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Super Concessional Contributions

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As restrictions continue to ease, it almost feels safe to look ahead and think about retirement saving again. And, of course, the looming deadline on this front is June 30.

As always, there are contribution opportunities for some. It is vital to lodge the necessary paperwork.

Anyone still able to make super contributions who also has a high taxable income should ensure they have made full use of the $25,000 limit on “concessional contributions” for financial year 2020.

Concessional contributions are normally thought of as salary-sacrifice and superannuation guarantee contributions. They are called “concessional” because if an employer pays this money as superannuation rather than salary, there is less tax taken out – superannuation funds pay tax at lower (concessional) rates than these individuals pay on their salary.

But in fact any of us can make concessional contributions.

A Perfect Storm to Expose Some Industry Funds

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The following article was written by Chris Brycki on the 27th of March 2020. And given his credentials, I would recommend your review. He sits on two Advisory Committees for the industry regulator ASIC and was previously a fund manager at UBS. He holds a Bachelor of Commerce (Accounting/Finance Co-op Scholarship) from UNSW. 

It reflects what we have been saying for the past 5 years and we are extremely concerned that some Industry Funds could lose anywhere from 50%-70% of value over the coming months.

The issue may not be performance-based, however negatively compounded as members are locked out from redeeming their benefit (accumulation or pension) or being able for it to be invested accordingly toward any future growth over an unknown future.

Although the following report focuses mainly on Hostplus who is in a particularly compromising position, several other major Industry Super Funds will also significantly be affected due to their extremely large exposure to Unlisted Assets, Venture Capital and Private Equity.

The Traps of some Industry Super Funds – A Precautionary Tale 

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As from November 19, the first sizable industry fund, Australian super, will be making some significant changes to their fund, that may cause some concern for investors, especially if they were coming close to retirement.  These changes come as amid fears of a potential property market plunge.  Amongst the changes, property funds will be frozen for up to two years in the event of a crisis. Furthermore, the fund will prevent members from investing more than 70% of their savings in its property portfolio option.  

According to Kofkin Bond and Co, one of the most challenging changes will be the rule that states that, for up to two years, the fund has the right to freeze any attempts at withdrawing savings from the property option, as well as prohibiting funds out of, as well as any new contributions into, the options.  

Choosing Your Retirement Lifestyle

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Choosing retirement and the perception of a person’s lifestyle, either currently or how one wants it to develop over time, is subjective – luxury living for one person is a modest existence for another. In this article, we offer guidance on the amount of money you may require for retirement to cover your basic living costs and support your desired style of living.
Choosing a retirement lifestyle shouldn’t be any different to how you maintain your current lifestyle — you live the life you can afford. Living within your means today and thinking about what life after retirement will look like, helps to set you up for a comfortable future.
So, the big question is: how much money is enough for your retirement? Have you worked out the amount of superannuation, and other savings, you will require to finance your retirement?
Is $1 million enough to retire on? Although $1 million may sound a large sum, according to John Piggott, director of the Australian Institute for Population Ageing Research at the University of New South Wales, agrees: “$1 million will not do all that much for you. It will give you a very low [salary] replacement rate.”

Importance of Superannuation and Financial Advice

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With little doubt, Superannuation (AKA Super) is likely going to be a persons longest-term investment and, therefore, deserves to be considered with a greater depth than perhaps their other financial investments.  There is no better time than now to engage in a conversation with a Kofkin Bond and Co financial adviser to ensure your Super is in order.

Super is not a short-term discussion

In the course of an average life, they may have many long and short-term savings and investment objectives. Saving for a holiday or a used car in your younger days may take a year or two, Whereas saving for a home deposit may take a little longer, and even then it may take thirty years, or more, to pay it off.

Top up your super before the end of the financial year

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The end of the financial year is rapidly approaching and, along with it, the opportunity to claim a tax deduction on additional superannuation contributions.

 Why contribute more to super?

Superannuation does impose restrictions on access to your money. It is, after all, intended to provide for your retirement. So why would you lock up more of your money? Because superannuation remains one of the most tax-favoured environments within which to build wealth. That can make it an ideal place to invest your long-term savings. 

What are some of the risks inside an Australian expats superannuation fund?

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We often hear Australian expats taking the age-old ‘set and forget’ approach when it comes to their superannuation. Here we wanted to explore some of the risks you may be exposed to in an Australian expats superannuation fund.

Generally, the superannuation can’t be touched for years. With this in mind, we are often asked why should expats bother looking into it before they jet off or even while they are abroad? A recent article out of the Australian Financial Review (AFR) has placed the spotlight on how our superannuation is invested and potentially exposing expats to investment risk that they may not have been aware of.

It points out the lack of transparency that members face when it comes to knowing where their super is invested and what the actual level of risk members take on by being in specific investment option (i.e. Balanced, Growth and High Growth).