Not entirely true.
A friend of mine took out the maximum $20k allowed and used it to trade the market. Current balance is $26k. That is a 30% return in 11 months, far better than the super fund would have provided.
Superannuation, the ultimate government cash cow?
- Thread starter drsmith
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Not entirely true.
A friend of mine took out the maximum $20k allowed and used it to trade the market. Current balance is $26k. That is a 30% return in 11 months, far better than the super fund would have provided.
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Same happened with a friend her niece who is in her 20's pulled out some super and bought NAB at around $15, so it isn't all doom and gloom.
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Just a guess, you were providing your daughter food and accomodation, maybe even a car, paying her internet and power and maybe even uni fees.
Not a criticism, did / doing exactly the same for my son, but not exactly a 25y old living pay check to pay check i was talking about is it?
You see my point.
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Wouldn't it be great if she could take the $300k, pay the house off and then contribute some of the house payment into her super?
Then she could look at the next move up the housing ladder.
What the...?
Must be kind to those who went to cash and only realising they may have goofed it and now, re-entering after reasonable gains have occurred and having consumed a portion of investible capital, can buy less than previously held so need to eek out a meager existence. Sarcasm, roll of eyes and all the rest.
Must be kind to those who went to cash and only realising they may have goofed it and now, re-entering after reasonable gains have occurred and having consumed a portion of investible capital, can buy less than previously held so need to eek out a meager existence. Sarcasm, roll of eyes and all the rest.
While many probably had to do that and some who didn't need to did, they must be gnashing their teeth at the returns from last FY. The FP sent me a quick snap shot at EoFY for the SMSF and it returned 36% (I'm sure other funds did better than that but I'm OK with it.) The best performers were MLT (no surprise there) at 54% and MIR at 62%. Even sleepy WHF cracked 44%. Having said that this FY it'll all be reversed of course!
Dona Ferentes
A little bit OC⚡DC
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if not reversed, then reversion to the mean?
Assume your return calculation is Internal Rate of Return? XPlan can crank out those numbers pretty easily. It has been a good year, but they always say it is in for the long term. I also have a SMSF, (barbell of LICs and speccies, plus IABs) and got the following numbers :
12 mths ... 40.4% incl franking or 39.1% without;
3 years ..... 16.2%pa,
5 years ..... 11.9%pa,
10 years ... 13.6%pa,
Since inception... 9.8%pa (set up 2006 so that includes the GFC)
I honestly don't know what product the firm uses. You've done well with those numbers.
My late wife and I set up our SMSF in 1998 and transferred in specie a bunch of share holdings plus cash to use as much as we could of the concessional and non-consessional limits available at the time (very generous ones too I thought.) I just had a glance at the end of the report and it is indicated a return of 13% pa over that period. Not sure how that is calculated but now my curiosity it piqued I'll make further inquiries later this month at a meet up.
My late wife and I set up our SMSF in 1998 and transferred in specie a bunch of share holdings plus cash to use as much as we could of the concessional and non-consessional limits available at the time (very generous ones too I thought.) I just had a glance at the end of the report and it is indicated a return of 13% pa over that period. Not sure how that is calculated but now my curiosity it piqued I'll make further inquiries later this month at a meet up.
Our biggest Industry fund, the $200 Billion AustralianSuper returned a record 20.4% to its members for 2020-21.
Its flagship fund, the "Balanced" option , has now returned 9.73% p.a. over 10 years, roughly the same return as the similar sized Sunsuper's "Balanced" fund.
AustralianSuper's CIO says it's looking to reduce its fixed income exposure for the coming fiscal year.
Listed equities comprise 58% of its asset mix. International equities 32% .The rest is in infrastructure, fixed income, property and private equity.
Its flagship fund, the "Balanced" option , has now returned 9.73% p.a. over 10 years, roughly the same return as the similar sized Sunsuper's "Balanced" fund.
AustralianSuper's CIO says it's looking to reduce its fixed income exposure for the coming fiscal year.
Listed equities comprise 58% of its asset mix. International equities 32% .The rest is in infrastructure, fixed income, property and private equity.
Dona Ferentes
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Now, it is the definition of Balanced that will determine actual numbers for different funds
Sunsuper's so called "balanced" fund has been queried for that very reason. More growth stocks in it, than is usual for a more neutral investing approach. Not the only super fund stretching the term a fair bit, either!
Some thing else. Almost 10% of complaints to the Australian Financial Complaints Authority in the past year, relate to super funds (Four times as many as the life insurers ) ,regarding delays in handling life insurance claims, followed by outright denial of the claim ! Industry Funds, even the big ones, aren't pure, either. ASIC has taken AWARE SUPER to court over its $ 100 million fees for no service; REST SUPER for trying to stop members transferring to a better performing fund and STATEMENT SUPER was sued for charging members life insurance premiums despite saying it would not.
The corporate cop is even looking further into the Industry Funds big, AustralianSuper automatically signing up members to its on-line, leftie, news-rag "The News Daily".
Some thing else. Almost 10% of complaints to the Australian Financial Complaints Authority in the past year, relate to super funds (Four times as many as the life insurers ) ,regarding delays in handling life insurance claims, followed by outright denial of the claim ! Industry Funds, even the big ones, aren't pure, either. ASIC has taken AWARE SUPER to court over its $ 100 million fees for no service; REST SUPER for trying to stop members transferring to a better performing fund and STATEMENT SUPER was sued for charging members life insurance premiums despite saying it would not.
The corporate cop is even looking further into the Industry Funds big, AustralianSuper automatically signing up members to its on-line, leftie, news-rag "The News Daily".
Astonishing figures in today's AFR for the top SMSF's. From the ATO's files, there are currently 6,000 of them with more than $5 Million in assets. 500 of those are over this threshold. Way over! The numero uno SMSF, had a 30th June 2019 valuation of more than $1/2 Billion.
This big daddy only has to compound at a modest 8% p.a. for it to be worth $ 1 TRILLION, just before the end of this decade. Perhaps the only consolation for poor folks on welfare or workers, suddenly back on Jobseeker, is that these worthy individuals will be dead in 20-30 years and their lightly taxed savings will have to come out of the superannuation system. It will then get to be (properly) taxed at the heirs' marginal rate.
One of the unspoken reasons for the demise of Malcom Turnbull, within his eastern suburbs constituency, was his successful pursuit of super rorts from the Howard-Costello era. From 1st July 2017, it was deemed $ 1.6 Mill (now 1.7) tax free super ought to be enough for most fair minded Australians for their retirement.....It seems there's still more work to be done.
This big daddy only has to compound at a modest 8% p.a. for it to be worth $ 1 TRILLION, just before the end of this decade. Perhaps the only consolation for poor folks on welfare or workers, suddenly back on Jobseeker, is that these worthy individuals will be dead in 20-30 years and their lightly taxed savings will have to come out of the superannuation system. It will then get to be (properly) taxed at the heirs' marginal rate.
One of the unspoken reasons for the demise of Malcom Turnbull, within his eastern suburbs constituency, was his successful pursuit of super rorts from the Howard-Costello era. From 1st July 2017, it was deemed $ 1.6 Mill (now 1.7) tax free super ought to be enough for most fair minded Australians for their retirement.....It seems there's still more work to be done.
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One of the misunderstandings about SMSF is the taxation regime.
I have been managing our family SMSF for over 25 years, but unfortunately do not figure in any of the tables for the biggest funds.
Under current rules, an SMSF can have a max of 6 family members, and all members contributions, earnings distributions, pensions etc will be taxed differently.
Once a member of an SMSF reaches 65 or whatever the deemed age is for younger people, a minimum of 5% of the super fund must be taken in a pension. As the member ages, this percentage increases every 5 years up to a maximum of 14% if the lucky bugger manages to reach 95!.
So, at some point in time, the beneficiary has to start taking out a minimum pension. In the case of the person with the half bill fund (assuming it is a single member), they would have to take out 25 million pension on reaching 65, and 25 mill next year etc etc. These triggering events create issues for cash flow, as sometimes hard assets need to be sold out to provide the cash for a large pension payout.
What they then do with the money will of course most likely attract some sort of tax, either as CGT, stamp duty, GST etc depending on how they invest it. Even just letting sit in the back would attract considerable income and thus likely maximum tax rate.
Given that there is a limit of 1.8 mill on concessional member contributions, it is unlikely that really large SMSF's will continue to be created, apart from the ones already in existence.
Mick
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That is all a bit vague, from my understanding the only amount that is tax free, is the component that is in pension phase.
That amount is capped initially at $1.6m, anything above that has to be left in the accumulation phase, where it is taxed at 15%.
I'm not sure the 500 will get away with having excessive amounts in super, it is constantly getting tweaked as more people get larger sums in there, initially it had to be made attractive so that the plebs accepted saving to pay their own pensions.
As for super rorts, one of the biggest was the pollies super, which gave them an indexed tax free pension for life, that could be accessed as soon as they quit politics.
The real consolation for the poor folks on welfare IMO, is they aren't taxed on it, except for gst and smoking, alcohol and petrol excise .
https://www.news.com.au/finance/wor...t/news-story/bd7255c7ea86b9497046372bdffb9c80
From the article:
However, we do know Mr Turnbull’s annual pension will not be as hefty as his predecessors’, thanks to a change to the superannuation scheme for members of parliament introduced under the Howard Government.
In 2004, John Howard created the Parliamentary Superannuation Bill, which stipulated that those who entered after that year would be subjected to a standard superannuation scheme.
Those who entered parliament before 2004 would still receive the six-figure pension sum of the old model upon retiring.
In 2015 following his ousting, Fairfax determined Tony Abbott would slide away with an annual pension of $307,542.
The Daily Telegraph reported Mr Howard, Julia Gillard and Kevin Rudd are enjoying more than $200,000 a year in pensions and perks, while Paul Keating is pocketing around $140,000 a year — not including their estimated extra $300,000 to maintain a staffed office and travel costs.
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over9k
So I didn't tell my wife, but I...
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I'm no finance/tax lawyer but I bet they've got it pretty well figured out, even if it's just running on grandfathered rules.
Not all of it. Depends on how much was contributed tax free, including the generous $1m contribution (each) allowable in 2007 I think, and the $148k pa (each). While the earnings above the $1.6m balance cap (each) or so may be taxed those amounts are still tax free when withdrawn. That's my understanding anyway.
Forgot to say that superannuation does not form part of your estate. You can arrange for it, via a BDBN, to be payable to your Executor and there will be a superannuation death benefits proceeds sub-trusts in wills. This means the funds can be directed to those accordingly to minimze their after-tax bill. Even smaller amounts can be achieve a saving. Seen a couple of cases, based on $300k or so each where a beneficiary has saved, for want of a better word, over $36k in tax. Then there are establishing Trusts, bucket companies, etc.
All quite legal. Hey, it may not seem great but like most who take advantage of tax breaks, offesting interest against income and stuff like that, these bigger dudes are in general doing exactly the same. Just the amounts involved seem to upset some.
over9k
So I didn't tell my wife, but I...
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There's also testamentary trusts to throw another factor in.
Like I said, they'll have it figured out.
Like I said, they'll have it figured out.
Yeah. And, especially where a TT is in place, a clause can be inserted to gift the share held by a Corporate trustee for fixed and non-fixed trusts to the executor. That effectively hand control over to the executor.
I've used tax breaks, where allowed, all my investing life (refund of excess franking credits is a tax break). After my wife's death her superanuation was paid out to me as required. I immeadiately, on advice, used the three year bring forward rule to recontribute $540k as a tax free non-concessional contribution. That tax free component is still in the SMSF. And what is sometimes forgotton is if you have qualified under the preservation rules, you can take as much as you like out of the fund, say a $1m. In your hands it's tax free and there is no requirement for it to be included in your personal tax return. Sure there is some numbers necessary within the funds but that's the fund not you.
Oops, got the facts wrong, again . Blinded by too many zeros. Should read half a million, not Billion ($ 544 Million to be precise ). A lot of dosh there, for just 2 people, possibly 4 under the old rules up to the start of July, this year.
Following on; Liberal MP Jason Falinski recons there should be MORE $ 100 Million SMSF's than the current 27 ! And the rules should not now be changed retrospectively .
Not much noise from Labor, yet, but the Gratten Institute is livid and shadow treasury spokesman, Jim Chalmers commented that tax concessions should be "sustainable and equitable". Fair enough. There won't be any more of these biggies, so.........
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