We regularly service our cars, have medical check ups and review the family budget – but how often do we review our superannuation? With 30 June fast approaching, here’s some thought provoking advice to ensure your super is healthy and on track.
Which type of fund is best for you?
These days it is no longer acceptable to follow the advice of tied financial advisors who want to sell their commission-based products – investors want advice that is in their best interests.
As a starting point, review your fund’s performance over the past one to five years. If your current fund was chosen by your employer and/or is underperforming, it may be time to change funds.
If you have a corporate super fund, you may receive reduced fees or lower insurance premiums. It is therefore important to understand these benefits before changing super funds. Retail funds offer more services, typically have higher fees and run at a profit. Industry funds are low cost funds with lower fees, run to profit members. If you have more than one super fund, consider consolidating to reduce fees.
Spread your investments
Ideally you want to retire comfortably to support your future lifestyle. Ensure your asset class allocation is in line with your investment strategy – check your lastest super statement and rebalance your portfolio if necessary. An independent advisor can help you tailor your asset allocation and add significant value.
Consider a Self Managed Super Fund (SMSF) to increase your super potential
If you and your spouse havecombined super of over $150,000, now is a good time to consider combining it in a SMSF to maximise your wealth (and future retirement fund).The Australian Taxation Office rule changes have seen a rush of SMSFs getting into investment property due to favourable changes introduced by the Government in 2007 that allow funds to borrow to buy an asset.
There are also generous tax benefits associated with buying an investment property through a SMSF, and with the concessional contribution cap set to reduce from 1 July to $25,000 for all super fund members, purchasing property through your SMSF may be an appropriate way to further boost your super.
Note however that stamp duty concessions end on 30 June – if you are thinking of investing in property through your SMSF, meet with your financial planner as soon as possible to implement your gearing in super arrangements.
Maximise contributions by 30 June
Make the most of maximising contributions to maximise your super wealth:
• For 20011/12, superannuants aged 50 and over can make up to $50,000 in concessional contributions (subject to work tests for 65 to 74 year olds). For 2012/13 this amount is reduced to $25,000, and for under 50 year olds, the cap is $25,000. Superannuants under 65 can also make non-concessional contributions up to $150,000 (or $450,000 “bring forward” over three years), again subject to the work tests for those aged 65 to 74.
• Avoid breaching contribution caps and being taxed 93% on your contributions by identifying and rectifying any errors before year end.
• This is the last financial year you can make in-specie share contributions to your SMSF – contribute now to minimise transaction costs.
• Avoid breaching the new and reduced $25,000 concessional cap by reviewing your salary sacrifice arrangements in early July.
• If you are over 55 it is imperative that you review and optimise your concessionally taxed pension. Avoid any problems later down the track by withdrawing at least your minimum pension by 30 June.
Insurance and estate planning
Consider holding life, TPD and income protection insurance to better protect your family in the event that you are unable to work for a period of time due to sickness or injury, particularly if you are self-employed.
In the event of your death, ensure your super goes to who you want it to – if you aren’t sure who the beneficiaries of your superannuation fund are, make it a priority to review it as soon as possible. There are tax-related liabilities depending on who you choose to bequeath your death benefit to, so it’s important to seek professional advice before completion of your Will.
Lost super fund
Visit the ATO’s free website “SuperSeeker” to find lost or forgotten super. You may be pleasantly surprised.
Be vigilent and make time to review your super – changes to your super now can mean a big difference in the amount that you receive when it comes time to retire.
At The Quinn Group our experienced team of Financial Planners, Accountants and Lawyers can assist you with all your investment strategies. For more advice about the health of your super, contact the Financial Planners here at Quinns by submitting an online enquiry or calling us on +612 9580 9166 to book an appointment.
Disclaimer: The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.