Phone (07) 3221 1122
Hot Issues
ATO reviewing all new SMSF registrations to stop illegal early access
Compliance documents crucial for SMSFs
Investment and economic outlook, October 2024
Leaving super to an estate makes more tax sense, says expert
Be clear on TBA pension impact
Caregiving can have a retirement sting
The biggest assets growth areas for SMSFs
20 Years of Silicon Valley Trends: 2004 - 2024 Insights
Investment and economic outlook, September 2024
Economic slowdown drives mixed reporting season
ATO stats show continued growth in SMSF sector
What are the government’s intentions with negative gearing?
A new day for Federal Reserve policy
Age pension fails to meet retirement needs
ASIC extends reportable situations relief and personal advice record-keeping requirements
The Leaders Who Refused to Step Down 1939 - 2024
ATO encourages trustees to use voluntary disclosure service
Beware of terminal illness payout time frame
Capital losses can help reduce NALI
Investment and economic outlook, August 2024
What the Reserve Bank’s rates stance means for property borrowers
How investing regularly can propel your returns
Super sector in ASIC’s sights
Most Popular Operating Systems 1999 - 2022
Treasurer unveils design details for payday super
Government releases details on luxury car tax changes
Our investment and economic outlook, July 2024
Striking a balance in the new financial year
The five reasons why the $A is likely to rise further - if recession is avoided
What super fund members should know when comparing returns
Insurance inside super has tax advantages
Are you receiving Personal Services Income?
It’s never too early to start talking about aged care with clients
Articles archive
Quarter 3 July - September 2024
Quarter 2 April - June 2024
Quarter 1 January - March 2024
Quarter 4 October - December 2023
Quarter 3 July - September 2023
Quarter 2 April - June 2023
Quarter 1 January - March 2023
Quarter 4 October - December 2022
Quarter 3 July - September 2022
Quarter 2 April - June 2022
Quarter 1 January - March 2022
Quarter 4 October - December 2021
Quarter 3 July - September 2021
Quarter 2 April - June 2021
Quarter 1 January - March 2021
Quarter 4 October - December 2020
Quarter 3 July - September 2020
Quarter 2 April - June 2020
Quarter 1 January - March 2020
Quarter 4 October - December 2019
Quarter 3 July - September 2019
Quarter 2 April - June 2019
Quarter 1 January - March 2019
Quarter 4 October - December 2018
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 3 of 2020
Articles
September update of latest COVID-19 initiatives.
Update of Superannuation contribution rules from July 1, 2020.
More than $31bn paid under early super release
Your super fund, your choice
SMSFs urged to act on compliance issues ahead of tougher penalties
A beginner's investment guide to long-term wealth
ATO confirms important issue on pension payments
How SMSF trustees navigated COVID-19 volatility
JobKeeper - Latest Update
Pandemic spurs a rise in investment scams
Estate planning and investments
Early release of Super extended to Dec 31
Excess TBC issues surfacing with reduced pension account values
The Bond Market.
Treasury underestimates early super by $15bn
'But how will we pay for this?'
SMSFs urged to review leases before granting rent relief
New financial year to bring new rules for super
Extra Tools & Resources for our clients.
Ways to outsmart your cognitive biases
COVID-19 cuts risk pension pain
New laws prompt review of SMSF estate plans
SMSF sector grows, new fund numbers drop
Your super fund, your choice

 

Choice is inherently regarded as a good thing, particularly in these COVID-affected times when some of our basic choices have had to be suspended for the greater community good.

 



       


So last week’s passage through parliament of a Bill expanding the amount of choice in the superannuation system ought to be reason for a small celebration.


The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 finally provides near universal choice of super fund by breaking the nexus between certain industrial relations agreements and the ability of an individual worker to select their own fund to receive their superannuation contributions.


The superannuation system has much to thank the industrial relations system for. The foresight of key union officials back in the 1980s lead to the creation of today’s industry super funds. But with superannuation now holding around $3 trillion of Australians’ retirement savings the focus has shifted to improving the system’s efficiency and competitiveness as called out by a range of reviews from the Financial System Inquiry and the Productivity Commission.


The legislative changes made last week introduce a fundamental choice for some 800,000 working Australians – the right to choose the fund their hard-earned contributions are paid to.


Small decisions in superannuation can have big long-term impacts.


Choosing which fund to hitch your retirement savings wagon to is one of those decisions. Choosing to consolidate your multiple superannuation accounts into one is another.


While most workers already have the ability to elect which fund your employer pays your superannuation contributions into this piece of legislation applies to those who are under an enterprise agreement or workplace determination where their employer designates their fund.


The intention of this change is to give employees more control and choice over their superannuation and to encourage more engagement, with the hope that the number of individuals with multiple funds having their accounts eroded by two lots of fees will reduce over time.


Superannuation may not be deemed the most pressing issue on the agenda for those who are still far from retirement, but it has good reason to make the list. To ensure you can later live the lifestyle you want, paying attention to your superannuation now is vital.


One of the simplest ways to get on top of your superannuation is to choose to consolidate it all into the one account. Many of us will change jobs several times in our lifetime and may have already accumulated a few default accounts selected by our past employers. By sticking to just one super fund or consolidating your accounts regularly, you avoid paying multiple account fees and insurance premiums. These fees may not seem costly at first, but over time, they will inevitably eat away at your superannuation balance. Consolidating your superannuation also allows you to know exactly how much you have in your fund at any given time.


When consolidating super funds take the time to understand the insurance benefits and options offered by each fund to make sure you are not walking away from valuable insurance cover.


For those people who have not had the ability to choose funds previously it is also worth reframing the way we view superannuation in our minds. Because we cannot usually access it until retirement and contributions are generally paid directly into our accounts by our employer, there is a tendency to view it as money we don’t yet own or control – particularly in our younger years when the account balance is building slowly.


There is a lot of discussion in the superannuation industry about member engagement. Being engaged with your super is smart but it doesn’t mean you have to suddenly have a view on investment markets or to directly control where your money is invested.


This is where an abundance of choice can work against you. Vanguard has produced a research report titled How Australia Saves and one of the key findings was that fund members who exercised investment choice over a 10 year period actually underperformed those members in the default MySuper portfolio offered by the funds in the survey.


So when exercising choice of fund understand that there are many well-diversified default superannuation options on the market so letting the professionals manage the portfolio is usually the best option for most fund members.


The bottom line is that superannuation is simply a concessional tax structure wrapped around your retirement savings where the federal government is offering tax concessions as the trade-off for locking those savings away until the time of retirement.


So mentally put it in the long-term savings bucket by all means but give it the same amount of attention you normally pay to your other investments. This means understanding your retirement goals, the costs you’re paying, and the investment strategy you’ve selected so that your money is being utilised in a way that best suits you.


 


Written by Robin Bowerman
Head of Corporate Affairs at Vanguard.
01 September 2020
vanguardinvestments.com.au


 




21st-September-2020
 

Retirewell Financial Planning Pty Ltd
ABN 29 070 985 509 | AFSL No. 247062
Phone 07 3221 1122 | Fax 07 3221 3322
Level 24,
141 Queen Street (Cnr Albert Street)
BRISBANE QLD 4000
Email retirewell@retirewell.com.au