Government must restore public trust in Super

Following on from my post yesterday, here is a link to an article written by Samantha Hodge in the Investor Daily re-iterating the need for Super to be kept sacrosanct.  Interestingly she mentions that those thinking of retiring in 30 years time will need $2.5M set aside for retirement.  What do you think?

Get your hands off Super

I was fortunate enough to attend the SPAA (SMSF Professionals Association of Australia) conference in Melbourne recently.  Given the recent press leaks about Super balances greater than $800,000 potentially being taxed, the time was right for rampant debate.  A line from the SPAA Chairman, Andrea Slattery probably sums up what most of the 1400 people attending the conference thought, “let’s keep super sacrosanct”.  The ability to confidently save for one’s retirement is hampered by not knowing what the future super or tax rules may be.  We need to reach a stage where these rules are set in stone with future changes only allowed with bi partisan support.

Over the past 3 weeks I have had ongoing advice meetings with 3 separate clients who have decided to adopt the “wait and see” approach before adding the large contributions to super that we had planned.  This constant changing of the rules is undermining the confidence that clients have in the super system and also hampering them from reaching the goals they have set for themselves.  It takes time for clients to build up confidence in the tax efficient Superannuation structure, especially if it is post tax contributions (non-concessional) that will be “locked away” for some time. For all that good work to be undone in a few press releases is heart breaking.

At the conference we heard from both sides of parliament, Bernie Ripoll and Mathias Cormann unfortunately not on stage at the same time, both obviously espousing their party lines eloquently. (I reckon the debate that could have ensued would have been worth the price of admission).

The underlying feeling was one of reservation; how can we ensure that this large pot of money held in the Super system (about $1.5 Trillion at December 2012 as per APRA) is off limits for political gain or to balance budgets? The sooner this is achieved the sooner we can all confidentally save for the retirement we deserve.

Here is a list of some of the sessions that were on offer and with many of them running concurrently, I was obviously not able to attend them all. If there are any topics of interest to you, why not give me a call 02-9415-1511 and we can discuss. 

• How to source income in a low interest rate environment
• How to maximise income for Pension and SMSF clients 
• Real Income with lower volatility 
• The Last Word on pensions
• The elephant in the SMSF room- Planning for loss of capacity in SMSF's
• Lending to self-managed superannuation funds - Matters to be aware of!
• Australian equities - What's hot and what's not in 2013
• Life Beyond Cash and Australian Equities
• Family SMSF disasters and how to avoid them
• Capitalising on small business CGT opportunities
• Do wind-ups wind you up?
• How SMSF Auditing needs to change in light of legislative changes and recent case law
• Strategic SMSF Estate Planning
• Auditor Registration
• A risky business - Insurance, borrowing and SMSFs
• Making the most when markets are giving you the least
• Aged Care and Centrelink - The growing advice wave
• Superannuation Contributions - The Revolving Door
• Investing amid uncertainty: A perspective on the emerging markets
• Property Market Update-Commercial and residential
• Does Social Media have a place with SMSFs?
• SMSF Legislation and Technical Update
• Running a business in a SMSF - What they're not telling you
• The New SMSF Audit Frontier
• Intimate with SMSFs - Release of 2013 SPAA and Russell Investment research
• How to Detect Fraud?
• In-house assets and related parties - Are you up to date?
• Gear on, gear off, gear inside, out? A peek at the full wardrobe for decisions on borrowing
• Does death mean the end of an SMSF?
• CGT small business concessions war stories
• Light at the end of the tunnel?
• ATO compliance update 

When Is The Best Time To Start Saving For Retirement?

Well, my answer is always “yesterday”. Yet I’m very aware that the reality of saving for your future is never so simple. What you really need when making decisions about your superannuation contributions, instead of a date by which you should have started saving, is clear guidance based on your particular circumstances.

An excellent article by Christopher Niesche published in the Sydney Morning Herald in August, focused on the recent reduction to $25,000 of the concessional superannuation cap. Contribute more than this amount to your super fund under the concessional cap in any year and an additional tax will be payable.

Niesche asked a series of experts from ING, BFG Financial Services and ANZ on their view of the impact of this change. While they all agreed this reduction should bring forward most people’s plans to contribute to their super, it was not entirely clear when the optimal time was for individuals to start bumping up their super contributions.

To me, the big question raised (yet not answered) by this article is: At what age and life stage is it more prudent in the long run to increase super contributions rather than paying off the mortgage, and vice versa?

And before you put this question into the ‘too hard basket’ I’m pleased to advise that as part of our Personal Ontrack program, we do have software designed to provide you with an accurate and actionable answer to the question.

The program determines whether your money is better off being invested in super, or paid off your mortgage, or simply saved by taking into account your age, tax bracket, mortgage rates and potential investment returns and other parameters unique to you.

By giving you a clear recommendation on when your super contributions need to increase, based on your individual situation, Personal Ontrack can help you make wise and informed decisions regarding your future.

Take the guesswork out of your superannuation plans and contact me, or one of my team to discover more about putting certainty into your financial future.