Anything and Everything about Superannuation

An intresting perspective

Funds have been peddling the Great Super Lie

Money in retirement: more than enough | Grattan Institute

I recall Peter Martin wrote an article some years ago expressing a similar view but referencing the "comfortable retirement income" parameters of the ASFA.

Being of unsound mind, I've usually had a rather skewed opinion of the ASFA position given the possibility of self-interest by that organisaion.

 

The Grattan Institute's closing comment left me a little confused "And superannuation tax breaks and age-based tax breaks should be reduced, to ensure the retirement incomes system does not become an excessive burden on future budgets, and endanger funding for aged care and health".

Incentives are there to encourage the contributions into super and to delay some of the cost of providing the pension. Obviously, If you've over-provided, then you'll miss out on the magical part-pension (health card, discounts etc) but the govt is footing the bill for the lost tax revenue which would otherwise accrue.

 

These limits recognised that many “fortunate individuals” were generally unable to build up superannuation balances unless working for the government.

I was not eligible for superannuation until I was over 40. Most women weren’t. Hubby was, but when he left a job the superannuation was paid out, no such thing as rollover accounts. These short-term, high voluntary limits (paid in after-tax) attempted to make up for late entry into superannuation.
Marg

 

While not saying exactly where I stand in regards to income @Marg4000, I know I am better off than 90% of other Australians using equivalised household disposable income as the measure.

I consider I have achieved that through being fortunate part of which was, in my view, the ability to plow lots into superannuation due to relatively generous limits allowed at one time. Not many of my peers, either in percentage terms or in absolute numbers, were in a similar position. I have known some whose idea of retirement is How long can I live off my $80k of super before I go on the pension?

The amount we were able to put into superannuation really enhanced the end result. So from my perspective that is my definition of fortunate.

Just for info, the median equivalised household disposable income for all Australians is $853 per week based on ABS data for 2015-2016.

 

Superannuation rise will strip $20b from wages: Grattan Institute

 

Super never strips a cent from employers. The high court agrees super is part of employee remuneration. Unpaid super is employer theft of remuneration

The wages trade off is $1 in salary or $1 in super. The ALP policy to boost super may be a transfer of earnings growth into banked super savings. Not the economy

 

Just saw this one advertised
www.superestate.com.au not my cuppa tea but..

 

@Redwing - low yield, falling asset values.

I'd hate to see the annual return though it will be increasing for late joiners.

 

I wonder if they report gross or net returns for this class. Would be quite a difference . While many like something tangible to call their investment, I don't think owning through a super fund would have the same appeal as owning directly.

 

My word. I am surprised at this. I am so out of touch with this stuff I hadn't realised it is apparently it is a case of lodge a few documents, get some ABNs, AFS's, AFSL's and Voila! Away ya go with a super fund.

Any vetting by regulators (snigger) of fit for purpose, of good character (Hello IOOF) and such or simply go ahead?

 

What a way to put people's retirement savings at risk. Buying high end properties with low yields and no leverage will do well in the long term - NOT

 

Hi Everyone,

I am new to this forum and my husband and I are looking at setting up a SMSF to purchase property and I need a answer to a question, which I’m hoping some here might be able to answer.
We will have $340k combined in super, he works full time and earns $110k and I am currently on maternity leave.
I have been told that we will need more than 30% deposit to purchase a property in our SMSF because I am currently on maternity leave. Is this correct? Also told to wait until I return to work next year to purchase property in SMSF.
Also can anyone tell us how much we might be able to borrow to purchase property in our SMSF?

I understand if you reply it is not financial advice.

Thank you in advance

 

The SMSF trustee will need around 30% plus costs - whether you are on maternity leave or not.

You need credit advice on how much the fund can borrow as there are a lot of variables.

 

Effectively your loan will be serviced on 10k contributions assuming 9.5% payg plus rental income. Once you choose a property send the rental appraisal to your broker for an assessement...its pretty simple to determine serviceability for an smsf and once the smsf is set up you will be in a position to offer for a property. Remember you cannot legally buy a property until the smsf companies are established.

Hope that helps

Cheers Ivan

 

How much are you wanting to spend on the property? 30% is not a requirement. 20% options out there as well but interest rates are higher.

Let's say you want to use $250k as 30% deposit, that translates to $583k of borrowing but the catch is servicing. With $110k income, your SMSF need pretty healthy cashflows (rents etc) to make it work. This can mean a higher deposit and lower borrowing.

Get your broker to calculate how much the SMSF trustee can borrow (with just one income and two incomes) and take it from there.

 

I wouldnt calculate a SMSF borrowing based on capacity and servicing. That is a trap of brokers as they are paid to maximise loans. This is contrary to best interest for a SMSF. I would carefully consider the danger of negatively geared cashflow for a SMSF. A poorly funded borrowing will continually consume contributions and literally go backwards with few options (if any) for adding any extra $$ if someone loses a job, dies, gets sick etc.

Have the broker address guarantees and the impact on individuals too.

One of the key benefits of super is low gearing - Positive gearing. This can allow income to be taxed a t a low rate and the fund can grow and diversify too.

 

Brokers have to be very careful with SMSF loans. They could easily cross the line and end up giving financial advice.

I consider SMSF loans too risky and don't do them anymore for this reason

 

Hi everyone,

Thank you for the replies. Has Provided us with answers and even more questions
Someone asked how much we were planning on borrowing.
We were considering one of two options:
1) purchase a house in deception bay (we live on the peninsula so not too far from us ) , qld for approx $330k
2) purchase a DHA property due to the guaranteed rental income for approx $550k

Thank you

 

In both cases, you can aim to have as much deposit as possible so that property is neutrally geared. Based on the rent and interest on the mortgage, a circa 40% deposit may just fit the equation.