Marisawright Posted November 10, 2014 Share Posted November 10, 2014 I know we're always being told to "consolidate our super funds" because you pay less fees by having all your money with one fund. However, I'm beginning to feel nervous about having all my eggs in one basket. I already have $300,000 in one fund, and I'm about to get a chunk of money from the sale of my investment property. Am I silly to open a second super fund with another company to put that money in? Quote Link to comment Share on other sites More sharing options...
Parley Posted November 10, 2014 Share Posted November 10, 2014 I don't see a problem with it, but would check out the fees and see if you pay more in fees that way. Make sure you don't put in more than $180000 in non concessional contributions in the 2014-15 year or you will get slugged punitive tax. Quote Link to comment Share on other sites More sharing options...
MARYROSE02 Posted November 10, 2014 Share Posted November 10, 2014 Put the money into a cash management account or a (short) term deposit, whilst you do some research? What sort of guarantees do Australian super funds operate/offer? Quote Link to comment Share on other sites More sharing options...
Marisawright Posted November 10, 2014 Author Share Posted November 10, 2014 Put the money into a cash management account or a (short) term deposit, whilst you do some research? What sort of guarantees do Australian super funds operate/offer? If I put it into a cash management account I'll have to pay tax on the interest. If I put it into super I can avoid tax - and as I'm over 60, I can withdraw it any time I need it too. No idea what kind of guarantees super funds have - which is why I'm thinking of spreading the risk. Quote Link to comment Share on other sites More sharing options...
Andrew from Vista Financial Posted November 12, 2014 Share Posted November 12, 2014 I know we're always being told to "consolidate our super funds" because you pay less fees by having all your money with one fund. However, I'm beginning to feel nervous about having all my eggs in one basket. I already have $300,000 in one fund, and I'm about to get a chunk of money from the sale of my investment property. Am I silly to open a second super fund with another company to put that money in? No, not silly at all, there can be a number of reasons why one might have more than 1 Super Fund. In relation to fees depending on the type of fund you opt for ie low cost low fee fund, master trust or wrap there are generally 3 types of fees: Member Fee (usually a low dollar amount approx. $78 pa) Administration Fee (percentage based mainly applicable on Master Trusts or Wraps)) Management Expense Ratio (MER) (percentage based) Say for example you had opted for a retail fund (not Master Trust or Wrap) and it had an MER of 0.6% and an Industry Fund which also had an MER of 0.6% it would not matter whether you had 2 or 1 fund the overall fee would be the same. The additional member fee (if applicable would be negligible really). It's really the net performance that is more important as this accounts for the returns after fees. I don't see a problem with it, but would check out the fees and see if you pay more in fees that way. Make sure you don't put in more than $180000 in non concessional contributions in the 2014-15 year or you will get slugged punitive tax. It is possible for people in circumstances to invest up to $540,000 in one financial year using the 'bring forward rule'. If I put it into a cash management account I'll have to pay tax on the interest. If I put it into super I can avoid tax - and as I'm over 60, I can withdraw it any time I need it too. No idea what kind of guarantees super funds have - which is why I'm thinking of spreading the risk. Super is not tax free and is taxed at up to 15% on earnings....Account Based Pensions (ABP) are tax free on earnings, both Super and ABP's are tax free on withdrawals over the age of 60. Being over age 60 does not in itself constitute a full condition of release it's age 65 that automatically does, being age 60 still has a link to employment and therefore it may not be possible to access the money from Super (albeit potentially possible to access up to 10% each financial year from an ABP) Kind regards Andy Quote Link to comment Share on other sites More sharing options...
Marisawright Posted November 12, 2014 Author Share Posted November 12, 2014 (edited) Thanks for that fantastic answer, Andrew. That's the first time I've seen the fees explained like that, it makes a lot of sense. I had already worked out about the 15% (only recently, I must admit!). However my situation is that I'm moving in the opposite direction to most people - back to the UK - and if I leave my money outside super it will be subject to much higher tax. We're not sure if the move will be permanent so I don't want to transfer the money to the UK until we're confident, which may be a year or two. If I put it in super I will probably not move it to the UK at all. I can rely on my husband's income for the immediate future and still contemplating what to do for the longer term, I need to look into a Transition to Retirement pension perhaps. Edited November 12, 2014 by Marisawright Quote Link to comment Share on other sites More sharing options...
rammygirl Posted November 12, 2014 Share Posted November 12, 2014 The UK will tax the withdrawal of super funds if you are resident there. They are only tax free if you take them whilst resident in Aus. Doesn't matter where they are once you get them they are taxable even if the money remains in Australia, remember wherever you are resident taxes you on your worldwide earnings according to THEIR rules. the double tax agreement only accounts for tax already paid in one country, just because Aus doesn't tax retirement income doesn't mean that the UK won't. This is how I understand it, correct me if I am wrong please Andrew. Just goes to show how important it is to seek proper advice with someone who can look at the whole picture and plan properly for the future. Quote Link to comment Share on other sites More sharing options...
le petit roi Posted November 13, 2014 Share Posted November 13, 2014 The UK will tax the withdrawal of super funds if you are resident there. They are only tax free if you take them whilst resident in Aus. Doesn't matter where they are once you get them they are taxable even if the money remains in Australia, remember wherever you are resident taxes you on your worldwide earnings according to THEIR rules. the double tax agreement only accounts for tax already paid in one country, just because Aus doesn't tax retirement income doesn't mean that the UK won't. This is how I understand it, correct me if I am wrong please Andrew. Just goes to show how important it is to seek proper advice with someone who can look at the whole picture and plan properly for the future. I agree with the last bit. However, in my case, the discussions I've had with one or two financial planners in my time here has been..ahem, 'enlightening'. I wouldn't have trusted them to organise a raffle never mind my financial future. It pays to take a little time to get the right person and not just jump straight in. For clarity, my comments are not directed at any of the financial people on this site, whom I have never had any form of contact with. Quote Link to comment Share on other sites More sharing options...
Marisawright Posted November 13, 2014 Author Share Posted November 13, 2014 The UK will tax the withdrawal of super funds if you are resident there. They are only tax free if you take them whilst resident in Aus. Doesn't matter where they are once you get them they are taxable even if the money remains in Australia, remember wherever you are resident taxes you on your worldwide earnings according to THEIR rules. the double tax agreement only accounts for tax already paid in one country, just because Aus doesn't tax retirement income doesn't mean that the UK won't. I wasn't talking about retirement income. I was talking about a lump sum which I will receive this year, while I'm still resident in Australia, and which I'd have to pay a heap of CGT on if I don't put it in my super. On top of that, if I left it in a cash management fund or similar, I'd pay Australian tax on the interest at 32c in the dollar once I'm non-resident. I know I'll be taxed if I ultimately take a pension from my super, and that's a real bummer. I'd love to know how to get around it but so far, there doesn't seem to be any way around it. Quote Link to comment Share on other sites More sharing options...
Parley Posted November 13, 2014 Share Posted November 13, 2014 I wasn't talking about retirement income. I was talking about a lump sum which I will receive this year, while I'm still resident in Australia, and which I'd have to pay a heap of CGT on if I don't put it in my super. On top of that, if I left it in a cash management fund or similar, I'd pay Australian tax on the interest at 32c in the dollar once I'm non-resident. I know I'll be taxed if I ultimately take a pension from my super, and that's a real bummer. I'd love to know how to get around it but so far, there doesn't seem to be any way around it. Are you sure you won't have to pay CGT on it anyway ? I would have thought you would ? Quote Link to comment Share on other sites More sharing options...
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