As we enter 2011 there are a few things you should be reviewing now with regards to your superannuation setup, here are my top 5 action items to review.
1. Find Your Lost Superannuation
There is nearly $13 Billion worth of Lost Superannuation in Australia, if you have had more than one job in your life you could have superannuation that you dont know about. If you have your Tax File Number and a spare 5 mins do the check to see if any of the $13 Billion is yours! Check out the ATO Super Seeker here.
2. Changes to Concessional Contributions
If you are aged over 50 there are only 18 more months where you can be putting $50,000 per annum into superannuation as a concessional contribution (this includes your employer super guaranteed contributions as well as any salary sacrificed contributions and if your are in the public sector schemes this also includes your productively contributions). This year make it a priority to ensure you are maximising what you can into your super savings before the rules change.
From 1 July 2012 you will only be able to make a concessional contribution of $25,000 regardless of age.
A reminder that the ATO has put the responsibility of ensuring members do not exceed their contributions each year onto YOU as the member. If you have been salary packaging now is the time to get a concessional contribution report from your super provider to ensure you are within your limits and do not get hit with excess contributions tax at 31.5% plus the 15% contribution tax!
3. Consolidated Your Super
If you are like most Australian’s you could have more than one super scheme. The downside with this is that you could be paying 2 or more layers of fees on your superannuation savings, also some funds that were set up in the early days through a bank or insurance company may have entry (or exit) fees attached – I have seen some massive ones in my time where up to 5% of the super contributions are being paid to a financial adviser who has never even given advice to the client. Make 2011 the year where you get your super in order and you take some time out to check the fund you are in and the fees you are paying. Check out the FIDO.gov.au super comparison sheet here or contact our office for a personal assessment of your super arrangements.
For those who are in the Public Sector Schemes you also have the ability to consolidate your super accounts into the CSS, PSS and PSSap (assuming you are a contributing member and you are not salary sacrificing).
4. Back Up Plan in Super
If you are looking for ways to protect you and your family and also ways to save some cash flow, with recent improvements to definitions within superannuation insurance policies for life, total permanent disablement and salary continuance you could move some of these insurance coverage into your super fund. You should also review what you have in place as a protection strategy if something happened would you have enough money to pay off your debts, pay for hospital expenses? If not now is the time to review your insurance needs and take some action to get your plans in order so you can get on with the good things in life!
For those with a Self Managed or Semi Managed Super Fund, have you put in place your estate plan within the fund? (what does your binding death nomination state?) Do you have contingencies within your investment strategy to manage any downside risk, now is the time to start the conversation and review your plans and strategies to make sure you are on track for you retirement. We have some great projection tools which we can use to illustrate if your current superannuation plans will meet your needs. If you want to review ‘your life in a spreadsheet’ to see if you will meet your income requirements when you want to retire contact our office today.
5. Take Charge of your Investment Strategy with a Semi Managed or Self Managed Fund
Over the last 18 months I have met with more and more people who want to take a greater control over their superannuation savings. You have a number of options when it comes to setting up your own investment strategy and plan. Check out our article from last year on how to calculate how much you need and how much you should be putting away.
- Option 1 – Industry Super Fund
If you are a member of an industry super fund such as AGEST, MTAASuper, CBUS, Australian Super or Unisuper to name just a few you could have more input to how your funds are invested and managed based on what your values, risk profile and longer term needs are. Check out your funds investment options and look at what returns you need to get there. If you need guidance talk to a professional, unless you have the skills, to service your super in 2011 and make it Super!
- Option 2 – Semi Managed Super Fund
A semi managed super fund gives you the flexibility of setting up your own investment strategy, risk management strategy and estate planning strategies within superannuation without the need to be trustee of the fund yourself which has some added administration and tax requirements. A professional trustee and administration service will do the back office work for you and with our guidance and advice you can setup an investment strategy that meets your financial needs, personal values and risk profile. Depending on your situation and needs will depend on the suitability and what is possible from direct share investment to investment in GOLD bullion and other precious metals to an ethical investment strategy.
- Option 3 – Self Managed Super Fund
A self managed super fund can give you maximum control and responsibility over your superannuation savings. At Money Mechanics we have a variety of ways we work with clients and their SMSF’s so you can really Do-It-Yourself or have our ongoing guidance, coaching and advice to navigate the changes. SMSF can invest in almost anything as long as it fits the investment strategy of the fund, from direct shares, precious metal, direct property (commercial and residential), international shares to artwork and collectibles. Each have a different risk profile and will depend on your values, what you want to achieve and tolerance to accept risk verse the possible return.
If you need assistance in exploring these further talk to a professional but most importantly start your journey to being free around your money and creating wealth with understanding.
Scott Malcolm (scott@money-mechanics.com.au) is Director of Money Mechanics (ph: 6257 5557) a fee for service advice firm who are authorised to provide financial advice through PATRON Financial Advice AFSL 307379.
The information provided on this article is of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information you should consider its appropriateness having regard to your own objectives, financial situation and needs.