LIC & LIT Listed Investment Companies (LICs) 2020

Yes, the problem is that it is a partial transfer from Choiceplus. It seems it is all or nothing when it comes to transferring Choiceplus to pension mode. It is quite ironic because we have been sort of worried that the market would crash just prior to retirement but in a funny sort of way it would probably work in our favour. If the market crashed we would likely be able to transfer full amount to pension mode and then when the recovery came, reap the benefits of the tax free environment.

I guess we should be careful what we wish for

 

Trust me, neither the companies offering super funds, nor any advisors involved, want the rules to be as complex as they are.

Because people sometimes point at and shriek and get upset at the people who have to administer the rules, but they're not the ones making the rules.

That's years and years of tinkering with them by successive governments. Which continues.

Don't start me...

 

Wow - I'm going to check mine now - I know we have "in specie" transfers, but never considered that it might be an all or nothing thing.

Although you can only open a retirement account once - as in when you open it, however you open it, you can't further add to it. It's not that that's the issue is it?

 

Yes and the recent matter with AMP is a case in point.

Heard the outrage on the radio all negative but I believe it's up to a member to roll funds over to another fund not the original fund. If the originating fund did it I think there could be very awkward stuff as a consequence. Not aware of the finer details though. Mainly because I don't have to know at this stage.

After all it is all about me and me shouldn't have another coffee but I will.

 

Hi @Starbuck001

We had a bit of a deep dive into Aust Super Direct in this thread
Australian Super member direct
A lot of it was to do with tax implications and one of those implications discovered with Aus Super also, is that you can only transfer in one go and only up to the transfer cap. They call their option 'seemless transfer'.

From my reading though, if you have 2M in direct you should be able to sell down 400K, move that back to standard grouped fund option and then do a seamless transfer of 1.6M from your direct option to pension account, at least avoiding CG tax implications on the 1.6M.

This issue is why my conclusion in the thread linked was that a SMSF would be better than direct if you were likely to breach the cap at retirement.

 

Earlier this year took a radical decision in regard to my personal holdings. Needed a few brews - only coffee not home made hooch - while thinking it through.

It'll be interesting to see how it pans out over six to twelve months.

The radical decision is... around 50% in DRPs.

Can always change it easily if it doesn't work and no major damage will be done really. Buying more shares for income but in a different way.

 

Hi Dunno
Yes that is basically what we have to do. So we need to sell LIC's and a couple of other direct shares to bring us below the TBC. We also have to allow for 18 months of pension payments which has to be held in accumulation mode of the Host Plus pension and the rest can move to Choice Plus pension. The balance above the TBC can remain in Choiceplus accumulation mode until we decide whether to buy more LIC's in that mode or just go with 50% International and 50% Aus. It is pretty frustrating but I guess in the scheme of things.........

 

Hi RogTheBear

We did talk to Host Plus about Opening the pension with a smaller amount and then adding up to the TBC at a later date. We ended up completely confused as he talked about how we could do that but if we wanted to add to it we would need to close it down and restart a new pension. Most of what he said just went over our heads so more research is required .

 

That makes sense to me (I work for a super fund) knowing that once you open a retirement super account, you cannot further contribute to it - so if you find more eligible money and want to add it, you can't, without opening a new retirement super fund, rolling over the other one, and adding the new eligible money.

So if you have a retirement and an accumulation and you, over time, draw down from your retirement, then at some point think you might as well tip what's in your accumulation account in, then you'll have to close the retirement, open a new one etc.

When I say "it makes sense", I'm speaking of the legislation and how it's applied. I assume there's a reason for it, but I've never dug into it.

 

I know not many on this page are fans of BKI, however did you notice their results announcement yesterday?

Basic earnings per share before special investment revenue - 3.25 per share
Basic earnings per share after special investment revenue - 3.48 per share
Dividend - 3.625 per share

I know that last year they would have received a significant amount of special dividends, however in the absence of an increase in payout ratios over the next 12 months or so, I would guess that BKI may announce a decrease in their dividend.

They still have significant cash ~$81m, however they had negative cashflow to the tune of $7.5m this half year (albeit the cashflow is including the special dividend that was paid in H1 2020). With their focus on higher yield (compared to the other old school LICs) and the reduction in dividends paid by big banks etc, something may need to change...

 

I have had a read through of the thread you referred to. Lotsnof interesting and informative content. Thanks.

 

You are just a naughty boy (RIP Terry Jones) forcing me to look at stuff. I need another coffee.

Page 2 of media release, Portfolio Movements.

"Over the last three years we have reduced our overall portfolio weighting in banks from 33% to 15%."

Hmm, AFI too according to previous posts. A trend here?

 

I have no idea what I am talking about but could you create your own SMSF, rollover your Choiceplus investments into your SMSF and then do a partial transfer to pension phase?

 

I also don't know what I am talking about but I am guessing it may be expensive.
We have started by selling off the banks and a couple of ETF's which made up a small portion of our fund then will look at the LIC's. We were thinking of selling the direct bank shares anyway based on their recent antics and because they weigh heavily in the LIC's that we hold (AFI ARG and MLT). As we just need to sell a portion of our LIC's I have been busily calculating the optimum selling prices before they go EX. As we all know, it is impossible to time the market but I guess we are lucky that there has been a very good run recently

 

Is it true the LICs are heavily weighted to banks @Starbuck001? Doesn't seem to be so according to BKI. - see my post above @kierank's.

It'd be more likely ETFs such as VAS have a greater weighting at the moment.

 

Makes one look at what people think in academic circles --33% to 15% over three years as their equality hypothesis is all a matter of personal taste that may well back-fire not if but when they buy back in ..

 

As of 1st Jan ASX300 has weighting of 18.38% of the big 4.



LICs aren’t revealing anything new. They can come up with different stories to justify their actions but the reality is all they are doing is adjusting their portfolios to be in line with index.

Cheers
Oracle

 

I noted yesterday that MLT has almost 22% of their assets in banks. Basically our plan is to keep LIC's in our Pension fund and sell off all the other fiddly bits. Sadly we do need to reduce some of our LIC's in order to transfer from accumulation mode to pension mode. (As mentioned above) .

 

May be sometime this year we could see CSL health care company to top ASX. Could be first time a non mining or financial company to top the list.

Unfortunately for BKI shareholders top 25 companies do not have CSL in it. I don’t understand why they don’t bite the bullet and invest in it. It has never been cheap to buy because of its growth prospects.

Cheers
Oracle

 

Am a holder of BKI, did read this but not going to stress over it.