Refund excess non-concessional contributions: draft rules

Refunding excess non-concessional contributionsThe treasury department has released an exposure draft of the new rules for refunding excess non-concessional contributions to super fund members.

This change was announced alongside the 2014 federal budget. Currently there is an option to have excess concessional contributions refunded, but not excess non-concessional contributions.

Under the new rules super fund members will have the option of having excess non-concessional contributions refunded, along with ‘associated earnings’.

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37% of life insurance advice doesn’t comply with the law: ASIC

ASIC research life insurance doesn't comply lawResearch by ASIC into financial advice for life insurance has shown a worrying level of non-compliance with the law, and conflicts of interest for advisers to the detriment of clients and insurance companies.

Quality of life insurance advice

ASIC’s survey of life insurance advice found that 37% of clients had received advice which “failed to comply with the law”.

Upfront commission appears to be a particular issue in the qualify of advice. “Where an adviser is paid under an upfront commission model it has a statistically significant bearing on the likelihood of that adviser giving advice that did not comply with the law,” said ASIC. 45% of upfront commission advice failed ASIC’s tests, whereas only 7% of non-upfront commission advice failed.

Read More »37% of life insurance advice doesn’t comply with the law: ASIC

What is the best superannuation fund?

Best superannuation fundUnfortunately for Australians trying to save for retirement there likely is no such thing as the best superannuation fund. What appears to be a simple question has quite a complex answer.

While there may be such a thing as a best superannuation fund for a particular person at a particular time, this is highly variable. Such a determination could only be made after considering an individuals financial needs and goals. Even then which is the best superannuation fund for them could change over time.

What qualities would the best superannuation fund have? It would depend on the needs to the member. Does best mean the highest investment return? But then how would this take account of the risk that the fund might have taken to produce the return? Also best performance in the past, as is often said, is no indicator of future performance.

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LISC should be indexed to increases in super guarantee

When the Low Income Superannuation Contribution (LISC) was introduced it was meant to offset the contributions tax low-income earners paid on their superannuation. This was because low-income earners would pay more on their super contributions then they would on wages received. However because the LISC was set at a fixed amount, $500, and didn’t take account of scheduled increases in the rate of superannuation guarantee, as the SG rate increases the LISC won’t offset all contributions tax for some low-income earners.Read More »LISC should be indexed to increases in super guarantee

Lost superannuation and unclaimed super

Lost superannuation, unclaimed superLost superannuation and unclaimed super are different things, though they can both end up with the same result. Some lost and unclaimed super can is required to be transferred to the ATO, earns only interest at the rate of CPI, and is unlikely to be returned to the owner.

Lost Superannuation

Some lost superannuation can be required to be transferred from a super fund to the ATO. Lost superannuation is super which relates to ‘lost member’.The Superannuation (Unclaimed Money and Lost Members) Act 1999 points to the SIS regulations for the definition of a lost member, in particular regulation SISR 1.03A. This section says there are two kinds of lost members: uncontactable and inactive.

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Unpaid super costs Australians $2.5 billion each year

Unpaid super, unpaid superannuationResearch by three large superannuation funds has found that unpaid super affects 650,000 workers, “leaving them collectively out of pocket almost $2.5 billion annually.”

Unpaid Super

The average worker who has unpaid super loses “around $3,750 per annum”, which the research says equals around 9 months worth of superannuation.

ASFA CEO Pauline Vamos said that the research highlights why it is important for people to check their superannuation, particularly young people.

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Contractor drivers are employees for super guarantee: ATO

Contractor or employees - super guaranteeThe ATO has issued an Interpretative Decision setting out when superannuation guarantee can be owed for people who are called ‘independent contractors’.

This is contained in ATO ID 2014/28: Superannuation Guarantee Status of the Worker: Pizza delivery drivers as employees.

The question addressed in the decision was:

“Are pizza delivery drivers, who are required to provide and maintain their own motor vehicles in performing their deliveries, employees for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA)?”

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Speed up transition to MySuper to benefit members, says AIST

MySuper transition, AISTThe Australian Institute of Superannuation Trustees (AIST) has called for the Government to accelerate the transition to MySuper default super funds from “high-fee bank-owned default super funds.”

Under the Stronger Super changes superannuation fund trustees have until 1 July 2017 to transfer the balances of existing default members to a MySuper product.

This means that “hundreds of thousands of consumers are paying higher fees for their super and missing out on the benefits of the MySuper reforms,” said AIST Executive Manager David Haynes.

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APRA starts to release MySuper statistics

APRA MySuper statisticsARPA has started to release MySuper superannuation fund statistics. According to APRA there are 116 MySuper products, holding total assets of $ 363.2 billion.

“The statistics provide a central source of information on MySuper products and support the broader transparency objectives of the Stronger Super reforms,” said APRA member Helen Rowell.

This release of statistics covers the September 2013, December 2013, March 2014 and June 2014 quarters. APRA has a duty under the SIS Act to publish quarterly MySuper Statistics, including “fees charged, costs incurred and net returns”.

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Streamlining of Future of Financial Advice bill likely delayed

Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014The Senate has again failed to pass a disallowance motion for the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014, and this appears to mean the Streamlining FoFA bill has dropped in priority for the government.

Wednesday the 1st of October was the last day for the Senate to vote on the disallowance motion or it would be been automatically deemed to have failed. When put to the vote the motion to disallow the FoFA regulations failed, 34 to 32.

The Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 was set to be debated in the Senate each day this week, except was not included in the Senate notice paper after the vote on the Streamlining FoFA regulations.

Read More »Streamlining of Future of Financial Advice bill likely delayed