What are you doing with your superannuation?

[nizar]

If you can aim for the wisdom of a 60plus by the time you are 40 you will have it made.

Will that's the aim, and where I hope my edge will lie compared to the masses. By the time Im 40 I would have had about 20years experience in the markets.

Thanks for your thoughts.

 

[tech/a]

A really important topic for all regardless of age.

Firstly I think it imperative that you have a SMSF if you have a fair size nest egg.
I also think it very important to have the right management of the fund in terms of its use and flexibility. Having sat through a 4 hr meeting recently with My CPA,I'm simply gob smacked at how their clever use of the SMSF in conjunction with other investments,trusts etc can give you massive return from not only tax saving but also from distribution of funds (One of us is 55)
to diminish gearing elsewhere in un related investments.

Ultimately the combination of "Smarts" which we are all continually working on and Professional help--when self managed,can and does have a tremendous effect on our returns.

So I applaud anyone who has progressed to self management.

 

[xyzedarteerf]

i have added just under 20k since starting on SMSF on Jan 08 so no complaints here. like most I should have done this years ago, im still in my 30's.

 

[MRC & Co]

I recently merged my superannuation accounts (3 of them), to diminish fees.

However, I found out my PSS superannuation cannot be merged due to some legal technicality. Anybody know a anything about this? I argued it, but got nowhere. Sounds rediculous to me to HAVE to pay 2 sets of fees and eventually, as it is a small amount (only several grand), it will be eaten up by fees and end up worthless!

In regards to the question, I have allocated nearly all my superannuation (as small as it is), towards high growth investments, being only 25, volatility is not a big deal to me, so I assume (at least based on historical trends), the high growth option would generate higher average returns over the longer term.

 

[fourth]

I took control of my super about march last year. Initially, that was just using the AMP website to move 100% in to Macquarie Small Caps. Once sub prime start messing with the markets I moved the balance in to cash and setup a SMSF and managed to avoid too much of a hit. I was relatively lucky with the timing of my exit from the markets. I also used supertrace to 'find' a 30% increase.

A few minutes ago I was screening small cap miners. My theory is, even if I lose money, it'd be money the fund manager would have lost anyway, and I buy training in the process.

So far, the SMSF is at 270% of what it was at the beginning of last year (I can not attribute much of that increase to my trading just moving in and out of the market at the right time + supertrace's bonus).

To anyone who thinks SMSF's are a waste of time, ask yourself. Which money can you afford to lose training up? A chunk of your super or your home deposit?

 

[bvbfan]

I recently merged my superannuation accounts (3 of them), to diminish fees.

However, I found out my PSS superannuation cannot be merged due to some legal technicality. Anybody know a anything about this? I argued it, but got nowhere. Sounds rediculous to me to HAVE to pay 2 sets of fees and eventually, as it is a small amount (only several grand), it will be eaten up by fees and end up worthless!

Technically the PSS don't pay fees, as the fees are paid from earnings prior to being declared and credited to your fund. (if i remember correctly)

 

[MRC & Co]

Technically the PSS don't pay fees, as the fees are paid from earnings prior to being declared and credited to your fund. (if i remember correctly)

Yeh, they told me that too, but isn't that the same difference to my bottom line?

Instead of paying fees, you just gain a smaller % return?

 

[bvbfan]

Yes and yes....but if earnings are nothing then do they get paid the fee?

Hmmm

There are only 7 funds to transfer into so it's pretty much locked to them.

Sorry can't remember (but don't think) there is any way to get PSS to PSSap which could then be transferred.

 

[MRC & Co]

Yes and yes....but if earnings are nothing then do they get paid the fee?

Hmmm

There are only 7 funds to transfer into so it's pretty much locked to them.

Sorry can't remember (but don't think) there is any way to get PSS to PSSap which could then be transferred.

Yes, good question, not sure if it's meant to be rhetorical.......

Ah well, it's only a small sum anyways, most of mine is with the other fund now. No way I would transfer them all to PSS either, doesn't compare with some of the others like AGEST as far as my research led me to believe.

When you leave for the game BVB, just doing a daytrip?

Thanks anyways champ.

 

[brianwh]

I am investigating the implications of moving from a wrap account organised through a FP to a SMSF - but timing is the dilemma. To make the move I have sell down the Funds the FP has put me in (they are mainly with Dimensional Funds which can only be accessed through a FP licensed to Dimensional and then through a Wrap Account) which would mean crystallising losses. This doesn't seem a very good strategy but paying more than 1% of the value of assets under mangement for this arrangement and then seeing some of these funds exceed benchmark losses is a bit hard to tolerate. And of course the funds themselves are taking their fees as well.

At this stage, as I am an allocated pension phase I will probably take the conservative approach and wait until there are more positive signs both here and abroad. But I'm not happy.

Would appreciate any thoughts. I am sure I am not the only one in this predicament.

 

[Julia]

There have been hints here and there in the media recently about the government wanting access to superannuation funds.

They need money for infrastructure into the future.

Here is an article by Alan Fels on the possibility of long dated bonds which effectively provide a guaranteed pension.

Doesn't sound like a bad idea for some people. I'd be interested to know what people think.

http://business.smh.com.au/business...d-pension-incomes-for-sale-20090529-bqbx.html

 

[Miner]

I am yet to be able to access my Super and hoping government will not put any inhibitor to access it.

With that assumption my plan is to part of my super to pay off my mortgage and becoming a true debt free person.

 

[prawn_86]

Im young and i dont trust the gov to keep the rules the same so that in 40 years time i will still have access to all, or any, of my super.

For that reason i dont salary sacrifice, co-contribute etc etc. I would rather have the moeny where i can access it, as opposed to locked away for 40 years and no assurance of being able to access it when that time comes.

 

[BradK]

There have been hints here and there in the media recently about the government wanting access to superannuation funds.

They need money for infrastructure into the future.

Here is an article by Alan Fels on the possibility of long dated bonds which effectively provide a guaranteed pension.

Doesn't sound like a bad idea for some people. I'd be interested to know what people think.

http://business.smh.com.au/business...d-pension-incomes-for-sale-20090529-bqbx.html

As a teacher, I'm amazed about the super schemes of some of the old chalkies. Some of the casuals that come through here have a 80% of their income indexed type scheme that passes to their spouse on death - and they pick up one or two days per week casual at $300 per pop. Great stuff.

Ross Gittins wrote an article once about how the risk of super has shifted from the company/ government to the worker through the superannuation scheme.

I know guys around here who also wanted to retire in two years time, who now, because of the last two years have to wait another 5, 6 or 7 years.

I also see guys who have retired, blown their super accounts in a divorce settlement and are back at school working well beyond their 60s and no joy on the horizon.

If anything, seeing all of these cases makes me realise that setting yourself up for retirement is extremely important. The 80% case study above just got back from three weeks in Hawaii and just loves being around the kids saying it makes him feel young. His wife is always in at the school volunteering for this and that.


So, Julia - how do I go about 'buying' an indexed pension for life at 60% of my pre-retirement income which will pass to my wife on death? Can I pay it off over the next 30 years? Is this what Mr Rudd is driving at? If he is, count me in!

Or is it better drip feeding $100 per week into QBE, BHP, WOW and RIO for the rest of my life and leaving it there? Unless in 2039 we have a 2008 type event?

Cheers
Brad

 

[jono1887]

Im young and i dont trust the gov to keep the rules the same so that in 40 years time i will still have access to all, or any, of my super.

For that reason i dont salary sacrifice, co-contribute etc etc. I would rather have the moeny where i can access it, as opposed to locked away for 40 years and no assurance of being able to access it when that time comes.

same here.. considering ill have almost 50 years til ill even reach the age where the money is accessable, i could get hit with a few surprises when its time to get it out. The best option would be to save it on your own and forget about the tax concessions that you get with super. Its too high of a risk making voluntary contributions at our age.

 

[Bill M]

Im young and i dont trust the gov to keep the rules the same so that in 40 years time i will still have access to all, or any, of my super.

For that reason i dont salary sacrifice, co-contribute etc etc. I would rather have the moeny where i can access it, as opposed to locked away for 40 years and no assurance of being able to access it when that time comes.

Hello Prawn, I fully understand this sentiment and I wouldn't trust the government in your case either. Back in the late 80's early 90's everyone was pushing super, they went to great lengths to tell you why you should put in as much as you can. They said the more you put in the bigger the package and then you can retire at 55 years and live happily ever after. Then you know what they did? They government of the day at the stroke of a pen upped the preservation age from 55 y/o to 60 y/o. That kicked in if you were born after July 1960. For those that were promised that big retirement at 55 it now all of a sudden will not happen, they were lied to and now they must work until 60.

The only reason I am putting in a bit of money into super now is to minimise my tax and also I am not far from getting that money. I have less chances being stuffed up by the government. But who knows what the pollies will do next, I like you do not trust them.

 

[Smurf1976]

Im young and i dont trust the gov to keep the rules the same so that in 40 years time i will still have access to all, or any, of my super.

For that reason i dont salary sacrifice, co-contribute etc etc. I would rather have the moeny where i can access it, as opposed to locked away for 40 years and no assurance of being able to access it when that time comes.

Likewise. I've only ever had the compulsory employer contribution and I don't intend ever contributing any of my own funds simply because I just don't trust government - they could raise the preservation age to 100 just like that if they wanted to.

 

[Krusty the Klown]

On average, there has been one change to the superannuation rules every week since 1992. So you can bet my big fat klown behind the rules will keep changing way in to the future. It's an ever evolving animal.

The biggest impact I can foresee is tax on the way out. Currently its tax free over 60, but now we are going in to a budget deficit and the tax base is shrinking. It might take 10 or 20 years, but I can see the tax on the way out starting gradually and then increasing over time.

 

[nathanblack]

considering i want early retirement(very early) i wont be able to touch my super for many years. i sometimes make addition contributions(at some point i'll get it and its worth it), but id rather sacrifice the tax advantage to access the money now. i keep as much capital available not in super or SMSF, i dont want to be bound by what i can invest in or when i can draw down and for what purpose.

anyone planning for early retirement must have there own funds, preferable not just equity in there home. obviously you only need money to survive from early retirement until actual retirement age, you can then access super.

as the age keeps getting pushed up i would assume most people are planning early retirement , even if only a few years.

 

[Julia]

On average, there has been one change to the superannuation rules every week since 1992. So you can bet my big fat klown behind the rules will keep changing way in to the future. It's an ever evolving animal.

The biggest impact I can foresee is tax on the way out. Currently its tax free over 60, but now we are going in to a budget deficit and the tax base is shrinking. It might take 10 or 20 years, but I can see the tax on the way out starting gradually and then increasing over time.

Yes, I agree that taxing income in the pension phase is probably going to happen. Initially I'd guess they'd introduce a tax on amounts over $x p.a., then it will creep lower. I hope I'm wrong.

Ross Gittins wrote an article once about how the risk of super has shifted from the company/ government to the worker through the superannuation scheme.

Unless, of course, you're a politician. Then all the risk falls back to the tax payer, given that the pollies' super is a defined benefit scheme which gathers a 15% contribution from the loyal taxpayers, and guarantees the amount paid as a pension. Grrr!

So, Julia - how do I go about 'buying' an indexed pension for life at 60% of my pre-retirement income which will pass to my wife on death? Can I pay it off over the next 30 years? Is this what Mr Rudd is driving at? If he is, count me in!

Brad, I only skimmed the article before posting it but that was what I gathered was being offered. We don't, of course, know the 'purchase terms' of such a pension, but I'd think any income stream which is government guaranteed is going to be pretty popular.

I have a small lifetime annuity through Challenger. It's fine, but if the same were available from the government, then you'd have to consider that safer than through any private company.

Or is it better drip feeding $100 per week into QBE, BHP, WOW and RIO for the rest of my life and leaving it there? Unless in 2039 we have a 2008 type event?

Well, of course the attraction of putting those same investment dollars into those same companies via Super is the tax advantage.

But if I were the age of Prawn and Jono I'd definitely be prepared to sacrifice that tax advantage for the benefit of remaining in control of my funds, as they've both indicated.

As a policy I completely agree with the compulsory super because a huge number of people would otherwise fail to save anything towards their retirement, but for young people there is just too much history of governments behaving badly to put in any more than the required amount.