentials provides access to over 70 managed funds, BT SuperWrap provides access to over 600 managed funds.
The BT Super Wrap Investment Options on offer include:
• Diversified managed investment strategies ranging from low risk/conservative options to moderate - high risk/growth options.
• Sector specific managed investment strategies which incorporate
o Australian shares
o International shares
o Property securities
o Direct property
o Australasian fixed interest
o International fixed interest
o Hedge Funds
o Cash and Cash Plus
And
Sector specific Australian shares which may include listed trusts, debt securities and Australian shares.

Colonial First State Superannuation Funds (CFS) first entered the Superannuation market in 1988, yet in spite of its relative youth, it may be regarded as one of Australia’s leading wealth management groups with in excess of $90 billion under management around the world. Part of the Commonwealth Bank Group, CFS offers many superannuation and investment products.
With the primary objective to provide quality products at a competitive price, CFS makes it easy for consumers to track their investments via the phone, internet, in person or mail and takes the necessary measures to ensure clients are aware of the fees to avoid surprise. Furthermore, CFS clients receive consolidated reports twice a year which provide a complete picture of all investments and transactions.
Colonial First State Superannuation Funds on offer include:
• FirstChoice Personal Super
• FirstWrap & FirstWrap Plus
• First Choice Employer Super
FirstChoice offers in excess of 105 investment options. It also offers a range of managers and asset classes through their professionally constructed multi-manager portfolios. The result is an investment menu that offers genuine choice, value and service.
• FirstChoice Multi-Manager Options
- Multi-sector: 7 portfolios that invest in a range of asset classes
- Single-sector: 12 portfolios which predominantly invest in one asset class
• FirstChoice Multi-Index Series Options
- Multi-sector: 2 index portfolios which invest in a range of asset classes
FirstWrap is aimed at investors with more sophisticated needs. It offers a comprehensive range of investments, all managed through the one account. Investment options available through FirstWrap include:
• Term deposits (a range of terms available)Unlisted property
• Over 250 managed funds
• Hedge funds and private equity funds
• All ASX listed company issued options (ASX 300 only for super and pension)
• Panel of brokers
• All ASX-listed shares (ASX 300 only for super and pension)
• Access to floats, placements and other corporate actions
• Margin lending facility

ASGARD was created over 25 years ago to administer investment, superannuation and retirement savings for Australians nationwide. ASGARD is owned by St George Bank, a member of the Westpac Banking Corporation. As a result of its 25 year operation, ASGARD now helps over 400,000 Australians with in excess of $37 billion in funds under management.
ASGARD may be classes as an award winning super fund. Over the years, it has won many prestigious awards including the ChantWest 2009 Apples Award, Heron Partnerships 2009/2010 5 Star Quality Rating for outstanding performance and SuperRating Gold Award 2009.
ASGARD Superannuation Products include:
• ASGARD Elements - This product is best suited to those with a financial planner who can oversee their investments. It offers an easier way to invest with a more concentrated, quality-focused investment menu.
• ASGARD eWRAP – This product is better suited to those who which to adopt a more active role in their investments. It offers a range of different managed funds and shares with access to cash, more than 400 managed investments and a wide range of ASX listed securities.

From January 1st 2013, new rules make our superannuation accounts be marked as ‘inactive’ years earlier than before. This means there will be even more chance we will be able to track down your lost superFrom January 1st 2013, new rules make our superannuation accounts be marked as ‘inactive’ years earlier than before. This means there will be even more chance we will be able to track down your lost super. Currently super funds don’t have to mark your account as inactive unless there have been no contributions for 5 years and the balance is less than $200. Starting next year your super will be marked as inactive if there have been no contributions for 1 year (no longer 5) and providing the balance is less than $2,000 (no longer $200).
Remember lost super marked as inactive will be just sitting there lost and earning a fluctuating income of approx 2.5%p.a. Even worse lost super not marked as inactive may de dwindling down towards nothing with no contributions coming in and fees from the super fund that is supposed to be managing your money eating away at it year after year.
So…if you think you might have some lost super. Get searching. Make it your new year’s resolution. There’s even more chance we can track down your hard earned money.
. Currently super funds don’t have to mark your account as inactive unless there have been no contributions for 5 years and the balance is less than $200. Starting next year your super will be marked as inactive if there have been no contributions for 1 year (no longer 5) and providing the balance is less than $2,000 (no longer $200).
Remember lost super marked as inactive will be just sitting there lost and earning a fluctuating income of approx 2.5%p.a. Even worse lost super not marked as inactive may de dwindling down towards nothing with no contributions coming in and fees from the super fund that is supposed to be managing your money eating away at it year after year.
So…if you think you might have some lost super. Get searching. Make it your new year’s resolution. There’s even more chance we can track down your hard earned money.

IOOF entered the Australian financial services market over 160 years ago.  Since then, they have been working with Australians to help manage their superannuation and retirement. Given their long standing presence in the world of Superannuation and wealth accumulation, it should come as no surprise to learn they have over $94.6 billion in funds under management, administration, advice and supervision. IOOF enables employers, clients and advisers to manage a varied range of investments such as direct shares and managed funds.

The financial serviced on offer by the IOOF Group includes:

  • Skilled investment management solutions for both from managed funds to superannuation.
  • Superior administration service for personal investments, superannuation savings and retirement income solutions.

IOOF has become a publicly listed company and has accumulated a number of very well-known brands such as, Perennial Investment Partners Limited, Australian Executor Trustees, Bridges Financial Services, Pursiot, Spectrum Super, Ord Minnett, as well as Australian Skandia.

IOOF offers its customers a number of Super fund platforms to select from. These are:

  • IOOF Pursuit Select – Suitable for those looking for greater flexibility, it offers a wide variety of investment options.
  • IOOF Portfolio Service – Provides an expansive selection of managed investment options via the IOOF online portfolio management tool
  • IOOF Pursuit Core Suitable for investors with less complicated needs, this platform has a smaller investment menu.

As a result of their long standing success and popularity, a number of IOOF Super products are now closed to new customers. These are:

  • LifeTrack (however the existing LifeTrack Corporate and Employer Superannuation products continue to allow new employees to become members)
  • Financial Partnership Portfolio Service (Allocated Pension, Employer Superannuation, Investments, Personal Superannuation)
  • SMF ERF – Select Managed Funds Eligible Rollover Fun

AMP Superannuation Funds have been working with Australians for more than 160 years, to help them manage their wealth via a number of corporate and retail Super products. AMP is there both employers and employees alike. Their simple application process is easy to navigate and can be completed in the comfort of your own home either online or over the phone.

AMP Super funds have a number of savings products that will assist you in achieving your retirement goals. These include:

  • AMP Flexible Super
  • AMP Flexible Lifetime® Super (no new applications accepted)
  • AMP SignatureSuper®
  • AMP SuperLeader®
  • AMP CustomSuper®
  • AMP Retirement Savings Account

Another benefit of AMP Superannuation is their straightforward investment options and their new online service known as My Portfolio. It enables easy online transacting and the ability to update your details, read important correspondence and view your statements.

Although this does not impact of existing AMP customers, a number of AMP’s Super funds are now closed to new investors, these are:

  • AMPAK Investment Plan
  • AMPAK Personal Superannuation Plan
  • Capital Secure Deferred Annuity
  • Childrens Investment Linked Insurance Bond
  • Childrens Investment Linked Plan
  • Childrens Investment Linked Plan
  • Childrens Portfolio Plan
  • Conventional – Childrens Endowment
  • Conventional - Endowment
  • Conventional - Whole of Life
  • Flexible Lifetime super
  • IL MultiFund Trustee Bond
  • Investment Account Deferred Annuity
  • Investment Account Insurance Bond
  • Investment Account Superannuation Bond
  • Investment Linked Bond
  • Investment Linked Deferred Annuity
  • Investment Linked Insurance Bond
  • Investment Linked Personal Superannuation Plan
  • Investment Linked Plan
  • Investment Linked Superannuation Plan
  • MultiFund Rollover Deferred Annuity
  • MultiFund Super Bond
  • Personal Achiever
  • Personal Investment Plan
  • Personal Superannuation Plan
  • Portfolio Plan
  • Protected Growth Deferred Annuity
  • Super Rollover Plan Investment Linked Deferred Annuity
  • Super Rollover Plan Personal Superannuation Bond

A recent warning was made by the Australian Securities and Investments Commission (ASIC) relating to the over-inflated benefits advertised by a number of large Superannuation funds and the overzealous and costly actions of some Self Managed Super Fund (SMSF) auditors.

ASIC reported they found the quality and reliability of investment research conducted on behalf of Super funds was highly questionable as a result of the conflict of interest. A good example of this was the overinflated rating of Collateralised Debt Obligations (CDO) created by large investment banks. They were touted as being a good investment, but turned out to be worthless.

ASIC went on to say that the pressure experienced by Super funds forced them into making false advertising claims which provided inadequate disclosure of warnings, failed to outline member costs, didn’t fully explain the risks associated with certain investment strategies and in general provided misleading information.

With respect to the SMSF auditors, their one size fits all approach led them to conduct tests that were unnecessary and costly to the consumer. For this reason, ASIC has also issued warning pertaining to the unscrupulous dealings of such auditors.

Unlike other forms of personal insurance including Life Insurance and Total Permanent Disability Insurance, Trauma Insurance is not a common component of Self Managed Superannuation Funds (SMSF). However, given the rise in popularity for Trauma Insurance, also referred to as critical illness insurance, it is becoming increasingly more common.

Initially, there was some hesitation on behalf of the ATO when deciding if Trauma Insurance could indeed be part of a SMSF. After much deliberation the ATO declared that a SMSF can hold a trauma policy provided the SMSF is held by a trustee and paid for by the SMSF. An additional clause as set out by the ATO stated that the policy must cover a member of the fund and any claims made must be paid to the SMSF until the member meets the conditions of release.

The decision to hold Trauma Insurance within a SMSF is not straight forward, as depending on the scenario at hand, it can be detrimental or beneficial. The following examples describe situations where it is appropriate to hold Trauma Insurance in a SMSF:

1)      If a self-employed member of a SMSF was unable to work due to a critical illness and their business went under (i.e. bankruptcy), then the payout from the Trauma Insurance claim could boost the balance of the member’s superannuation and enable them to live a comfortable retirement.

2)      Although Trauma Insurance is not usually tax deductible, premiums can be paid by tax deductible contributions for the self employed and pre-tax contributions for employees.

3)      A potential strategy to adopt for those with a SMSF is to ‘insure future contributions’ by taking a trauma insurance policy out to pay in the event of a critical illness to boost the ‘contribution’ above the contribution cap as claim payouts do not count towards contributions caps and in this way own additional funds on early retirement.

Trauma insurance would be inappropriate in the following scenarios:

1)      A “Condition of Release” must be met before a trauma insurance claim will be paid from a SMSF. As these conditions are very strict, many individuals find they do not meet the conditions and subsequently are unable to receive their payout.  The resulting financial distress may ultimately defeat the purpose of coverage.

2)      Trauma Insurance premiums are not tax deductible to the SMSF. Furthermore, claims payments incur a taxation liability, similar to TPD insurance claims in superannuation. This “double whammy” can ultimately make trauma insurance in the setting of a SMSF unattractive.

3)      Saving for retirement may not actually occur if insurance premiums comprise a major portion of the contributions being made to the fund. Thus, questions arise relating to whether Trauma Insurance held in a SMSF is in fact for the purpose of improving a member’s cash flow. If the answer is no, then it may be in breach of the ATO’s third requirement as an improvement to cash flow.

Given the complexity involved in the decision making process, we recommend seeking professional advice to help you determine if Trauma Insurance would make a valuable addition to your SMSF.

With an improvement in living conditions and medical interventions, Australians are living longer. This means that for many, the money they saved for retirement may fall short of needs. As means of overcoming this problem, the former Prime Minister of Australia, Paul Keating recommended increasing the superannuation guarantee from 9% to 15% of salary by 2020.

Keating went on to state that current retirement savings would provide a comfortable retirement for those aged 60-80, but it would be inadequate to provide for aged between 80 and 100.He also stated that the funds accrued through the increase in the compulsory guarantee should be paid into a government “longevity insurance fund” which would aid the funding of retirees aged over 80.

Additional recommendations outlined by Keating included increasing the cap on super contributions for those aged over 50 from $25,000 to $100,000 as a means of encouraging increased retirement savings.

When discussing Self Managed Super Funds (SMSF), Keating recommended savers have a minimum of $600,000 worth of superannuation savings before setting up their own SMSF and that SMSFs should be required to select a nominal amount of relatively stable assets such as government bonds or higher-rated corporate bonds to avoid financial disaster when approaching retirement age.

If you wish to maximize your superannuation savings, then take the time to refer to the guide below. Each of the tips are easily performed and can make a considerable difference to your total come retirement time.

1)     Ensure your superannuation fund has your Tax File Number (TFN). By doing so, you can take advantage of the co0contribution scheme and make non-concessional contributions and your employer’s superannuation contributions will be taxed at the reduced rate of 15% - A much better rate than 46.5%. Furthermore, if your Super fund has your TFN and you earn less than $37,000 per annum you will be eligible for the Super Tax  refund.

2)     Roll your multiple superannuation accounts into one to avoid paying multiple administration fees. Additionally, if your multiple super funds are each deducting insurance premiums, your savings are being further eaten away by unnecessary costs!

3)     Make sure your Super fund has your most current contact details. Without this, the government may take your super savings out of your fund and place it with the ATO.

4)     It pays to double check that your employer is making the compulsory super contributions and that the contributions sent to your super fund are correct.

5)     Calculate how much your superannuation fund is regularly deducting for life insurance premiums. Is it good value and is it adequate for your current needs?

6)     Review your current investment options. Are you happy with the mix of investments or would you prefer more conservative or aggressive options?

7)     It always pays to consider how much money you will actually need upon retirement. If it looks like you may fall short, the there are options you can consider today to help boost the final balance.

8)     Take the time to assess the value of your current super fund. Are the administrative fees fair and what are the returns like? If your fund falls short, then consider seeing what other funds are out there and how you can change your fund of choice.

9)     Lastly, consider who you would like nominate as the beneficiary of your super if you were to pass away. Do you wish for the money to go towards your dependents or towards your estate?

 

 

The Australian Prudential Regulation Authority recently released a paper outlining the inequalities retail fund members, bound to an insurer faced in relation to insurance premiums. The paper found that on average, those who were bound to an insurer were on average paying an additional $159.42 per annum more than the benefits they received. This compares with only $41.61 per year more for those members of retail funds that aren't tied to their insurers. At the end of the day, this equates to an additional $12.8 million worth of fees for their superannuation savings.

Some members of the insurance and superannuation industry believe this reports makes an unfair comparison, given the individual structure unique to retail funds compared with other industry funds. Regardless of such sentiments, the report definitely provides food for thought and highlights the need for retail fund members to make informed decisions regarding their chosen package of benefits monetary and otherwise.

Some would describe Superannuation as a mandatory form of savings for when we retire. Although many are led to believe the Age Pension performs this role, increasing numbers of retirees are find the pension is simply inadequate to provide for a comfortable retirement. The amount of money saved through the super scheme will depend on a numbers of factors including the percentage of one’s income contributed (9% minimum mandatory), additional contributions above and beyond the mandatory 9%, the time a superannuation accounts has been held as well as the interest rate earned by your super account and any fees associated with maintaining the fund.

In most cases, employees have the option of selecting their Super fund of choice. There are some circumstances however, when an employer may be forced to select a fund as they may already have a private fund set up or a result of industrial award.

Almost anyone who is paid for work is entitled to the Super Guarantee. Exceptions to this rule include people less than 18 years of age or over 70 year of age, individuals earning below $450 within a calendar month, Australians who are part of a non-complying fund and those who are paid to do domestic or private work for 30 hours or less per week.

Everyone with a Super fund has the option of making extra contributions from their after-tax wage and may receive tax benefits for doing so. Your employer can also make additional super contributions above the Super guarantee.

A number of different Superannuation funds exist, these include the following:

Industry funds such as Health or Retail funds. These are run by employer associations and/or unions solely for the benefit of members.

Public Sector Employees Funds specifically for government employees.

Corporate funds such as the HTR Company fund.

Self Managed Superannuation Funds are created by 5 or less individuals and are regulated by the Australian Tax Office.

Retail Master Trusts for individuals, e.g. The Small Superfund for Jane Jones.

A known benefit of Super funds is that they pay less tax than normal savings accounts, given someone is taxed at greater than 15% and tax benefits can apply to people accessing their super in retirement.

Most Super funds, provide insurance, including income protection, death and disability. The premiums are taken out of your super savings, so it is essential you have adequate savings to avoid eroding your savings and having insufficient funds to maintain your insurance policy.

A law exists for those with only a very small amount of money in their fund, amounting to less than $1000. In this scenario, fees may be reduced or dropped all together as the law states that fees may not exceed the interest earned by the account.

In general, very strict laws apply to the access of funds held within super accounts. A limited number of exceptions allow some individuals to access their savings prior to their retirement age/preservation age. These exceptions include severe financial hardship or compassionate grounds like medical treatment.

One’s preservation age, the age at which they can access their savings, depends on their date of birth and currently varies from 55 – 60 years of age.

The Government’s decision to make employer superannuation contributions compulsory, forced all working Australians to save for their retirement. However, those in the financial position to do so will benefit from making additional contributions towards their Superannuation. Multiple ways exists in which to make additional contributions and depending on one’s situation, additional contributions may be deductible.

One way in which to make additional contributions is to opt for salary sacrifice. In this scenario, an employee designates a portion of their salary to be ‘sacrificed’ for another benefit. Sacrificed funds are made ‘pre-tax’ and are taxed at 15% when received by the fund. This compares very favourable to the usual tax rate for those in the high income bracket who are taxed at close to 50%. Thus, salary sacrifice can be a very effective way to contribute additional funds towards one’s superannuation, as it lowers one’s taxable income by the value of the sacrificed funds.

One may also opt to use after tax dollars to make additional contributions. Such contributions are not taxed on entry to the super fund if the contributor is either under the age of 65 or under the age of 75 and working.

Those who decide to make after tax contributions to their superannuation in the 2013 financial year and earn less than $31,920 a year are eligible for the Government Co-Contribution. This government scheme matches dollar for dollar contributions up to $5000. Those who earn more than $31,920, but less than $46,920 will receive government co-contributions that are determined according to a sliding scale basis. The contributor must submit their tax return in order to receive the co-contribution.

The self-employed, have alternate means of making additional contributions. This group can make deductible contributions to superannuation up to the nominated concessional contributions cap.

It’s important to note that the government has imposed caps on the maximum amount that can be contributed. Breech of these caps can result in harsh tax consequences. Tax deductible/concessional contributions are capped at $25,000 per year and include mandatory employer contributions. After tax/ non-concessional contributions cannot exceed $450,000 over a 3 year period.

 

As Superannuation was designed to provide an income during retirement, many rules and regulations exist to ensure these savings are protected and not whittled down prematurely. The guidelines that enable Australians to access to their superannuation are termed superannuation ‘conditions of release.’

Not surprisingly retirement is the most common condition of release from superannuation. Retirement is in part calculated by an individual’s ‘preservation age’; namely the age at which one can access their retirement benefits. Depending on the year in which one was born, the ‘preservation age’ currently sits between 55 and 60 years of age, although taxation issues exists if someone decides to access their super before the age of 60. Those who are 65 years or older automatically meet this condition of release and can access their superannuation savings.

Less common, but still a considered a major superannuation condition of release is Total and Permanent Disablement.  This condition allows Australians to access their superannuation prior to retirement in the event of total and permanent disablement. This means the person in question needs to be incapacitated to the extent that they are ‘unlikely, because of ill health, to engage in gainful employment that they are reasonably qualified for by education, training or experience.’ One must gain certification from 2 independent doctors and the disability must be permanent. It’s important to note that claim payments received via this condition of release generally incur a taxation liability.

Hardship and compassionate grounds are yet another condition of release that enables limited access to superannuation savings, so that an individual’s retirement prospects are not drastically affected. This condition enables individuals who ‘cannot meet reasonable and immediate family living expenses’ to withdraw a single benefit between $1,000 and $10,000 within a 12 month period. If someone is not deemed to be in a position of financial hardship, they have the option of applying to the superannuation fund for release on the basis of compassionate grounds. In this scenario, the individual must a) not have the financial capacity to meet ongoing expenses, b) APRA has determined in writing that the release is permitted or c) the release is permitted within the rules of the superannuation fund.

Terminal illness is another scenario in which one may access their superannuation prior to preservation age. As for Total and Permanent Disablement, 2 independent doctors must certify that the medical condition is likely to result in death within 12 months. Benefits may be withdrawn as a lump sum and are generally paid tax free.

Lastly, an individual has the option of accessing their superannuation funds if the balance of the benefit is less than $200. This is often the case when individuals change jobs regularly and subsequently end up with multiple lost and unclaimed super accounts.  Although it can be tempting to withdraw these small sums of money, we recommend you consider rolling your multiple superannuation accounts into an active superannuation account.

The sooner you start planning for retirement the better, as it gives you more time to ensure you have the appropriate strategies in place to achieve your retirement goals and enjoy an enjoyable and fulfilling retirement.

Points to consider include the age at which you will retire, what sort of retirement and lifestyle you aspire towards, how much money you will need to retire comfortably, what type of retirement stream you will use as well as if you will continue to work in retirement.

When considering these points, it’s advisable to speak with family and friends as well as enlist the assistance of a financial adviser.

Data suggests that a couple who which to lean a modest lifestyle during retirement will require $31,263 per year compared with $54,562 per year for a more comfortable retirement.

When calculating your costs of retirement, it’s important to factor in much more than just the general, day to day living expenses. We encourage you to also consider increasing medical costs as you age, whether a nursing home or assisted living may be required as well as additional costs towards renting if you do not own your own home.

The age at which you choose to start your retirement and access your superannuation is partly decided for you and is referred to as the 'preservation age'.

Depending on the year you were born, the preservation age varies from 55 – 60 years of age.

It’s becoming increasingly common for Australians to work part of their retirement years as a means of ensuring they will have adequate funds to meet their retirement goals or just keep themselves busy. The Transition to Retirement strategy enables Australians over 55 to receive a regular income stream whilst at the same time boost their superannuation savings thanks to the favourable tax rates on offer.

Three main types of income streams exist namely; Allocated, Fixed Term and Lifetime. The stream selected will dictate how you can access your retirement savings.

The Government will adopt a new strategy to protect unclaimed superannuation accounts of less than $2000 from unnecessary administration fees and charges. In the past, accounts containing this sum of money were charged annual fees of close to $200 a year. This meant that such accounts would disappear if left unclaimed for more than 6 years. This new plan will be a huge bonus for those who lose track of their superannuation, in particular part-time and casual workers and those newly employed.

 

The plan is for the unclaimed money to be held by the Government. In addition to escaping fees, the unclaimed super will act to create additional revenue for the Government. What’s more, the Government will pay interest on the unclaimed accounts at the rate of inflation. Lastly, the Government’s initiative will further enhance retirement savings by reducing the Super fund’s administration costs and in turn improving the fund’s returns.

Australians are rejoicing thanks to a recent report by the financial services research company Super Ratings. This company found that Australian Superannuation funds were performing at their strongest in 5 years, thanks to a particularly strong September quarter.

The data released by Super Ratings showed that for the year to September 30th, the median balanced fund grew by 8.2%, whilst the best-performing funds surged by close to 10%. This proves that although many viewed superannuation funds as a risky investment since the onset of the Global Financial Crisis, Super funds will in fact outperform cash options over a 10-year period.

Thus, although many decided to pull their money from balanced super funds during the height of the GFC, the last 10 years saw the median super fund outperform the cash option by 9.2%. So although it’s fair to say funds are still operating in a difficult environment, sustained momentum will allow fund members to reacquaint themselves with the benefits superannuation will afford them during retirement.

Self Managed Superannuation Funds or SMSFs are becoming an increasingly popular way to manage one’s super and prepare for a comfortable retirement. The main benefit of SMSFs is their flexibility as many forms of investment are allowable according to the Superannuation Industry Act of 1993.

But with a high level of flexibility and choice, comes a high level of responsibility. For this reason, SMSFs are not for everyone. Here is an outline of the points to keep in mind when considering starting off a SMSF.

Cost

The ATO recommends an individual requires at least $200,000 in superannuation assets in order to successfully run a SMSF. This is because the cost of setting up and successfully running a SMSF is approximately $2000 per year.

Resources – Time & Knowledge

SMSFs require a significant amount of time and knowledge to run successfully as even the smallest mistake could result in large investment losses. Whilst some may have the skills to successfully manage their SMSF in accordance with the governing laws, many will need to seek professional advice.

Liability

It’s important to be aware that as the members of a SMSF are also the trustees they are obligated to maintain the fund according to the relevant laws and regulations. If there is an issue with the way in which the fund has been managed they are answerable to the ATO.

Residency

SMSFs must be controlled from within Australia. If a trustee or main decision maker of the fund decides to leave the country for a period of longer than 2 years, the SMSF may become non-compliant. The consequence of becoming non-compliant is a tax rate of 46.5%!

Diversification

Another regulation to be aware of pertains to the level of investment diversification required. For this reason, SMSF investment strategies usually stipulate that sufficient diversification across a range of other assets is required. For example, SMSF’s that invest 100% of the assets in direct SMSF property may be breaching their investment strategy and subsequently may place the fund in a position of unnecessary risk.

 

Although many find it difficult to appreciate the value of Superannuation in their youth, it is an effective and valuable means of saving for your retirement. As the cost of living goes up, we can no longer rely on the age pension to comfortably support us during retirement.  In addition to providing for a comfortable retirement, super has many other advantages such as a long investment timeframe and the benefit of compound interest. Another major bonus is the attractive tax incentives on offer from the Government.

 

Here is an outline of the tax savings on offer:

1) Employer contributions and returns made on your super are taxed at a maximum of 15%. This compares very favourably with one’s marginal tax rate which could be as high as 45%.

2) Salary Sacrifice

3) Government Co-contributions for anyone earning less than $61,920 per annum.

4) Additional spouse contributions if your spouse earns less than $10,800 per year

5) Small business are eligible for small business capital gains tax.

6) Roll over one’s super into an allocated pension upon reaching retirement.

7) Lastly, Australians who work part time and are over 55 have the option of continuing to contribute the super, whilst simultaneously accessing their super funds in the form of a pre-retirement pension

 

Please note that limitations exist on the amount of non-concessional and concessional contributions made each year.

Not surprisingly, many Australians take little interest in their choice of superannuation fund. Most employees are happy for their employer to select their Super fund for them and pay little notice to the regular statements received in the mail. Unfortunately, thus scenario is far from ideal, as having the right super fund can make a big difference to your bank balance and subsequent enjoyment of life come, retirement time.

Many different Super funds exist in Australia, but they are not a ‘one size fits all’. They vary on many levels including life insurance options, investment types, ancillary features and pension types. They can also differ widely with respect to their level of customer service and client reporting. For this reason, it pays to seek advice when selecting your fund of choice to ensure one’s investment and wealth creation needs are met and retirement outcomes and maximised.

The following lists the type of Superannuation funds available:

1) Corporate Superannuation funds

These funds are especially created for a company under the umbrella of an existing retail or Industry Fund. As such, this form of fund is only available to current employees of that particular company and offer varying levels of investment choice. Depending on the size of the organisation, members may be offered discounts another benefit is that most employees would be automatically offered life insurance and possibly income protection without the need for a medical.  Provided the account is left open, employees can maintain this cover even if they leave the organisation. The downside however is that if a person decides to leave the organisation, they will lose their discount and will be moved into the personal or retail division of the superannuation fund.

2) Industry Super Funds

These funds are now open to anyone, so you no longer need to belong to a certain industry in order to be accepted.  Generally speaking, these funds are more limited in their offering compared to retail funds, but on the plus side offer simple, low cost method of investing.

3) Retail Superannuation Funds and ‘Wrap accounts’

These are public funds usually offered by banks and large financial institutions. On the plus side, retail funds usually offer a wider range of investments, insurance and ancillary features than corporate superannuation and industry superannuation.

Given the level of investment choice on offer, if you are keen to have more involvement in your super, then retail superannuation funds may be for you. Tailored insurance options can also make retail superannuation attractive.

 

 

4) Self-Managed Superannuation Funds - SMSF’s

If you want to have multiple investment options and total control over you retirement savings then a SMSF is for you as these funds are controlled by its members and is limited to a maximum of 4 members. With greater control however comes greater responsibility as all members are obligated follow a strict number of rules and regulations.  SMSF’s are also suitable for business owners wanting to utilise superannuation funds to purchase real business property.

Figures show it makes dividends if you start thinking about your superannuation early on. Just taking a few simple measures may make the difference between living comfortably and living your retirement dreams. Here are 6 pointers to help you maximise your retirement nest egg.

  1. 1.      As money held within your superannuation is generally taxed at a more favourable rate, consider selling off your assets and putting the proceeds directly into your super.
  2. 2.      Did you know you can reduce your tax by making spouse contributions? As well as profiting directly, you will build your spouse’s super at a greater rate.
  3. 3.      If you have more than 1 super fund, take the steps to consolidate them. This not only saves you the headache of keeping track of your multiple funds, it also saves you unnecessary administration fees.
  4. 4.      Have you considered the Government co-contributions? Depending on your financial situation, you could convert every 1 dollar invested into super into as much as 2 dollars.
  5. 5.      By directing more of your pre-tax salary directly to your super, you will save on tax as well as bump up your retirement savings
  6. 6.       For those over 50 years of age, you have the option of allocating up to $50,000 a year to your super at a concessional rate.

Make the most of your opportunities to boost your retirement savings. Any combination of the above options will help you in your quest for an enjoyable retirement.

Given the age pension is no longer sufficient to fund a comfortable retirement, Superannuation is becoming increasingly important. Choosing the right super fund can make a significant difference to your final bank balance, but knowing which fund to select is not straight forward. With hundreds of funds to choose from in Australia, it’s important to consider your individual situation and financial goals. Factors which will affect your choice of fund include your age, income, investment risk and choices, as well as any extra contributions you may make in addition to the standard 9%.

Here is a list of points to consider when determining the best super fund for you:

Fees

We recommend you read the product disclosure statement so you can better calculate the total number of fees your chosen fund will charge. Take note of any exit fees.

Investment strategy

Investment strategies can make a huge difference to your bank balance. If you are unsure of the best investment strategy for you, consider seeking professional financial advice.

Personal insurance

If you are keen to purchase term life insurance, trauma insurance, or even income protection insurance through your super fund, make sure the insurance policy on offer will provide adequate cover.

Another point to consider is whether the insurance premiums deducted from your super fund are eroding your savings.

Additional features or services

Each fund will offer a slightly different range of additional services. Selecting a fund with a larger range of options will provide greater flexibility and greater opportunity to grow your super.

Data released by Selecting Super, a branch of the research group Rainmaker highlighted the poor performance of Australian Superannuation funds over the 5 past years. Collated data additionally showed that most Australians are not actively involved in the selection of their Super fund, allowing their employer to select their fund for them.

As a result of the Global Financial Crisis, the majority of super funds experienced a negative return after fees and taxes were taken into account. Of the 83 default super options available in Australia, 51 of them delivered negative annual returns for members whilst only 32 delivered positive returns. This illustrates the importance of selecting the right fund, to ensure your retirement savings are protected.

Of the top performing default options, REST Industry Super produced an annual return of 6.7% after fees and taxes. In contrast, Connelly Temple Employer Super was found to be the worst performer, returning only 2.5 % per annum.

Although some may caution against judging a Super fund’s potential on their past performance, many industry experts would encourage such activity likening the performance and track record of a Super funds to a footy team.

Regardless of the performance of your Super Fund (s), one of the easiest ways to reduce your loss is to ensure you have only one Super fund, to avoid paying unnecessary administration and account keeping fees.

Superannuation is one of the most debated and topical issues amongst Australians. However, when it comes to it how many actually have it set up correctly in order to provide for their future? Many are able to provide status updates and upload photos of the here ad now but are failing to look out for their future. Gone are the days where we can rely upon the age pension to provide our income in retirement. It is my prediction that by the time the Y generation reaches retirement the government will have announced that the age pension will become non-existant.

 

It astounds me as to how many young people between 30-40 don’t have a grip upon their Superannuation. Several times a day we see clients within this bracket who hold on average of 5-7 superannuation funds. Some of these funds are charging them up to 4% p/a. They are also paying 5-7 lots of admin fees instead of consolidating all of their funds into one low fee account. Next year on the 1st July 2013 the SG rate will be increased by 0.25% and gradual increases will occur annually up to 2019-20 when it will hit 12 %. If a superannuation firm charges- $1.50 per week (on average-‘Australian Super Fund’) then across the year in one fund they will pay $78 per year- and if they had 5 funds then that totals $390 per year. If they are 30 (35 years from retirement and continue in the same manner then they would be paying $10, 920 per year more or have lost that out of their superannuation funds).  That’s a lot of money!!!

 

So instead of updating your profile-reflecting on the present get your future sorted by getting your superannuation under control.

Ensuring you have enough superannuation to comfortably retire on can be challenging and daunting task. The good news is there are a number of steps you can take better manage your superannuation at any stage in life. So whether you are young and single or an empty nester we’ve got some important pointers to keep in mind.

Young & Single:

Although retirement may feel like a million years away at this stage in life, take advantage of setting up your superannuation right from the start. In order to do this, you should select the right superannuation fund for your needs and try to stay with the one fund. You may wish to employ the expertise of a financial adviser to select the right investment strategy. Another point to consider is making extra contributions to your superannuation with money left over from your tax return funds.

Young Couples:

Now is a good time to calculate how much superannuation you may need for the future. If you have more than one super fund, roll your accounts into the 1 to avoid paying unnecessary fees and make administration and management easier. Given your situation may have changed at this stage in life, review your investment strategy and make necessary changes. If funds permit, make extra contributions to your superannuation with your tax return funds. If motherhood has prevented you from working, see if your partner can make extra superannuation contributions on your behalf and also consider government co-contributions.

Mature Families superannuation stage

Once again, given your personal situation has probably changed, review your investment strategy and make necessary changes. Investigate investment strategies which may boost your super savings and consider making extra contributions with tax return funds.

Empty Nesters superannuation stage

Calculate if you will have enough savings for a comfortable retirement. If you are concerned, then enlist the help of a financial adviser to boost your superannuation balance. Given many financial commitments have ended at this stage in life such as the mortgage and school fees, aim to make extra contributions with your tax return funds. Finalise your work plan; what age will you retire, or do you plan to work part-time for a few more years to ease into retirement? Lastly investigate transition to retirement and superannuation income stream options. If you do you research early on, it can make the final decision much easier come retirement time.

 

If you are keen to ensure you have adequate savings come retirement age then consider the following points.

  • If you’re in the position to do so, aim to make extra contributions on top of the mandatory 9%.
  • Take the time to figure out how much you will need to retire comfortably. It’s worth using an online superannuation calculator or speaking with your financial supervisor to get an accurate and realistic figure.
  • Read the statements sent out by your superannuation fund. This will provide important information on how your money has been invested and how your fund performed in the previous year. It also allows you to check that your employer has made the correct contributions on your behalf.
  • Make sure your superannuation fund has your current mailing address. You won’t be able to keep track of your savings, if the statements never make it to your mailbox.
  • Consider rolling multiple superannuation accounts into 1 account. This will not only make administration easier, you will also save money on account keeping fees.
  • Although purchasing life insurance through your super seems like the logical decision, ensure your regular premiums are not eating away your retirement savings.
  • Consider reviewing your superannuation strategy on an annual basis to ensure your savings are on track and your personal situation hasn’t changed, eliciting the need to change your investment strategy.
  • Last, but not least, if you are unsure of your superannuation fund and associated investment strategies, contact a financial adviser.

Research indicates that women generally have lower superannuation balances when compared with men. The major reasons for this are the following:

  • The average earnings of women lag behind the average earnings of men.
  • Women who go on to have children spend less time in paid work and have reduced opportunity to contribute towards their super. Reports suggest that leaving work for 5 years will results in 26% less super than someone who does not take time off to raise a family.
  • As women generally outlive their male counterparts, their retirement will be longer. Figures show, women will require 13% more savings than men.
  • Many traditional households had “stay at home” mothers. These meant women relied on their husband’s income and had reduced opportunities to build their super.

If you are yet to experience these events, and are concerned for your superannuation balance come retirement age there are a number of strategies you can employ. These include:

  1. Contributing to your super via alternate means such as taking advantage of spouse contribution, suer splitting or the government co-contribution scheme.
  2.  Develop a savings plan whereby you contribute more than the minimum 9% of your wage.
  3. Weigh up if your superannuation has been invested to maximise your returns and/or protect your savings from market fluctuations.

Some women fear they be unable to accrue adequate savings by the time they retire. If you are nearing retirement age then consider how you could make additional contributions. Often at this stage in life the mortgage has been paid off and children have left home thereby freeing up some money.


  • Australians have the options of purchasing a personal insurance policy within or outside their superannuation fund. Although most superannuation funds within Australia offer a range of insurance products including Life Insurance, TPD Insurance and Salary Continuance Insurance; each with varying levels of coverage and cost, some individuals find their needs are better catered for by a policy outside their super.

Some of the benefits attached to having your insurance within your super fund include the following:

  1. Increased cash flow, as premiums are paid directly by your super.
  2. As premiums are paid with pre-tax dollars, tax benefits exist.
  3. Death benefits paid to dependents are usually tax free.
  4. You don’t have to think about managing your policy as premiums are automatically taken out of your fund.
  5. If you do not have any pre-existing conditions most super funds will automatically provide cover without the need for a medical exam.

As of the 1st of July 2012, Australians will see a 50% reduction in Government Co-Contributions. Similarly, the contribution match will also drop from 100% to 50%. Reassuringly, the government has not changed the income threshold levels for the scheme which stays at $31,920. If you’re wondering where the spare money will be siphoned, the government states it will be allocated to fund other superannuation measures such as the low income super contribution of $500.

By reducing the co-contribution payments, the government has effectively reduced the effective upper income limit. This means that as of July 1st 2012, individuals earning up to $61,920 will no longer qualify for a co-contribution of some value. Instead the upper limit has now been set at $46,920. As was the case pre July 2012, those who qualify for a Government Co-Contribution will have their co-contribution reduced by 3.333 cents for every extra $1 earned over the $31,920 threshold.

This essentially means that those most affected by the changes to the scheme will be Australians who earn more than $37,000 (upper threshold for the low income superannuation contribution), but who do not qualify for the low income superannuation contribution.

Those who do qualify for the co-contribution scheme can still access the superannuation concessional contributions cap of up to $25,000 per year. They will also be able to continue making deductible superannuation contributions via employee salary sacrifice or for the self-employed, as a deductible contribution

Many are surprised to learn they can supplement their spouse’s superannuation fund by making a contribution on their behalf.  Additionally, if your spouse is either a low-income earner or no longer working, then you may claim a tax offset as the contributing partner.

If you are keen to make additional spouse contributions, the following conditions must be met.

1)      You must be under 65 years of age OR aged between 65 & 70 years of age and gainfully employed on at least a part time basis.

2)      You must be legally married or de-facto to the person making the contributions.

3)      The spouse must provide their Tax File Number to super fund receiving the contribution.

Some of the advantages attached to making superannuation contributions on behalf of your spouse include receiving a tax offset. This offset may be as high as 18% if your spouse's assessable income is $10,800 or less with the maximum offset of $540 available. If your spouse’s income is greater than $10,800, the offset is calculated on the lesser of $3,000 reduced by $1 for every dollar that your spouse's income exceeds $10,800 or the amount of the spouse’s contribution. Consequently, the offset is no longer available when the recipient spouse's income is more than $13,800.

Further advantages of making contribution on behalf of your spouse include:

1)      The capabilities of funding your spouse’s life cover through their superannuation.

2)      Tax savings benefits associated with splitting assets.

3)      Tax savings afforded when investing in a concessionally taxed environment.

4)      The taxable portion of an income stream is subject to a 15% tax offset if paid to recipient aged between 55 and 59 years of age

5)      The accumulated superannuation savings can be in a tax-free environment when an income stream is started. A complying superannuation fund is generally entitled to a tax exemption for so much of its income as is attributable to its liability to pay current income stream payments.

 

It’s good to know there is no upper limit with regards to how much you can contribute to your spouse’s super. Although the tax offset is calculated on amounts of $3,000 or less you can contribute as much as you like. As spouse contributions are viewed as non-concessional contributions, contributions up to the cap of $150,000 will not be taxed within the fund. If non-concessional contributions exceed this cap, the amount exceeding the cap will be taxed at the highest marginal tax rate plus the Medicare Levy. In some situations, the averaging rules may be used, which may allow up to $450,000 of non-concessional contributions to be made in a financial year.

Another interesting fact is that the additional superannuation contributions made on behalf of one’s spouse are treated as a tax free component in the superannuation funds. As such, the full value of the additional contributions, less the fees is retained. When the time comes to withdraw money from the superannuation fund, namely at retirement age they form part of the tax free component of a super lump sum payment. For this reason, these amounts are not included in your spouse's assessable income and are tax-free.

To ensure you get the most from your chosen Superannuation fund, it’s essential you adjust and evolve your investment strategies over time.

Two factors to keep in mind when determining the best investment strategies for are 1) the length of time you are investing and 2) the individual risk profile of your desired investment strategy.

With this in mind, it makes sense for a conservative investor to opt for a balanced fund with a mix of stable performers such cash and bonds. However, if someone was keen to reap greater profits and was comfortable with the associated risks then a more aggressive fund investing in Australian and international shares may be the better fit.

The time of investment or more specifically the length of time until retirement will also determine how aggressive or conservative one should be with their superannuation strategies. As one would imagine, this is because someone who is far from retirement age has a greater length of time to recover from financial ups and downs. Conversely, if someone has only a few years until retirement, steering away from riskier assets will provide protection against significant market changes.

With this in mid, many opt for what are known as Lifestage Funds. Lifestage Funds work by matching your attitude to risk with an appropriate investment strategy. As such, Lifestage Funds evolve with you to provide an efficient and well-diversified portfolio that’s designed and managed according to your age and associated risk profile. Consequently, Lifestage Funds are more aggressive and growth-oriented in your younger years as you have more time to withstand the impact of market fluctuations on the value of your investment. As you move closer to retirement, your Lifestage Fund will shift to a more conservative asset mix to ensure you superannuation savings are safe and you can enjoy a well-earned rest.

Although retirement may feel like a million years away, it’s important to consider the cost of retirement and how much money you will need to live comfortably once you stop working and enjoy your well-earned rest.

We encourage you to take the time to consider you daily expenses upon retirement age. Will you still have a mortgage or other debts to repay? Consider the general day to day expenses as well as potential luxuries such as holidays, a new car or even a boat! Make sure you set aside the time to come up with your personalised list.

To help you achieve your retirement dreams, ensure your superannuation is in order. Do you have lost or missing superannuation accounts? Do you need to consolidate your funds into the one account to avoid paying unnecessary fees? Consolidation is especially important the closer you get to your target retirement date.

The friendly and accredited staff at Super Search can help you track down your lost Super accounts. We can consolidate your funds and advise you on the best fund to meet your needs. So remember, plan now for a prosperous and fulfilling future.

 

Regards,

By law, your employer is required to make ongoing and regular superannuation contributions equal to 9% of your salary. However, according to the Association of Superannuation Funds of Australia, this amount is insufficient. They calculate the average working Australian should store away 12%-15% of their salary over a 30 year period as a minimum. Consequently, many of us will need to make additional super contributions in order to live comfortably come retirement age. On a positive note, if you begin making personal contributions towards your superannuation early on in your working career, even small personal contributions will make a significant difference to your retirement savings in the long run.

So the best time to start making the additional contributions is sooner rather than later as not only will you end up with a greater total sum of money, you will also be able to take advantage of the benefits of compound interest.

Personal contributions to your superannuation can be made either from your pre-tax salary (also known as salary sacrifice) or from your post-tax salary. Different taxation rules apply to each method of contribution and depending on your financial situation one may be better for you.

Opting for Salary Sacrifice enables you to reduce your taxable income. This ultimately means you will pay less income tax whilst at the same time boost your retirement savings. In addition, superannuation salary sacrifice contributions are taxed at just 15%, significantly less that the income tax rates of the high income earner which can be up to 46.5% including the Medicare Levy.

Voluntary post-tax superannuation contributions are not subject to any additional tax when they enter or leave the fund as you have already paid tax on these amounts. In addition, if you are a low-income earner and earn less than $61,920 per annum, post-tax contributions may attract a superannuation co-contribution of up to $1000 per annum from the Government.

Government regulations dictate who can make personal superannuation contributions into their own super account. If you are aged less than 65 no restrictions apply and you are able to make personal contributions regardless of work status. If you are aged between 65 and 74 then personal contributions can be made if you have worked at least 40 hours over 30 consecutive days during the financial year in which the contributions are made. Personal contributions are not allowed for those aged 75 and over.

Superannuation for the self-employed can be tricky business. For starters, the vast majority of self-employed Australians would rather inject additional money into their business rather than towards their superannuation fund. It’s important to be smart and think ahead as being self-employed can actually have a number of advantages when making contributions towards your Superannuation.

These advantages include:

1)     Tax deductions

Up until the age of 75, personal concessional contributions are entitled to a full tax deduction. In some situations, small business operators engaged in their business may have the added flexibility of deciding whether to distribute profits via salary, employer superannuation contributions or distributions to an interposed entity.

 

2) CGT retirement exemptions

The small business retirement exemption allows qualifying small business owners to access an exemption from CGT, up to a lifetime maximum of $500,000 when the proceeds of the sale of their business are contributed towards superannuation to fund their retirement.

3) Non-concessional contribution caps

Non-concessional contribution caps is an important concession for any small business owner who is nearing retirement age and is keen to make contributions above the standard contributions limits for the purposes of establishing a tax-effective retirement income.

Contributions stemming from the disposal of small business assets that qualify for the CGT small business retirement exemption or the 15-year exemption are excluded from the non-concession al contributions cap up to a lifetime "CGT cap amount" of $1.1m.

As well as the annual cap on non-concessional contributions, small business taxpayers may contribute money arising from the disposal of assets that qualify for these CGT small business concessions.

Independent research released by the Financial Services Council has illustrated that people who receive financial advice saved an extra $1590 a year after advice costs when compared to those without a financial adviser. The study also showed that those who sought financial advice on superannuation were up to $100,000 better off at retirement age due to improved savings behaviour.

In addition to improved savings for both general and superannuation savings, financial advice has also been shown to improve insurance cover. The study found that on average, those with a financial adviser were at least four times more likely to hold some form of life insurance and those with insurance held premiums with $260,000 worth of life insurance cover compared with only $100,000 for those who purchased insurance without the direction of a financial adviser. As such, if a family were to rely on an insurance payout, they would be better off if the premium was recommended by their financial adviser.

Given the benefits attached to financial advice, it is essential the government creates reforms which enable easy access to financial advice.

Many Australians would classify their superannuation as their greatest investment. For this reason, many opt to enlist a professional to manage our super fund. There are however, individuals who prefer to have control of their superannuation and would benefit from selecting a self managed super fund (SMSF). As the name suggests a SMSF requires self management, this equates to regular monitoring and input and the associated skills and expertise to do so.

The alternate option is to hire a professional to help you manage your SMSF on your behalf.
For instance you could enlist the assistance of a tax agent to prepare your fund’s accounts and/or a fund administrator to help you manage the day to day running of your fund and meet your annual reporting and administration obligations. Individuals keen on a SMSF may also seek the advice of a financial advisor to help them prepare an investment strategy.

 

SMSF generally comprise 1 – 4 trustees, all of whom must be members of the SMSF. More often than not, the trustees of a SMSF are related through either family or business and are in charge of running the fund and acting in the best interest of its members. In some circumstances, someone may decide to set up a single member SMSF. In this case, one must have a second trustee which can be either an individual or a corporation.
A SMSF must be compliant with Superannuation Industry Legislation and the Income Tax Assessment Act. It must run in accordance with its trust deed and must be a resident fund in order to meet compliance.

 

The benefits of opting for a SMSF include:

1)      Tax incentives

2)      Greater control over how your money is invested

3)      Improved fund security

 

As well as setting up an investment strategy for your SMSF, the following steps must be performed:

1)      Check the residency of your fund

2)      Create your trust deed

3)      Determine the structure of your fund.

4)      Appoint your trustees

5)      Register with the ATO

6)      Open a bank account for your fund.

The Sole Purposes Test is an additional and essential step to creating your SMSF. This test requires that the sole purpose of the SMSF is to provide its members or if the member dies before retirement the member’s dependents or beneficiaries with retirement benefits.

If you are nearing retirement age you may have heard of the concept of Transition to Retirement. Transition to Retirement allows senior members of the workforce to access funds from their superannuation whilst they are still working.

 

To be eligible for Transition to Retirement, you must have reached the preservation age. Preservation age varies depending on which year you were born.

 

 

Date of Birth

Preservation age

Before 1 July 1960

55

1 July 1960 – 30 June 1961

56

1 July 1961 – 30 June 1962

57

1 July 1962 – 30 June 1963

58

1 July 1963 – 30 June 1964

59

After 30 June 1964

60

 

 

The benefits of embracing Transition to Retirement includes the ability A) Boost your regular wage or B) Choose to work part-time, but maintain your full-time salary by drawing on your superannuation funds to supplement the difference.

 

The ATO has created a set of rules which govern how much or how little you can withdraw from your super fund when under the age of 65. The minimum has been set at 4% of your super fund balance and the maximum being 10% of your super fund balance.

 

An additional rule governing Transition to Retirement specifies that you can only access your super as a ‘non-commutable’ income stream. This means that you can only receive your super as regular payments, rather than as a lump sum cash payment while you are still working.

 

Transition to Retirement also has many tax incentives. We recommend you discuss your individual situation with your accountant as variables can impact on the tax implications of transition to retirement.

 

 

 

 

 

In general, the following tax incentives may apply:

 

Lower-tax rate

As long as you fall within the current contribution cap, salary sacrifice contributions made to your super fund are taxed at the reduced rate of 15%.
Age tax concessions

Individuals aged between 60 and their preservation age may be eligible to receive a 15% tax offset on the taxable part of your income.

Tax-free Income

Upon your 60th birthday, your transition to retirement super income becomes tax free.

 

Tax-free investment earnings

Instead of being taxed at 15%, the earnings made by the assets backed by your transition to retirement income are in fact tax free.

It is important to do your homework when selecting a Superannuation Fund. There are many factors to consider when making your decision, not just the fees. As Superannuation is Australia’s chosen vehicle for retirement savings, making the wrong choice can have adverse consequences in the future. There are 5 main types of superannuation funds available these include: Industry funds, corporate funds, retail funds, public sector funds and lastly self managed funds. Additional points to consider when selecting your fund of choice include: 1) The performance of the super fund 2) Available investment options 3) Fees 4) Insurance options available within the super fund and 5) Services and business strengths on offer. 

Just as personal situations change, so should your Super. This means that the investment strategies selected when you first entered the workforce will require updating as you age and enter different stages in life.

When analysing what is the best and most suited superannuation strategy for you, consider the following two factors 1) Your individual risk profile and 2) The length of time you're investing. In other words, would you prefer to select safer, more conservative investment strategy or one with greater return potential, but higher risk? Level of risk is directly related to when you wish to retire. If retirement is decades away, then you can afford to take greater risk as you have more time in which to recover.

A great way to ensure your investment strategy matches your stage in life is to opt for a Lifestage funds. Lifestage funds evolve and change over time matching your attitude to risk with an appropriate investment strategy. For this reason, Lifestage funds adopt a greater level of risk and are more growth-oriented when you are young and change to a more conservative asset mix as you steer closer towards retirement age.

Whether you’re new to the workforce or simply considering a change in your superannuation fund, you need to address a number of factors to ensure you select the right find to meet your needs and retirement goals.

Here are 5 points we recommend you investigate before settling on a super fund:

1)     Fees

 

Don’t be fooled, even minor variation in fees can amount to a substantial difference years down the track. Make sure your retirement nest egg is protected from unnecessary administration costs.

 

2)     Investment options

When pondering you investment options consider the following questions.

A) The level of risk you are comfortable with.

B) The degree of involvement in your superannuation you would like.

3)     Investment performance

As Superannuation is a long term investment that is dependent on a range of variables such as investment options, insurance benefits and fees it is important you consider the big picture.

4)     Additional benefits

Many people are surprised to learn that you can combine your superannuation with your insurance. This equates to no out of pocket expense for insurance as your premiums come straight out of your superannuation account. Additional benefits of structuring your insurance in this manner include less paperwork to worry about, tax effectiveness and the ability to purchase insurance as a cheaper rate due to the bulk buying power of Super funds.

5)     Account access and customer service

Ensure you select a fund that provides good customer service and enables you to easily access your account.

Why should I consolidate my Superannuation Accounts?

It will make a larger difference to your superannuation account balance then you may initially think. Not only will you be reducing your fees being paid out of each of your accounts, you can keep track of your money easier with only one statement for your one superannuation account. If you are one of the many Australian’s that each quarter end up with multitudes of envelopes you may be paying more fees than you are aware of, and all this is eating into your retirement!

 

You could have superannuation that you didn’t know about or had completely forgotten about. It is estimated that Australian employees have approximately $18.8 billion in missing superannuation monies. It is worth searching for these missing accounts and consolidating them to your one active account.

 

The comparison seems rather compelling, lower fees, more funds in your account. But is this really the big picture? Industry and retail finds offer different services and price structures.

 

Industry funds are associated with low costs, limited investment options and no adviser commissions. Where retail funds are generally more comprehensive and provide multiple products with greater investment options. However some retail funds have now introduced low-cost products that are the same price or even cheaper than some industry funds and offer extra benefits such as personal insurance.

 

So how do they really compare? Make sure you do your research and consider the investment options, available insurance, fund performance, fees and other services including member benefits   or speak to a financial planner in regards to your needs and financial situation.

Because your superannuation (and any life insurance attached to it) is generally not covered in your will you will need to ensure you have nominated a beneficiary who you want your superannuation to be paid to in the event of your death.

 

A nominated beneficiary is a person (or persons) whom a fund member nominates to receive the super if the member dies. This can be any person in an interdependent relationship with you or who is financially dependent on you at the time of your death. This includes your spouse – including defactos and same sex partners, your children – of any age or the legal representative of your estate. If your beneficiaries are nominated correctly, benefits paid are usually tax-free.

 

To find out more about nominating or updating your beneficiary you should contact your super fund.

Your employer can tell you if they offer salary sacrifice arrangements and what you must do to arrange this. Your employer may charge an administration fee to implement salary sacrifice arrangements.

 

If you make super contributions under an effective salary sacrifice arrangement, there may be benefits for both you and your employer. Super contributions are not a fringe benefit, this means if salary sacrificed super contributions are made to a complying super fund, and the sacrificed amount is not considered a fringe benefit for tax purposes your employer will not be liable to pay fringe benefits tax (FBT) on the super contributions or need to include your super contributions as a reportable fringe benefit amount on your payment summary. Salary sacrificed contributions are treated as employer contributions. Super contributions are deductible for your employer and salary sacrifice reduces your assessable income. The sacrificed component of your total salary package is not your assessable income for taxation purposes. This means that it is not subject to pay as you go (PAYG) withholding tax. As you influence the amount of the extra super contributions your employer makes to your super fund, any salary sacrificed amounts will be reportable employer super contributions. If you make super contributions through a salary sacrifice agreement, these contributions are taxed in the super fund at a maximum rate of 15%. Generally, this amount of tax is less than what you would pay if you did not enter into a salary sacrifice agreement and instead were subject to PAYG withholding tax on your earnings. However, it is important to remember the concessional tax treatment is limited to a set amount of contributions made each income year.

With the current economic issues and heavy share market losses more and more people are turning to property investment through their self-managed super funds. A change in legislation a few years ago opened the door for many to invest in bricks and mortar through their super, even allowing funds to be borrowed through their SMSF to purchase property assets.

 

Direct superannuation investment in property has traditionally been restricted to those with massive super balances, but provided that the average super balance in Australia in less than $50,000 there was no chance of investing in property without having to borrow, until recently that is. A SMSF now has the ability to borrow approximately 70% of the property value.

 

Purchasing property within super is becoming a huge positive, mainly due to the potential tax benefits, some cases resulting in no capital gains tax. 

 

As with all investment opportunities, you should seek financial advice for your personal situation.


Super Search operates Australia wide to take the hard work out of finding, comparing and consolidating your Superannuation.

we are a non-institution owned company. Our team of advisers are fully qualified and up to date with the latest industry products and services to ensure your retirement savings are back on track and you are back in control of your wealth.

Superannuation is a long term savings vehicle which aims to provide for you in retirement. While many older Australians receive and rely on the Age Pension, this alone is insufficient to provide for a comfortable retirement.

If you earn more than $450 per month and are aged between 18 – 70 years of age, you are legally entitled to regular and ongoing super contributions equal to 9.5% of your regular earnings.  If you wish to accelerate the growth of your Super, you may choose to make additional, voluntary payments.

Once you reach retirement age, the amount of income received will depend on the sum of contributions paid, the way in which your money has been managed as well as the fees attached to your super fund.

The earlier you take an interest in your Superannuation, the greater your financial reward come retirement time.

Statistics show most Australians have more than 4 Super accounts. Whilst in theory, most of us would like to consolidate our funds and make the most of our money; many of us never get around to doing it. By ignoring lost Super and failing to consolidate our accounts, we are essentially throwing away our hard earned cash.

A staggering amount of rules and regulations govern Superannuation in Australia. Our job at Super Search is to make Super simple. With our help, you will easily find and roll all of your accounts into one easy to manage fund. Remember - a dollar saved on fees is an extra dollar towards your retirement.