Vanguard Super?

Questionare recieved and responded. I'm probably asking too much

When it comes to money and investing, how would you describe yourself?*

I enjoy learning about investing
Strongly disagree
Slightly disagree
Neither agree or disagree
Slightly agree
Strongly agree

People come to me to talk about investing
Strongly disagree
Slightly disagree
Neither agree or disagree
Slightly agree
Strongly agree

I tend to be more hands-off, leaning on others to help with my investments
Strongly disagree
Slightly disagree
Neither agree or disagree
Slightly agree
Strongly agree

I consider myself financially responsible
Strongly disagree
Slightly disagree
Neither agree or disagree
Slightly agree
Strongly agree

When I think about retirement (even if it's a long way away), my biggest worry is*
Living the life I want in retirement
How to save enough so I am in control of when I retire
How can I save for retirement and also pay my bills and live the life I want now
Not related to money at all

Ans: Well it is about money, but it's not really about money (and it's definately not about the other answers) - Setting up with a superannuation fund with an *exceptional* level flexibilty to ensure I can take avantage of the full extent of the benifits of superanuation law in a way that specifically suits me - that flexibility extends to full inspeci transfer of member assets to another superannation fund if the fund I'm with (assume vanguard super) ceases to suit my requirements.

 

Still following with interest.
Come on get your act together Vanguard.

 

In specie transfer between funds is a CGT event and comes with a contribution "trap": that may dont realise. You can take XXX BHP shares from one fund at $100 but they may enter the other fund at $97 cost and overlap with a CGT issue. The ATO has an obscure ruling on this which funds all know about and follow. It deems the cost at the market value on the date received not the date transferred or agreed. It can mean the CGT amounts are wrong for sale and purchase since CGT laws mean CGT event A1 isnt applicable to the contract price as it wasnt used yet the former fund will measure the CGT based on its value. It can be effective to sell, rollover cash and rebuy to avoid a complete mess for the sake of a small cost in brokerage. Property should often NOT be dealt with inspecie without duty rulings in the relevant state.

 

Curious, would that that apply for an SMSF in the case of seperation of spouses that are the only two members of the SMSF and one wishes to leave the fund? Or is there CGT relief to the fund in this scenario?

 

Yes. However there is a specific tax and also super law/s that governs a spouse splitting agreement that is made by a court. This may disregard the CGT issues. The rules are strict. The assets must be in their original form, such as shares or real estate. Where you liquidate the assets and transfer cash, CGT applies
INCOME TAX ASSESSMENT ACT 1997 - SECT 126.140 CGT event involving small superannuation funds

Part VIIIB of the Family Law Act 1975- gives a court the power to deal with superannuation interests of spouses (including de facto spouses). The Family Law Regs set out how super is measured etc. Part 7A of SIS Regs allows powers for super accounts to be split. A split may be a rollover or not. If rolled over then a CGT transfer could occur if its inspecie. IF.....It is a limitation of smsfs. eg No industry fund may accept certain investments such as property, unit trusts that are unlisted etc. Some will accepted listed investments but may have % limits which fail the rollover requirements. . Due to the low tax rate it isnt a major concern for most people. 10% tax and reset costbase is generally nothing worth the effort of inspecie especially when a divorce occurs. I have seen it however.eg a specific property from joint smsf to a personal smsf. And sometimes one spouse will just say ...no.

The members may also mutually agree to wind up the SMSF and rollover cash after each members shares in CGT where a spouse split must consider the asset value and the tax along with all other assets. Thats the role of the court if the parties cant agree. .. however, the super that is rolled over as cash will be after tax and may still be matrimonial property subject to the Family Court to make orders.

Where all transfers are made according to s126-140 the costbase of the asset received by the fund will be that of the former fund. This information is not always provided and should be a aspect of the orders.

 

Vanguard Super delayed until 2022 | Super Review

 

Glad I didn’t wait and went with StakeSMSF instead.

HostPlus ChoicePlus were the other leading direct ETF contender and have increased fees recently with an additional $30.64 p.a. admin fee to cover legal costs. Total minimum cost for two now $577.28 plus expensive brokerage ($19.95 or 0.11% HostPlus, $9 VPI vs $3 for Stake)

 

I can forseee many issues that a disrupter like Vanguard may encounter with Australia's super and regulatory enviroment v that of the UK. The greater one is MySuper and the "one fund" mandate etc. Even the rigidity of new superstream v 3 poses some challenges to the seemingly open account basis Vanguard wish to portray. There are many risk elements that may be difficult for APRA and the Vanguard model.

There has been some talk about a concern that many entities are supporting non-advice smsf setups to engage in high risk and this flaw in the SMSF model seems to have filtered down to some concerning areas eg very small funds engaging in very high risk v that of the regulated models that govern industry and APRA funds. With market growth it all seems rosy but cracks may appear if a market turnaround occurs. Very high risk may demonstrate as losses later and even be magnified.

 

Vanguard ‘confident’ its super fund will be a winner

Financial services juggernaut Vanguard concedes it will be difficult to crack the $3.3 trillion superannuation market in Australia but says now is the right time to swoop.

“It’s going to be hard,” Vanguard Australia’s head of superannuation, Michael Lovett, said. “We know we’re up against some really strong competitors. But we’re confident that in our history, when Vanguard puts its mind to something we can be competitive.”

 

Bummer it was push back to 2022.
Lets hope it is all sorted and ready in 2022.

 

I heard there will be a pre-release for employees, family members and friends. It looks like it will happen this year. I think I`ll jump straight in, 50% VTS 50% VAS and maximize contributions for me and my wife, set and forget. I assume fees will be very low and it will shake the industry.

 

it isn’t clear year whether Vanguard Super will offer ETFs at least initially. It may just be pooled managed funds.

Their Vanguard Personal Investor product also doesn’t offer VTS as it is US domiciled so I’d expect the same for their super offering even if they do offer ETF’s. Eg VGS rather that VTS/VEU

 

Highly likely that PSTs will be used as these can be repriced daily. . There are many regulatory hurdles APRA want addressed. The chief one is the view many people could go all in. There also needs to be some consideration of "MySuper" based issues. Many employers are limited to the funds they can contribute to. The super clearing house must allow these Vanguard products to accept contributions based on My Super rules and the abilty to opt out without knowing what you are opting out of isnt addressed

 

Hey guys, assuming Vanguard will launch this year, what ETFs would you pick for a 20 years timeframe?

 

20 years set and forget?
VTS

Not advice.

 

Very unlikely to be included in Vanguards Super offering. It isn't available on Vanguard Personal Investor due to being US domiciled. It is unclear if Vanguard Super will offer ETFs at all.

 

Yep, super set and forget, reinvest the dividends and contribute as much as you can, that`s my plan.

I think at one point all the products will be included.

 

Wealth giant Vanguard, which manages $10 trillion on behalf of investors around the world, has hit back at market speculation that its much-anticipated superannuation offer is behind schedule, saying it is confident of launching by the end of the calendar year.

‘No delay’: Vanguard says super launch on track

So self-assured was Vanguard of its new Australian venture that it abandoned its long-standing business of managing money for third-party super funds, forfeiting about $100 billion worth of local investment mandates.

But the world’s second-largest asset manager went relatively quiet about the project throughout the COVID-19 pandemic. While advertisements introducing the firm to local customers began to air on network television last year, market observers and competitors began to speculate that the launch had hit a snag, given the time since it was first announced.

Asked to comment on the industry conjecture, Michael Lovett, head of superannuation at Vanguard Australia, said the firm was committed to the launch and was making good progress. But he admitted it had been a challenging 2½ years.

He confirmed Vanguard Australia was yet to be granted a registerable superannuation entity (RSE) licence from the Australian Prudential Regulation Authority. “The regulator has high standards, which we agree with,” Mr Lovett said.

 

A bit of marketing spin. Vanguard must be hitting a lot of regulatory hurdles. They will most likely adopt a unitised large number of ETF investments or hybrid "strategies" which are only capable of being held by their own RSE Trustee. Vanguard would be price maker and also product wholesaler, custodian and trustee...Thats messy and complex. Just because its low costs doesnt mean its OK. There will be fund mandated limits and rules on % and more. Then all the member framework that sits off to the side. Even cash and other fixed income etc and insurances, MySuper compliance ...etc. The one problem I see is the "in house asset limit" which may stop a Vanguard product holding more than 5% of vanguard investments and it would need APRA to consider why such investments arent a in house asset according to SISA s71(1) (e) and (j) ....when they are. A example could be a CBA Staff Super Fund cant hold more than 5% of its investments as shares in CBA.

One issue that isnt explained yet is how independence works. The SIS Act doesnt allow a trustee to be influenced and that the Trustee may even need a independent board (1/3rd PLUS Chair). Yet its a "Vanguard" brand holding Vanguard constructed product. Given Vanguard make a margin on pricing, the issue of fee double dipping (even at a low % margin) may have some problems. The very fact Vanguard are seeking to profit from this amrket segment is self contradicting perhaps. But not greatly different to unions v industry funds perhaps ?

 

Any update on this?
No news is good news???
‘No delay’: Vanguard says super launch on track
‘No delay’: Vanguard says super launch on track