July 2009 Newsletter

Welcome to the July 2009 edition of our SuperGuide newsletter, a free and independent source of superannuation information for consumers that can help you plan for your retirement, and potentially save you money in the process.

• EXCLUSIVE INTERVIEW: CHEAP ADVICE. In this edition, we have an exclusive interview with ASIC’s head of superannuation, Louise Du Pre-Alba, explaining the new cheap financial advice option now available from many of the larger super funds. Some super funds are even offering this service to members for free! Check out this illuminating interview in THE SOAPBOX.
• MAKE $300,000 WITHOUT TRYING. You can save for retirement the easy way. I explain how the ‘average’ Australian can turn $4,500 into $300,000 with very little effort. This article is an extract from my latest book, which is designed to encourage those who may not be that excited about super to take an interest and create a more secure financial future without having to fork out any money (besides the $7.95 cost of the book).
• REVENGE OF THE GENEROUS PARENTS. In a bright young world where the word ‘no’ seems to be out of place, the Government penalises your children for growing up, by imposing a tax on any super benefits that you leave to your adult children.
• HOW YOU CAN ARRANGE FOR YOUR DIY SUPER FUND TO LIVE LONGER THAN YOU. You may be surprised by what’s on offer when planning for what happens to your super benefits, and your SMSF, after you leave this earth.

You can find articles on the topics above, plus an interesting report on baby boomers and the GFC, and Q and As from readers, and more, by clicking on the links below.

For those waiting for answers to Q and As: I have held off from answering the bulk of the Q and As for an extended period of time because we were doing some essential housekeeping on the site. After the Budget changes were announced, we conducted a review of the site to ensure that all articles reflected the changes announced in the Budget and then, with the new financial year, we were busy updating all relevant articles to ensure that everything on our site was updated to help Australians seeking super information for the 2009/2010 year. Now that we have completed this update I can return to answering readers’ question. Hopefully, I will get through the Q and A backlog very soon.

If you like this newsletter and our website, then please pass on the newsletter to your friends and encourage them to sign up for SuperGuide newsletter. As consumers, we have more influence with decision-makers when we speak as a group.

Trish Power

If you are having trouble viewing you can view the newsletter online here.

THE SOAPBOX EXCLUSIVE INTERVIEW: Cheap financial advice now available – what does it mean for consumers?
Superannuation funds are now providing cheap (and in some cases, free) personal financial advice to super fund members with the blessing of the Australian Securities and Investments Commission (ASIC). In early July 2009, ASIC announced that it’s okay to provide personal financial advice over the phone, via email or face-to-face without conducting a full ‘know your client’ process provided that the advice relates only to the member’s account within the super fund. Such advice is being labelled ‘intra-fund advice’.
Read more

FEATURES

Turn $4,500 into $300,000 without even trying
All you need is a job and some time. With regular modest superannuation contributions you could have up to $500,000 or more in retirement savings! It doesn’t matter what age you are – 25, 35, 45 or 55 – it is possible to turn $4,500 into $300,000 and more, just by turning up to work.
Read more

Baby boomers delay retirement, retirees return to work
In case you needed further proof of the impact of the global financial crisis (GFC), a recent survey titled Self Funded Retirees has found that retirees have been hit hard by the extended market downturn, while many baby boomers planning to retire have reconsidered and opted to remain in the workforce for a longer period.
Read more

‘No tax’ in retirement because you SATO
The superannuation tax rules are not the only tax benefits that you can take advantage of in retirement. If you are aged 60 or over, your superannuation benefit from a taxed source is not included as part of your assessable income.
Read more

HOW SUPER WORKS

Super tax – as easy as 1-2-3
Your superannuation benefit can be taxed at three stages: When making contributions, When a super fund earns income, When receiving super benefits.
Read more

Dear Dad: Tax for everything
If you plan to leave your super to your adult children when you die, your death benefit may be hit with tax, even though you would have received that benefit tax-free (if aged 60 or over) while you were alive. The reason for this inconsistency is that death benefits paid to non-dependants, such as independent adult children, are subject to a special ‘death tax’.
Read more

DIY SUPER

How can a SMSF live forever?
Q: It has been suggested, that a family self-managed super fund (SMSF) can become a multi-generational tax haven, which can go on into perpetuity, provided that you establish a special corporate trustee, as well as a SMSF Will. The money as I understand cannot remain in the fund indefinitely and the relevant tax has to be paid. Another limiting factor would be that you cannot have more than four members of a SMSF. Could you kindly clarify the situation?
Read more

Making money is a super compound: rule of 72
Investing can put you on the fast track to real wealth due to the amazing effects of compound interest, which is also known as compound earnings. Compound interest is earnings on any earnings that you have reinvested.
Read more

Q and As

Super for beginners, Part 1: I’m new to Australia – help me!
Q: I’m new to Australia and I have absolutely no idea where to start with my super in order to have the best outcome 40 years from now. So far, I have had my super spread through about 3 different industry super funds, as organised by temp agencies. I know this is not the way to continue, but I am not sure who to trust to point me in the right direction. I plan on working, living, and retiring in Australia and want to organize things properly from the beginning to avoid losing money in the future. Help? Thank you!
Read more

No super access for business debts or tax bills
Q: I am a small business owner in the incubus stage. I have just submitted my taxes for the first time in 3 years as the struggle to keep a small business alive has left me working to live. I am looking at a substantial tax payment and I am wondering if I can cash my super to pay off this debt.
Read more