March 2010 Newsletter

Top 10 super wish list, super deal on life insurance, financial advice for $500?, SMSF property instalments, and more.

Welcome to the March 2010 edition of the SuperGuide newsletter, a free and independent source of superannuation information for consumers.

The highlights of this month’s SuperGuide newsletter are:

• THE SOAPBOX: MY TOP 10 SUPER WISH LIST. Only ten? For now! Trish outlines what she believes are the 10 big-ticket ‘room for improvement’ super items hurting Australian consumers, and gives tips on how to fix them.
• FINANCIAL ADVICE FOR LESS THAN $500? YOU’RE DREAMING! Australians are willing to pay only $500 for financial advice, according to a recent survey. Trish believes the survey findings prove there is an untapped market for low-level, affordable, fee-based advice that helps Australians in the transition stage of wealth accumulation.
• IN SEARCH OF THE TOP-PERFORMING SUPER FUNDS. We have the latest performance data from the country’s top superannuation rating companies.
• LIFE INSURANCE: ONE IN FIVE PARENTS WILL DIE EARLY, OR BE TOO SICK TO WORK. The disturbing findings of a recent survey have reinforced the lesser-known benefits of cost-effective insurance within a super fund. In a series of three articles, SuperGuide highlights how to make the most of your non-super super fund offerings.
• SMSFS AND PROPERTY: INSTALMENT WARRANTS 101. Due to popular demand, you can read about the latest ‘hot product’ in the DIY super world.

In this month’s newsletter, you also can read about the latest superannuation rates and thresholds, new Age Pension rates, and Q and As: comparing super funds, SMSFs, and tax in retirement. Click on the links below.

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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

THE SOAPBOX: My Top 10 super wish list for Australian consumers
The Government is digesting the Henry Tax Review and presumably cooking up mind-boggling changes to superannuation and retirement policy for the May 2010 Federal Budget. The Cooper review is considering the many industry submissions before preparing and delivering its final report to Government due by the end of June 2010.
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FEATURES

Investment performance: We’re the best! No, we’re the best!
A popular question from SuperGuide readers is: what is the best-performing super fund in Australia? Using the term ‘best’ is dangerous in any field because it involves some level of personal judgement, and the answer can change frequently depending on what you’re measuring, and when you’re making the assessment.
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Financial advice for less than $500? You’re dreaming
What do you think it costs for a financial adviser to prepare a five-year investment plan? According to a recent survey, nearly half of us (44%) believe that it will cost less than $500 for a financial adviser to meet with us, assess our financial needs and risk tolerance, devise a structure that can hopefully set us up financially for the rest of our life, and then meet with us again, to take us through this amazingly cheap plan.
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Super rates and thresholds for the 2010/2011 year
The ATO has released the contributions caps for 2010/2011 year – no change from the 2009/2010 year caps I’m afraid. The ATO had also released other updated superannuation rates and thresholds for the 2010/2011 year, with further updates to be announced closer to the end of the financial year.
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Age Pension: March 2010 rates now available
The new Age Pension rates, taking effect from 20 March 2010 are set out in the tables below. Note that ‘pf’ stands for ‘per fortnight’. The Age Pension rates are adjusted twice-yearly – in March and September.
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INSURANCE

Life insurance: One in five parents will die early, or be too sick to work
On average, Australians enjoy long lives but the flipside of that equation is that some people die young, and many of those who die young are parents. One in five parents will become too sick or injured to work, or will die before retirement age, according to a disturbing report released during March 2010.
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Life insurance: hey, does super have a deal for you
One of the best deals in superannuation has only a slight connection to your life in retirement. If you’re a member of a large super fund (such as an industry fund or retail fund or public sector fund), and you joined the super fund via your employer, then you’re likely to have access to an excellent deal in life insurance.
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Four reasons to buy insurance via your super fund
Choosing the right level of insurance cover within your super fund is one of the three big decisions you make when joining a fund, along with choosing your investment options and deciding how much you want to contribute to your fund.
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DIY SUPER

SMSF and property: instalment warrants 101
NEWS UPDATE: On 10 March 2010, the Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP announced two changes to the instalment warrant rules in relation to superannuation.
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SMSFs: What is the proportioning rule?
Q: I have come across a statement which refers to a proportioning rule. Could you please explain to me exactly what the proportioning rule is, who it applies to and when it applies, and how you do the calculations for a SMSF?
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Non-cash contributions, CGT and contributions caps
Q: I have a question relating to a strategy in reducing capital gains tax (CGT). My husband and I, both near 50, plan to spend around $700,000 of our cash to buy shares soon. We don’t have a trust structure or company (both PAYG) and wondered how/if we could buy them in the name of our self-managed super fund?
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Q and As

Super for beginners, part 11: Is my super fund good enough?
Q: I have my super with a major financial organisation. I’m wondering, are they a good company to be dealing with? I feel that their fees are a bit high: based on an investment amount of $300,000 the MER amount is $6,600 plus a monthly admin fee of $8.44. What are your thoughts on this matter?
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I’m 59 and I have $180,000 in super. Will my super be taxed?
Q: I’ve just turned 59, and I’m thinking of retiring before I turn 60. I would like to know whether I would have to pay tax on my superannuation. I know that after I turn 60, it’s tax-free, so my inquiry is regarding the period till I turn 60.
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