# ING Living Super - Safety of Cash + Term Deposits to extreme events?



## daffyd23 (12 April 2013)

I've been considering ING Living Super for when I get to a point in life where I want to reduce risk.  In particular, rolling Term Deposits appear reasonable for someone who cannot justify the expense of a SMSF, without the direct risk of bond price falls in a pooled fund as interest rates rise.

But I noticed that the although the general FAQs on their website note the government guarantee: http://ingdirect.com.au/about_us/faq/general_faqs.htm

The PDS notes: 
"An investment in ING DIRECT Living Super is neither a deposit nor liability of ING Bank (Australia) Limited or any of its related corporations and none of them stands behind or guarantees the Fund."

So I'm wondering if Cash+Term Deposits are invested in ING Australia (my assumption, since that would be easiest to manage at their end in terms of match assets - Australian Mortgages - and liabilities)?  And how ring-fenced that investment would be to trouble within the European Parent (keep in mind ING is still A-rated so relatively safe compared to parts of Europe)?

Would it be safer to focus on Australian banks and/or diversify? e.g. Colonial have a fee-free product if you invest in CBA term-deposits, AustralianSuper let you invest in term deposits with mebank and NAB through their MemberDirect subscription, etc.

Appreciate any thoughts and discussion.


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## sydboy007 (13 April 2013)

daffyd23 said:


> I've been considering ING Living Super for when I get to a point in life where I want to reduce risk.  In particular, rolling Term Deposits appear reasonable for someone who cannot justify the expense of a SMSF, without the direct risk of bond price falls in a pooled fund as interest rates rise.
> 
> But I noticed that the although the general FAQs on their website note the government guarantee: http://ingdirect.com.au/about_us/faq/general_faqs.htm
> 
> ...




While TDs and cash will protect you, fixed interest bonds would provide even better protection.

That's because if things go to poo and interest rates fall further, the price of a bond will increase so as to provide the lower rate of return.  In the process you can make a capital gain on the bond.

The reverse will occur when interest rates eventually go back up, but looking at the US, Japan, and probably EU soon, the printing presses are going 25/7 and it doesn't look like they'll be slowing down any time soon.

I suggest checking out FIIG securities.  They have an informative newsletter, and I have found their staff to be quite knowledgeable without the pressurised selling techniques that a lot in the financial industry apply.


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## So_Cynical (13 April 2013)

We had a bit of a discussion about ING in another thread a while back.

https://www.aussiestockforums.com/forums/showthread.php?t=25962


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## Julia (13 April 2013)

daffyd23 said:


> I've been considering ING Living Super for when I get to a point in life where I want to reduce risk.  In particular, rolling Term Deposits appear reasonable for someone who cannot justify the expense of a SMSF



One would imagine that when you've reached the point in life where you want to reduce risk, as you describe above, you'd have a Super balance which could justify the now minimal expense involved in setting up a SMSF.
Esuperfund seem to do set up plus tax return for a very inexpensive amount.
Then you'd have complete control over where to invest your money.  

I haven't looked into the ING product you mention but it seems a bit silly to me to pay fees to some organisation just to  have them move money from one TD to another.  I don't know, but I'd be surprised if they didn't receive some sort of commission from banks whose TDs they use, focusing more on self interest than what's best for you.
Instead you could just keep an eye on http://www.infochoice.com.au and make your own decisions without some middle person.


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## Bill M (1 May 2013)

daffyd23 said:


> So I'm wondering if Cash+Term Deposits are invested in ING Australia (my assumption, since that would be easiest to manage at their end in terms of match assets - Australian Mortgages - and liabilities)?  *And how ring-fenced that investment would be to trouble within the European Parent* (keep in mind ING is still A-rated so relatively safe compared to parts of Europe)?
> 
> Would it be safer to focus on Australian banks and/or diversify? e.g. Colonial have a fee-free product if you invest in CBA term-deposits, AustralianSuper let you invest in term deposits with mebank and NAB through their MemberDirect subscription, etc.
> 
> Appreciate any thoughts and discussion.




I have just opened up an ING Living Super account and now I am having second thoughts about it. I wanted to know that if I had 250K in my account invested in cash and term deposits would I be covered for 250K by the Government Guarantee? I had the question answered by email as follows.

---
_*In Living Super, investments the Cash Hub and Term Deposits are pooled and held in the name of the Trustee of the Fund. As such these investments are covered by Government guarantee to a maximum of $250,000 across all of these accounts. The guarantee does not apply specifically to any individual account within the Fund.*_
---

After that reply I was still unsure if my 250K in Living Super would be covered so I simply asked if my personal account would be covered or not and this was the reply.

---
_*The Trustee of ING Direct Living Super is given the $250,000 Government Guarantee to cover all members. So if there was a need for the Government Guarantee to be used, it would be divided across all members of the fund. The whole amount of $250,000 is not for each individual member.*_
---

"Divided across all members". Oh my goodness, there could be thousands of members with $ Billions on deposit and the Government Guarantee "would be divided across all members"? If ING was to collapse you could basically lose all of your capital.

This is something to be aware of, your personal account is not covered by the Government Guarantee, is that right? Why would a term deposit not be covered in full? Am I missing something? Wouldn't all managed super accounts be the same then? In effect if a super provider goes bust you could lose all your money even though it is in cash. 




Julia said:


> I haven't looked into the ING product you mention but it seems a bit silly to me to pay fees to some organisation just to  have them move money from one TD to another.  I don't know, but I'd be surprised if they didn't receive some sort of commission from banks whose TDs they use, focusing more on self interest than what's best for you.




ING Living Super has it's own cash and term deposits and if you invest in them there are no fees. All I wanted was a term deposit without management fees and that is why I took up this product.


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## FlyingFox (1 May 2013)

Hi Bill,

I think it is because the Guarantee is at the account level, up to a maximum of 250K per account. Since there is only one theoretical account, that of the trustee , as such for the product, there is only one guarantee. That is what I gather from the emails.

Makes sense. I think it is the same for all super because your money gets pooled and your returns computed from the pools. It's not like they go and change a TD for me when I want to move to bonds etc ....

Cheers


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