Superannuation
Super investments hold steady
Recent upheaval in the financial markets has half of all Australians concerned but does not have them rushing to change their superannuation investment strategy.
The Investment and Financial Services Association (IFSA) have released a Newspoll survey that shows only one in five investors have changed their financial strategy in the last three months, despite the volatility of the financial markets.
These figures show that superannuation is viewed as a long-term proposal and the recent panic has not prompted investors to rush out and change their investment strategy.
The survey conducted by Newspoll on behalf on the IFSA on 17 October, asked participants to choose from a list of four words, how they felt about the current state of the financial markets:
• 51% chose “concerned”
• 23% were “unphased”
• 20% said “optimistic
• 5% said “scared”
Respondents also understood that recovery from the financial crisis would take some time, with 65% believing it was likely to take between 12 months and three years to fully recover.
Other key findings from those between the ages of 50 and 64 who responded to the survey were:
• Those approaching retirement are more likely to see a financial planner – 35% have consulted a planner regarding their super in the last two years
• More than half of respondents between 50 and 64 had made additional voluntary super contributions
To view the complete findings of the survey, visit
the IFSA.
Super sites
We received a lot of requests for further information on our “Super funds dive” article in Tuesday’s enewsletter. Many subscribers contacted us for the best independent sites on superannuation. The following three sites may assist you to assess your funds performance, or choose an alternative.
FIDO, the ASIC consumer website offers a super fund comparison worksheet
Read a Choice article on superannuation in a volatile environment
Rainmaker/Selecting Super checklist which assists to make the best super choice
Super funds dive
The numbers are out – super funds have posted the worst ever negative returns since 1992 when compulsory super was introduced.
SuperRatings have released these comparative results which show that, of the balanced funds, the best performance came from Vision SuperSaver, which showed a (1.7%) negative return. The worst was Legg Mason corporate MasterTrust’s negative return on (15.87%). SuperRatings Managing Director, Jeff Bresnahan, described June as “the worst possible finish to an already poor year”. Test your funds returns against yearly returns in SuperRatings Top Five funds in a range of categories including balanced, growth, Australian, International funds and many more.
http://www.superratings.com.au/latest-returns.php
Super fund results
Cash investments are up but balanced and growth portfolios the worst since the introduction of compulsory super in July 1992 independent research firm, Super Ratings reports.
The results were released in a Super Fund Estimate for 2007/8, and show that whilst a balanced portfolio (held by the majority of Australians) may have achieved an 11% return over a five year period, last year saw a 6.4% loss in such portfolios. International Share Options showed a 17.3% downturn. But Managing Director, Jeff Bresnahan, thinks there is cause for optimism, with long term returns still strong, and a negative return expected, on average, every six years. Check your funds performance here.
Find your super
With more than five million unclaimed superannuation accounts reported in 2006/07, roughly one in two working Australians are losing out.
During 2006/07 managers of unclaimed superannuation sitting in Eligible Rollover Funds made $1million in fees, based on $5.65 billion remaining in ERFs. Despite increased media coverage to highlight the issue of unclaimed superannuation, the amount continues to grow year-on-year.
Calls are being made for the Government to better regulate this sector, by passing the responsibility of managing unclaimed superannuation to the ATO, or capping fee rates on ERFs. Realistically, many members of ERFs do not exist however, the money could be put to public use until claimed, rather than being wasted on fees.
Anyone who thinks they may have unclaimed superannuation should contact the ATO as a preliminary step. An amount found under $200 may be available to be taken out of the fund tax-free. Call the ATO on 13 28 65 or use their SuperSeeker search tool.
Super informed
Do you really understand how superannuation works? Can you judge your funds performance? Super Decisions is here to help.
This week the Australian Securities and Investments Commission (ASIC) launched Super Decisions, an easy to understand guide to making the most of your superannuation, featuring essential facts and tips. Our super is important to us but how many of us really understand the rules or how best to make your super work for you? With people living longer there’s never been a better time to make sure what you have will provide what you need it to. Its not just for those planning to retire, they key to achieving what you want is good planning so this would also be an ideal guide for those starting their first job and choosing their first super account.
Providing in the guide are tips such as
· judging your super fund’s performance
· choosing your investment strategy; and
· what to do when you change job
It also includes the Super Fund Comparison Worksheet, a practical tool which enables you to compare benefits, fees, insurance, investment options and services of different funds. You can request a copy of Super Decisions by calling ASIC on 1300 300 630 of visit their website, FIDO.
Super calculators
Most bank websites now include a superannuation calculator. But for an independent comparison of funds and to get an idea of how much your super will be worth one day.
The FIDO super calculator includes the latest changes, such as salary-sacrifice, co-contributions, investment options and fees. Super laws seem to be in a constant state of flux, so to work out where yours is heading, try the FIDO calculator now
Women’s super gap
ClearView Retirement Solutions is urging women over the age of 55 to look at ways to bridge the retirement savings gap through the use of pre-retirement pensions.
A recent report by the Association of Superannuation Funds of Australia (ASFA)* has found women on average will accumulate approximately half the amount of superannuation of their male counterparts ($43,000 compared to $78,700). According to ClearView, depending on individual circumstances, a ‘pre-retirement pension’ offers women who are 55 or over and still working the ability to significantly boost retirement savings without compromising present incomes.
This may be achieved by increasing the proportion of their regular income that is salary sacrificed into superannuation, while drawing a tax-advantaged income stream from their existing super, to ‘top-up’ their reduced salary. In simple terms, this can allow them to grow their super even faster, without giving up a cent of their current income. And, despite beliefs to the contrary, this approach is not just for ‘the top end of town’. This strategy can be equally valuable to those earning an average salary and with modest existing super balances. Whilst the concept of accessing your super early as a means of growing it may seem counter-intuitive, the tax treatment of superannuation and a product called a pre-retirement pension could make it possible.
If you would like to receive regular updates on relevant changes and opportunities that could affect your retirement plans, join the ClearView Retirement Outlook Program to stay up-to-date with the latest information around superannuation, tax and Centrelink. Learn more about ClearView or call 132 976
* ASFA: Why a woman can’t be more like a man – gender differences in retirement savings; November 2004. Any advice in this material is general advice only and does not take into account your individual objectives, financial situation or needs. Before acting on it, you should consider the appropriateness of it taking into account your personal circumstances.
Sue’s early super payout?
Q. I am a 56-year-old lady who has worked in nursing positions for about 40 years. Early this year, I developed short-term memory loss. If I resign from my nursing position, will I be able to collect my Q Super?
I have made visits to doctors, but no one has any suggestions or a remedy. I had some major losses in my life. My husband died in March after many years of a debilitating disease. My daughter moved away with her husband and two young children. I now have my elderly mother living with me, as her dementia is getting much worse. Can you advise me as to what I can do about my superannuation?
A. As you are over 55 and no longer working, you should be entitled to your superannuation. You need to approach Q-Super though. They will probably ask you to complete a declaration saying that you are retiring from the workforce. Be careful though, as you are not yet 60, remember that you could be up for some tax to remove your super. You should really turn your super into an allocated pension if you are leaving the workforce. You will need advice on this, so make an appointment with one of the Q-super people; they should be able to help.
If you would like to discuss this by phone. you can call me on (02) 9955 9633, email me at , or you can also have a look at my website www.stonebridgews.com.au
Richard Sheargold
Super funds hold strong
If you don’t own any direct shares, you certainly own them through your super fund. So should the stock market fluctuations give you cause for concern? SuperRatings says no.
It’s a bit of a surprise but a welcome one – significant losses in property and international and Australian shares in July did not transpire into any major decline for the average investor in balanced funds. The average decline of just 0.95% was at odds with expectations, but this could be because of the greater diversification of assets within a balanced portfolio. Also, the non-for-profit super funds have been investing in alternative or unlisted investments, which seems to have insulated them from the worst of the July downturn.
Don’t panic is the key message coming through here. The only people who need to be most concerned are those who intend to cash out their super in one lump sum. But recent tax changes are making this choice less popular. And remember, any investment can lose money over one month or one year. Being part of a super fund is no guarantee of a high return. There is a risk factor in any kind of investing. For more information on super funds, click here
Illegal super
The Australian Securities and Investments Commission (ASIC) and the Australian Tax Office (ATO) have warned people about an increase in the number of illegal superannuation schemes. If someone is offering you early access to super and it seems too good to be true, it probably is.
If you join one of these early access funds, you run the risk of losing large amounts of your savings and could even be fined for being a part of an illegal scheme.
Naturally these funds charge considerable fees in order to give you the early access, in some cases up to 30 per cent of your balance. Some operators have even stolen entire super funds. So take time to read the fine print and follow this advice from ASIC:
1. Don’t take financial advice from someone without a licence.
2. Think about superannuation as an investment for the future.
3. Seek help from a trusted source of you find yourself in financial difficulty.
For more information click here
Industry super works
SuperRatings has rated industry super funds in nine of the top ten, and eighteen of the top twenty, places for the past five years. That’s a solid performance in anyone’s bank book!
Industry super funds are now acknowledged as providing not only lower fees but also strong returns. These latest findings give weight to industry funds, which are recognised as having sound investment strategies whilst being run to profit members only.
The SuperRatings results were awarded for the ‘balanced’ superannuation option, which is where most Australians choose to invest their contributions. For more information click here
Super the most tax-effective investment for a worry-free retirement
Next to your first home purchase, superannuation is one of the most important investment decisions that you will make in their lifetime.
Statistics show that with people now living 20 or 30 years in retirement, there is a greater need to ensure sufficient funds are available to last the long haul. Statistics also show that if you take a couple aged 65, one of them has a one-in-three chance of reaching 100. That’s a lot of retirement income.
Superannuation remains one of the most tax-effective ways that you can save for a comfortable lifestyle in retirement. Generous tax benefits are available both when you contribute to super, and during retirement, which means that money invested can last years longer into retirement, longer than if it was invested in the same way outside the structure of superannuation.
InvestSMART, a discount broker of superannuation investments, have provided the @aboutseniors website with the following table which shows a number of the top performing diversified superannuation funds based on 12 months performance.
If you wish to look at any of the funds in the table below you will be taken to InvestSMART’s website where you can research this fund more, compare it with other investment options and most importantly request or download a Product Disclosure Statement.
Top Performing Super Funds
Managed Fund data is supplied by Morningstar Research and Standard & Poor’s Information Services and is subject to the following disclaimer.
Managed fund unit prices are indicative only.
Investing in Superannuation allows you to plan for a comfortable retirement by putting away a small amount every week during your working life, providing you with a benefit on retirement, in the form of a lump sum or an income stream. Click here to find out more about retirement income streams.
Considering you cannot access your super until you retire, earnings in your super fund are compounded each year, adding to the benefit you receive on retirement.
If you are looking to get your super into order the first place to start is to make sure you do not have lost super (from a previous job) or multiple funds. Latest research from ASFA – The Voice of Super has found that there is a significant deadweight cost for funds and fund members in having multiple funds.
InvestSMART is able to perform a free search to locate lost super, simply click here to access their “Find My Super” online facility.
IMPORTANT : This information has been prepared for distribution over the internet and without taking into account the investment objectives, financial situation and particular needs of any particular person. Neither InvestSMART Financial Services Pty Ltd nor www.aboutseniors.com.au makes any recommendations as to the merits of any investment opportunity referred to on www.aboutseniors.com.au or any related websites. All indications of performance returns are historical and can not be relied upon as an indicator for future performance.
© 2007 Morningstar Research Pty Ltd. All rights reserved. To the extent that the above constitutes general advice by Morningstar, this advice has been prepared by Morningstar Research Pty Ltd ABN: 83 062 096 342, AFSL: 243 161 and does not take account of your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. Please refer to Morningstar’s Financial Service Guide (FSG) for more information at www.morningstar.com.au/fsg.asp and consider the product disclosure statement before making a decision to acquire the financial product.
Super Confusion
Since choice of superannuation fund became available for most Australians on July 1, there has been a flood of promotional material about how, why and when you "should" change fund. The problem with much of the information being offered is that it may not be objective. Many "how to" guides about Super Choice are sponsored by funds with a vested interest in the reader’s choice. There is, however a truly objective, easy to follow, downloadable guide to super choice. for more information The National Information Centre on Retirement Investments (NICRI) has produced a comprehensive and easy-to-follow guide to Super choice for those seeking a completely objective overview of how choice should work.
The 17-page guide is downloadable as a PDF from the NICRI website and, as well as a what, why and when breakdown of issues associated with choice, it provides a checklist of what you need to know about a current fund, and alternative, before deciding to change. It also points you to further useful information on how to understand the fees and when you might need further financial advice.
Comparing Super Funds – Online Assistance
Australians are now able to determine which fund their superannuation contributions will go to. There will be a huge amount of information, much of it commercially based, persuading you which fund to choose. There are, however, a couple of useful first-base websites you can visit to gain an objective overview.
The Association of Super Funds Australia (ASFA) has created a new SuperGuru website which offers an easy to follow guide to super and choice. In particular the “Super Smart Planner” calculator allows you to calculate your future retirement income, allowing you to see the contributions you will need to make to reach the income level you think you will require. Also offered on the guru site is a superannuation fund fee calculator which allows users to estimate and compare cost of contributing into any given superannuation funds. Fees are a major factor in the eventual return, therefore it is useful for investors to isolate these costs, and compare them both within the fund, and with other funds. ASFA warns that costs are not the only consideration when choosing a fund. Other issues are:
- the likely number of years with a particular fund (this is especially important if you are considering an entry fee)
- the investment options offered by the fund, and whether they are relevant to you
- the type of shares, property, overseas investments, bonds, or other securities and investment that the fund buys
- the risk attached to each investment option or the investments of the fund as a whole
- the fit between the fund and the investor’s portfolio of other investment assets (diversification)
- the composition of the trustee board and fund sponsor and the investment managers used by the fund
- the fund’s track record or performance over time (higher investment fees sometimes but not always can be associated with higher returns)
- the types of services offered by the fund, including the level and frequency of reporting, member education and life and disability insurance, and whether these are important to you.
Go there
Smarter Super The Australian Bankers’ Association (ABA), the Financial Planning Association (FPA) and the Investment and Financial Services Association (IFSA) have combined to produce a free financial literacy guide – Smarter Super – Make the Most of Your Retirement.
The three associations have worked together on the guide to assist employees who are able to choose their own superannuation fund when Choice of Fund is introduced on 1 July. Smarter Super – Make the most of your Retirement helps explain some of the technical aspects of superannuation, and provides useful tips and suggestions.
Copies can be sourced from:
- The ABA or Phone 1800 009 180
- FPA or Phone 1800 626 393
- IFSA or Phone 02 9299 3022.
Other Links are: - Association of Superannuation Funds of Australia (ASFA). The site has areas of particular interest to the general public, including:
- About Super, especially the 10 fact sheets providing background on superannuation and adequacy of retirement income.
- Super Smart Planner, a sophisticated and technically advanced retirement income calculator so you can calculate what your future retirement income might be, in today’s dollar values. Use the Super Smart Planner to work out what superannuation contributions you need to make to achieve the retirement income you want.
Go there
- ASIC’s Superannuation Calculator. This uses a spreadsheet (Excel) to let you see the long term effects of fees, making extra contributions, government co-contributions, reduction in contributions and changing investment strategy or funds.
Go there - Australian Taxation Office:
- The ATO has information on just about everything you could want to know about superannuation:
Go there - Super Co-contribution. If you earn less than $40,000 a year, and make personal superannuation contributions, the Australian Government will now give you a helping hand with the Super Co-contribution. It means that if your total income for tax purposes is $27,500 or less a year, the Government will match your personal super contributions, up to $1,000 a year, on a dollar-for-dollar basis. For every dollar you put into your super, the Government will put in a dollar, too. The Federal Budget 2004-05 is to change this: From 1 July 2004 the government will contribute up to $1,500 for a personal contribution of $1,000 for people earning up to $28,000, phasing out at $58,000.
Here’s the ATO’s Super Co-Contribution page: Go There
- The National Information Centre on Retirement Investments (NICRI) has a number of information sheets for guidance on superannuation:
Go there Overview and Planning- The Australian Securities and Investments Commission’s FIDO site offers Super decisions: Understanding and making superannuation choices (’Your guide to super’) which you can download. (This is a 1,234KB PDF file.)
Go there - The ANZ bank’s Superannuation Centre has in addition to general information on superannuation, discussion of your needs, tools and calculators, Self-Managed Superannuation Fund (DIY Fund) considerations, explanations of Eligible Termination Payments (ETPs) and rollovers, as well as step by step guide to processing your ETP.
Go there
