Super funds return 10%, how much money is enough, updated contribution guides, bumper Q and As and more
Welcome to the bumper July 2010 edition of the SuperGuide newsletter, a free and independent source of superannuation information for consumers.
The highlights of this month’s bumper SuperGuide newsletter are:
- SUPER FUNDS DELIVER 10% RETURN TO MEMBERS FOR 2009/2010 YEAR. After two horror years, super funds have delivered healthy returns for the millions of fund members still grappling with the devastating
- COOPER REVIEW: TOP 10 RECOMMENDATIONS FROM FINAL REPORT. If you have been reading the daily papers, you may be under the impression that the Cooper Review recommendations are set to become law. Not so, at least not yet, and probably not all of the recommendations. The Government has yet to respond to the final report, but you can check out the main recommendations by clicking on the link below.
- HOW MUCH MONEY IS ENOUGH? New data has been released indicating that our current retirees need more money if they want a ‘modest’ or ‘comfortable’ lifestyle. Find out how much such a lifestyle will cost by clicking on the link below. If you want a lifestyle that is more than ‘comfortable’, then we can also help you work out how much you need. Click on the links below.
- UPDATED CONTRIBUTION GUIDES. Our contributions survival guides are very popular with SuperGuide readers, and we have now updated them for the 2010/2011 year. You can check out the guides by clicking on the links below. You can also access them by clicking on the links at the right-hand side of the home page.
- MAKING SUPER CONTRIBUTIONS: 20 POPULAR Q AND As. We have been inundated with questions over the past few months and many of the questions relate to the contribution rules. In this article, you can find 20 of the more popular Q and As that we have answered about the contributions rules, updated for the 2010/2011 year. We are regularly updating the site with new Q and As so if you have a question, check out our site first, in case we have published a response to similar question. Click on the link below to access the 20 POPULAR Q AND As on contributions.
- SUPER AND TAX. Take a refresher in how the super tax rules work – how super is taxed at three stages,
In this month’s newsletter, you also can read about the the rules for claiming tax deductions for super contributions, tips for over-65s making contributions, whether
COMING UP!
- ELECTION SPECIAL. You may have noticed THE SOAPBOX is missing from the JULY 2010 edition. No, I certainly haven’t run out of opinions, but I am saving my views (and there will be many) for our election special which will be emailed to our subscribers in the week prior to the 21 August 2010 federal election. We will follow-up on the consequences of the election result for superannuation savers in the SEPTEMBER 2010 edition.
- INVESTMENT SPECIAL. Coinciding with the issue of millions of fund member statements by super funds, our SEPTEMBER 2010 edition will focus on investment performance, asset allocation and SMSF investment strategies. As a bonus, I will be sharing my own secret weapon when accumulating wealth – TARGET RETURNS. I believe the super fund industry has the investment game the wrong way up when building wealth for super fund members – but you’ll have to wait until our SEPTEMBER 2010 edition to find out why.
Behind the scenes we have been working hard to make SuperGuide even more consumer-friendly. We are developing age-based guides, enhancing our search facility and updating all content to reflect the 2010/2011 year.
Note: You can click on the links below or you can access the newsletter links directly via the SuperGuide website. Click here if you would like to access the July 2010 newsletter page via the website.
SuperGuide is now tweeting merrily – you can follow us on Twitter, or you may prefer to become a SuperGuide fan on Facebook, or do both.
If you like this newsletter and our website, then please pass on the newsletter to your friends and encourage them to sign up for the SuperGuide newsletter. As consumers, we have more influence with decision-makers when we speak as a group.
Thanks for supporting SuperGuide.
Trish Power
FEATURES
Super funds deliver 10% for 2009/2010 year
It was touch and go for Australian superannuation funds, enduring a shocking sharemarket performance in May and June, but super funds have stumbled over the line to deliver double-digit returns for the 2009/2010 financial year, according to rating company
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Retail funds outperform industry funds for 2009/2010 year
Can you feel it? The warm breeze is the collective sigh of relief within the funds management and superannuation industries that super fund returns are in the black – and in double digits. The median growth fund delivered a return of 10.4% for the 2009/2010 year, and the top-performing super funds for the year were predominantly retail
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Cooper Review: Top 10 recommendations from final report
On 5 July 2010, the Government released the final report of the Super System Review (Cooper Review). Although the Government won’t be providing an official response on the final report for several weeks, the Superannuation Minister, Mr Chris Bowen made positive noises about two of the ten recommendations put forward by the Cooper Review.
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Making super contributions: 20 popular Q and As
I receive many interesting questions from readers. I believe this contact with our readers makes our site even more consumer-friendly because we enhance the SuperGuide website in response to the popularity of certain articles and topics, and in response to the types of questions that we receive.
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HOW MUCH MONEY IS ENOUGH?
A comfortable retirement: How much money is enough?
So, the big question is: how much money do you really need for your retirement? Lifestyle is a very personal thing —luxury living for one person is a modest existence for someone else. I don’t intend to suggest the exact lifestyle you must choose for your retirement years but I can offer you some guidance on the amount of money you need if you want to cover your basic living costs and support a hobby or active social life. For example, do you expect to take frequent holidays and are you planning to enjoy regular glasses of wine or beer?
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Setting a retirement target: Living on more than $55,000 a year
The most popular question about superannuation and
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UPDATED CONTRIBUTION GUIDES
Super concessional contributions: 2010/2011 survival guide
Superannuation contributions can be divided into two types — concessional (before-tax) and non-concessional (after-tax). Each type of super contribution is subject to a contributions cap (see table below). A contributions cap sets a limit on the amount of contributions you can make in any one year. If you exceed the cap, your excess contributions are likely to be subject to
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Your 2010/2011 guide to non-concessional (after-tax) contributions
Non-concessional contributions are more popularly known as after-tax contributions. You may even hear them called ‘undeducted’ contributions. Such contributions are subject to a contributions cap, which sets a limit on the amount of after-tax contributions that you can make in one year (1 July through to 30 June). If you exceed the cap, your excess contributions are likely to be subject to penalty tax.
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Cashing in on the co-contribution rules (2010/2011)
The Federal Government is giving away money to anyone who makes a non-concessional (after-tax) contribution to their super fund, and who earns less than $62,000 a year. The tax-free giveaway is officially called the co-contribution scheme.
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For over 65s: Ten super tips when making contributions
Anyone under the age of 65 can make super contributions without having to satisfy a
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HOW TAX AND SUPER WORKS
I’m under 60. Does my super payout also affect my other income, and tax bill?
Q: I have tried to phone the ATO re this query but can’t get through! Could you tell me the answer to this question? I turn 55 soon and I am eligible for a super payout of $150,554 next month of which only the $554 is taxable at 16%. However I still intend to keep working at my $58,000 a year job and wondered how this will affect the tax payable on my super.
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Super for beginners, part 14: Save tax – supply TFN to your super fund
Here’s a tip that can potentially save you thousands of dollars. Check that your super fund has your tax file number (TFN). If you joined a super fund before July 2007, or started your current job before July 2007, then your fund may not have your TFN. Effective from 1 July 2007, when you give your TFN to your employer on a TFN declaration (NAT 3092), your employer must forward your TFN to your super fund.
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Super for beginners, part 15: 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 and when receiving super benefits.
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For your convenience: income tax rates for the 2010/2011 year
Superannuation is a concessionally taxed investment vehicle, which means the rate of tax that you pay on your personal income generally influences any decision that you make regarding your superannuation savings. Although SuperGuide is not strictly a tax information site, for your convenience we have included the latest income tax rates, and the income tax rates for the two previous financial years.
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DIY SUPER
Minimum pension payments: At what date do you determine the age for payment calculation?
Q: I am drawing an account-based pension from my SMSF. I am turning 65 in September 2010. Will I need to draw a minimum of 2% or 2.5% for the 2010/11 year? Or, in other words, what is the determining age, the one at the start of the taxation year, or the age attained in the course of the taxation year?
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Tax-deductible contributions: Timing the start of pension is essential
Q: Can you tell me if the rules regarding putting capital gains tax money into super changed on 1 July 2007? I put money into my SMSF in June 2006 from a capital gain. I wasn’t able to tell the fund at that time what it was for as my accountant hadn’t completed the figures so that notice was sent to them in June 2007.
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SMSFs: Taking lump sums from accumulation account
Q: With a SMSF with two members both having accumulation and pensions, when you draw down pension amounts the drawdown amount reduces the pension balance in accordance with the concessional/non concessional percentages and any super contributions go into the accumulation account.
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Q and As
Permanent contribution caps for over-50s?: What are the proposed rules?
Q: I am single and 56 years old and hope to retire at age 60. I currently salary sacrifice the maximum of $50,000 into super, (this includes the 9% super guarantee from my employer). Now with the new $500,000 limit introduced after the Henry Review does that mean that once I reach $500,000, I won’t be able to salary sacrifice at the concessional level?
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Co-contributions: Can I claim the tax-free bonus as a property investor?
Q: I am not working but I source my income from rents derived from my property investments. Am I able to participate in the Government co-contribution scheme?
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Co-contributions: Can I claim the tax-free bonus for the financial year that I retire?
Q: I’m aged 69 and I will retire in December 2010. Am I entitled to make a deposit into my super fund and receive the Government co-contribution for the 2010/2011 year?
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