Anything and Everything about Superannuation

I mean 3 year rule

 

That is just marketting.

The SMSF can build terms into the deed about death benefits so that a BDBN is not needed.

 

Ah so is that common? In this case they promote "SMSF wills" as an aspect of the lightyeardocs SMSF trust deeds. I presume they work this way too.

More flexibility than a simple BDBN and an alternative to simply nominating the estate as the beneficiary and then opening up to estate challenges.

 

No more flexibility, I guess the point is it removes any discretion the trustee has, but without the need for a BDBN which has the risk of being defective. Death benefits can still only go to dependants as defined under super law.

 

I see. I presume a trust deed amendment is required if the trustee/members want to change their wishes?

 

Yes

 

Correct, although by no means is all my super in that DB fund, alas. And I can only convert half of that fund to a CPI adjusted pension for life at a screamingly good conversion factor, more's the pity. Still, nothing to complain about, given most don't have that opportunity at all.

I also work in superannuation, so my comment wasn't a plea for directions on what to do, it was a simple comment about what I have always regard as an unfair situation under superannuation law.

"Legal personal representative" as a beneficiary is also a dog's breakfast ...

 

It all started with this and went downhill from there!

 

Give the people rights & that's what happens

 

I would wait until the changes become law with some certainty surrounding the work test issues. Then
1. It would depend on a range of factors. In the year a pension starts, after age 60 CGT will be pro-rata and not 100% exempt just because the asset sale occurs after the pension starts. Its a fatal element many smsf tax advisers will know well. However for those who dont know it can be a trap located when the tax return and actuarial cert is obtained. The tax return doesnt contain any process to treat income prior to the pension start as one element and that incurred after differently as exempt. Instead an actuarial certiifcate apportions the whole year of income....So you cant have 100% tax free if a actuarial certificate is needed.
2. A SMSF may not be the solution. In any fund each member can have multiple pensions but only one accumulation account so you will always reblended the elements. To keep them distinct needs more than one fund. Depending upon intended beneficiaries this can even be a good strategy to keep them apart so that adult beneficiaries get the account which has the most tax free element. Often that is kept on its own.
3. You really need financial advice. All the questions asked involve licensed financial advice. Decisions to start pensions and contribute are always financial advice.

 

A first for me. Received the SMSF tax return (and personal tax return too) electronically from the accountancy firm and signed that way as well.

Modern techo stuff. But now I have to split the bloody things for retention is separate folders.

 

@Paul@PAS understand and agree on points 2&3, thoughts on waiting until certainty on changes to work test.

Re point 1, I may be missing your point, but not following the pro-rata comment on CGT. If an SMSF is 100% in pension phase, has segregated pension assets, and all assets are bank account or listed securities I had assumed a withdrawal would be CGT free.

Edit: I think I see your point now. In the first year the pension starts. So be careful not to sell assets with significant accumulated capital gain until the next tax year after starting a pension.

 

Same. But spouse got a paper form in the mail

 

If a smsf has 100% of its assets subject to pensions for all of the year then yes the gain is exempt. However is ANYTHING changes this its not. eg A new members joins with $10 to open their account, new contributions through the year, a member that exceeds the $1.6m cap, non pension members etc. Some funds cant segregate where they used to. And some segregation fails too. Just because a fund is paying a pension does not automatically make all CGT exempt is the key warning. And its surprisingly common that accountants tell clients that it mean it is. Usually adviser who dont do a lot in the world of smsf work. Its common to find a fund where someone retires then starts a pensionand sells assets after waiting to take it tax free.

Yes in the first year the tax cannot usually be fully exempt

 

Sounds like if assets are (or will be) greater than the pension cap (per member) it might be beneficial to utilize a separate fund in some cases.

 

Best & worst superfunds for 2020/21 are out

Australians urged to switch where they invest for retirement as best and worst superannuation funds revealed

Thirteen Australian superannuation funds fail performance test | Superannuation | The Guardian

APRA reveals best and worst superannuation funds

If you don't like the performance of your fund move.... Sounds simple? It is. You will also need to consider whether you lose some benefits eg insurance coverage.

 

Comparison of MySuper investment option only (as far as I understand it).
Unfortunately like many attempts by the goverment to clean up the leakage in our superannatution system it's a pretty useless comparison for anyone with an ouch of nouse.

I suppose if it gets people thinking about their super and then actually investigating their options then that's a good thing.. Trying to find a positive....

 

A (confused) question: Does the underperforming fund refer to that fund as the whole, or only to the particular product mentioned within that fund? For example, (Fund name) Christian Super - (MySuper product) My Ethical Super. It is not the whole Christian Super underperforming, but rather the My Ethical Super product within Christian Super underperforming? Is my interpretation correct? Sorry I am asking for a millennial relative who has got super in one of the 13 underperforming funds - whether they should switch? Thanks.

 

Just the MySuper option. But it warrents further investigation if the manager is underperforming their MySuper option.

 

Decisions to switch are financial advice and only capable of personal advice under license. You shouldnt be providing unlicensed financial advice to a relative is the key message. Your knowledge limits them seeking their own information to make their choice. And they will never learn. Calling the fund and asking may also yield some useful guidance.

Mysuper options include age based risk strategies. They may even have enhanced risk esp if they are 100% exposed to ethical. The likely underperformance issue may relate to missed exposure to market segments eg banking, resources which has performed well in the review period.
IMO its like saying you went cash and the fund underperformed. why ?