Ask the Expert: When moving from a SMSF to managed super makes sense
Question 1
I have a self-managed super fund with a property valued at $420,000 and $70,000 in cash. I have personal shares worth approximately $100,000 that I’ve had for years. I have an investment property worth $580,000 and my home is rented out and worth approximately $1.1 million.
I’m 61, single, transitioning to retirement, living with friends and don’t work, so rent is my income. I’m thinking of moving all of my SMSF to an industry fund, selling the unit to clear debt and have a surplus of about $150,000.
I will have approximately $640,000 in super and own my home. Would I have enough to live modestly and use about $8000 for travel every year?
The shares have done well but should I cash in or keep? I want financial advice, I’m just not sure how I find a good adviser.
If you no longer want the responsibility of running a SMSF, or if you plan to sell the property within the SMSF, then moving to a low-cost/high-performing industry fund sounds appropriate.
Winding up an SMSF and rolling the funds over to another super fund can take time and be complex. An accountant or financial adviser who specialises in this area could assist.
My recent article went over what to ask a financial adviser. You should also ensure they are listed on ASIC’s Financial Adviser Register.
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In terms of being able to live “modestly” plus $8000 a year for travel, a big part is your definition of “modest”. Some people I ask say modest is $30,000 a year, others say it’s $80,000.
According to ASIC’s Moneysmart retirement calculator, which uses conservative figures based on what you have outlined above, you could receive an income of just over $57,000 each year (including age pension). Indexed to inflation and lasting until age 92.
A financial adviser will have access to some sophisticated modelling software that can help you see how you are tracking and what can be done to maximise your retirement.
Question 2
I have a share portfolio worth $3.4 million. Can I still get a Commonwealth health card? My wife has $250,000. Thank you. Brian.
Hi Brian,
A couple can receive $158,440 a year in adjusted taxable income (plus deemed income on super income streams) and still be eligible.
Given your combined investments of $3,650,000, you would need to receive dividends and interest below about 4.3 per cent per annum.
If that is the case, or if you are close, you should apply.
Question 3
Stay informed, daily
Hi Craig, I’ve always enjoyed your informative responses. Recently my wife retired at 66 after 30-plus years in a government/Australia Post position with defined benefit super.
Auspost Super was bought by Suncorp/ART five or so years ago, but they always told her the defined benefit was maintained. On retiring, they now say the formula to calculate her retirement income is used to calculate a lump sum and not a weekly pension amount ongoing.
I’ve never heard of this before, they are not replying to queries and the Australian Financial Complaints Authority says it can investigate only after ART replies. Are there varieties of defined benefit super?
Thanks, Allan.
Hi Allan,
That is a tough one.
Whether they can change how they make payments (from a pension to a lump sum) would have come down to what the trust deed states and what was agreed at merger. Either way, they are required to let your wife know of any changes.
ART has an obligation to let you know the outcome of your inquiries/complaint. Information on how to make a complaint to ART is in their Financial Services Guide, which can be found here.
As stated in its FSG, ART is a member of AFCA.
AFCA will generally try to get the complainant and super fund to try to sort things out first, before it gets involved. However, if ART isn’t responding in a timely manner, you can and should contact AFCA again. It will act if ART does not respond.
AFCA is an independent body set up by the federal government to help resolve disputes between financial institutions and their customers. It is free for consumers.
Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.
Disclaimer: The responses provided are genera
l in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.
Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.
