NEWS – Insurance in Super to closer meet Member needs at different life stages

Insurance in Super to closer meet Member needs at different life stages

Rod Myer writes at The New Daily –

Insurance cover in superannuation could be redesigned to closer meet the financial needs of members, research house Rice Warner believes.

Because insurance in super needs depend on age and family situation, insurance products could be designed around such variables as age and family type.

Currently insurance is pretty much a ‘one size fits all’ arrangement with everyone paying the same premium in the same category getting the same level of cover. Even those that choose to pay more get the same upgraded cover as others in their category.

However as the following table from Rice Warner shows, people’s insurance needs vary dramatically with their life circumstances.

 

Chant West says all this could change with smart design.

“Using the above statistics, we could shift the default sum insured to one based on needs – all without changing the premium or getting any additional information from members” the research says.

“We would simply assess the amount of the claim based on the dependants at the time of death.”

The super industry has begun to move on the discrepancies within super that see younger people erode their accounts by paying for insurance they don’t need.

Recently Cbus and AustralianSuper have announced moves that will reduce the cost of super for young members by reducing or eliminating coverage of various types of insurance for those under 20. Other industry funds such as HOSTPLUS and First Super have been working to reduce the cost of insurance without compromising cover.

And, according to another researcher, Rainmaker, an average 20-year-old now would receive around $175,000 in default death cover, down from from a high of $210,000 in 2014, Fairfax Media reported.

But the average level of cover offered to younger fund members has dropped by 20 per cent over the past two years.

(Read More)

Our comment – It all makes good sense for commercial super – but how long will change take?

Another possible solution is an SMSF (seek advice for suitability, or ask us to refer a helpful advisor for you) where you can select the insurance to suit your needs, sometimes at competitive prices – this is the flexibility and comfort an SMSF may provide you.

Interested to know what Self-Managed Super (SMSF) is all about, and if it is for you?

See the slides SMSF Roadmap Overview.

If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and see how our Super-Connector Service assists you to find the right expert to answer your question – it’s FREE also! No obligation. 0407 361 596, Paul.

Also get your FREE Expert Guide – Self-Managed Super and You – top right hand side above.

MASTERCLASS Investment – Difference between Fundamental and Technical Analysis in Share Investing?

Investment – Difference between Fundamental and Technical Analysis in Share Investing?

Investors in shares can tend to fall into 2 groups – fundamental analysis and technical analysis, but we have come to learn and to understand what benefits BOTH stock-analysis disciplines, both fundamental and technical, can bring for increased share-market investment success.

To analyse, is to measure, or to count. But to analyse well, you must measure what matters, and count what counts. 

It’s quite rare for a Technical Analyst (“TA”) to delve into the “fundamentals” of stock-picking, as this is the territory of a Fundamental Analyst (“FA”).

So, what is the difference between fundamental and technical analysis?  And how do they each help investors to make better share-savvy decisions? 

Fundamentals assess a stock’s underlying business operation and its profit-related activities/outcomes – its financial returns.  An “FA” places the business under a “financial-ratio microscope” to measure all possible issues relating to its operational profit-growth momentum and, as a consequence, its potential share-price growth.   

Technicals chart a stock’s share price upward or downward momentum.  A “TA” follows share prices in order to align investors with on-coming positive or negative price action – that is to prepare investors to BUY when share-price patterns and volume data are indicating potential sustained rising, and to SELL when charting is indicating a potential meaningful fall in a stock’s (or the market’s) share price/s.  

In a nutshell, fundamental analysis “spots” academic reasoning for business earnings growth (business profit), and technical analysis charts and “spots” buying and/or selling (investor profit) share-price trends.

Measuring what Matters and Counting what Counts 

It is only “measuring what matters” that enables investors to “count what counts”.

An investor’s ultimate count is the net-profit outcomes resulting from the timely, technicals-triggered, “when-to-buy” and “when-to-sell” trades of fundamentals -measured & identified investment-grade “what-to-buy” stocks. 

SuperBenefit’s investing/trading advisor method involves combining regular stock-market philosophies of longer-term “buy & hold” investing (fundamentals) and, shorter-term “buy & sell” trading (technicals) that will help investors construct investment-grade “quality-stock” portfolios with bullish long-term run-with-the market growth objectives, and bearish short-term retreat-to-safety cash options as time-to-time situations would warrant.  

The below schematic shows a typical range of fundamental analysis financial ratios that would be applied by a “FA” to measure and assess the operational strength and profit-growth momentum of a business.  

A positive fundamental analysis assessment relative to these below financial ratios would point up a:     

• Financially Healthy;
• Rationally-Valued “Growth” Company;
• With “Standout” Superior Management.

Want to learn the core issues of share investing?

See our slides SMSF & Shares Overview to get a quick session where you can learn to easily understand Company Financial Statements, how to find healthy companies, what Tools and Ratios to use, work on examples, and also includes how to get better investment outcomes.

If you have questions, call 0407 361 596

Pensions Centrelink – Beware of scams to watch out for targeting pensioners and older Australians

Centrelink – Beware of scams to watch out for targeting pensioners and older Australians

The Australian Government Department of Human Services (DHS) has some great tips on scams to watch out for targeting pensioners and older Australians, June 2017 –

Older Australians keep a step ahead of the latest scams

Scams are on the rise. We have details about the recent scams to keep you and your family safe.

We know there’s an increase in scams that pretend to be from us.

You could get a phone call, email, SMS or social media messages from a scammer. Scammers ask for personal details to get money or steal identities, and their questions can look and sound genuine.

Some of the recent scams targeting older Australians include:

Age Pension calculator offer

Keep clear of fake social media messages, such as Facebook posts, using our logos to advertise a link to an Age Pension calculator. If you use the calculator, a scammer may charge a fee to your mobile phone account without your permission.

Phone calls offering higher pension payments

Be cautious of phone calls advising you can get an increased pension. Scammers will pretend to be our staff and may ask you to call them back on a private number. They may also ask you to pay a fee to get a larger payment or back pay.

We will never ask you to:

• send us personal information by email, SMS or social media;
• click on internet links or open attachments sent to you online;
• pay a fee to get a payment or service;
• give password or PIN numbers to your bank accounts;
• buy gift cards or vouchers, such as iTunes cards.

If you are contacted and you think it’s suspicious, ask for the caller’s contact details and call one of our payment lines.

Next steps

Stay informed about scams.

Read more about:

• protecting yourself from scams for older Australians on the ScamWatch website;
• the Australian & New Zealand’s National Identity & Cyber Support Service on the IDCARE website;
• Scams and warnings for Aboriginal and Torres Strait Islander People on the MoneySmart website.

What are your thoughts? Start or continue the conversation here!

Call for FREE education, or to speak to an advisor about your specific situation. SuperBenefit works with SMSF trustees to CONNECT them with the advisors they need. A call is FREE. If you have any questions, why not give us a call – it’s FREE!

No obligation. 0407 361 596, Paul.

Basics about Super – What is Salary Sacrifice Super?

Basics about Super – What is Salary Sacrifice Super?

The Australian Tax Office (ATO) tells what is Salary Sacrifice Super–

Salary sacrifice is an arrangement with your employer to forego part of your salary or wages in return for your employer providing benefits of a similar value.

If you make voluntary super contributions through a salary sacrifice agreement you should be aware of how your contributions will affect your super balance. You can agree with your employer for your voluntary contribution to be in addition to your employer’s compulsory super contribution.

If you are deciding whether you should salary sacrifice some of your income into your super or you are already salary sacrificing, you may want to find more information or check your entitlements under the Fair Work Act 2009.

One example of a salary sacrifice arrangement is to have some of your salary or wages paid into your super fund instead of to you.

Salary sacrificed super contributions are classified as employer super contributions, rather than employee contributions. This reduces the amount of super guarantee contributions that your employer is required to make for you, unless the terms of the agreement between you and your employer specify that they continue to pay the minimum super guarantee amount. If you make super contributions through a salary sacrifice agreement, these contributions are taxed in the super fund at a maximum rate of 15%. Generally, this tax rate is less than your marginal tax rate.

The sacrificed component of your total salary package is not counted as assessable income for tax purposes. This means that it is not subject to pay as you go (PAYG) withholding tax.

If salary sacrificed super contributions are made to a complying super fund, the sacrificed amount is not considered a fringe benefit.

Find out MORE.

What are your thoughts? Start or continue the conversation here!

Call for FREE education, or to speak to an advisor about your specific situation. SuperBenefit works with SMSF trustees to CONNECT them with the advisors they need. A call is FREE. If you have any questions, why not give us a call – it’s FREE!

No obligation. 0407 361 596, Paul.

Masterclass SMSF – Who can be Trustee, special notes & Changing Trustee

SMSF – Who can be Trustee, special notes & Changing Trustee

All self-managed super fund (SMSF) members must be trustees of the fund, but a trustee need not be a member, however there are some exceptions such as:

• Minors, being too ill or old, mental incapacity or travel overseas for an extended period, they can become (or remain) a member of an SMSF if another person is appointed to act as trustee on their behalf;
• If a fund member dies, their legal personal representative (LPR) will normally act on their behalf until a decision has been made to make a death benefit payable; and
• If a person becomes the last remaining fund member, they can keep the fund running if another person is appointed as trustee or implements other solutions.

All members of an SMSF should be aware that failing to meet the trustee rules and requirements could render the fund non-compliant.

Notes for some specific situations and solutions:

Minors

Minors are not able to be SMSF trustees because they are classed as being “under a legal disability” and are not permitted to enter into contracts, but can be a member of an SMSF if a parent (who may also be a member of the fund), a guardian or a LPR is prepared to act as trustee on their behalf. Once the minor reaches the age of 18, the parent, guardian, or LPR must resign as trustee and the minor is then appointed as trustee if they want to remain a member.

Mental incapacity

Having a mental incapacity is also considered to be under a legal disability and means a person cannot be an SMSF trustee, but they can be an SMSF member if a person who holds an enduring power of attorney (EPOA) is appointed to act as trustee on their behalf.

Situations where a trustee becomes mentally incapacitated without an EPOA can be problematic.

An eligible person(s) eg family member, needs to be court-appointed to act on that person’s behalf (ie, become the person’s LPR) and then are they able to become trustee of the SMSF in place of the disabled member.

Members going overseas for an extended period

Be careful if a fund member plans to go overseas permanently and in some cases, even temporarily, as the Australian Tax Office (ATO) may deem that the ‘central management and control’ of the fund has not remained in Australia and the fund will not meet the definitions of ‘resident Australian superannuation fund’ and will lose access to the tax concessions. The solution is to appoint an EPOA to a resident of Australia, or rolling over the departing member’s benefits to a public offer fund or converting the fund to a small Australian Prudential Regulation Authority (APRA) fund (SAF).

Older members

In time a member of an SMSF will age and/or suffer from some sort of illness that will impact their ability for continuing to act as trustee or a director of a corporate trustee of their SMSF. Some actions are  – they have a choice of winding up the SMSF, or choosing to continue to run the SMSF by appointing a LPR who holds an EPOA on their behalf to take their place as trustee of the SMSF.

Deceased members

When a member dies, they are no longer a trustee of the SMSF and an LPR will act as trustee until a death benefit can be paid.

The Trust Deed rules become the guide and may allow the remaining trustee/member to appoint someone else to act as trustee until a decision has been made to make a death benefit payable. Binding Death Nominations can assist with directing benefits as per the member’s wishes but to be valid, the nomination must also be consistent with the requirements set out in the trust deed rules.

The person appointed as trustee for the deceased member remains in this role until a decision has been made to make a death benefit payable, either in part or in full, and then usually they step down from trustee

Also note that if a part payment is made, the person must step down as trustee when a decision has been made to pay a death benefit, and the subsequent payments are determined by the remaining trustee(s).

Becoming a single member fund

If a fund that has two or more (but less than five) members it will eventually become a single-member fund and then that member can appoint a second trustee to the fund. They do not have to be or become a member of the fund as well, and cannot be an employee of the remaining SMSF member (unless a relative). Alternatively, the fund could appoint a corporate trustee, and meet certain other conditions.

What are your Thoughts? Comment below!

Want to learn more, know the options and what we need to retire on, the super system in Australia and what is self-managed super? To get the answers, see our FREE slides Super & SMSF for Business owners

Call for FREE education, or to speak to an advisor about your specific situation. SuperBenefit works with SMSF trustees to CONNECT them with the advisors they need.

A call is FREE. No obligation. 0407 361 596, Paul

MASTERCLASS Investment – What are “Share Market Indices/indexes”?

Investment – What are “Share Market Indices/indexes”?

This month Masterclass Investment looks at what is a share market index (indices plural) – these are values or broad measure summaries of a group of shares, which may be over the whole market in Australia (ASX), or sectors (eg Industrial) and are a means to track changes in stock prices for companies that are in the index/group. So indices frequently provide information about how a group of stocks have performed (of which that index is made up of) – eg S&P 200 is the top 200 stocks by market capitalisation.

Investors use them to provide a benchmark to compare a stock or industry or sector other periods or sectors. Standard & Poor are one of the largest providers of indices which started in USA, but also have offices in 23 countries and create the Australian Stock Exchange Indices. They are calculated to provide investment managers something to measure their portfolio’s performance against – a measure that covers a broad range of Australian shares and includes only shares that are traded in high volume. High volume (liquidity) is important to allow less price distortions arising from a lack of participants in the stock.

The general method of calculation is –

Share Index = Total Market Value of all Companies (in group/sector) / Base Value

Where –

Total market value of all companies = Stock Price x Number of shares available (adjusted)

Base Value = the amount of capital that all the companies had at the time the index was started. The base capital figure is adjusted over time due to changes in the companies in the index.

So the base capital is adjusted when companies in the index;

• Are removed or added;
• Issue more shares;
• Buyback shares;
• Spin-off.

This ensures that the index figure is exactly the same before and after an adjustment above is made in the base capital figure.

Example

BHP is the largest stock in the S&P/ASX200 index. It makes approximately 13.6% of the index.[1]

Imagine if BHP decided to split into many small companies and was no longer allowed to be in the S&P/ASX 200.

Capitalisation alone is not used as it will be a large number and an indexed number is easier to work with and track/graph.

A rise in the share index reveals that the total value of companies in the index rose and a fall in the share index signifies that the total value of companies in the index fell. The index producers also adjust for price changes that usually occur when shares go ex-dividend so that the index figure isn’t affected.

The criteria for when a stock will be included require that it be:

• Listed on the ASX;
  
• Must be a public float of at least 30%;
• Must be actively and regularly traded (liquidity).

Then the market capitalisation of a company is assessed and an average of 6 previous months end-of-day adjusted market capitalisation figures are used. Companies may be removed from an index if they no longer meet these criteria such as when a company significantly changes its structure e.g. merger or acquisition.

In Australia the S&P Australian Index Committee is responsible for maintaining the S&P/ASX indices.

Want to learn the core issues of share investing?

See our slides SMSF & Shares Overview to get a quick session where you can learn to easily understand Company Financial Statements, how to find healthy companies, what Tools and Ratios to use, work on examples, and also includes how to get better investment outcomes.

If you have questions, call 0407 361 596

SMSF Basics – What is involved in Running your SMSF (Self-Managed Super Fund)

SMSF Basics – What is involved in Running your SMSF (Self-Managed Super Fund)

After setting up your Self-Managed Super Fund, there is quite a list of on-going tasks involved in running your SMSF, covering administration, investment strategy and implementing it, compliance, insurance and pension stage responsibilities.

(a)   Administration tasks

Some of the many tasks to keep up with including paying expenses and keeping documents for proof at year end, recording minutes and resolutions of meetings for significant decisions and preparing the annual tax and regulatory return NAT 712266. It is also required that an Operating Statement and Statement of Financial Position be prepared. An independent auditor (not the accountant/tax agent) must be appointed to review the fund is complying, and once a report is given, the income tax and regulatory return can be lodged. A supervisory levy is paid when lodging – over $250.

By law, keep all records including accounting records, statements, annual returns for a minimum of five years. Where-as you must keep records such as minutes of meetings, change of trustee, reports to members and trustee consents, for a minimum 10 years.

(b)   Investment Strategy and Limitations

The law governing all super (SIS Act) at Section 52 requires a written investment strategy be formulated and given effect or put into action. This is to encourage a serious and professional approach. The overall guiding principle is the Sole Purpose Test – that funds are maintained for the sole purpose of providing retirement benefits. This is why some restrictions apply in order to avoid risk, and both the SIS Act and the trust deed need to be consulted. Restrictions include general prohibition from acquiring assets from members and related parties, keeping assets separate from personal and business affairs, limited borrowing rules, personal use of assets, careful use of derivatives and no lending to members.

(c) Compliance, Trustee Responsibilities, Disputes

To stay compliant, Trustees must regularly consult the trust deed to follow it, as well as consider changes in superannuation, taxation and other laws (an update Trust Deed if required), and keep aware of the circumstances of the members. A breach of the trust deed as considered a breach of the superannuation law. In all dealings, the Sole Purpose Test is the key requirement – to maintain the fund solely for the core purpose to provide retirement benefits.

Fund members must live in Australia, so be aware that relocation overseas can affect compliance.

Outside Dispute resolution between members and trustees is not available via the Superannuation Complaints Tribunal, so Trustees must mediate themselves or resolve via the court system.

(d)   Insurance in your SMSF

The SIS law and Regulations require Trustees to consider and seek advice about member insurance needs. What if…? Ensure that your fund applies for cover that is appropriate – life, total and permanent disability (TPD) and/or disability income insurance (income protection). There are advantages to hold these in an SMSF – for example the premiums are tax deductible for the SMSF. Other considerations may include some circumstances where access to super benefits may be restricted such as disability payments.

(e)   Paying Benefits & Income Streams (Pension)

Contributions by employers (concessional) and members (non-concessional) as well as fund earnings are generally classified as “preserved benefits” and cannot be accessed by members until a condition of release is met. A condition includes meeting preservation age, which are dates determined by member date of birth, as well as officially retiring from work.

Date of Birth from	To	Preservation Age
	30 June 1960	55
1 July 1960	30 June 1961	56
1 July 1961	30 une 1962	57
1 July 1962	30 June 1963	58
1 July 1963	30 June 1964	59
1 July 1964	And later	60

When a member generally meets the age of 60, and has elected to convert super to pension/income stream, the lump sum or income stream payments are tax free. If a member is under 60 and paid a benefit PAYG tax will need to be paid and reported to the member and ATO on a payment summary. The amount withheld is reported to the ATO annually or quarterly.

Other conditions of release include reaching 65 YO, restricted access at preservation age via transition to retirement, death, permanent incapacity, terminal illness.

See ATO publications (number is the ATO Nat number eg NAT11032)

11032    Running a self-managed super fund

71454    How your self-managed super fund is regulated

Interested to know what self-managed super (SMSF) is all about, and if it is for you?

See the slides SMSF Roadmap Overview.

If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and see how our Super-Connector Service assists you to find the right expert to answer your question – it’s FREE also! No obligation. 0407 361 596, Paul.

Also get your FREE Expert Guide – Self-Managed Super and You – top right hand side above.

SuperBenefit works with SMSF trustees to CONNECT them with the advisors they need. A call is FREE.

If you have any questions, why not give us a call – it’s FREE! No obligation. 0407 361 596, Paul