Superannuation Discussion + market volatility

[cove]

Re: The totally off-topic thread

We are changing our superannuation strategy this week. Have run our own for 5 years and that has been a success. We are moving to a pension phase because we can.

 

[Hvr]

Re: The totally off-topic thread

With the PSS this benefit

Superannuation reverts to "spouse" on death for their rest of life or children until age 25.

comes at a cost, i.e. small percentage reduction in the pension.

 

[CaptJCool]

Re: The totally off-topic thread

With the PSS this benefit comes at a cost, i.e. small percentage reduction in the pension.

Yes it does,

depending either 15% if you took an upfront discount on the income stream, or 33% if you didn't.

(1/3 for you, 1/3 for partner and 1/3 for recurrent costs of running the fully paid off house)
Havecto back yourself to live 30 years plus post finishing up, that said, I know a couple who have 4 between them, sadly spouses can die but no impediment to remarriage.....the seminar host said in one extreme case, one fine lady has 4 reversionary income streams for her lifetime !

Magic! A

 

[Renato1]

Re: The totally off-topic thread

For those quitting the Federal Public Service before retirement age, the CSS scheme was the best ever devised. Only problem was, most Public Servants early on were not told that the CSS preservation option was available to them - and did not avail themselves of it till the late 1980s, when it was publicised (though those who had been misinformed, were later given an option to opt back in and claim their pensions). I remember many leaving the APS and taking their contributions out, forgoing what I later learned was the preservation/pension option.

The CSS was a 25% employer contribution scheme.

The subsequent PSS scheme was a 15% employer contribution scheme. It was a pretty good scheme providing one went the distance and retired while in it. But, along with the then new Military Superannuation scheme, it was the worst superannuation scheme in Australia if one resigned from the Public Service before retirement age. This was because one's lump sum within the scheme only "grew" at the rate of the CPI - which meant zero real growth till preservation age.

While this aspect obviously affected many Public Servants, most Public Servants stayed on till retirement. But Military personnel typically got out of the services well before preservation age, either because they weren't fit enough to stay in, or all the moving around put too much strain on their families.
This meant that most of them were totally shafted - and did not get the growth in lump sum that the rest of the country got (unless, they were retrenched, where they could then move the lump sum out of their dud scheme).

I wrote a submission to an Enquiry about the shafting of our military personel, and it was nice to see in their final report, they pretty much agreed with me, though they didn't state the obvious about being totally shafted.
Regards,
Renato

 

[Flying mermaid]

Re: The totally off-topic thread

We are changing our superannuation strategy this week. Have run our own for 5 years and that has been a success. We are moving to a pension phase because we can.

I ran our super fund for 26 years, turned it to transition to retirement for 4 years and been in pension mode now for 2 years. Have learnt a huge amount along the way!

 

[burmans]

Super is not my money. Way too many hands in the pie now without adding a financial advisor. And for the record my "financial advisor" has been taking a cut of the pie but has not offered a single piece of advice in over 10 years. Actually that's a lie. They have never offered any advice.

I think ComeFlyWithMe's is that you can (and should have) changed this. There are low-fee super options where you don't pay an advisor a fee and he is applying the caveat emptor theory. Yes, we know there are plenty of people out there who are happy to take our money without doing much but that's true of many things in life. The difference in opinion is you want them to come to you and offer not to have that money, he thinks you should have changed it yourself.

 

[DaveB]

Have been in pretty much all types of super over the years and as always, all have their pros and cons.
Breaking the PBS gold handcuffs when five year maximum SES contracts were introduced was a get out of gaol free card moment and my career never looked back.
Running your own SMSF to try and do better than the pros will just consume you and life is too short to focus your energy on money. Closed our SMSF before starting our business 16 years ago.
Currently using industry schemes and enjoy the ability to directly buy the odd stock or two.
About to restart our SMSF to assist in buying a commercial property for our business. Wont involve debt directly as government rules and bank interest rates aren't kind when it comes to small-medium business, super or commercial property. Property Trust structure whilst a pain in having to get regular valuations is enabling a gradual management buyout of business and property as I wind down my involvement.

 

[amaroo]

Commercial property has been an outstanding performer for our SMSF.

Clipping the ticket on both sides is always a good idea.

 

[cove]

The assets we have in our SMSF would only take a couple of weeks to turn to cash as we are now in pension phase. No need to have anything that might take a year or two to offload at our age.

 

[ComeFlyWithMe]

I think ComeFlyWithMe's is that you can (and should have) changed this. There are low-fee super options where you don't pay an advisor a fee and he is applying the caveat emptor theory. Yes, we know there are plenty of people out there who are happy to take our money without doing much but that's true of many things in life. The difference in opinion is you want them to come to you and offer not to have that money, he thinks you should have changed it yourself.

Got it in one.

Blaming one's own apathy on others however is a popular way not to take responsibility for one's own action (or inaction).

It does speak to the poor state of financial literacy in this country also.

 

[JohnK]

Got it in one.

Blaming one's own apathy on others however is a popular way not to take responsibility for one's own action (or inaction).

It does speak to the poor state of financial literacy in this country also.

Superannuation is too complex for majority of people. Government should take greater responsibility and stop attempting to take greater share of pie. Poorly performing funds should be run out of town.

There. I have taken greater responsibility for a lot of people.

 

[ComeFlyWithMe]

Superannuation is too complex for majority of people. Government should take greater responsibility and stop attempting to take greater share of pie. Poorly performing funds should be run out of town.

There. I have taken greater responsibility for a lot of people.

Sounds like communism to me. The less government meddles with superannuation, the better.

Poorly performing funds would not survive if not for the apathy or ignorance of their members.

I think you and I have a different definition of taking responsibility.

 

[cove]

Receiving our first pension payments this week. I am thinking it was all worthwhile.

 

[straitman]

Wow.

Reading a lot of good and bad information here.

I am no guru at super but after some research have a great financial planner who is worth a bit more than his weight in Gold.

He hates Industry funds with a passion and has shown why several times by running comparisons. Their fees are lower but as was alluded by someone early in this thread their returns can often low also. I am a mid range investor for risk and we still continually very well thanks.

IMHO anyone who says they don't have control either has their head in the sand or needs some different (new) advice.

 

[ComeFlyWithMe]

Wow.

Reading a lot of good and bad information here.

I am no guru at super but after some research have a great financial planner who is worth a bit more than his weight in Gold.

He hates Industry funds with a passion and has shown why several times by running comparisons. Their fees are lower but as was alluded by someone early in this thread their returns can often low also. I am a mid range investor for risk and we still continually very well thanks.

IMHO anyone who says they don't have control either has their head in the sand or needs some different (new) advice.

Glad you are happy with your advice.

Most retail advisors have an aversion to industry funds because of their own conflicted remuneration (commissions in other words). Luckily that is now disappearing with recent reforms. Now they sell you commission laden insurance policies instead or set up an SMSF and clip the ticket along the way. Independent financial advice doesn't really exist.

One can compare anything to anything and make theirs look superior. Unless you are exactly matching the underlying asset classes and their proportions, comparing one fund product's returns to another and expecting a fair comparison is almost impossible. Industry funds in general have outperformed retail funds over the long term in almost all cases. Fees aren't everything, and industry fund's focus on this is really a diversion from what really matters - the net rate of return. There are some great retail fund products too, but many people don't even realise there are usually 10 or more products to choose from within a single fund.

Agree with you on the last point, however.

 

[PLANT]

Where do we get "the net rate of return" figure?
What equation to work it out? Using what figures from where please?
Like to show family members..... Financial planner is "clipping" them by having retail fund that is under performing a simple industry fund!

 

[ComeFlyWithMe]

Where do we get "the net rate of return" figure?
What equation to work it out? Using what figures from where please?
Like to show family members..... Financial planner is "clipping" them by having retail fund that is under performing a simple industry fund!

Some funds show the "personal rate of return" on statements, but you can compare 1, 3, 5 and 10 year published performance as a good start. Fees need to be compared separately, then the difference multiplied by the return (what you would have earned on the lower fee structure) but stick to the headline performance numbers to start.

Beware with fees, some components can be insurance premiums. You may or may not need this and while they often add it automatically (default cover), this can be removed or changed. Take it out of your comparison calculation unless you know the insurance is exactly the same (level and type of cover, waiting periods, etc.).

Typically, insurance is least expensive through a super fund, and it can usually be paid with pre tax dollars. Those with separate life, TPD or income protection policies can usually get it cheaper through super (although the brokers and advisors won't tell you that - think commission).

The investment industry itself is rife with under-performers too and there are huge debates over active vs passive investment. Passive is cheaper (just follows markets) and often performs the same or better than active management. There are exceptions of course and some great active managers, but it's hard to know exactly what your fund is invested in, if you're even interested.

 

[JohnK]

Sounds like communism to me. The less government meddles with superannuation, the better.

That's not communism. True communism as you'd know is when people work together for the good of the people. Military dictatorships often confused for communism are a different story.

Governments need to take greater responsibility. If you want people to save for their retirements then the government needs to assist more instead of farming it off to greedy private enterprise.

You think financial advisors are a great idea. I don't. Too many shonks out there. Most people, including me, wouldn't know the difference.

And yes we do think differently. I feel sorry for people who are starting off now and will retire in 40+ years. They won't have much. The ponzi scheme will totally collapse by then.

P.S. I have managed to save for my retirement without superannuation. Without any financial advise apart ftom my illiterate parents who didn't go past year 6. For me superannuation is a game. It is cream on top. I have been careless and losing some of that cream but about to take some of the control back.

 

[penegal]

Reading a lot of good and bad information here.

heh, too true.

Let's face it - the Superannuation industry is a bad joke to take all the poor fund managers out of circulation from the real funds management industry.

... I am only 1/4 joking here.


But all those big bad banks need to sell their garbage to someone, who better than your super fund.

 

[OATEK]

That's not communism. True communism as you'd know is when people work together for the good of the people. Military dictatorships often confused for communism are a different story.

Governments need to take greater responsibility. If you want people to save for their retirements then the government needs to assist more instead of farming it off to greedy private enterprise.

You think financial advisors are a great idea. I don't. Too many shonks out there. Most people, including me, wouldn't know the difference.

And yes we do think differently. I feel sorry for people who are starting off now and will retire in 40+ years. They won't have much. The ponzi scheme will totally collapse by then.

P.S. I have managed to save for my retirement without superannuation. Without any financial advise apart ftom my illiterate parents who didn't go past year 6. For me superannuation is a game. It is cream on top. I have been careless and losing some of that cream but about to take some of the control back.

While not as pessimistic as JohnK about super, I am in the same camp when trying to judge good from bad on financial advice. I know there are some advisors on here that are held in very high esteem, but when I was making critical decisions 17 or so years ago I didn't know where to look. As someone mentioned up-thread, the NSW State Super fund have a financial planning offshoot (SSFP now called StatePlus) who I eventually turned to when leaving the public sector for private enterprise. The advice I received was to preserve my benefit in the SSS Defined Benefits Scheme rather than cash out, look at diversifying with some property, and putting the maximum p.a. into any new super fund, and I am very pleased I took that advice.

When I moved to the private sector organisation in 1999 they put me into an ING (since part of the ridiculously named OnePath) fund, that consistently under-performed, which I should have exited much earlier. When I reached 60 the SSS Scheme began paying me a pension under the scheme rules, and I went pack to the SSFP and they put me into a new fund fund for current super contributions, and since I have added a transition arrangement that allows me to work only three days a week, supported by two pensions. These funds my not be at the leading edge, but I am receiving consistent returns, increasing my fund balances and generally feeling quite confident that when I pull up sticks at the end of next year I will still be able to enjoy the same level of lifestyle and travel that we have enjoyed for the past decade (i.e. at least one major overseas trip of 3+weeks each year, on top of various domestic/asian sojourns).

I wish I had taken control of the ING account earlier, but even back in the mid-2000s I didn't have confidence in the advisors I was pointed at by banks etc. It wasn't until I went back to SSFP that I finally felt things were getting under control. So as others have said, finding a trustworthy advisor and sorting out your super should be a priority for those of us not well versed in financial matters.