Entries Tagged 'Self Managed Superannuation' ↓

Superannuation Master Trusts

Super funds are one of the fastest growing products in the Australian finance market. This has caused a great increase in the number and variety of options in Super funds that are offered.

Master Trusts are a investment portfolio solution which seeks to simplify the work for super funds that attach themselves to the Master Trust. A useful analogy might be found in insurance companies. A customer might buy an insurance policy from a specific insurer; the insurer will also be insured by another insurance. Master Trust work in a similar way as Funds for Super funds.

What do these Master Trust do for you or your Super Fund? Why would you be interested in contracting the services of a Master Trust? What are the points to keep in mind when choosing a Master Trust?

What do Master Trusts do?

They provide a low cost investment portfolio for members. As you know Super Funds are the product the government uses to collect people’s savings for retirement. Complying Super funds are awarded a 15% tax break and are responsible of investing peoples super for it to grow until the super is terminated and the cash is handed out.
Master Trusts invest the money from other funds in order to minimize costs. This is especially good for  people that manage their own Super Fund. Making the right choices when managing a Super Fund is not an easy task when you don’t have the necessary skills which is where Master Trusts come in supplying investment plans and portfolios for Super Funds.

But what is the difference between a Master Trust and a regular Super Fund? Why would I be interested in using a Master Trust?

The main issue when choosing a Super Fund or deciding to manage your own Super Fund is cost and control. You might feel that you could do the same job and save yourself the Super Fund manager’s fee. Master Trusts allow you to save money on the Super Fund managers commission by offering a wholesale price in exchange of a high volume of super funds to manage.
Regular Super Funds also use these Master Trusts as a way of cutting costs and passing the management expense to the Trust.

What should you keep in mind when choosing a Master Trust?

Master Trusts offer different products at different prices. It is important that you decide what services your Super Fund requires and how the Master Trust will provide them. Typical choices include a portfolio for:
-    General saving and investing
-    Superannuation rollovers, personal, spouse and employer contributions
-    Converting your superannuation savings into an allocated pension.

Master Trusts also offer a selection of investment options from various fund managers and specialists without having to deal with each fund manager and at much lower management costs.

Master Trusts are yet another tool to make the most out of your super fund. If your are thinking of managing your own super fund they might a cheaper way of using experts to run your fund or at least a good way of getting a feel of the going rate when choosing another Super Fund.

Superannuation Guarantee Payments

What are Superannuation Guarantee Payments? Are you eligible for them? How can you make sure they are paid in your behalf? What to do if you think they aren’t being deposited in your super? What about contractors are they entitled to Superannuation Guarantee Payments?

These questions are very important if you are a Super fund member or are planning to. Let’s begin with our first question

What are Superannuation Guarantee Payments?

Superannuation Guarantee Payments are a way to save for your retirement. In many countries they are called pension funds or retirement savings. The principle is not new but the Australian Super Fund puts a new twist by increasing the flexibility and control provided to users. The idea is to force people to save for retirement by getting employers to deposit 9% of the employees wage in a Super fund. The government forcing the employer to make the payment instead of using taxes to fund the pension fund is of course a smoke screen or gimmick. The 9% payment actually becomes part of the employee’s wage that is how the employer sees it when he has to calculate the real cost of having a worker. Wages must be adjusted to take this new expense into account which will eventually mean a readjustment of wages in line with this new expense. In the end it is the employee that pays the cost, there is little difference between setting up a tax to pay for pension funds or forcing people to contribute 9% of their wage towards their pension fund.

However, smoke screen or not it is an effective way to get people to save from the moment they start working.

When are you eligible for Super Guarantee Payments?

If you work for someone you are more than likely eligible as the requirements are very easy to meet.
If you are:

Over 18 and under 70 and made over $450 before tax you are eligible and even if you are under 18 you are also eligible if you worked more than 30 hours on a given month.

What if you think your employer is not paying your Guarantee?

You will know if your employer is paying you Super Guarantee Payments because you will receive an annual member’s statement from your fund. If you do not receive the statement or it is inaccurate then you must talk to your employer and try to settle the problem. Prepare yourself with specific questions for your employer, how much is he paying, to which fund, how often?
If you still feel like you are not being paid your due in Guarantee payments you can file a complaint to the Tax Office.

What about contractors are they eligible for Guarantee Payments?

The answer is maybe. If you are contracted under a contract that is mainly for labor your employer might be liable to pay Guarantee Payments. Talk to your employer and contact the Tax Office for more information on this issue.