Apologies in advance if I am in the wrong forum.
Dad lives in NSW, from a Non English speaking background, and just turned 60. He has over $200k in super, and has been a member of the same superannuation company for many years.
Earlier this year he decided to see a financial planner for advice as he heads toward retirement. FYI he owns his primary residence and leases 3 properties he still pays mortgage for (negatively geared).
The financial planner prepared a report and said that Dad would have to salary sacrifice $600 -$650 per week to be able to retire at 65 based on the products/services that their financial services company had to offer. Firstly that doesn’t leave him much to live off!! Secondly this is interesting because this company was referred to Dad by friends who said they would be able to offer good independent financial advice but they are pushing their own interests.
Dad then decided to look into Self Managed Super (mostly for the benefit of his 2 adult children) with the goal of investing in property together.
The financial planner has been trying really hard to get Dad to sign to become a member with his company and I now hear Dad is meeting with the planner next week.
I am concerned he will be pressured to sign by the planner and think Dad may be best just leaving things as they are with the Super company he has been with forever and who perform OK (not the best or worst).
Dad knows little about super, much like myself. He hasn’t done any decent research yet about Self Managed Super because he is time poor (works offshore and does 29 days on, 8 days off), so I took it upon myself to learn more and am yet to get my head around it.
From what I have learnt so far Self Managed Super has pros and cons too. I understand the account administration and compliance is a big responsibility on its members and that it is more expensive to run etc. I also learned that some superannuation companies offer their own self managed funds where Dad can choose how to invest but the company takes care of all the administration & compliance. Dad’s current Super company offers this.
Does anyone here “Self Manage” Super this way? ie through a Super company who looks after admin etc? Sounds to me like this may not be all it’s cracked up to be. Interested to know the opinions of the people on this forum.
Thanks,
DeeYes, super is a great structure for someone your dad’s age and that can be a great strategy. income in super is taxed at a max of 15% whereas he may be taxed up to 45% outside. nearing retirement age means the money won’t be locked away too long as it could be accessed from age 55-60ish depending on a few things. once a superfund is paying an income stream any income supporting that is exempt from tax.
But the planner you are using sounds like he may be a cowboy, looking after himself more than the client. First look him up and see if he is properly licenced.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terryw, thank you for your reply.
The financial planners website states that they are members of the FPA and are CERTIFIED FINANCIAL PLANNERS who operate under a licence granted by a Wealth Management company which I wont name.
You’re right that Dad doesn’t have too long before he can access his money. So therefore I wonder if he should just leave his super where it has always been and managed by a company he has been with for many years. For him to change to self managed super now I think would benefit his kids more than him? But then again I am no expert.
It depends on his situation. A SMSF could work out cheaper than the fees he is paying, and he gains total control. There are also various other tax benefits available to SMSFs – anti detriment payments. Other benefits are estate planning, control and various tax strategies.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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