Author Topic: Superannuation thread  (Read 56328 times)

ozbeach

  • Bristles
  • ***
  • Posts: 317
  • Location: Australia
Re: Superannuation thread
« Reply #150 on: February 11, 2019, 04:39:08 PM »
Around two years ago (some time in 2017) I spent a fair bit of time investigating the various super offerings. The employer fund I was in seemed ok, returns were good, but I was concerned I was paying a lot in fees. I ended up with analysis-paralysis, but decided that the HostPlus Indexed Balanced fund was probably going to be my choice. I decided to wait till my member statement came out at the end of the financial year before making a decision. Of course, it didn't come out in July, and slipped till November by which time I had forgotten about it (they don't post them anymore; you have to go online yourself and download). I had been on Long Service Leave through 2017, but had to go back to work for a few weeks in 2018 to wrap things up there, so decided that I may as well leave things as they were while the last few pay cheques got deposited. Again, I figured I would look at this more closely once I got my end of FY statement, and again it kept getting delayed till I forgot about it. (I was monitoring the balance all this time as I do a net worth update at the end of each month so it's not like I had taken my eye completely off the ball!) Anyway, with all the talk last week around the Banking Royal Commission and egregious fees etc, I finally got around to downloading my member statements. On the first page of each statement were listed the fees - around $100 so no big deal. But dig through to page 14 and I finally found the "indirect" charges (MER etc) - $7,500 for FY16/17 and $11,000 for FY17/18!


I dug out my research, went online and opened a HostPlus account last Thursday, requested a rollover and everything was sorted by Monday. So easy.


Moral of the story: stop putting it off and just do it!

mspym

  • Magnum Stache
  • ******
  • Posts: 4608
  • Location: Downunder
Re: Superannuation thread
« Reply #151 on: February 11, 2019, 05:45:19 PM »
@ozbeach thanks for the boot up the bum I needed, time to review my super and how much I am paying in indirect fees

Ozlady

  • Handlebar Stache
  • *****
  • Posts: 1436
Re: Superannuation thread
« Reply #152 on: February 11, 2019, 05:53:04 PM »
Was that a retail fund Ozbeach?  If so, care to share which fund is that?  Gosh! those fees are too rich to swallow!

mjr

  • Bristles
  • ***
  • Posts: 461
  • Age: 55
  • Location: Brisbane, Qld
  • Retired at 52
Re: Superannuation thread
« Reply #153 on: February 11, 2019, 06:39:55 PM »
On the assumption that you have about $500k in your super fund (which is of course entirely your business), did you checkout an SMSF ?

While Industry Funds *do* run rings around retail funds in terms of lower charges, SMSFs can run rings around Industry Funds.

ozbeach

  • Bristles
  • ***
  • Posts: 317
  • Location: Australia
Re: Superannuation thread
« Reply #154 on: February 11, 2019, 07:36:53 PM »
Was that a retail fund Ozbeach?  If so, care to share which fund is that?  Gosh! those fees are too rich to swallow!


Not a retail fund, but not an industry fund either :)


I don't want to name names in a public forum.

ozbeach

  • Bristles
  • ***
  • Posts: 317
  • Location: Australia
Re: Superannuation thread
« Reply #155 on: February 11, 2019, 07:50:48 PM »
On the assumption that you have about $500k in your super fund (which is of course entirely your business), did you checkout an SMSF ?

While Industry Funds *do* run rings around retail funds in terms of lower charges, SMSFs can run rings around Industry Funds.
When I started my research I figured that I would likely go the SMSF route. But at the end of the day, I wanted to put the lot into a few Vanguard indexes and the compliance issues (even with the "SMSF in a box" options) seemed overly onerous. Sad to say, I think one of the requirements was two Directors? and I didn't know anyone to ask. The HostPlus Balanced Indexed gives me 90% of what I wanted for minimal fees ($78pa plus MER 0.02%) and no compliance headaches. The other issue I considered was that I will be switching to pension mode in a few years - this seemed to be another area that could easily become a minefield with a SMSF.


One thing I have learnt is how easy it is to switch, so I remain open to being convinced of the merits of an SMSF :)

happy

  • Walrus Stache
  • *******
  • Posts: 7088
  • Location: NSW Australia
Re: Superannuation thread
« Reply #156 on: February 11, 2019, 08:54:22 PM »
On the assumption that you have about $500k in your super fund (which is of course entirely your business), did you checkout an SMSF ?

While Industry Funds *do* run rings around retail funds in terms of lower charges, SMSFs can run rings around Industry Funds.
When I started my research I figured that I would likely go the SMSF route. But at the end of the day, I wanted to put the lot into a few Vanguard indexes and the compliance issues (even with the "SMSF in a box" options) seemed overly onerous. Sad to say, I think one of the requirements was two Directors? and I didn't know anyone to ask. The HostPlus Balanced Indexed gives me 90% of what I wanted for minimal fees ($78pa plus MER 0.02%) and no compliance headaches. The other issue I considered was that I will be switching to pension mode in a few years - this seemed to be another area that could easily become a minefield with a SMSF.


One thing I have learnt is how easy it is to switch, so I remain open to being convinced of the merits of an SMSF :)

SMSFs appeal to my sense of independence but I am still currently with an industry fund. One thing the funds seem to have in their favour is convenience when it comes to changing asset allocation ( just click a button),  and starting and stopping pensions and income streams. It cost me nothing additional to set up a TRIS, and won't cost anything for subsequent changes. I know, I know I probably paid for it in advance in the fee structure. The other issue is they achieve a level of diversification across many asset classes ( depending on what you chose within the fund - mine I can chose single asset classes if I wish as well as a pre-mix) that an individual investor is unlikely to achieve in a SMSF, even using index funds.

When I first started out learning about investing this latter fact irked me no end...I couldn't actually pin down what my money was invested in in simple terms like stock or bonds. Now I understand more it no longer bothers me.

Last time I did the math, it wasn't really worth it to change to a SMSF. Time has passed and my super balance is bigger now...now I'm retired I should re look at it again. But there would need to be substantial gains in a SMSF  over an industry fund to offset all the administrative issues.

mjr

  • Bristles
  • ***
  • Posts: 461
  • Age: 55
  • Location: Brisbane, Qld
  • Retired at 52
Re: Superannuation thread
« Reply #157 on: February 11, 2019, 09:18:36 PM »
Sad to say, I think one of the requirements was two Directors? and I didn't know anyone to ask. The HostPlus Balanced Indexed gives me 90% of what I wanted for minimal fees ($78pa plus MER 0.02%) and no compliance headaches.

Set up a corporate trustee, which is the more robust option anyway and you can be the sole director.

$78 + 0.02% is pretty cheap, although don't forget the ICR which is 0.05%.

I engage a low-cost SMSF accountant with whom I am very happy and they take care of all tax and compliance issues.

I also have the  majority of the funds in Vanguard ETFs and I can fiddle them as I like.

I'll be upfront  and admit that I have a real problem with investing with union-affiliated funds.  If that's not something you share, then I agree that what you have now is not worth changing.

marty998

  • Walrus Stache
  • *******
  • Posts: 7252
  • Location: Sydney, Oz
Re: Superannuation thread
« Reply #158 on: February 12, 2019, 12:14:04 AM »
Sad to say, I think one of the requirements was two Directors? and I didn't know anyone to ask. The HostPlus Balanced Indexed gives me 90% of what I wanted for minimal fees ($78pa plus MER 0.02%) and no compliance headaches.

Set up a corporate trustee, which is the more robust option anyway and you can be the sole director.

$78 + 0.02% is pretty cheap, although don't forget the ICR which is 0.05%.

I engage a low-cost SMSF accountant with whom I am very happy and they take care of all tax and compliance issues.

I also have the  majority of the funds in Vanguard ETFs and I can fiddle them as I like.

I'll be upfront  and admit that I have a real problem with investing with union-affiliated funds.  If that's not something you share, then I agree that what you have now is not worth changing.

Yeah corporate trustee is the way to go for an SMSF. If you do an individual trustee, the ATO mandates by law you must have two trustees. I'm guessing this is because there are problems if the sole trustee dies....super doesn't automatically go into an estate and cannot be in a will.

On the topic of union affiliated funds.... why do you have this problem? The unions don't have a say in the investment decisions, and there is generally equal representation between union reps and employer organisations. Just as I don't think a union official has any special skills to run a super fund, neither do I think the members of the Business Council of Australia or Australian Chamber of Commerce & Industry or the Master Builders Association have any special skill either. They're all equally bad, and it's the price you pay to keep everyone happy. But across all of the industry funds they must be doing something right -  they top all rankings for 1, 3, 5, 7, 10 and 15 year performance measures....

Ozlady

  • Handlebar Stache
  • *****
  • Posts: 1436
Re: Superannuation thread
« Reply #159 on: March 01, 2019, 03:01:33 PM »
Yay or Nay?

Say you have a child who has just started an industry fund; and you want to gift her $5000 every year ...but you do not want her to touch the money for a LONG LONG time...

What do you guys think of the merits of tipping it into her industry fund (Aust Super Balanced Fund) as a non concessional contribution and watching it compound through her life?

(also out of touch from pesky future spouses:))))


Luckyvik

  • Stubble
  • **
  • Posts: 237
  • Age: 42
  • Location: Sydney, Australia
Re: Superannuation thread
« Reply #160 on: March 01, 2019, 04:06:09 PM »
I think it's a great idea, as long as you don't mind that she can't touch it until she's 60

marty998

  • Walrus Stache
  • *******
  • Posts: 7252
  • Location: Sydney, Oz
Re: Superannuation thread
« Reply #161 on: March 01, 2019, 04:57:02 PM »
Yes, I think it's a good idea too. Putting in $5000 a year now saves her from having to put in $25000 a year later on.

Also helps limit the damage from fees on low balances while she is young.

Ozlady

  • Handlebar Stache
  • *****
  • Posts: 1436
Re: Superannuation thread
« Reply #162 on: March 01, 2019, 07:06:09 PM »
Thanks plus no contribution tax of 15%

Also plan to drip over a year instead of a whole lump sum to even out the average price...

GT

  • Magnum Stache
  • ******
  • Posts: 2743
  • Age: 46
  • Location: Melbourne, Australia
Re: Superannuation thread
« Reply #163 on: March 01, 2019, 08:12:38 PM »
Thanks plus no contribution tax of 15%

Also plan to drip over a year instead of a whole lump sum to even out the average price...

Only if she hasn't been suckered into stupid insurances tacked onto her Super that she doesn't need at this stage of life.

deborah

  • Senior Mustachian
  • ********
  • Posts: 12041
  • Location: Australia or another awesome area
Re: Superannuation thread
« Reply #164 on: March 02, 2019, 02:17:48 AM »
You do realise that spouses can get their hands on super when they divorce, donít you?

Ozlady

  • Handlebar Stache
  • *****
  • Posts: 1436
Re: Superannuation thread
« Reply #165 on: March 02, 2019, 03:35:36 AM »
Thanks to all for your valuable comments!

happy

  • Walrus Stache
  • *******
  • Posts: 7088
  • Location: NSW Australia
Re: Superannuation thread
« Reply #166 on: March 02, 2019, 02:01:32 PM »
I've been encouraging my young ones to invest in super as well for all the above reasons, and also as the market is so expensive at the moment. Once I showed them one of those graphs that showed the exponential growth of compounding interest over 40 years, they were much more interested. I'll keep an eye on their balances and do some math from time to time. Once it looks like it will grow into a reasonable retirement, I'll be offering advice about investment outside super, if they want to take any notice of me.

Model96

  • Stubble
  • **
  • Posts: 118
Re: Superannuation thread
« Reply #167 on: March 03, 2019, 02:18:45 AM »
These days saving for your first home deposit through extra contributions to super is a big benefit that is worth investigating.
I went smsf property, best thing I ever did and reached my goals in less than half the expected time.

Cheers, Paul.S

bigchrisb

  • Handlebar Stache
  • *****
  • Posts: 1236
Re: Superannuation thread
« Reply #168 on: March 03, 2019, 11:47:35 AM »
On the topic of union affiliated funds.... why do you have this problem? The unions don't have a say in the investment decisions, and there is generally equal representation between union reps and employer organisations.

Because of things like this (article from the AFR on 22 Feb, its paywalled, so no direct link.  If you search for it you will be able to click through to the article).  In short, the ACTU is demanding 30 industry funds pressure BHP to maintain an antiquated shipping arrangement.  Super should not be an IR tool, hence unions have no place in it.  Quote below.   I also had a lot of trouble actually getting transparency from my old fund (CBUS, an industry fund) on what they did and didn't do.  If they won't answer a member's questions then they won't be managing my super.

"Trade unions have demanded 30 union-backed industry superannuation funds use their leverage as shareholders to pressure mining giant BHP to save the jobs of 80 local seafarers who work on ships hauling iron ore."

I also have a moral beef with how much money is involved in running people's super.  My old day job was in commercial property.  A lot of very high end property occupied by super funds, and a lot of people working for them on massive incomes.   When the whole lot could be replaced with a single whole of country index operation.

Industry funds have a record of being the least worst between retail and industry funds.  Just because they are less bad than their neighbor doesn't make them good.  I'll manage my own money rather than a sponsor a fund manager's swish office and yacht thank you. 

happy

  • Walrus Stache
  • *******
  • Posts: 7088
  • Location: NSW Australia
Re: Superannuation thread
« Reply #169 on: March 03, 2019, 02:09:49 PM »
I had no idea that industry super funds used their leverage as shareholders in this way. That gives me pause for thought. My super might actually be being used to lobby for causes which I may or may not support: either way though, its without my consent.

I am not surprised by what you've said about the big salary aspect, in fact I begrudgingly expect that. Makes me mad though, that its compulsory to participate in super, and one might expect it would be in the gubbmint's interest to prevent too much rorting. How that could be achieved of course is another thing.

Ozlady

  • Handlebar Stache
  • *****
  • Posts: 1436
Re: Superannuation thread
« Reply #170 on: March 03, 2019, 02:36:01 PM »
These days saving for your first home deposit through extra contributions to super is a big benefit that is worth investigating.
I went smsf property, best thing I ever did and reached my goals in less than half the expected time.

Cheers, Paul.S

Can you elaborate with a numerical example please? Are you a young person or close to retirement?

I always thought one should not buy (residential) property inside an SMSF closer to retirement as one has to take a certain % compulsive amt once reach retirement age and difficult to sell part of the property in order to do that?

But if one is young, perhaps there is room to do that?

I would be really keen to dissect your example...so please post for my education:))

Especially the part where you say .."reach my goals in half the time.."

middo

  • Handlebar Stache
  • *****
  • Posts: 1330
  • Location: Stuck in Melbourne still. Dreaming of WA
  • Learning.
Re: Superannuation thread
« Reply #171 on: March 03, 2019, 03:16:27 PM »
I spent some time on the weekend trying to roll my wifes three super funds into the one fund.  Using the ATO website it was easy to find her details and numbers for the two funds we wanted to roll over.

Fund A - use the ATO roll-over button.  Done.

Fund B - use the ATO roll-over button.  No.  Can't do it.  I looked further into it.  PSS (Public Sector Super) from some work 20 years ago.  It is increasing, and the costs are very minimal, but we cannot get it out until she retires.  Thanks Federal Governments!

Luckyvik

  • Stubble
  • **
  • Posts: 237
  • Age: 42
  • Location: Sydney, Australia
Re: Superannuation thread
« Reply #172 on: March 03, 2019, 03:23:43 PM »
middo- The PDS fund could be a defined benefit fund of it's not letting you rollover online.

Might be worth a phone call to find out what benefits she is entitled to (might be a lump sum or an income stream (pension) and at what age as some of these funds allow retirement at an earlier age such as 55. If she can't roll it over you might want to ensure beneficiary details are up to date.

middo

  • Handlebar Stache
  • *****
  • Posts: 1330
  • Location: Stuck in Melbourne still. Dreaming of WA
  • Learning.
Re: Superannuation thread
« Reply #173 on: March 03, 2019, 04:00:15 PM »
middo- The PDS fund could be a defined benefit fund of it's not letting you rollover online.

Might be worth a phone call to find out what benefits she is entitled to (might be a lump sum or an income stream (pension) and at what age as some of these funds allow retirement at an earlier age such as 55. If she can't roll it over you might want to ensure beneficiary details are up to date.

Thanks.  I hadn't thought about the beneficiaries.  I'm fairly sure it is a defined pension scheme, and she is eligible for a pension of ~$300 p.a. when she turns 57 I think.  (Could be wrong, this is from memory)  The balance is around $9000.  We are not talking big dollars, but it would have been easier to just roll it into her current super fund, but rules.  The fund used to have an address that we hadn't lived at for 18 years. 

happy

  • Walrus Stache
  • *******
  • Posts: 7088
  • Location: NSW Australia
Re: Superannuation thread
« Reply #174 on: March 03, 2019, 04:11:23 PM »
I spent some time on the weekend trying to roll my wifes three super funds into the one fund.  Using the ATO website it was easy to find her details and numbers for the two funds we wanted to roll over.

Fund A - use the ATO roll-over button.  Done.

Fund B - use the ATO roll-over button.  No.  Can't do it.  I looked further into it.  PSS (Public Sector Super) from some work 20 years ago.  It is increasing, and the costs are very minimal, but we cannot get it out until she retires.  Thanks Federal Governments!

I have a small amount in PSS. Its a defined benefits scheme, and you're pretty well stuck with it until you hit preservation age AND are retired. You can't put more in, and you can't do a TRIS once you've reached preservation age. I've not tried to roll it over because of its pension option. As well, one portion only increases with CPI and there are very limited investment options for the other. The one advantage is that you can take a lifelong pension and on my math at least, taking it as a pension way outweighs taking the lump sum. Eg at 65 lump sum around 108k vs indexed pension of around 10,800 PA. In other words, if you live more than 10 years, past 75, you win more or less. Maybe make it 11 years coz if you took the 108k and invested it you'd probably do a bit better.

Go onto the site and use I-estimator to see what your figures are.


marty998

  • Walrus Stache
  • *******
  • Posts: 7252
  • Location: Sydney, Oz
Re: Superannuation thread
« Reply #175 on: March 07, 2019, 01:43:33 AM »
On the topic of union affiliated funds.... why do you have this problem? The unions don't have a say in the investment decisions, and there is generally equal representation between union reps and employer organisations.

Because of things like this (article from the AFR on 22 Feb, its paywalled, so no direct link.  If you search for it you will be able to click through to the article).  In short, the ACTU is demanding 30 industry funds pressure BHP to maintain an antiquated shipping arrangement.  Super should not be an IR tool, hence unions have no place in it.  Quote below.   I also had a lot of trouble actually getting transparency from my old fund (CBUS, an industry fund) on what they did and didn't do.  If they won't answer a member's questions then they won't be managing my super.

"Trade unions have demanded 30 union-backed industry superannuation funds use their leverage as shareholders to pressure mining giant BHP to save the jobs of 80 local seafarers who work on ships hauling iron ore."


Ahh yes, and the Industry Funds are free to ignore that request, as is BHP, which I expect they will do.

The likes of Heather Ridout and Innes Willox who sit on the Australian Super Board are hardly going to entertain this stupidity from the unions.

Model96

  • Stubble
  • **
  • Posts: 118
Re: Superannuation thread
« Reply #176 on: March 16, 2019, 06:43:39 AM »
These days saving for your first home deposit through extra contributions to super is a big benefit that is worth investigating.
I went smsf property, best thing I ever did and reached my goals in less than half the expected time.

Cheers, Paul.S

Can you elaborate with a numerical example please? Are you a young person or close to retirement?

I always thought one should not buy (residential) property inside an SMSF closer to retirement as one has to take a certain % compulsive amt once reach retirement age and difficult to sell part of the property in order to do that?

But if one is young, perhaps there is room to do that?

I would be really keen to dissect your example...so please post for my education:))

Especially the part where you say .."reach my goals in half the time.."

Hi Ozlady, feel free to ask I know I don't explain things so well!

I encourage my (working) kids to salary sacrifice as much as they can stand into Super, so they can get the government to help them buy a first home by getting a deposit together quicker. The info is all in here much better than I can explain..       https://www.ato.gov.au/individuals/super/super-housing-measures/first-home-super-saver-scheme/

I started an smsf at 47 years of age, with the goal of doubling my super money by 60 through borrowing and paying off an investment property purchase through smsf. With capital gains it had doubled in 3 years! The plan is to sell when I get to 60 years old (9 years away) and switch from accumulation phase to pension phase.
Hopefully I will be retired well before 60 though, and superannuation is just a nice boost!!

conwy

  • Stubble
  • **
  • Posts: 143
Re: Superannuation thread
« Reply #177 on: May 22, 2019, 03:08:08 PM »
I'm going to aim for 20% of my stash in Super and 80% out of super.

Reasoning:

  • I want the option of retiring earlier than 65.
  • I want the option of buying a house before 65.
  • I might die before 65 (unlikely but possible).
  • The low tax and extra time super has to grow will offset the low amount I invest in it.
  • At the same time, a bit of extra income at 65+ won't go astray.
  • It's also useful as an additional emergency buffer ("compassionate grounds").

Luckyvik

  • Stubble
  • **
  • Posts: 237
  • Age: 42
  • Location: Sydney, Australia
Re: Superannuation thread
« Reply #178 on: May 22, 2019, 03:28:20 PM »
I'm going to aim for 20% of my stash in Super and 80% out of super.

Reasoning:

  • I want the option of retiring earlier than 65.
  • I want the option of buying a house before 65.
  • I might die before 65 (unlikely but possible).
  • The low tax and extra time super has to grow will offset the low amount I invest in it.
  • At the same time, a bit of extra income at 65+ won't go astray.
  • It's also useful as an additional emergency buffer ("compassionate grounds").

@conwy FYI- The oldest preservation age is 60 not 65 see:
https://www.ato.gov.au/rates/key-superannuation-rates-and-thresholds/?page=11

Gremlin

  • Bristles
  • ***
  • Posts: 324
Re: Superannuation thread
« Reply #179 on: May 22, 2019, 04:55:46 PM »
I'm going to aim for 20% of my stash in Super and 80% out of super.

Reasoning:

  • I want the option of retiring earlier than 65.
  • I want the option of buying a house before 65.
  • I might die before 65 (unlikely but possible).
  • The low tax and extra time super has to grow will offset the low amount I invest in it.
  • At the same time, a bit of extra income at 65+ won't go astray.
  • It's also useful as an additional emergency buffer ("compassionate grounds").

@conwy FYI- The oldest preservation age is 60 not 65 see:
https://www.ato.gov.au/rates/key-superannuation-rates-and-thresholds/?page=11

It is at the moment.  When I started work the oldest preservation age was 55.  But that's not the rules that now apply to me.  I now can't access super until 60.  Depending on your age and your appetite for an early retirement, it may be prudent to build in some buffer to allow for future changes.  Having a FIRE strategy that only works if there's no future changes to the superannuation rules is a risk. 

As an example, the Tax Review has recommended moving the preservation age to 67 from 2024 and aligning to the pension age.  http://taxreview.treasury.gov.au/content/StrategicPaper.aspx?doc=html/Publications/Papers/Retirement_Income_Strategic_Issues_Paper/Chapter_5.htm

Neither party seem to want to touch this right now, but there's many more budgets and elections to go between now and when I'm 67.

deborah

  • Senior Mustachian
  • ********
  • Posts: 12041
  • Location: Australia or another awesome area
Re: Superannuation thread
« Reply #180 on: May 22, 2019, 05:37:38 PM »
I'm going to aim for 20% of my stash in Super and 80% out of super.

Reasoning:

  • I want the option of retiring earlier than 65.
  • I want the option of buying a house before 65.
  • I might die before 65 (unlikely but possible).
  • The low tax and extra time super has to grow will offset the low amount I invest in it.
  • At the same time, a bit of extra income at 65+ won't go astray.
  • It's also useful as an additional emergency buffer ("compassionate grounds").

@conwy FYI- The oldest preservation age is 60 not 65 see:
https://www.ato.gov.au/rates/key-superannuation-rates-and-thresholds/?page=11

It is at the moment.  When I started work the oldest preservation age was 55.  But that's not the rules that now apply to me.  I now can't access super until 60.  Depending on your age and your appetite for an early retirement, it may be prudent to build in some buffer to allow for future changes.  Having a FIRE strategy that only works if there's no future changes to the superannuation rules is a risk. 

As an example, the Tax Review has recommended moving the preservation age to 67 from 2024 and aligning to the pension age.  http://taxreview.treasury.gov.au/content/StrategicPaper.aspx?doc=html/Publications/Papers/Retirement_Income_Strategic_Issues_Paper/Chapter_5.htm

Neither party seem to want to touch this right now, but there's many more budgets and elections to go between now and when I'm 67.
This was written TEN YEARS AGO and it hasnít happened. They havenít even started to think about lifting superannuation age. Since they have always had a long lead time before the age increases happen, Iíd expect that, if it was legislated tomorrow, the increase from 60 to 67 would start to happen in 2030 and that would mean that in
2030 your preservation age would be 60.5
2031 your preservation age would be 61
2032 your preservation age would be 61.5
2033 your preservation age would be 62
2034 your preservation age would be 62.5
2035 your preservation age would be 63
2036 your preservation age would be 63.5
2037 your preservation age would be 64
2038 your preservation age would be 64.5
2039 your preservation age would be 65
2040 your preservation age would be 65.5
2041 your preservation age would be 66
2042 your preservation age would be 66.5
2043 your preservation age would be 67

At the earliest.

Also, there are an enormous number of people who simply break down before aged pension age now. They are put on New Start or get NDIS, and the figures for those have ballooned since the OAP ages have increased and superannuation preservation age has increased. Most of the people who use up their superannuation before pension age do so because they are in this situation. Studies show that it is the rare person who just fritters their super away, although many decide to take a bit of it out to make a one off purchase at the start of retirement - pay off the mortgage, buy a caravan...

Gremlin

  • Bristles
  • ***
  • Posts: 324
Re: Superannuation thread
« Reply #181 on: May 22, 2019, 05:53:06 PM »
I don't disagree Deborah.  But if I'm FIRE-ing at 40 (say) with a view that I have 20 years to go before I can access super, I don't want that to be out by 5 years because I assumed there wouldn't be any changes to the super regime.

I love super and Mrs Gremlin and I have a stack of money socked away in super.  But I have more than I would otherwise outside of super to cover the gap between now and my preservation age, given that I don't definitively know what that preservation age will be.  It may be 60, but it may be more than that by the time I'm 60.

happy

  • Walrus Stache
  • *******
  • Posts: 7088
  • Location: NSW Australia
Re: Superannuation thread
« Reply #182 on: May 22, 2019, 05:58:04 PM »
I'm more pessimistic than Deborah. I think its quite possible that the preservation age will increase again at some point in the future. The main issue against that is indeed a proportion of the population that is constitutionally unable to manage to work til 67...maybe more incentive to keep working part-time will emerge, although that won't solve all this problem.

I think it pays to consider all the worst case scenarios with super if you are a long way from accessing it. The idea of lifetime contributions cap has been around a long time in various papers...? at least 10-15 years, maybe longer. There was not much public discussion about it, and then all of a sudden the idea of lifetime contribution and pension fund caps appears and before you know it, they're on. ( I have a low information diet, so I may be incorrect about the lack of discussion but that's how it appears to me). Its also getting harder and harder to put super in, so it would be helpful to make elective contributions sooner rather than later.

deborah

  • Senior Mustachian
  • ********
  • Posts: 12041
  • Location: Australia or another awesome area
Re: Superannuation thread
« Reply #183 on: May 22, 2019, 11:35:05 PM »
OK, let's look at the worst cases... I think this is very worth doing, and that they don't have much to do with preservation age.

Firstly, I'd look at political differences.

The election was interesting, because there were some super announcements that didn't really make it to the news. One was that Labor would cancel the super catch up rules (that you can now add superannuation you missed out on adding for several years), and stop people being able to put concessional contributions in themselves - for instance see - https://www.canberratimes.com.au/story/6119884/not-so-super-election-promises/?cs=14248.

If we assume that each party will be in power at some stage, and that the promises that they restate at every election are going to occur at some stage, what are the risks to us as early retirees?

I contend that raising the preservation age is the least worry. It has been suggested by various white papers, but neither political party has seemed at all interested. When we will actually have a 12% super guarantee also seems to be a bit of a political football - Labor wants it, the Liberals don't and wages stagnation has made it political dynamite. But if we start to have some inflation, it may be back on the table.

Labor appears to be against several measures that would make it easier to retire early and stuff extra money into super later on. This means that we need to avoid counting on such measures still existing when we retire.

Since the beginning of Howard's reign, the liberals are all for families having just one income, and having a traditional stay-at-home wife. The family allowances were created by Howard to ensure that sort of family had no disadvantages, and many of their measures can be viewed in that context. The ability to put super in your spouse's fund, and the measures I've mentioned already are part of this liberal emphasis on the traditional family.

We also face a problem with the aging population and consequent lack of tax. Labor has it in for family trusts, and I suspect that the liberals will eventually also decide that they are too much of a tax haven. I also think now people can have a maximum of $1.6million in super pension phase, that the tax on super in accumulation phase will increase.

As our superannuation system becomes more mature, and people can play catch-up with their concessional contributions, both sides of politics will see little need for non concessional contributions to exist, and the amount people can put into super will continue to decrease. This has already been happening, and both parties have been reducing these contributions. I would be surprised if you could make any non concessional contributions in a decade.

Luckyvik

  • Stubble
  • **
  • Posts: 237
  • Age: 42
  • Location: Sydney, Australia
Re: Superannuation thread
« Reply #184 on: May 23, 2019, 12:34:46 AM »
OK, let's look at the worst cases... I think this is very worth doing, and that they don't have much to do with preservation age.

Firstly, I'd look at political differences.

The election was interesting, because there were some super announcements that didn't really make it to the news. One was that Labor would cancel the super catch up rules (that you can now add superannuation you missed out on adding for several years), and stop people being able to put concessional contributions in themselves - for instance see - https://www.canberratimes.com.au/story/6119884/not-so-super-election-promises/?cs=14248.

I contend that raising the preservation age is the least worry. It has been suggested by various white papers, but neither political party has seemed at all interested. When we will actually have a 12% super guarantee also seems to be a bit of a political football - Labor wants it, the Liberals don't and wages stagnation has made it political dynamite. But if we start to have some inflation, it may be back on the table.


The SG gradual increase to 12% has already been legislated. They would need to introduce new legislation to stop it if they wanted to stop it.
https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?page=24

deborah

  • Senior Mustachian
  • ********
  • Posts: 12041
  • Location: Australia or another awesome area
Re: Superannuation thread
« Reply #185 on: May 23, 2019, 12:58:05 AM »
Yes, it has been legislated. Several times. And each time, it is rolled down the street

marty998

  • Walrus Stache
  • *******
  • Posts: 7252
  • Location: Sydney, Oz
Re: Superannuation thread
« Reply #186 on: May 23, 2019, 02:53:40 AM »
If I look back on many of my posts here after the years I'm sure most would be 100% in favour of super and the increase to 12%.

Must be a function of getting old because I'm starting to see the opposite view that raising it to 12% is not necessarily desirable for very low income earners. You can bet employers will say to staff "you're getting an extra 0.5% in super, so we'll give you a pay raise of 1% instead of 1.5% this year. Will only continue perpetuating the low wages growth environment.

Someone on $50,000 could use the 2.5% in their pocket, rather than going into super. They would still of course have the option to contribute extra through salary sacrifice, but I do start to question whether compelling people to give up 11%* of their gross income is a good thing.

Perhaps 10 is a reasonable ceiling, even if it is not adequate for various groups.

* $12 super out of $112 income is 11%.

happy

  • Walrus Stache
  • *******
  • Posts: 7088
  • Location: NSW Australia
Re: Superannuation thread
« Reply #187 on: May 23, 2019, 03:57:21 PM »
I get what you are saying Marty, but conversely those on under $50k a year are the ones most in need of 12% later on.

There is a big danger of employer slithering out of wage rises. I've had it happen to me in the public service where in the late 1980's compulsory super came in ( at a meagre 2%), in my sector and we forfeited payrises of 2% for a couple of years because it was going into super. I was so outraged by the compulsory acquisition of my pay rise I was biased against super for a long time. Of course it was still my money but I didn't being treated like a child being made to save by Big Brother, and I had no faith that I would ever see the money some 30-40 years later.  It was another decade before I saw the light.

deborah

  • Senior Mustachian
  • ********
  • Posts: 12041
  • Location: Australia or another awesome area
Re: Superannuation thread
« Reply #188 on: May 23, 2019, 05:21:12 PM »
The other reason why I don't think preservation age is much of a worry is that for a number of years we have had TRIS or its equivalent. I would expect that if the preservation age is lifted past 60, TRIS will be modified to be allowed to keep starting at 60, so that people who can't continue working can at least access an income stream from their super.

Also =, I forgot to link to this article in the ABC in my previous post - https://www.abc.net.au/news/2019-04-02/part-33a-superannuation-policies-of-both-major-parties-explain/10960328

conwy

  • Stubble
  • **
  • Posts: 143
Re: Superannuation thread
« Reply #189 on: May 24, 2019, 06:48:07 PM »
Ok, so maybe I can get my super out at 60 rather than 65. So what? I still want to be able to retire much earlier than that, hence why I'm involved in this community.

I'm not necessarily planning on quitting work. By 40, I hope my career will be at a point where either I have a very relaxing, flexible, easy full-time job or I work a high-pressure, intense 6 months out of every year and then completely chillax for the other 6 months.

But I want to always have the option of quitting work altogether and still being able to survive at my current lifestyle until I'm 60. I don't think super was ever intended for that, but that's what I'm after.

So I'll put enough into super that it's worth something by the time I can access it, but not so much that I don't have a very comfortable safety cushion throughout my 40s and 50s. I think the 80/20 non-super/super split should do that.

The good thing about staying more or less in the workforce is that I'll have that extra income stream, which can be stepped up or stepped down, in case of healthcare costs, extra expenses or a slight change in my goals.

----

My guess is that this 80/20 split isn't too far off from most Australians, except that the bulk of their non-super wealth is in their home, which is a lower-performing and non-liquid investment. All I'm doing is substituting a diversified portfolio for the overpriced home, thus making more efficient use of my capital while allowing me to live almost anywhere in the world. Rather than "the Australian dream", I call it "the globe trotter's dream" - I own my own space-time-slice of anywhere on earth, in perpetuity.
« Last Edit: May 24, 2019, 07:02:06 PM by conwy »

deborah

  • Senior Mustachian
  • ********
  • Posts: 12041
  • Location: Australia or another awesome area
Re: Superannuation thread
« Reply #190 on: May 25, 2019, 12:16:28 AM »
Hi, @conwy , there is a thread - https://forum.mrmoneymustache.com/australia-tax-discussion/early-retirement-australia/ - where we were talking about how to retire early in Australia before Super kicks in. You may be interested in that.

conwy

  • Stubble
  • **
  • Posts: 143
Re: Superannuation thread
« Reply #191 on: May 26, 2019, 05:50:12 AM »
Hi, @conwy , there is a thread - https://forum.mrmoneymustache.com/australia-tax-discussion/early-retirement-australia/ - where we were talking about how to retire early in Australia before Super kicks in. You may be interested in that.

Brilliant, I'll be right over! Thanks deborah!

marty998

  • Walrus Stache
  • *******
  • Posts: 7252
  • Location: Sydney, Oz
Re: Superannuation thread
« Reply #192 on: June 20, 2019, 05:18:42 AM »
Loving this little run on the markets. In addition to my shares going gangbusters, my Super balance just passed $200,000!

Not too shabby at all!

ozbeach

  • Bristles
  • ***
  • Posts: 317
  • Location: Australia
Re: Superannuation thread
« Reply #193 on: June 20, 2019, 02:33:37 PM »
Loving this little run on the markets. In addition to my shares going gangbusters, my Super balance just passed $200,000!

Not too shabby at all!
ditto!


Mine achieved record annual percentage increase the other day and we're only half way through the year (my tracking spreadsheet is calendar years rather than financial).


I've "earnt" more in super in the last six months than I ever did from an employer in a year.


Now, if only we can hang on to these gains and not have a November/December performance like last year!

mjr

  • Bristles
  • ***
  • Posts: 461
  • Age: 55
  • Location: Brisbane, Qld
  • Retired at 52
Re: Superannuation thread
« Reply #194 on: July 16, 2019, 11:50:06 PM »
QSuper and UniSuper funds topped the APRA list with 9.9% return for the last financial year.  My SMSF which is about 75% shares and 25% cash returned 10.2%.

Anyone have any wilder better (or worse) performances from their funds, SMSF or otherwise ?

deborah

  • Senior Mustachian
  • ********
  • Posts: 12041
  • Location: Australia or another awesome area
Re: Superannuation thread
« Reply #195 on: July 17, 2019, 02:35:24 AM »
SMSF 14.7%

mjr

  • Bristles
  • ***
  • Posts: 461
  • Age: 55
  • Location: Brisbane, Qld
  • Retired at 52
Re: Superannuation thread
« Reply #196 on: July 17, 2019, 03:22:03 AM »
Neat.  What's your allocation, Deborah ?

deborah

  • Senior Mustachian
  • ********
  • Posts: 12041
  • Location: Australia or another awesome area
Re: Superannuation thread
« Reply #197 on: July 17, 2019, 11:56:23 AM »
Iím a bad person, as itís mainly individual stocks.

marty998

  • Walrus Stache
  • *******
  • Posts: 7252
  • Location: Sydney, Oz
Re: Superannuation thread
« Reply #198 on: July 17, 2019, 03:37:49 PM »
Australian Super returned 8.8% in the balanced option if I recall correctly. I haven't worked out my returns are yet (I'm with them but I was 75% shares, 25% fixed income for most of the year).

Just switched mine to 50/50 shares/fixed income now.

The top retail fund was IOOF for what its worth. Long way behind the top industry funds again.

middo

  • Handlebar Stache
  • *****
  • Posts: 1330
  • Location: Stuck in Melbourne still. Dreaming of WA
  • Learning.
Re: Superannuation thread
« Reply #199 on: September 02, 2019, 10:42:24 PM »
I received unexpectedly a letter from my employers default fund last week welcoming me as a member of their fund.  I asked my payroll - they had changed systems on the 1st July, and everyone's super had somehow automatically been paid to the default fund.  They were busy retrieving the funds paid the wrong way and fixing the issue, but I was the first to work out something had gone wrong.

I had noticed no payments into my normal fund for about 6 weeks, but they are a bit lumpy so I was starting to watch it more closely.