super duper annuation
August 6, 2009 9:29 PM Subscribe
We are completely new to superannuation and need to make decisions pretty soon and definitely need some help.
So, my wife got a job offer from an Australian government agency and we got the superannuation forms in the mail today. (We live outside the Australia right now). I googled beginners guide to superannuation, dummies for superannuation but couldn't find anything that is accessible immediately. So the question is, how to decide on superannuation, is there some kind of a comparison chart, or beginner's guide available online?
Just in case contact, anonsuperannuation@yahoo.com
and it is anonymous because we haven't told the advisors these plans, so this is not public information yet.
So, my wife got a job offer from an Australian government agency and we got the superannuation forms in the mail today. (We live outside the Australia right now). I googled beginners guide to superannuation, dummies for superannuation but couldn't find anything that is accessible immediately. So the question is, how to decide on superannuation, is there some kind of a comparison chart, or beginner's guide available online?
Just in case contact, anonsuperannuation@yahoo.com
and it is anonymous because we haven't told the advisors these plans, so this is not public information yet.
Sien's got it covered, and whatever I say surely isn't financial advice, and should not be taken as such.
Super funds are divided into Industry, Corporate and Self-Managed. You probably want an industry fund.
So the question is, how to decide on superannuation
The killer factors are fees and return. Fees you can find out about in advance, return you can't. Corporate Super makes its dosh by charging more fees to members, and using that to support a better marketing campaign to get employers on side. This worked very well until a couple of years ago, when the rules about choice of super funds changed (so employers now have far less say in the fund used by their employees). Industry super funds tend to have a far larger member base, so the admin costs are lower on a per-member basis, and they don't pay commissions to financial advisors (which are, of course, taken out of members' balances).
The ATO do have an over-view page here.
Choice magazine have a number of articles, though some may be paywalled.
posted by pompomtom at 9:55 PM on August 6, 2009
Super funds are divided into Industry, Corporate and Self-Managed. You probably want an industry fund.
So the question is, how to decide on superannuation
The killer factors are fees and return. Fees you can find out about in advance, return you can't. Corporate Super makes its dosh by charging more fees to members, and using that to support a better marketing campaign to get employers on side. This worked very well until a couple of years ago, when the rules about choice of super funds changed (so employers now have far less say in the fund used by their employees). Industry super funds tend to have a far larger member base, so the admin costs are lower on a per-member basis, and they don't pay commissions to financial advisors (which are, of course, taken out of members' balances).
The ATO do have an over-view page here.
Choice magazine have a number of articles, though some may be paywalled.
posted by pompomtom at 9:55 PM on August 6, 2009
I recommend the resources at the Australian Securities and Investments Commission Super Decisions page. This is a government regulator of financial services. It includes a guide to comparing funds.
I would agree that Industry Superfunds are worth consideration in your choices.
posted by AnnaRat at 9:59 PM on August 6, 2009
I would agree that Industry Superfunds are worth consideration in your choices.
posted by AnnaRat at 9:59 PM on August 6, 2009
If you're going with a govt job, they usually recommend their own. If it's federal govt, even better, Commsuper is one of the best out there (used to be phenomenal, now merely excellent). Ask them, and they will recommend. :)
posted by smoke at 10:55 PM on August 6, 2009
posted by smoke at 10:55 PM on August 6, 2009
It's possible to switch funds too - it'll cost you to do it, but just in case you make a decision then hear of something better suited to you later on, you're not completely locked in forever.
In my experience, government employee funds are cheap but don't promise returns much above inflation rate. Industry funds are *almost* always the best.
posted by harriet vane at 1:00 AM on August 7, 2009
In my experience, government employee funds are cheap but don't promise returns much above inflation rate. Industry funds are *almost* always the best.
posted by harriet vane at 1:00 AM on August 7, 2009
It doesn't always cost to switch either (look at the exit costs). I had accumulated a few different funds and rolled them into one fund a while ago; I don't think any of them charged me to do so. Most were industry funds, there was one commercial fund.
posted by AnnaRat at 2:31 AM on August 7, 2009
posted by AnnaRat at 2:31 AM on August 7, 2009
Also know that to take the super out of Australia incurs a 30% fee (at least I remember it being 30%). We've left ours there and will draw from it when we retire from wherever we end up. There is no need to take it out when you leave Australia – at least for US citizens.
posted by qwip at 8:35 AM on August 7, 2009
posted by qwip at 8:35 AM on August 7, 2009
If she's becoming a government employee, she'll likely be paid 13%-17% of her salary towards super by her employer. This compares favourably to 9% for most Australians.
If she'll be earning less than around 60K in a financial year, look into the superannuation co-contribution. This is where the federal government will top up your extra payments to super. It maxes out at a $1500 government payment for you paying $1000 after tax into super. It sounds like she'll be earning more than this, but also like you'll be moving in to the country halfway through a financial year. Calculator available at the Tax Office site linked.
You can also salary sacrifice super - which means paying before-tax income directly into super, and only get charged the 15% contributions tax. Her payroll office should be able to set up either of these as automatic payments.
If she is a temporary resident or on a working holiday visa, you may be able to get your super cashed out when you leave Australia.
I agree that Comsuper has a good track record, they've also had some reasonably good returns over the last few years My partner uses them and is happy. Virgin Super have very simplified options (five types of index funds only) and reasonable costs, with easy-to read forms, and if you're not planning to stay it's a good simple option - what I'm using, but I don't have much in super to worry about. Be aware that most super funds will sign you up for life/disability insurance as a default option, which you may not want and which can cause a dent in your super amounts.
posted by quercus23 at 1:29 PM on August 7, 2009
If she'll be earning less than around 60K in a financial year, look into the superannuation co-contribution. This is where the federal government will top up your extra payments to super. It maxes out at a $1500 government payment for you paying $1000 after tax into super. It sounds like she'll be earning more than this, but also like you'll be moving in to the country halfway through a financial year. Calculator available at the Tax Office site linked.
You can also salary sacrifice super - which means paying before-tax income directly into super, and only get charged the 15% contributions tax. Her payroll office should be able to set up either of these as automatic payments.
If she is a temporary resident or on a working holiday visa, you may be able to get your super cashed out when you leave Australia.
I agree that Comsuper has a good track record, they've also had some reasonably good returns over the last few years My partner uses them and is happy. Virgin Super have very simplified options (five types of index funds only) and reasonable costs, with easy-to read forms, and if you're not planning to stay it's a good simple option - what I'm using, but I don't have much in super to worry about. Be aware that most super funds will sign you up for life/disability insurance as a default option, which you may not want and which can cause a dent in your super amounts.
posted by quercus23 at 1:29 PM on August 7, 2009
This thread is closed to new comments.
If you intend to stay in Australia you probably want to go with Industry Super. In Australia a number of big companies run super funds. Largely they just extract higher fees than industry super and make money out of this. They are able to do this because they aggressively market their funds to employers and via dodgy investment advisers.
If you are in higher education you'll probably wind up in Uni Super which is fine.
posted by sien at 9:43 PM on August 6, 2009