Consumers don’t know who owns their financial planner

Statistics published by Roy Morgan show that consumers perceive financial planners branded differently from their actual owners as far more independent than they rank bank-branded financial planners.

All the big four bank’s financial planners rank low for perceived independence by consumers, as Roy Morgan says “the planners belonging to all the major banks and labelled as such are generally understood to be ‘tied’ rather than ‘independent’”:

  • CBA         14%
  • ANZ         13%
  • NAB         12%
  • Westpac   11%
  • AMP         27%

However consumers view financial planners with different branding, but at least partially owned by the big four banks and AMP, as much more independent:

  • Financial Wisdom (CBA)     55%
  • RetireInvest (ANZ)             37%
  • Godfrey Pembroke (NAB)   50%
  • St George (Westpac)          20%
  • Charter (AMP)                    48%

Perceived independance of bank financial planners

Read More »Consumers don’t know who owns their financial planner

Number of lost super accounts drops, unclaimed super rises

According to the ATO its efforts, including SuperSeeker and working with super funds, has resulted in a 30% drop in the number of lost superannuation member accounts. A recent statement by the ATO said:

The culmination of these efforts has resulted in the number of lost member accounts at 30 June 2014 reducing by over 30% in comparison to 30 June 2013, with an associated reduction of over 10% in the value on the Lost Members Register.

However this isn’t the full picture of lost and unclaimed superannuation, as per a note to the most recent ATO lost and unclaimed super statistics:

“Lost uncontactable and lost inactive accounts are still held by super funds, whereas unclaimed super money and SHA accounts have been transferred to the ATO. ”

So in the ATO statistics lost superannuation is only superannuation held by super funds, unclaimed superannuation is transferred to the ATO. While the number of lost superannuation accounts did drop by 31% in 2013/14 the total number of lost and unclaimed super accounts only dropped by 1%. Based on the recently released ATO statistics the number of unclaimed super accounts held by the ATO rose by 19%:

Lost Superannuation and Unclaimed SuperannuationSource: ATO statistics

Read More »Number of lost super accounts drops, unclaimed super rises

Higher contributions tax for those on over $180,000: Mercer

Mercer four point plan: higher contributions tax (Div 293), lifetime contributions caps, limit ECPI and changes to LISC.Extending Division 293 tax to everyone on the highest income bracket is one of the four points in a plan to improve the superannuation system released by consulting firm Mercer.

The four points of the plan are:

  1. Division 293 tax to apply to everyone on the highest tax rate bracket
  2. No-one in the 19% tax bracket to pay contributions tax
  3. Introduce lifetime contribution caps in addition to annual contributions caps
  4. Limit tax-free status of income supporting a pension via an asset cap

Currently Division 293 tax increases the contributions tax for high income earners, those earning more than $300,000, by 15%. Under Mercer’s plan this would extend to people earning more than $180,000. Based on the the 2014/15 tax rates these people would pay 30% on their contributions and have a marginal tax rate of 45%.

Mercer recommends that “nobody pays more tax on their concessional contributions than they do on their income”, and a key part of this would be changes to the Low Income Superannuation Contribution (LISC), so that the contributions tax for someone on the 19% tax bracket or lower would be 0%. However this is unlikely to find favor with the Government, given the announced intention to repeal the LISC as part of the Minerals Resource Rent Tax repeal.

Mercer also recommends implementing a lifetime contributions cap while keeping the annual contributions caps to “limit the cost of the tax concession in any one year”:

“for example a person’s annual cap could be increased by half the unused amount from the previous year but with a limit of say three times the annual cap in any single year. A similar approach cap could apply to non-concessional contributions thereby removing the existing complex three year rule.”

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The 3 Rs of SMSFs: Responsibility, Related parties and Rules

ATO three Rs of SMSFs - Responsibility, Related- party transactions and rulesAccording to the ATO the three Rs for SMSFs are Responsibility, Related party transactions and Rules. This was the topic of a speech given by Stuart Forsyth, ATO Assistant Deputy Commissioner for Compliance, Strategy, Risk and Delivery, Superannuation to the Australian Investors Association Annual National Conference 2014.


SMSFs mean taking responsibility for your retirement savings. As Mr Forsyth said in the speech “SMSFs are far from ‘do-it-yourself’ or ‘set and forget”, instead they “require significant time, attention and expertise”.

Mr Forsyth asked that people remember the ATO isn’t a prudential regulator. Prudential regulation “governs the conduct of people and institutions in a position of trust over other peoples’ money”, instead SMSF trustees must be “vigilant in protecting their fund’s assets”.

Estate Planning

Mr Forsyth highlighted a number of things SMSF trustees need to consider as part of the responsibility of running an SMSF, the first was succession planning – including binding death benefit nominations, reversionary pensions and enduring powers of attorney.

The SMSF deed also needs to be checked, as it should “reflect the requirements of the fund and be tailored to meet the fund’s objectives and the members’ needs”.

Trustees were also encouraged to “consider the advantages of appointing a corporate trustee” as it would likely result in a “smoother succession”.

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Broad agreement with Financial System Inquiry interim report

Financial System Inquiry (FSI) / Murray Inquiry - industry responseThe response by the financial, tax and superannuation industries to the release of the Financial System Inquiry (FSI) has been generally positive, though some particular points have received criticism.

KPMG was “disappointed” that the report contained so little consideration of tax issues, as “just 14 pages out of 460 are devoted to tax” with most issues were left to the tax white paper.

Taxpayers Australia also disagreed with the inquiry’s concern over SMSF borrowing, saying that the organisation “would not go as far as saying the ban should be re-introduced” as it was “too early to say that allowing borrowings has introduced excessive risk into the system”. Taxpayers Australia did say they “would welcome greater regulation to ensure that any borrowing is safe and in the best interest of the fund members” and suggested this could come from requiring advice on borrowing in SMSFs being a financial product, or caps on the “maximum percentage of a fund’s assets” that SMSFs could use for borrowing.

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Financial industry shifting focus from regulation to innovation

Financial industry moving from regulation to innovationA survey released by FSC and DST show that financial industry CEOs are looking to refocus efforts from meeting regulatory requirements to product innovation.

Martin Spedding, CEO of DST Bluedoor, said in the 14th annual FSC-DST CEO Survey that:

“Preparing for MySuper, SuperStream and FoFA has been disruptive and costly, diverting resources and attention away from other more productive areas. As this implementation phase nears its end-point, the industry’s leaders are re-focusing on the opportunities of the future.”

However there are impediments to introducing something new, with 42% of respondents saying they were unable to release a new product or process due to regulation.

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Easier employer contributions reporting under draft regulations

The Treasury department has released draft SuperStream regulations for consultation which would reduce the number of different super funds too which employers will need to report contributions data. These changes, if registered, would mean that from 1 July 2015 employers would only have to report contributions data to their default… Read More »Easier employer contributions reporting under draft regulations

ATO SMSF videos: pensions & planning for the unexpected

The ATO has published two new videos in the continuing efforts to improve trustee knowledge of superannuation and tax rules.

SMSF planning for the unexpected (relationship breakdown, incapacity, death)

This video encourages SMSF trustees to think ahead when setting up an SMSF, particularly where events force a change in the fund, such as:
  • adding new trustees
  • changing the trustee
  • winding up the fund

Read More »ATO SMSF videos: pensions & planning for the unexpected