Every company I have ever worked for asked where I wanted the superannuation to go. My choice.
If you hand money to companies investing and banking and pay little attention you unfortunately get what you deserve. Unfortunately a lot of Australians spend more time studying a form guide or lotto numbers.
A large number of industry super have no fees. I chose to manage my own superannuation and managed to average a return of 12% over the last 4 years. If you pay attention to your banking and investing you can live quite well.
Terry
-- Edited by tcp99 on Wednesday 7th of November 2012 07:11:24 PM
-- Edited by tcp99 on Wednesday 7th of November 2012 07:11:56 PM
Retreat said
11:22 PM Nov 7, 2012
My tongue in cheek thoughts are;
·It was a great idea of Paul Keating, but I doubt if the how to micro steps to implement the project to benefit workers was ever thought through and drafted.
·Not until employees are at least in their 40s do they look upon their superannuation as an asset because it is paid direct into a fund by the employer. It never touches the employees hand or bank a/c and seldom is it part of the salary negotiations. Statements from the superannuation funds are difficult and confusing by design to understand.
·Employers must pay it; if the employee paid it into the fund they would have ownership and then be interested in the returns generated and fees deducted. With the current system neither the employer nor employee takes ownership of the funds management. The fund is obviously interested in the fees and commission that the fund generate. Who is looking after the interest of the employees (fund members) interest?
·The government has licensed certain people to be financial advisor which allow them to charge for providing financial advice. What was the average return of managed superannuation funds for the last 3 year? I believe it was a negative 0.3%. Choosing a super fund or financial adviser is a bit like choosing a racehorse to back, nobody knows for certain who will win as there is no exact science to calculate the winner.
·My information from the bush telegraph is that Tom Waterhouse was the big winner yesterday at Flemington and his return on capital invested is a healthy positive number not minus 0.3%.
·Im not meeting many people who have retired well off from their superannuation fund, but I have bumped into a number of wealthy Financial Advisers with huge houses in the best address. Maybe caravanning lifestyle is beneath the superannuation rich retirees.
Im suggesting all Grey Nomads lobby Wayne Swan for Tom Waterhlouse to be licenced as a financial adviser and superannuation fund manager for My Super and the Future Fund.
Gerty Dancer said
12:05 AM Nov 8, 2012
I reckon you are right, Retreat! Those super funds make a lot of money for their financial advisor-employees, and some of them charge very high fees. Having your money in the bank earning interest means the interest is taxable, but the tax payable is less than a quarter of the fees charged. (in our case anyway)
Some people have several super accounts, all paying management fees, and as you say while they are young they dont bother to check on them. The smaller accounts go into arrears eventually when fees are greater than the account balance, and then employers payments and employees benefits are lost. What a waste.
If you were to pay that money into a bank account for all those years with compounding interest I'm sure you would be better off... At least as times are nowadays. There have been periods of quick gains in the share market which kept everybody hanging on for the next big rise like gamblers on a "sure thing".
Retreat said
12:54 AM Nov 8, 2012
Gerty Dancer wrote:
I reckon you are right, Retreat! Those super funds make a lot of money for their financial advisor-employees, and some of them charge very high fees. Having your money in the bank earning interest means the interest is taxable, but the tax payable is less than a quarter of the fees charged. (in our case anyway)
Some people have several super accounts, all paying management fees, and as you say while they are young they dont bother to check on them. The smaller accounts go into arrears eventually when fees are greater than the account balance, and then employers payments and employees benefits are lost. What a waste.
If you were to pay that money into a bank account for all those years with compounding interest I'm sure you would be better off... At least as times are nowadays. There have been periods of quick gains in the share market which kept everybody hanging on for the next big rise like gamblers on a "sure thing".
I'm sure it was never the intention of government to regulate for the benefit of those servicing the industry, but I feel this may be the current result. Although governments mean well, they seem to stuff up the implication of projects.
Markets are very unpredictable, but it seems unfair that fund members pay fees when the fund has lost money, all the managers still get paid. Maybe it would be fairer if managers and advisers were paid the equivalent of the pension plus a commission calculated as a percentage of the fund's profit and not on the fund's balance.
TAJ said
01:45 AM Nov 8, 2012
was in super fund 30 years retired at age 61 when got to 65 invested all in credit union
averaged about 5% no management fees
suenray
we don,t have the best of everything we make the best of everything we have
brickies said
02:37 AM Nov 8, 2012
Yes thank you very much big help in retirement for me
Retreat said
04:30 AM Nov 8, 2012
tcp99 wrote:
Every company I have ever worked for asked where I wanted the superannuation to go. My choice.
If you hand money to companies investing and banking and pay little attention you unfortunately get what you deserve. Unfortunately a lot of Australians spend more time studying a form guide or lotto numbers.
A large number of industry super have no fees. I chose to manage my own superannuation and managed to average a return of 12% over the last 4 years. If you pay attention to your banking and investing you can live quite well.
Terry
-- Edited by tcp99 on Wednesday 7th of November 2012 07:11:24 PM
-- Edited by tcp99 on Wednesday 7th of November 2012 07:11:56 PM
Terry,
If you team up with Tom Waterhouse and keep producing 12% you have my a/c.
I know a lot of industry funds do not pay commission to financial advisers, but I would imagine fees would have to be charged to stay in business.
tcp99 said
05:34 AM Nov 8, 2012
THe biggest problem I see with advisors and funds is they are slow to react to changes and quite prepared to let you lose money in the short term. With the new laws they now have to be pretty transparent upfront about fees and commissions so it is vhanging. Over the years I made my best investment within 24 hours of the 1987 stockmarket crash. By buying blue chips stocks sold by idiots and watching them go back to where they should have been. IMO all investments are long term and unfortunately people get hurt by looking for unrealistic returns from companies such as Pyramid, Storm and Banksia. Wonderful how the shonks who run them manage to put all the blame on the Governments and walk away with their money stashed with their wives or kids.
If only they jailed all of them and grabbed their assetts back from their families.
Terry
Retreat said
08:13 AM Nov 8, 2012
tcp99 wrote:
THe biggest problem I see with advisors and funds is they are slow to react to changes and quite prepared to let you lose money in the short term. With the new laws they now have to be pretty transparent upfront about fees and commissions so it is vhanging. Over the years I made my best investment within 24 hours of the 1987 stockmarket crash. By buying blue chips stocks sold by idiots and watching them go back to where they should have been. IMO all investments are long term and unfortunately people get hurt by looking for unrealistic returns from companies such as Pyramid, Storm and Banksia. Wonderful how the shonks who run them manage to put all the blame on the Governments and walk away with their money stashed with their wives or kids.
If only they jailed all of them and grabbed their assetts back from their families.
Terry
Terry
Your share purchase timing was perfect.
People retiring now who have not had any life experiences in investing would find it very difficult to navigate through the truck loads of financial products and rubbish available.
Many of these people see their only option being to put their trust in a financial adviser. The current crop of retirees have not had a full working life in the compulsive superannuation system and, just coming out of the GFC are not likely to have huge sums of super.
It is interesting times that we live in.
Gerty Dancer said
01:36 PM Nov 8, 2012
tcp99 wrote:
teach in schools finance, investing etc.
Absolutely tcp99!! I wholeheartedly agree!!!
-- Edited by Gerty Dancer on Thursday 8th of November 2012 01:37:24 PM
Wizardofoz said
08:59 PM Nov 8, 2012
I wrote this on a racing forum that I am a moderator on and the same discussion on superannuation arose, I believe it to be close to the mark, you may think differently.
To further add to the above, let's not kid ourselves, 9%, 12% or even 20% super contribution is not going to be sufficient to return the same income as the employees retiring salary or wage. Singapore is one of the few countries that actually acknowledges that superannuation contributions need to be around 40% of salary and wages to allow the employee to have a return equal to that of their last pay packet...now the truth is, in Australia, currently few employers or employees can afford that, but what the government has in place is a split contribution arrangement where the employer and employee both contribute to the super fund so the high super contributions can be sustained...to me this the only way that a true fully sustainable retirement fund can be operable.
It is a general rule of thumb today that on retirement, at least $1 million is required to live comfortably ie., invested @ 5% = $50,000 pa or around $1000 per week (which to most people is a comfortable wage). As an example, an employee earning $50,000 pa today, would accrue $20,000 pa with a 40% super contribution, multiply that by 50 which takes an employee to 67 year old if they started work at 17...the end super amount is $1 million (plus capitalising interest $$$$), more than equal to their existing salary if invested at todays rates. therefore, at the current 9% rate, the end payout is a mere $225,000 which is just not sufficient and is really a pittance. The above figures are all relevant to the present, and will remain in sync as wages rise so the equation doesn't really change, all that does is the investment interest rates and these do have an enormous effect on the end annuities, that's where low interest rates are a huge negative for the self funded retiree, which a meaningful superannuation scheme would ensure that most Australians were. If interest rises to 10%, only $500,000 is required to return the $50,000 pa.
For superannuation to be self sufficient and meaningful, all parties including the government as a contributor, have to contribute to the scheme (my suggestion would be, the government 15%, employer 12.5%, employee 12.5%), then and then only will pensions become virtually redundant and all employees will be adequately funded in retirement.
This is the scheme that Singapore has in place, note the high contributions by the employee, but after all, at the end of the day, it is THEIR money...
EXTERNAL LINK I will add to this post, to be realistic we presently cannot afford the above scheme, but we must move to a minimum of 20% and have an automatic rise plan to at least 30% built in if Australians are to have a fitting retirement scheme.
Retreat said
09:18 PM Nov 8, 2012
Wizardofoz,
you have done your sums very well, explanation very detailed, great article.
Good to see someone come up with a solution, we now just need someone implement it.
With Singapore being a almost totalitarian state in a lot of their laws there sure have it right with Superannuation. And off topic they hava a fantastic subway system while we gave millions to the MYki clowns.
One of the problems we have is that if you commit a white collar crime your chances of getting a realistic penalty and being forced to repay is almost nil.
We ned to make superannuation fully portable and teach in schools finance, investing etc.
Retreat said
10:10 PM Nov 8, 2012
Wizardofoz wrote:
As an example, an employee earning $50,000 pa today, would accrue $20,000 pa with a 40% super contribution, multiply that by 50 which takes an employee to 67 year old if they started work at 17...the end super amount is $1 million (plus capitalising interest $$$$), more than equal to their existing salary if invested at todays rates. therefore, at the current 9% rate, the end payout is a mere $225,000 which is just not sufficient and is really a pittance.
The above figures are all relevant to the present, and will remain in sync as wages rise so the equation doesn't really change, all that does is the investment interest rates and these do have an enormous effect on the end annuities, that's where low interest rates are a huge negative for the self funded retiree, which a meaningful superannuation scheme would ensure that most Australians were. If interest rises to 10%, only $500,000 is required to return the $50,000 pa.
Retreat's Suggested Retirement Plan.
Sell house, caravan and 4x4 say $600,00; add super of $225,000 = $A825,000
Take $825,000 to Fiji and convert to Fijian Dollars = $fi1,514,345.00
Buy house $Fi230,000.
Left with $1,284,345 Fijian dollars to retire on. No need for a car, you can walk everwhere.
Could also go to NZ and have $NZ1,050,000 before buying a house which would be around $400,000 leaving around $NZ600,000.
neilnruth said
03:44 AM Nov 9, 2012
Sorry, I think I prefer my small abode in Australia.
Retreat said
04:16 AM Nov 9, 2012
neilnruth wrote:
Sorry, I think I prefer my small abode in Australia.
Me too.
Retreat said
05:27 AM Nov 9, 2012
Interesting segment on ABC 7:30 to night highlighting some of the hardship caused by the Banksia collapse.
There were 15,000 investors of which 50% are over 55 years of age. High interest was not the motivation, the motivation was more likely the feeling of supporting the community.
For those on Centrelink payments the frozen deposits are still counted as assets by Centrelink
Although it is not a good situation, there appears to be a reasonable assets and funds held by Banksia that will eventually be distributed back to investors.
neilnruth said
01:02 AM Nov 10, 2012
That hardly seems fair that frozen assets are still considered as available to you by Centrelink. Like a double whammy.
Every company I have ever worked for asked where I wanted the superannuation to go. My choice.
If you hand money to companies investing and banking and pay little attention you unfortunately get what you deserve. Unfortunately a lot of Australians spend more time studying a form guide or lotto numbers.
A large number of industry super have no fees. I chose to manage my own superannuation and managed to average a return of 12% over the last 4 years. If you pay attention to your banking and investing you can live quite well.
Terry
-- Edited by tcp99 on Wednesday 7th of November 2012 07:11:24 PM
-- Edited by tcp99 on Wednesday 7th of November 2012 07:11:56 PM
My tongue in cheek thoughts are;
· It was a great idea of Paul Keating, but I doubt if the how to micro steps to implement the project to benefit workers was ever thought through and drafted.
· Not until employees are at least in their 40s do they look upon their superannuation as an asset because it is paid direct into a fund by the employer. It never touches the employees hand or bank a/c and seldom is it part of the salary negotiations. Statements from the superannuation funds are difficult and confusing by design to understand.
· Employers must pay it; if the employee paid it into the fund they would have ownership and then be interested in the returns generated and fees deducted. With the current system neither the employer nor employee takes ownership of the funds management. The fund is obviously interested in the fees and commission that the fund generate. Who is looking after the interest of the employees (fund members) interest?
· The government has licensed certain people to be financial advisor which allow them to charge for providing financial advice. What was the average return of managed superannuation funds for the last 3 year? I believe it was a negative 0.3%. Choosing a super fund or financial adviser is a bit like choosing a racehorse to back, nobody knows for certain who will win as there is no exact science to calculate the winner.
· My information from the bush telegraph is that Tom Waterhouse was the big winner yesterday at Flemington and his return on capital invested is a healthy positive number not minus 0.3%.
· Im not meeting many people who have retired well off from their superannuation fund, but I have bumped into a number of wealthy Financial Advisers with huge houses in the best address. Maybe caravanning lifestyle is beneath the superannuation rich retirees.
Im suggesting all Grey Nomads lobby Wayne Swan for Tom Waterhlouse to be licenced as a financial adviser and superannuation fund manager for My Super and the Future Fund.
Some people have several super accounts, all paying management fees, and as you say while they are young they dont bother to check on them. The smaller accounts go into arrears eventually when fees are greater than the account balance, and then employers payments and employees benefits are lost. What a waste.
If you were to pay that money into a bank account for all those years with compounding interest I'm sure you would be better off... At least as times are nowadays. There have been periods of quick gains in the share market which kept everybody hanging on for the next big rise like gamblers on a "sure thing".
I'm sure it was never the intention of government to regulate for the benefit of those servicing the industry, but I feel this may be the current result. Although governments mean well, they seem to stuff up the implication of projects.
Markets are very unpredictable, but it seems unfair that fund members pay fees when the fund has lost money, all the managers still get paid. Maybe it would be fairer if managers and advisers were paid the equivalent of the pension plus a commission calculated as a percentage of the fund's profit and not on the fund's balance.
was in super fund 30 years retired at age 61 when got to 65 invested all in credit union
averaged about 5% no management fees
suenray
we don,t have the best of everything we make the best of everything we have
Terry,
If you team up with Tom Waterhouse and keep producing 12% you have my a/c.
I know a lot of industry funds do not pay commission to financial advisers, but I would imagine fees would have to be charged to stay in business.
THe biggest problem I see with advisors and funds is they are slow to react to changes and quite prepared to let you lose money in the short term. With the new laws they now have to be pretty transparent upfront about fees and commissions so it is vhanging. Over the years I made my best investment within 24 hours of the 1987 stockmarket crash. By buying blue chips stocks sold by idiots and watching them go back to where they should have been. IMO all investments are long term and unfortunately people get hurt by looking for unrealistic returns from companies such as Pyramid, Storm and Banksia. Wonderful how the shonks who run them manage to put all the blame on the Governments and walk away with their money stashed with their wives or kids.
If only they jailed all of them and grabbed their assetts back from their families.
Terry
Terry
Your share purchase timing was perfect.
People retiring now who have not had any life experiences in investing would find it very difficult to navigate through the truck loads of financial products and rubbish available.
Many of these people see their only option being to put their trust in a financial adviser. The current crop of retirees have not had a full working life in the compulsive superannuation system and, just coming out of the GFC are not likely to have huge sums of super.
It is interesting times that we live in.
Absolutely tcp99!! I wholeheartedly agree!!!
-- Edited by Gerty Dancer on Thursday 8th of November 2012 01:37:24 PM
I wrote this on a racing forum that I am a moderator on and the same discussion on superannuation arose, I believe it to be close to the mark, you may think differently.
To further add to the above, let's not kid ourselves, 9%, 12% or even 20% super contribution is not going to be sufficient to return the same income as the employees retiring salary or wage.
Singapore is one of the few countries that actually acknowledges that superannuation contributions need to be around 40% of salary and wages to allow the employee to have a return equal to that of their last pay packet...now the truth is, in Australia, currently few employers or employees can afford that, but what the government has in place is a split contribution arrangement where the employer and employee both contribute to the super fund so the high super contributions can be sustained...to me this the only way that a true fully sustainable retirement fund can be operable.
It is a general rule of thumb today that on retirement, at least $1 million is required to live comfortably ie., invested @ 5% = $50,000 pa or around $1000 per week (which to most people is a comfortable wage).
As an example, an employee earning $50,000 pa today, would accrue $20,000 pa with a 40% super contribution, multiply that by 50 which takes an employee to 67 year old if they started work at 17...the end super amount is $1 million (plus capitalising interest $$$$), more than equal to their existing salary if invested at todays rates. therefore, at the current 9% rate, the end payout is a mere $225,000 which is just not sufficient and is really a pittance.
The above figures are all relevant to the present, and will remain in sync as wages rise so the equation doesn't really change, all that does is the investment interest rates and these do have an enormous effect on the end annuities, that's where low interest rates are a huge negative for the self funded retiree, which a meaningful superannuation scheme would ensure that most Australians were. If interest rises to 10%, only $500,000 is required to return the $50,000 pa.
For superannuation to be self sufficient and meaningful, all parties including the government as a contributor, have to contribute to the scheme (my suggestion would be, the government 15%, employer 12.5%, employee 12.5%), then and then only will pensions become virtually redundant and all employees will be adequately funded in retirement.
This is the scheme that Singapore has in place, note the high contributions by the employee, but after all, at the end of the day, it is THEIR money...
EXTERNAL LINK
I will add to this post, to be realistic we presently cannot afford the above scheme, but we must move to a minimum of 20% and have an automatic rise plan to at least 30% built in if Australians are to have a fitting retirement scheme.
Wizardofoz,
you have done your sums very well, explanation very detailed, great article.
Good to see someone come up with a solution, we now just need someone implement it.
RE Wizardofoz
With Singapore being a almost totalitarian state in a lot of their laws there sure have it right with Superannuation. And off topic they hava a fantastic subway system while we gave millions to the MYki clowns.
One of the problems we have is that if you commit a white collar crime your chances of getting a realistic penalty and being forced to repay is almost nil.
We ned to make superannuation fully portable and teach in schools finance, investing etc.
Retreat's Suggested Retirement Plan.
Sell house, caravan and 4x4 say $600,00; add super of $225,000 = $A825,000
Take $825,000 to Fiji and convert to Fijian Dollars = $fi1,514,345.00
Buy house $Fi230,000.
Left with $1,284,345 Fijian dollars to retire on. No need for a car, you can walk everwhere.
Could also go to NZ and have $NZ1,050,000 before buying a house which would be around $400,000 leaving around $NZ600,000.
Me too.
Interesting segment on ABC 7:30 to night highlighting some of the hardship caused by the Banksia collapse.
There were 15,000 investors of which 50% are over 55 years of age. High interest was not the motivation, the motivation was more likely the feeling of supporting the community.
For those on Centrelink payments the frozen deposits are still counted as assets by Centrelink
Although it is not a good situation, there appears to be a reasonable assets and funds held by Banksia that will eventually be distributed back to investors.