Government to limit lost super losses

Government to limit lost super losses

Lost Super

The Federal Government is introducing legislation to prevent fee erosion of lost super accounts with balances under $6,000 stating that they are committed to “ensuring that Australians have adequate retirement savings.”
Assistant Treasurer, Mr Josh Frydenberg has said that the amendment would increase the threshold at which funds would be transferred to the Australian Tax Office (ATO) as unclaimed super funds, from $2,000 currently to $6,000 over the coming 16 months.
For smaller funds, it’s often the case that fees, charges and insurance premiums exceed the investment returns.  It’s a problem for lost super, as often the members are unaware that they have the accounts and could easily end up losing money earmarked for retirement.  Transferring lost super accounts with low balances to the ATO can help protect these accounts from fee erosion, and preserve value until they can be reunited with the members.
The trouble is, if the member had established the fund for the express purpose of funding insurance premiums for death, total disablement or income protection, this valuable cover can be lost on transfer, meaning the client loses their insurance protection but maintains a small superannuation balance.  Hardly the desired outcome in the event of the need to claim – and also highlighting the need to stay on top of our super funds and in touch with our providers!
Currently, lost member accounts with a balance under $2,000 must be transferred from fund managers to the ATO as unclaimed super.
The new Bill is set to increase the $2,000 balance in two separate phases.  Firstly to $4,000 from 31 December, 2015 and then to $6,000 from 30 December, 2016.
Time to do a check on your funds to make sure you’ve rounded up all those smaller accounts!
If you think you may have lost Super, click here to run a no cost search: SuperSeeker

Government to limit lost super losses

A super alarming reality for women

50percent_infographic

#equalfuture


You might be shocked to know that the average super account balance for women when they retire is $90,000 less than the average for men, and 90% of women will retire with inadequate savings to fund a ‘comfortable’ lifestyle.1
These alarming statistics are a stark reality for many women today across Australia. That’s why Amanda Cassar from local financial planning practice, Wealth Planning Partners, is on a mission to improve the financial fate of all Gold Coast women by providing better access to financial education and advice.
Amanda says, “a major contributor to this issue is ‘super baby debt’, where taking time off work to have a family means women can miss out on up to $50,000 in their super2. When not at work, employer contributions may stop. Even with part-time work, employers are only obligated to contribute to super if you earn over $450 a month.”
“Other contributing factors to women not building a reasonable amount of retirement savings include: lack of parity in take-home pay compared with their male equivalent, running a single-parent household after divorce and inability to be the primary care-giver and work full-time.”
So what can women do to close this alarming retirement savings gap?
Amanda suggests the following three strategies that almost every woman can use to boost their super savings.

  1. If you have a spouse, consider asking them to make a ‘spouse contribution’ into your super account

If you are in a relationship and live with that person on a ‘genuine domestic basis’, and have an assessable income of less than $13,800 for the financial year, then your spouse can make a non-concessional (after-tax) contribution on your behalf and claim a maximum tax offset of up to $540 if your spouse contributes $3,000 or more into your super fund.
Please note: eligibility criteria apply. See the Australian Taxation Office (ATO) website for further details.
Spouse definition: A spouse includes a person (same or different sex) who, although not legally married to you, lives with you on a genuine domestic basis as your husband or wife. It generally does not include a person to whom you are married but who lives separately and apart from you on a permanent basis.3

  1. You may be eligible for a Government co-contributiontip

Another option to help you ‘catch-up’ on your super savings is to take advantage of the Government co-contribution scheme. You may have decided to return to work part-time after the kids were born, or alternatively return to work full-time. Either way, if you make a non-concessional (after-tax) contribution to your super fund, and earn less than $50,454 a year (for 2015/2016), the Government may make a co-contribution entitlement of up to $500 if you satisfy the requirements.
 
 
Amanda outlines three simple steps to make an eligible Government co-contribution payment:

  1. Assuming you earn less than $50,454 (‘total annual income’) for the 2015/2016 year, simply make a non-concessional contribution (i.e. from your ‘after-tax’ bank account) to your super fund account. Contact your super fund for their EFT or BPAY® contribution details.
  2. Then, lodge your 2015/2016 tax return.
  3. Within 60 days, the Government then pays the co-contribution into your super fund.
  1. Maximise concessional cap limits while you work

Regular super contributions beyond those your employer makes can rapidly increase your final retirement savings. One of the most tax-effective ways is to make contributions ‘before tax’ via your employer with a salary sacrifice arrangement. Limits apply to the total amount in before-tax dollars you may contribute to super (including your Superannuation Guarantee contributions made by your employer). Please see below for the limits that apply in this 2015/2016 financial year.

  • $30,000 contribution limit applies to those aged under 50 as at the end of the financial year
  • $35,000 contribution limit applies to those aged 50 or over at the end of the financial year

Need more information?
For more information on super strategies tailored for women and how to achieve greater financial security, please contact Amanda Cassar from Gold Coast financial planning practice, Wealth Planning Partners, on 07 5593 0855 or email amanda@wealthplanningpartners.com.au
 The Association of Superannuation Funds of Australia (ASFA), 2015.
2 The Association of Superannuation Funds of Australia, 2012: ‘How the ‘super baby debt’ eats away at a woman’s nest egg.
3 Source: Australian Taxation Office at ato.gov.au
® Registered to BPAY Pty Ltd ABN 69 079 137 518.
* Amanda Cassar is an Authorised Representative of Financial Services Partners, Australian Financial Services Licence 237590. This information is current as at July 2015, does not consider your personal circumstances and is general advice only. You should not act on the information provided without first obtaining professional financial advice specific to your circumstances. This article contains information from sources believed to be accurate at the time of writing.  This information may be or may become inaccurate.  You should seek your own timely financial advice on the contents of this editorial and not rely on this as advice from the provider.

Spring has Sprung!

Most of us have heard of the expression ‘healthy, wealthy and wise.’ It shows to me the inextricable link between our health, fitness and mood, and our money mindset and abilities.
And, it’s finally time to welcome in the first day of spring! Woohoo! We’ve made it through another Winter!
Although, being Gold Coast based, that’s hardly a struggle!
Spring has always been associated with joy, passion and reawakening, and we love nothing more than a bright sunshiny day.
Research proves that warmer days and longer exposure to daylight have a great impact on our mood. We even find ourselves smiling more than we have. Bonus!
Being happy is a pretty hard emotion to fake! It’s something we all strive to find and maintain. As the saying goes… ‘whatever makes you happy!’
So, aside from getting your finances in tune, What are some simple things we can do to achieve the healthy as well as the wealthy?
Try the following top tips!
1.SMILE – even fake smiles can lift your mood!
2.Exercise – or just Move
3.Get a good night’s sleep – 8 hours minimum
4.Spend more quality time with your family and friends
5.Money does not buy happiness – spend on experiences, not stuff
6.Get outside – nature does work wonders
7.Keep a gratitude journal – find something everyday that lit your fire
8.Choose to be happy – it can be choice! How do you choose to feel today?

Money & Mindset

Money & Mindset

money mindset
The foundation of how and what we think about money often comes from the environment we were raised in, and our parents own views. We need to be very mindful of what exactly they taught us about money and how this impacts the decisions we make today.
Cast your mind back to your childhood and ponder a few vital questions:

  • What did you notice at home when it came to the family finances?
  • Did your parents fight constantly about money or was the topic just ignored or never even mentioned?
  • Did they teach you lessons like ‘money is the root of all evil’ or  ‘money doesn’t grow on trees’ or ‘kids/pets are expensive’?
  • Did they live in scarcity, always ‘being on a strict budget’ or having to ‘tighten the belt?’
  • Did they live beyond their means or were they extreme savers?
  • Did you see them give money away to the homeless or did they actively support any favourite charities?
  • How are they around money now?

Can you see any familiar patterns? Are you personally excited, apathetic or pessimistic about money?
It’s time to have a bit of a think about our personal beliefs around money.  Where do you think the ideas came from?  Some notice early certain thought patters that they don’t agree with and are brave enough to take the step and change mindset, thinking, “I’m going to do things differently!”
And for the really good news; you really do get to choose what you want to believe from now on.
The patterns and beliefs of your parents, were also handed down from their parents, yet each generation can have vastly different circumstances to be raised in.  These ideas from your parents don’t have to be your ideas any more. You can choose to challenge the thoughts once you start being aware of where they originally came from.
So, is there one idea you can change that may help your relationship with money?

Government to limit lost super losses

Choppy Markets affecting you?

Choppy
As you’ve probably noticed, markets have been a little choppy of late!  You may be wondering what it’s all about.  Hopefully, this will give you a basic insight into what’s been going on!
The primary influences for the recent market falls are:

  • The Chinese currency devaluation and share market volatility was met with new government policy aimed at managing risk of further decline and managing investor sentiment.  Manufacturing data released on Friday suggests these measures have not had the full desired impact to stabilise growth.
  • Other emerging economies are now also facing weaker growth, higher interest rates and higher levels of debt.
  • If the US raises interest rates for the first time in 9 years this September, emerging economies will be likely to face even more headwinds that will contribute to their effect on global growth.

Recent market activity and what lies ahead are:

  • While the markets move to price for weaker growth can be justified and is likely overdue, it is being questioned as to whether this market correction has been more severe than necessary.
  • Developed markets are likely to be effected by the emerging markets slowdown (particularly relating to China), but the developed markets are still supported by a number of positive factors and China still has opportunities to support their future growth.
  • We do believe there may be softer returns than experienced in previous years, but we do not see this as a market breakdown, it is more a ‘bump in the road’.

If you’d like to know a little more, please click here for the Market Update as prepared by ANZ by clicking here: Market Update 2015_08 Market correction

Government to limit lost super losses

Market Correction Time Again?

Markets, down, wall street, bull, horns
 
Big thanks to Ord Minnett for the following short but sweet look at the current correction going on in Markets:
Stock markets have continued to trade down while bond prices have lifted following heightened fears of a growth slowdown in China. The correction started after China’s sudden devaluation of its currency. At the time, there was enough doubt about China’s motivation behind the move, leaving open the possibility that the adjustment in the currency was simply part of a planned liberalisation of its currency market. But the steady fall in global commodity prices and weak Chinese manufacturing updates have now moved attention and concerns to its economy.
Investors now face the same question they have had to address many times this cycle: is the fall simply a correction in a sustained medium-term bull market, or the beginning of the end of the cycle? For the moment, we are siding with a correction, but in a multi-year rally that is ageing.
Two prominent risk factors could end the economic and risk market cycle: a surge in inflation which requires the Federal Reserve to raise the cash rate more aggressively and to a higher level than currently expected; and an emerging markets debt crisis.
The latest market turmoil was not set off by the Federal Reserve but by worsening growth concerns about emerging markets, and particularly about China. Growth in emerging economies has been disappointing for years now but this time around that weakness is coming on top of a world economy that slowed to below trend in the first half of 2015.
The main threats to risk markets are now that growth stays well below trend, setting off deflationary forces, or worse, that market turmoil feeds on itself and the global economy, which in turn brings about a recession. For the moment, we believe the odds of a global recession remain low, but accept a higher risk of sustained below-trend growth.
The reason we don’t believe it is the end of the cycle is because we do not think Chinese weakness is sufficient to bring about a global recession, and because there remain sufficient supports from cheaper oil, lower bond yields and monetary easing in emerging economies. The latter does require stable currencies and, in turn, a delay by the Federal Reserve in moving on the US cash rate. A continuation of recent market turmoil and falling commodity prices would probably induce such a delay by the Federal Reserve.

Government to limit lost super losses

China Moves to Halt Sharemarket Rout

China stock-market-1024x681
Well, with all eyes on the dramas in Greece, for some it’s overshadowed the more worrying concerns coming out of China.
And if you feel Greece is Europe’s problem, you’re probably not alone – but China is a lot closer to home and the slump has triggered fear of a worrying slowdown in the country’s economy.
Thanks to ANZ for the following information on what’s happened and an idea of maybe what lies ahead.
Chinese policy makers have released several new measures to halt the slide in share prices. What’s going on?
From go to slow(er)
It is no secret that the Chinese economy has been slowing since 2010, though it continues to grow at a much faster rate than developed economies. Recently China’s growth was reported to be 7% for the first three months of 2015, but real activity indicators suggested growth momentum was far more sluggish.
Before the recent slump, the Chinese share market had more than doubled since June 2014 and appeared to be helping to stabilise the Chinese economy. Property transactions and home prices picked up as consumer confidence improved and Initial Public Offerings (IPOs) re-started in the middle of last year, providing access to capital for many private companies. There were also anecdotes that the ‘wealth effect’ from the share market was providing a boost to domestic consumption.
China’s slowdown is partly a result of the government’s desire to focus on transitioning from an investment-driven economy to one that is more dependent on consumption. At the same time, the large stimulus program used to support growth during the Global Financial Crisis (GFC) had left Chinese local governments with large debt burdens, making it hard for them to fuel further growth with more credit. Meanwhile, banks remain wary of lending further to companies to help them grow, despite multiple interest rate cuts and the slashing of the amount of money banks need to keep aside for lending.
Action!
Following the biggest three-week rout in China’s main share market index (the Shanghai Composite Index) since 1992, Chinese authorities sprang into action to stabilize the market, fearing social and economic instability if things worsened. Besides taking action against short sellers, they relaxed margin lending rules, cut trading fees and slowed the pace of IPOs. Over the weekend, China announced that a group of brokerage firms will invest RMB120b (US$19.3 billion) to set up a market stabilisation fund. The Chinese central bank will also provide short-term funding to the state entity which makes margin loan financing available to the brokers.
It remains to be seen whether the authorities’ measures will have a meaningful long-term impact. While the valuation of the broader market is approaching more reasonable levels after the recent decline, shares in smaller companies (‘small cap stocks’) and technology-focused shares are overvalued and the bubble may be about to burst.
What’s ahead?
We see issues in China as being far more important for financial markets than the debt crisis situation in Greece. While uncertainty around whether Greece exits the euro zone is likely to cause market jitters in the coming months, we don’t expect this to have a major impact on markets longer term. However the situation in China has the potential to be much longer lasting given its importance in the global economy, especially for Australia as China is its largest trading partner.
It is not so much the Chinese share market falling that’s concerning, but rather what follows. If the share market drop harms business and consumer confidence in China, then it would worsen the current slowdown. Declining wealth may also hinder consumer spending and slow the economy’s transition. Moreover, the weaker share market will make it more difficult for businesses to reduce debt levels down to more manageable levels without weakening growth, as seen in developed economies post the GFC.
We have been expecting a slowdown in the Chinese economy and have a negative position to emerging market shares. We have also been fairly negative towards Australian shares and the Australian dollar because the Chinese slowdown sways commodity prices downwards, and the Australian economy as a result.
That said, we consider Chinese policy makers will be successful in stabilising growth at a reasonable level, though more action may be required.
We hope you found this Market Flash a useful insight into the recent share market events in China and our investment views.

Yes or No? The Greek Referendum – what will the outcome mean?

A big Thank You to the team at Ord Minnett for the following analysis on what a Yes or No vote will mean in the Greek Referendum on Sunday …
We draw on work from our global counterpart to understand what a “yes” or “no” in Sunday’s referendum could produce. Either way, the path for Greece has become even trickier. It almost goes without saying that investors should not expect a quick fix to the situation, although a “yes” vote is likely to provide some relief for markets in the near term.
Firstly, it now appears inevitable that the Greek referendum on “the proposals from the institutions” will go ahead on Sunday. Under the scenario of the “yes” vote succeeding, outcomes are ultimately likely to prove stabilising but could be volatile in the meantime. Key uncertainties relate to who will govern Greece and what will be negotiated in the aftermath of the second bail-out program’s expiration.
Under a “no” vote, positions on both sides are likely to harden and the situation worsen rapidly. This raises risks of more extreme political and economic outcomes, including of course, a Greek exit from European monetary union.
Yes, with a complicated path towards stability (60% probability)

  • Given the greater probability based on polls, this represents a base case scenario. A “yes” vote likely means that PM Tsipras stands down and a national unity government is formed under technocratic leadership. (Readers will recall Greece operated under a technocratic government led by former ECB member Lucas Papademus in late 2011 and early 2012, which added stability for a time). Such a government would have a mandate to secure a deal with the Eurogroup and begin to implement it. Although the terms offered previously are simply not on the table any more, not least because Greek circumstances have changed.
  • A unity government engaged in constructive negotiations would imply an ECB which keeps rolling emergency liquidity and works cooperatively with the Bank of Greece to ensure that the country’s payments system still functions. However, the difficult issue of how the banking system will be gradually returned to full function would also have to be addressed. This is amid little willingness on the creditors’ side to allow large increases in liquidity or to provide funds for banking recapitalisation. Any return toward full function will take time.
  • This scenario will likely produce expectations that elections will follow by early 2016 at the latest.
  • Although Tsipras has made remarks that he will stand down if the vote is “yes”, he is clearly not bound by them. This represents a second scenario, in which he attempts to continue as PM and returns to negotiations. But there has been a complete breakdown of trust and process. As a result, the terms of any subsequent agreement are likely to be extremely detailed and embody an onerous oversight regime. Negotiations over a program will therefore be protracted. It is also worth noting that the demand for debt restructuring from Greece “up-front” has not been dropped. With Tsipiras still in power, the ECB will likely continue to roll emergency liquidity support, but the support for banks would be limited and the negative effects created by capital controls will still exist. It is easy to imagine the ECB setting a deadline beyond which emergency liquidity would cease, effectively forcing Greek authorities to conclude a deal by a certain date or face the permanent closure of the Greek banks as euro-denominated institutions.
  • A third alternative is for Mr Tsipras to call a snap election after a “yes” vote. Such a process would normally take a minimum of three weeks. But given the rapidity with which the referendum has been called, there may be means to expedite this. This would put the rest of the region in the difficult position of having no one to negotiate with who has the authority to make commitments that will bind the incoming administration. It is also unclear exactly how the platform of the major parties would evolve in a new election campaign. Could Syriza (or at least part of it) shift to campaign on the basis of Euro-exit? And how does the rest of the region try to keep some minimal functionality in the Greek economy? A new elections scenario is inherently unpredictable and possibly chaotic.

No, with a slide towards more extreme stress (40% probability)

  • Although PM Tsipras has argued otherwise, many in the rest of the region see the referendum as a means for Greece to decide about Euro participation. In the wake of a “no” vote, there is likely to be a split within the rest of Europe as to how to approach the situation. The European Commission and France (and possibly others) will argue that negotiations should continue with the aim of finding agreement. Others will return to negotiations with their positions hardened against a newly emboldened Tsipras.
  • The “no” vote would put the ECB in a very difficult position. On the one hand, the absence of agreement on a program will lead some to argue that emergency liquidity should halt. This would lead to the bankruptcy of Greek banks while minimal functionality of the payments system in euros would be extremely difficult to sustain. Greece would have little option but to announce a redenomination into a newly launched currency and to nationalise its banks in this scenario. Of course, redenomination brings with it the spectre of hyper-inflation for imported good & services.
  • Even if the ECB chooses to continue emergency liquidity, the limits on the current measures will tighten through time as deposits are withdrawn. Moreover, if the “no” vote creates doubt that the banks will ever reopen, credit cards and electronic transactions will no longer be acceptable as a means of payment in many instances within Greece (even if the Greek state tries to legislate otherwise). Businesses will stop transacting goods & services in return for a bank balance that cannot be turned into cash, and is likely to be redenominated.
  • Combine this with the potential interruptions to the logistics of food, energy and medicine supply created by capital controls, and it is possible to concoct very worrying scenarios indeed. We can imagine the ECB being forced to consider small increments to emergency liquidity simply to retain some value in the claims on bank deposits as a means of exchange, and hence to keep electronic transactions between agents operating within Greece functioning. The balance between that and the ECB’s statutory obligation to lend only to solvent institutions will be extremely difficult (and perhaps impossible) to find.
  • A best guess is that a “no” vote would require a political intervention that hasn’t yet been forthcoming in order to bring Greece back from euro exit. And the dynamics of worsening banking and payments dysfunction would shorten the timescale for such an intervention to a handful of weeks at most.

All eyes on Sunday.

Government to limit lost super losses

What does the Greek Crisis mean for Investors?

Greece
What has happened?
It’s déjà vu for investors as the birthplace of Western civilization, Greece, once again teeters on the edge of economic collapse.
It marks the latest in an ongoing series of crises for the country after major debt restructuring packages were struck in 2010 and 2012.
But with negotiations between Greece and its creditors breaking down, markets have declined amid concerns of a potential Greek default. However, it’s important to keep the situation in context.
“We will respect the decision of the Greek people, whatever it may be.” Greek Prime Minister Alexis Tsipras.
The size of the $US240 billion Greek economy is about half the size of the New South Wales economy. Greece owes creditors approximately $US350 billion. By comparison, total US national debt currently stands at approximately $US18.6 trillion.
Possible macro-economic impact
European institutions and countries may prove they are able to absorb the losses of a Greek default, although Greek citizens would have to bear the brunt of a failed economy and potential exit from the European Union.
Markets around the world are inter-connected, so concerns lingers about the potential knock-on effects if Greece leaves the EU, with some commentators wondering whether other struggling countries could follow, prompting further losses and destabilizing in Europe. The ongoing uncertainty has prompted a new round of market volatility and uncertainty.
Key Points: The Greek Crisis

  • Greece’s current bail-out program, last negotiated in 2012, expired on June 30.
  • Greek Prime Minister, Alexis Tsipras, walked away from negotiations with the European Commission and instead called a referendum for July 5 to let the people decide.
  • The Greek stock exchange and banks have been shut with ATM withdrawals limited to 60 euros a day.
  • While Tsipras supports a ‘no’ vote to use as a bargaining chip at the negotiating table, European leaders have warned it would likely lead to Greece’s exit from the EU.

How will this affect my investment portfolio?
The Greek referendum announcement surprised investors, prompting a decline in the value of the Australian and New Zealand share markets. Meanwhile, Australian, New Zealand and US bond yields – typically a safe haven for investors – also weakened.
This response is reasonable: markets are expected to become more volatile when the outlook becomes uncertain.
“The confidence effect of a deal, the predictability it would bring, together with the injection of liquidity into the economy from disbursements will restore job creation and growth.” European Commission President Jean-Claude Juncker.
What should I do?
“The IMF also will continue to carefully monitor developments in Greece and other countries in the vicinity and stands ready to provide assistance as needed.” IMF Managing Director Christine Lagarde
While an increase in short-term volatility is to be expected, it’s important to remain focused on your medium-to-long term investment goals during times of uncertainty. I continue to look to keep your investment strategy on track, and note that the Wealth Planning Partners team are always available to discuss any questions you have.

Planning Ahead – Business Chicks

Planning Ahead – Business Chicks

For Amanda cassar, there’s nothing better than helping others with her financial planning business. Here’s her story…

Tell us a little bit about your business:

We are a financial-planning business based on the gorgeous Gold Coast. We have a team of five advisers that help our clients Australia-wide with ‘the WPP way’ to secure, build and succeed. We devise strategies to protect everything you’ve worked so hard for, devise wealth creation tools for the future, and put it all together to help you succeed in reaching your goals. We specialise in risk insurance and superannuation (especially self-managed superannuation).

What do you love most about what you do? When I meet clients, there’s often a bit of despair over the finances, and I love that I get the opportunity to help them. There’s complexity to people’s financial lives and I can help make this overwhelming jigsaw puzzle come together in a way that’s easy to understand and helps put a smile back on the faces of my clients. The paperwork can be a bit much, and for most people, financial literacy has never been taught, so it’s quite daunting. I love that I can help my clients achieve what they often didn’t think was possible.

If you could do any other job, what would it be and why? I’d be a warrior woman against injustice: feeding the poor,