Anything and Everything about Superannuation

This is what the eSuperfund site says:
ATO Supervisory Levy
The ATO charges an annual levy of $259 for each SMSF. This annual ATO Levy applies to all SMSF's and not just SMSF’s administered by ESUPERFUND. Accordingly the annual ATO Levy cannot be avoided irrespective of which provider you choose to administer your SMSF.

ASIC review fee
In addition where the sole purpose of the company is to act as Trustee for a SMSF (for a "special purpose") the annual ASIC review fee is reduced to $46 per annum compared to $246 per annum for a company that is not a "special purpose" company.

So in reality, it appears that the actual fee on top of fees paid to Esuperfund is $259 + $46 (assuming the company is set up for the sole purpose of acting as Trustee for the SMSF).

Happy to be corrected.

 

Also we got charged a government fee with our SMSF set up last year when we completed our tax return

Included in the estimated figure is a yearly Australian Taxation Office compulsory supervisory levy of $518 which applies to all newly registered self-managed superannuation funds for the year ended 30 June 2016.

 

Just checked my bank statements. You are correct I only had to pay $47 to ASIC instead of $249 as previously quoted.

Cheers,
Oracle.

 

And you can pre-pay 10 years worth of ASIC fees which cost us $347 (or $34.70 per year) when we did it a couple of year ago.

 

Yep we did the same a few years ago.

 

You have to wonder with many Superfunds, how about nice simple retirement funds....for the people

Industry super funds pay unions more than $50m over 10 years

How to end super rip-off scandal

It’s a pity Australians were never able to vote for superannuation — the forced siphoning of 9.5 per cent (or more) of their wages into confusing accounts that will be mercilessly gouged by the financial services sector until they retire. New Zealanders voted on super in 1997 and more than 90 per cent of them rejected it, which was wise.

Australia’s super system has cost government and workers a fortune in forgone tax revenues and fees to the massive benefit of the financial and professional services industries. It’s shifted wealth from poor to rich, distorted the economy and done precious little to reduce Age Pension outlays. Not many people see superannuation this way because the industry has such well-heeled, self-interested cheer squads relentlessly singing its praises.

Anyway, we’re stuck with super; so 25 years on, perhaps it’s time to at least try to make it work in the public interest. The level of super fees, a national disgrace and a direct consequence of government policy, is the lowest hanging fruit for policymakers, notwithstanding its mighty strong stem.

The Productivity Commission released an interesting 265-page report last week canvassing ways to reduce super fees. It rightly acknowledged competition is a farce in a compulsory system, which should have been obvious to the Keating government that drew up the super rules in the early 1990s.

Since 2004 the value of super assets has more than tripled to more than $2 trillion, yet the average annual percentage fee has barely fallen, and remains more than 1 per cent.
​

The great super scam

 

Thanks @austing. I'm still on a steep learning curve.
I think you're suggesting:

• transfer any super into a low cost super fund (esuperfund or another), choose international shares (high - but not 75%+ I presume?). Given they are international, I presume no/little franking, so this is the growth play with any dividends DRPed although no franking means no grossing-up benefit either.
• use any non-super investment funds to buy dividend focussed shares (LICs perhaps) aiming to live of dividends in early retirement.
• on access to super, you drawn down the super paying no CGT

If that's right, I've a couple of questions:

• But after retirement, don't you miss the advantages of grossing up dividends (ie. 0 tax) in a superfund retirement vs just having them as income and having to either pay some tax and perhaps get some back from franking?
• To retire early, say on $50,000 of dividend income, you'd need a non-loaned non-super investment of $1m @ 5% dividends. That's not small! ...and if you had loaned it, then the repayments are barely matching dividend income so you're not able to retire on $0.
• While I like your reasoning for peace of mind, if you had $1m of cash (ie. not loaned), surely there's more tax effective ways of playing things until super access age?

 

great video!

 

Got a reply back from Australian Super in regards to offering lics and other etfs within their member direct product offering!

They said they are aware of competitors offering a more diverse range of offerings and the investment team will be making some inclusions and changes to their products in the near future.

Sounds good!

Until then it's still DIY pre mix option with Australian super at a 70 30 split to Aust shares and int shares !

 

Hi all

Have been with them with the DIY mix (50% Australian shares / 50% International shares) for quite some time.

Last financial year the returns were around:

Australian shares - 12.65%
International shares - 15.66%

If they include the LIC option through Member Direct it may be worth a look. More likely from my point of view it looks too much trouble as the current allocation of the Australian Share DIY mix is close enough to the LIC for my liking and not worth the trouble.

Probably keep it as it is - 9.5% employer contribution goes in, shovel some of my own funds in over the year, keep the mix the same (ie, 100% equities) and claim the maximum personal deduction at the end of the year (ie, $25000 - total employer contribution).

Hopefully wake up one day with a nice healthy balance and then another day turn it into a tax free income stream to supplement other sources of income.

Loving the change in super from 1 July 2017 where I can claim deduction for super without the limitations of having to salary sacrifice.

Current mix is growth focussed, DCA, tax effective and simple - get on with life.

Best to all

 

I don't think austing is suggesting Esuperfund or any SMSF. High growth implies a premixed option and finding one with a high international allocation. Some funds allow you to choose allocation between Australian and international equities and then forget about it.

Bunlee just mentioned using Australian super to go a 50/50 split in a DIY mix. Very cheap.

Not easy no, plenty do it however.

Why do people but negatively geared property with huge loans? Because they believe it will grow. Same with why people use loans to buy shares, they hope eventually they will grow.

 

A bit late to the party, what are people’s thoughts on HostPlus?

 

Just thought I'd share. My super is with x company and each time they send a statement with a cover letter. The cover letter says bla bla, the balanced option returned x% bla bla bla. For the last 10 years I believed that my Super was in the balanced fund - I mean why would I not think the cover letter related to my super? Every year it mentions the balanced option.
So I only just discovered that in tiny 8pt font that I am in a different group which returns peanuts!

 

Not spruiking the source, however the content is interesting for those who can't salary sacrifice, those who have sold a ppor and a few others.

Linky

 

I suspect with the legislation effective from 1 July 2017, there could be some unintended consequences.

I was chewing the fat with an acquaintance - a cold glass of vino was involved - and the topic turned to superannuation. He receives defined benefit incomes (Defense force, public service). As a result, his total transfer balance cap based on these exceeds the $1.6M cap. He also has a SMSF which itself is well in excess of $1.6M and reverted to accumulation phase. I got the impression he also has other investment income but I don't know the details obviously as I never press people on these matters.

His approach is one of Well, I'm very comfortably well off on the pensions alone, so if the Government has decided I am no longer required to draw down a minimum pension, I may as well increase the SMSF and my beneficiaries can benefit.

Seems to me that contradicts the Government's original concept of consuming superannuation in retirement.

Probably not that many would be in his position however but it was interesting nevertheless.

 

Pretty hard now to accumulate $1,600.000 for new entrants even if contributing the full $25k from day 1.

 

About 25 years with 7% p.a. returns.

 

I consider you're right. A few will or can using the 25k deductible and the 100k non -deductible but I think the reality for the majority it'll be a pipe dream.