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'Your trusted source for wealth management tips and information.'
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ContinuumFP eNewsletter April, 2016
- a 6-minute read before links
It seems to be holiday season again…
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STOP PRESS: WE ARE CURRENTLY EXPERIENCING A DIFFICULTY WITH OUR WEBSITE.
IT IS BEING ATTENDED OVERNIGHT AND SHOULD BE FUNCTIONING PROPERLY ON FRIDAY 22 APRIL 2016. IN THE MEANTIME, LINKS IN THE FOLLOWING MESSAGE WILL ONLY DELIVER A WHITE SCREEN.
WE APOLOGISE FOR THIS INCONVENIENCE AND INVITE YOU TO TRY THE LINKS AGAIN LATER.
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With Easter celebrated early this year, we are now only days away from Anzac Day – another day to celebrate those who have given their all in the hope that we might enjoy a higher level of security and maintain a better way of life.
Our thoughts go out to all families who have members serving in our ‘forces’: more particularly though at this time, to those who have lost loved ones in conflicts in our defence.
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…a week later – on Monday 2 May 2016, Queenslanders will commemorate Labor Day: all these Public Holidays!
Arising out of the March eNews, we want to focus on one key area this month: Superannuation – and with the financial year fast coming to an end, this matter could benefit you if attended promptly. (In spite of the timeliness for financial year-end consideration, the following information should be a useful reference to you for further consideration in the future.)
Superannuation
Whilst at this time of the year a significant focus for superannuation is the level of contributions that you can/ should make for the year, we are also using the opportunity to promote some of the ‘management’ issues that should be kept up-to-date in relation to your superannuation.
The areas that you can follow up to ensure your superannuation account is serving your broader wealth management needs, include –
- Does your superannuation provider have your current residential (and postal) address recorded?
- Is all of your superannuation accumulating in just one account? (If not, is there a strategic reason for maintaining more than one account?)
- Has your superannuation provider been appropriately advised as to who you want to receive your superannuation death benefits when you should die?
- Are the funds you have accumulated in your superannuation account been properly allocated so as to take into consideration your investor risk aversion profile and your timeframe until needing to access your superannuation fund?
- Is the insurance you are paying for through your superannuation account appropriate to your circumstances?
- If you have attained your ‘age condition of release’, should you be drawing a transition to retirement benefit from your superannuation account?
Superannuation accounts may exist under a number of types of fund: they can include – public-offer personal or employee accounts; Industry Super funds; employer-sponsored corporate funds; or self-managed superannuation funds (SMSFs). Regardless of the category, all have to comply with the provisions of the Superannuation Industry (Supervision) Act; and depending on the type and/ or size of the fund, need to demonstrate that compliance to their relevant Regulator (either APRA, ASIC or the ATO).
Update your current contact information
On a very regular basis, our office is advised by superannuation funds that former employees of some of our clients have been unable to be contacted and consequently, their account balance is being converted to cash and sent to the ATO (Taxation Office) for safekeeping until that office can identify the owner/ member. In these circumstances, any insurance protection that is held in those accounts is discontinued – and that may have been the only asset protection held by those members.
It is important that you advise your superannuation provider of any change of address – and for you to be alert for an annual member statement to be distributed to you (usually within six months of the end of the financial year utilised by your fund). The address may be a street address, a P O Box address and in many cases now, an email address. Whilst we regularly stay in contact with superannuation account holders who have provided email and/ or postal addresses, we are not favoured with such information in all cases.
Amalgamate your superannuation accounts
Keeping track of your financial affairs is important. By ensuring that all of your superannuation is accumulating in the one fund, control over the various administration issues, including the costs of administration (and again, minimising the risk of ‘losing’ track of your funds), is made more efficient.
With multiple funds, some of the matters we discuss below can be duplicated and/ or out of sync with what you intend: insurance and death benefit nominations are of particular concern in this regard. (In some particular circumstances, it may be appropriate to retain additional superannuation accounts: these are quite rare circumstances however – and should only be pursued under advice from a financial planner.)
Nominate beneficiaries for superannuation death benefits
It is a concern that a high proportion of superannuation fund members have not taken the time to advise their trustees who should receive any death benefits arising from their account. In this circumstance, the trustee of the Fund has to follow the legislation when distributing any superannuation account – and depending on the number of such beneficiaries and the amount in the account, that could have unwanted taxation implications.
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In our website Library articles, there are a number that deal with this topic, including discussion about Discretionary Nominations and Binding Death Benefit Nominations.
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Asset Allocation
The topic of asset allocation (and of portfolio construction) is key to bridging the circumstances and requirements of the investor, with their financial goals, the timeframe they have to achieve them – and their investor risk aversion profile.
Some public offer funds (and most Industry Funds) make the initial assumption that all people of a given age will have the same goals, risk aversion and timeframe and invest funds for all people in that age group in the same portfolio, regardless of their gender, their financial circumstances or their occupation. As financial planners we believe that this assumption is erroneous, or at the least, inappropriate.
There is a fair amount of research into superannuation accounts and products that indicates that members with accounts in SMSFs consistently attain better outcomes than their peers, because of two main factors –
a. their portfolios are better diversified; and
b. they work to a (legislatively prescribed) Investment Strategy,
in most cases, under the advice of a financial planner.
Contributions
The financial year is drawing to a close: if you are eligible to make a tax-deductible superannuation contribution (whether by personal contribution or by salary sacrifice), remember that to benefit from the tax deduction in this financial year, the following constraints apply –
- a tax deduction can only be taken for contributions actually received before/ by close of business on 30 June; and
- there are ‘penalties’ for contributing more than the contribution cap amount relevant to your circumstances (which could be age-related, or dependent on the type of contribution).
Insurance
Because of the provisions of the legislation governing superannuation in Australia, Life Insurance, Total and Permanent Disability (TPD) insurance and Income Protection insurance are the only policies that trustees of superannuation funds are able to carry within their funds – and since 1 July 2014, the ‘occupation’ definition for TPD insurance has been somewhat restricted.
Note that any TPD policies held prior to that date and continued unaltered, are ‘grandfathered’ as to ownership – but may still be restricted when it comes to payout after a successful claim has been made on the insurer.
Transition to Retirement
For people born before 1 July 1960, access to their superannuation account balance is available from when they turn 55 years of age. Those born after 30 June 1960, have a graduating scale of ages for access that means that those born in each financial year after that date – and up to 30 June 1965, add a year, so that those born after 1 July 1964 will be able to access their account balance after they have turned 60. (This access provision is referred to as the Age Condition of Release. By quick reference, if you were born after 30 June 1960, but
before: access is allowed from:
30 June 1961, age 56;
30 June 1962, age 57;
30 June 1963, age 58;
30 June 1964, age 59;
thereafter, age 60.)
Given that superannuation can continue to be contributed to a member’s accumulation account without any work tests applying, up to age 65 (at time of writing), some clients find that they can accelerate their accumulation to superannuation by utilising the ‘transition to retirement’ pension strategy.
General summing up on Superannuation
If any of the above matters trigger a concern for you that something needs to be done to ensure that your superannuation is being managed to your advantage and in your best interest, we encourage you to either –
- (Recommended) Get in touch with your adviser at Continuum Financial Planners Pty Ltd: either phone on 07-3421 3456; or use our website Contact Us facility; or
- Get in touch with your superannuation fund trustee to discuss the matter/s of concern with them. (If unable to get satisfaction in this course of action, see a) above.)
Tips and updates
Starting next month – and over the next several months, we are going to include small pieces of information in our newsletters about issues around Life Insurance; as well as about services we offer. The insurance information is to try to pass on some awareness about the insurance process to help you better understand how to use insurance as a ‘sleep at night’ protection for you and your family.
The detail regarding our services are being posted because of the comments we hear quite regularly from clients that they ‘…didn’t know you did that…’.
Referrals
From time to time we mention that we are open to receive referrals and to work with new clients. We take this opportunity to reaffirm that this continues to be the case, but especially to thank those of you who have referred friends/ work colleagues to us in recent months. Whilst not all of the people we interview on referral, become clients – over eighty percent of them have to date.
If you consider that any of your circle of family/ friends or other contacts could benefit from engaging us to work with them in accumulating, protecting or effectively utilising their financial situation, we would certainly welcome your good word on our behalf.
Spreading the word
Please feel free to send this eNews to at least one of your friends or family: you can use the icons at the head of the newsletter to do that, including emailing it to them. They are welcome to sign up for the newsletter to receive regularly and can do so by going to our website and responding to the pop-up banner that invites registration for the newsletter.
Best wishes for safe commemoration of the forthcoming public holidays:
Continuum Financial Planners
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Continuum Financial Planners Pty Ltd is a Corporate Authorised Representative of Securitor Financial Group Limited ABN 48 009 189 495 | AFSL 240687 Level 8, 260 Queen Street, Brisbane QLD 4000
