MOVING YOUR SELF MANAGED SUPERFUND (SMSF) INTO PENSION PHASE

Moving self-managed superannuation benefits to pension stage is a common way to invest in retirement income. When you have a self-been able superannuation account (SMSF), there are many things you should think about whenever starting a pension.

What is an account-based pension?

An account-based pension is similar to a personal retirement living income account operating in a superannuation fund. You receive regular income obligations, while at the same time your bank account may earn investment income. Any investment income gained in pension period is taxed free.

Your self-managed superannuation trust deed must permit the payment of the account-based pension.

It is an excellent time for an overall review of your trust deed, and an update, if appropriate. This will likely generally require a legal professional.

Think about your fund’s investment strategy

The investment strategy that matched you in deposition phase is probably not appropriate in pension period.

Studies also show(1) that the impact of negative profits can be higher when attracting down on your capital, in comparison to when in accumulation period (where you will not be attracting down and may be increasing your capital), which means that your investment strategy should consider this additional risk. Your adviser will be able to assist you in determining an appropriate investment technique for your self-managed superannuation.

Make the minimum payments

When jogging an account-based pension, one of the key requirements is to make sure you sketch at least the bare minimum payment amount each financial year. That is an importantstandard in maintaining the tax-free status of your fund’s earnings in pension stage.

If you do not meet the minimum payment amount requirements, then the complete balance of the bank account established pension will be treated as though it were in deposition phase for the whole year. This will likely result in assessable investment profits being taxed at 15%, somewhat than being received tax-free. It is not enough for your finance to simply ‘account’ for the bare minimum payment through the journal entry; cash must be paid from your profile and leave your self-managed superannuation.

Keep your records safe

SMSF trustees are essential for legal reasons to keep records of trades of the fund, including those associated with pension obligations. These data will also assist your accountant in substantiating your fund’s duty position. Details relating to pension payments must be placed for at the least five years, but note that some information (e.g. minutes of trustee meetings) must be retained for ten years.

Estate Planning

If you are receiving a pension from your fund, the rules of your self-managed superannuation may allow you to nominate one of your dependents (usually your spouse) to continue to get the pension after your death, generally referenced as a reversionary pension. Additionally, you could be able to nominate one or more dependents to get the lump sum payment or a pension after your loss of life, or your house to receive a lump sum payment.

How To Ensure Your Financial Planning Firm is a Success

Helping people plan for retirement can be one of the most rewarding experiences someone in finance can do. The act of helping someone reach their ultimate goal of retirement with wise investing and great advice is worth its weight in gold to your clients. Distrust of a financial planner or a firm can ruin a reputation as well as the business. Being realistic with clients will be covered later in this post but it is something that many planners fail at initially. The following are ways to ensure your financial planning firm is a success.

Be honest with potential clients as lying to them can lead them to terminate their service at a later date as well as other accounts they might have with the firm. Entire families tend to stick with the same financial firms and banks unless they have a reason to switch. Let a client know that if they want to retire at any point that they will not be able to go out to dinner daily at the fanciest restaurant in the city. A trusting client is the best type of client so build this trust by being almost too direct.

The security of financial information about clients is paramount as these records being hacked can lead to the shutting down of a firm. Losing clients will be an understatement if a firm puts out a press release saying information could have been compromised. Kaspersky Lab CA can help with this as it is high quality when it comes to protecting computers from spyware and hackers. Do not take any risks when it comes to private information of clients or employees.

Pulling all of the favors that you can to get a nice base of clients is recommended when first starting your firm. Use personal, professional, and other resources to get your client base going. Planners and firms can be judged by how much money they manage on a yearly basis. Getting this number up can help land larger clients that could allow you to manage millions of dollars for them.

As you can see starting a firm does not mean it will be a success. The success is in the details with every business so take care of the factors you can then hope for the best!

Make Your Self Managed Super Fund Work for Your Future

Opting for a self managed super fund can appeal to thousands of people and you cannot blame them. Everyone wants the chance to put a little away for when they’re older and reach retirement and without proper savings, anything could happen. You can be a good saver but there is no guarantee you’ll have enough for a rainy day and you don’t really want to work at seventy either. However, with a self managed super fund, all that could change but how can you ensure they work for you?

Educate Yourself to Understand What the Self Managed Super Fund Is All About

For anyone who is interested in super funds, it may be wise to know you need to go back to school. Now, taking a very basic course on super funds can be great simply because you learn everything you need to. It can be so important as super funds are difficult to deal with when you have limited knowledge; however, if you can learn a few things then it can be far easier. Educating yourself on super funds will make your investments a lot easier and safer. To find out more, check out www.smsfselfmanagedsuperfund.com.au.

Invest Wisely

If you are in this with a group of people, it’s wise to ensure you don’t invest at every chance you get. While the aim of the self managed super funds are to increase your income, it’s important to invest at the right opportunity. This will be far more profitable than investing whenever you feel like it. Also, investing isn’t easy and with self managed funds, there are a few restrictions to what you can invest in too so it’s best to get to know what those restrictions are. Investing is simple with these funds and they can work for you too but again, if you invest at the right moment, you’re likely to see better results.

Contribute On a Regular Basis

It’s hard to be able to put money aside as it is but if you are going to choose a super fund, it’s important for you to stick with your set contributions. If you continuously miss payments or contributions then you’re share is going to be pretty small. That is why you need to ensure the amounts you are planning to contribute are reasonable for you and affordable. It’s all well and good saying you want to look into a self managed super fund but if it’s too expensive then it’s a waste. Ensure you are able to contribute in a timely manner.

Invest Only When Ready

Investing money is one thing but putting a large sum of money into something such as a self managed super fund, well, it’s something very different. However, this can work for you and your future and it really can become a useful and reliable source of income when you retire. While this is a good adventure to look into, it’s wise to note you must be ready for the task ahead. You are putting money into this so you have to be ready for the investment because that is what it really is at the end of the day. Use your self managed super fund wisely and hopefully you’ll see the results flourish soon enough.

What You Need To Know About Superannuation Service

Saving for our retirement is an essential part of financial planning. Superannuation or our retirement fund is something that we all know we should be planning for. In most Western countries, once people start working and earning money, it is mandated that both they and their employers contribute a certain percentage of their wage towards superannuation.

Typically, your superannuation funds are inaccessible until your age reaches 65, but you are still allowed to manage it according to what you want and need.

There are lots of superannuation services that are available for you to choose from. It is up to you who is more appropriate and beneficial for your needs. Here are some of the services that are available to you.

What You Need To Know About Superannuation Service

  1. Industry Funds: The Industry funds are run by the unions or employer associations. This fund is made solely for the benefit of its members. There are no shareholders in this kind of fund unlike the Retail or Wholesale Fund.
  2. Wholesale Master Trusts: Wholesale Master Trusts are also known as the Retail funds and are managed by a financial institution or firm for a number of employees.
  3. Retail Master Trusts: A Retail Master Trusts is run by a financial institution or firm for a certain individual.
  4. Employer Stand-Alone Funds: Employer Stand-Alone funds are made by the employers for their employees. Each fund is structured individually and may or may not be shared by employees.
  5. Public Sector Employees Funds: Public Sector Employees Funds are made by the government for government employees exclusively.
  6. Self-Managed Super Funds: Self-Managed Super Funds or SMSFs are created for a group of five or less people. They are supervised by the Australian taxation office and follow a strict rule. Each member of the SMSF is called a trustee and a member of the fund too. In contrast to traditional superfunds, you have the power to choose specific types of investments that suit your lifestyle and circumstance. The only caveat is that you need to do so within the compliance regulations of the government.
  7. Small APRA Funds or SAFs are also created for a group of 5 or less people. But compared to the SMSF, the SAF has approved trustees but they are not members. SAF is controlled by the APRA and not the ATO (SMSFs are controlled by the ATO).

These superannuation funds services sometimes require you to seek help from professionals who knows the laws and regulations that you need to follow.

SMSF and SAF in particular are funds that you will manage yourself and professional advice is highly suggested to ensure your success. Using this kind of superannuation funds will need a lot of knowledge to manage it properly. Experts are knowledgeable and are aware of the ever-changing rules and regulations that apply to transition to retirement. You may choose to inquire from financial planners, lawyers, auditors, or accountants that specialize in superannuation.

You can visit their website (www.smsfselfmanagedsuperfund.com.au) and get more detailed information which will help you understand what is superannuation really is.

Financial System Inquiry Submissions Focus on Australian Superannuation

Industry Super Australia (ISA), representing Australian Superannuation funds, wanted the government’s financial system inquiry to impose taxes on high-frequency trading (HFT). ISA is the umbrella organization for the industry superannuation movement, and it manages collective projects on behalf of its members.

High-frequency trading uses powerful and sophisticated computers to rapidly trade large number of securities and stocks and is characterized by short retention period of portfolios. The platform utilizes complex algorithms that analyze markets, which automatically execute orders based on market conditions.

Financial System Inquiry Submissions Focus on Australian Superannuation

The Australian mentioned that global attention on high-frequency trading was triggered by allegations made by noted US author Michael Lewis that the HFT industry was taking in billions of dollars in profit at the expense of the rest of the market.

Australian Superannuation, through ISA policy head Zac May, pointed out that high-frequency trading practice tilted market balance in its favor to the detriment of the share market to the tune of $2 billion annually.

Australian Superannuation arrived at the figures by multiplying a quarter of all market trades by the average time that elapsed between the bid and offer prices for stocks representing the top 200.

May, formerly connected with the US Securities and Exchange Commission, shared the same view as Lewis by demanding levy on HFT transactions and enactment of rules to slow the pace of trading, reported the Sydney Morning Herald.

He added that Australian superannuation invested money on real companies and Australian economy. High-frequency trading, on the other hand, does not, according to the Australian superannuation head.

Westpac Banking Group (Westpac), in its submission to the financial system inquiry, wanted the government to convince Australian superannuation members to invest some of their money in bank deposits to help lighten the economy’s capital deficit. Westpac made the suggestion amid fears of a widening fund shortfall that could leave banks with little capital to finance further expansion of the economy.

The Australian Superannuation stated in its submission to the financial system inquiry that raising productivity levels is necessary given the challenges that the economy faces from “an ageing population and the end of the mining sector boom.” It adds that based on its research “the regulated superannuation sector is one-third more efficient than the banks at capital formation.” Continue Reading here http://www.frontenacventures.com/year-end-tax-planning-superannuation-fund/

Australian Superannuation suggested superannuation will become the banking industry’s partner in funding further growth of the economy considering that it expects superannuation to surpass the financial assets of banks in the next 15 to 20 years.

For more articles about the Australian banking sector, visit the trusted source of information like www.smsfselfmanagedsuperfund.com.au. The website is the leading banking and finance portal in Australia today which also provides comparison tools that will let you compare products and services offered by various banks and financial institutions in the country today.

There are other sources of information that are also useful for the many online researchers who wanted to know about Superannuation funds that are bothering their minds all day long. By searching on the internet, you will be guided about the rules and some benefits of it.

Year-End Tax Planning – Using Your Superannuation Fund

The end of the financial year is fast approaching, meaning this is an important time to think about ways to reduce taxes for the 2013 financial year. The use of your superannuation fund is a great way to save money on tax, but it also bolsters your personal financial position, as the money you spend at tax time, stays with you for your retirement rather than spending on items you may not necessarily need.

Following is a couple of ideas why you should look at tipping into superannuation rather than spending in other areas to maximize you opportunities in the 2012 financial year:

Year-End Tax Planning - Using Your Superannuation Fund

  • The transitional contribution concession for those over 50 has now changed. As of the 1st July 2012, if you are over 50 and have more than $500,000 as a superannuation balance, your maximum contribution limit will be the same as those under 50 years, $25,000 p.a. If your balance is lower than $500K, you will still be able to contribute $50,000 p.a.

 

  • Because of this $500,000 balance limit for concessional contribution, you may wish to consider a “Contribution Split” to a spouse, where 85% of your prior year’s contribution can be allocated to your spouse. If this is done effectively, a member’s balance can reduce below $500,000 and thus add several years to the contribution concession.

 

  • With the share market currently below is previous high levels there is an opportunity to make in specie contributions of shares into your superannuation fund which you own personally. There will be Capital Gains Tax consequences in doing so, but there may be deductions available if you have not reached your contribution cap. The rules have changed at the 1st July 2012, where an off-market transfer of shares can no longer be made to a superannuation fund, but they now need to be transferred on the market. This does not mean that the transfer cannot be done.

 

  • The Small Business Entity accelerated depreciation concessions are being beefed up in the 2013 financial year, where a small business is able to claim a deduction for assets purchased up to the value of $6,500 rather than the current level of $1,000. It may be better to wait until after July 1 to purchase assets between the value of $1,000 and $6,500. The first $5,000 of a motor vehicle purchase will also be deductible in 2013, meaning it may be best to hold off on the purchase of a motor vehicle. The money you save in tax here can be put into super to further reduce your tax bill.

 

  • Contributions can be made on behalf of a spouse earning less than $10,800 in assessable income and reportable FBT to attract a tax offset of up to $540 in the personal return of the individual making the contribution (18% of the contribution up to $3,000).

 

  • Non-concessional contributions made by an individual earning less than $31,920 will be matched dollar for dollar by the government up to $1,000. These phases out by 3.3c in every dollar when the taxable income is between $31,290 and $61,290. For example a person on $45,000 who contribution $1,000 as a non-concessional contribution to super will receive a government co-contribution into their fund of $564.

Whilst providing a list of options you have at your fingertips, this is not an exhaustive list, and covers only some of the opportunities available to you. For those approaching or over 55 this can be coupled with some pension strategies to make it extremely effective. We will be covering pension strategies in another article.

These types of strategy are much simpler in a Self-Managed Superannuation Fund, as you have control over what happens within the fund. Some of these strategies will still work in your standard superannuation fund.For more information you can read here http://www.rogersonkenny.com.au/resources-rk/year-end-tax-planning-for-self-managed-super-funds