Super funds are short-changing retirees, report finds

Superannuation industry labelled an ‘unlucky lottery’.

Super failing retirees: report

Underperforming super funds and multiple accounts are costing members $3.9 billion every year, according to a draft report by the Productivity Commission into Australia's $2.6 trillion superannuation system.

The report, Superannuation: Assessing Efficiency and Competitiveness, released today, highlights a “massive rip-off”, according to Financial Services Minister Kelly O'Dwyer.

It says that by eliminating multiple accounts and switching to a better-performing fund, a 55-year-old could gain an extra $61,000 by retirement age and that new member could add an additional $407,000 to their retirement nest egg by 2064.

It has found that one-third of accounts are unintended multiple accounts and that these fees erode members' balances by $2.6 billion a year.

It also says that in the past 10 years, one in four funds have "persistently" fallen short of the mark, potentially costing a new member $375,000 by retirement age.

The report makes two key recommendations:

  • the creation of a “best in show” list of top-performing funds from which employees can make an informed decision when selecting a fund.
  • that employers lose their current obligation to choose a default fund for their employees’ compulsory contributions given a potential conflict of interest.

 

It also questions the long-held claim that industry funds outperform retail funds.

Deputy chair of the Productivity Commission Karen Chester said the system developed in 1992 by then Labor Prime Minister Paul Keating was "outdated" and had “structural flaws”.

"We're 27 years down the track from when compulsory super was introduced in Australia so it's time to modernise and time to get rid of these two fundamental flaws that are causing members great harm," she told the ABC's AM program.

"While the system works reasonably well for some members, it has become an unlucky lottery that sets the odds against many members.

"The impact is highly regressive. It causes great harm to young people, workers on low incomes and workers in and out of the workforce. These are awkward truths that the industry needs to address."

She said that given longer life expectancy, retirement funds needed to be as effective and efficient as possible to put the least pressure possible on the Aged Pension.

"The main objective of the super system in accumulation is to make sure that members retire with the biggest balance possible," Ms Chester said.

"But if those balances are being eroded by these two problems – unintended multiple products and underperforming products and funds – then they're not going to retire with the biggest possible balances."

The report also highlights the issue of insurance products that accompany super accounts, with Ms Chester saying that many members did not know they had insurance.

"Not all members get value out of insurance in superannuation,” she said. “Many see their retirement balances eroded – often by $50,000 – by duplicate, unsuitable or even zombie policies.”

Ms O’Dwyer said: “Young people and low-income workers are being ripped off. It must stop. This is an interim report but we are encouraged by the proposals, which go a long way to solving a lot of the issues.

“I simply want to see low fees, good governance and funds working for the members, whether they be retail or industry.”

Ms O’Dwyer said the Government put a number of measures on the table on the Federal Budget, including capping fees and removing exit fees.

Submissions and comments on the draft report are being sought by 13 July via the inquiry website.

Do you know what fees your super fund charges? Is your fund a top performer? Do you know if you have insurance?

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    COMMENTS

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    johnp
    29th May 2018
    10:18am
    Re. "also questions the long-held claim that industry funds outperform retail funds."
    what a load of garbage; any fool knows that most industry funds outperform most retail funds
    Old Geezer
    29th May 2018
    10:24am
    No industry funds do not outperform other funds including retails ones. I have seen many examples of bad industry funds.
    johnp
    29th May 2018
    10:29am
    provide them and not just a single one
    Old Geezer
    29th May 2018
    10:35am
    Have just $100 put in a industry fund and see that in 3 months you have nothing left. That's extortion in any other circle.
    Anonymous
    29th May 2018
    12:54pm
    Silly comment OG. Put $100 in any super fund without adding to it will see it disappear. Same happens to most bank accounts. It all get eaten up by charges. So your comment is disingenuous at best, because you know Johnp is right.
    GeorgeM
    29th May 2018
    3:22pm
    This YLC article is defective, and does not tell what the report actually said. It mentioned that 8 out of the top 10 Funds were Industry funds, so OG is peddling rubbish as usual. Also, that their intention is to offer the top 10 list for new super account set-ups to help people select one of the top performers.
    MICK
    29th May 2018
    10:44pm
    OG - liar.
    You know that industry funds outperform retail funds BY A COUNTRY MILE.
    Alan Kohler put this in perspective tonight. His summary was that retail funds have DOUBLE the fees of industry funds yet industry funds earn 50% more than retail funds. End of story.
    Please peddle your coalition lies to somebody who is easy to con!
    MICK
    29th May 2018
    10:45pm
    So much for the supposed "union thugs" you and Big Al claim are bleeding industry funds when they likely are only there to keep the top end of town honest.
    Old Geezer
    29th May 2018
    10:44am
    If you are drawing a pension from an industry super fund it is questionable whether you are actually being paid what you are really entitled to.

    "Once Labor opened the “franking can of worms” it suddenly came into focus that industry super funds are running their members’ funds with pension money and accumulation money pooled together. Pension members of pooled super funds may not have been aware that their franking credits on their share dividends have been utilised by accumulation members liable for the 15% superannuation tax. We can only guess at what tax credits and benefits have been dispersed from pension members to accumulation members. We can only guess as to how much tax has been lost by the government in this opaque structuring.
    "

    https://www.clime.com.au/wp-content/uploads/2018/05/20180503-franking-booklet-2.pdf?omhide=true&utm_source=clime&utm_medium=email&utm_campaign=frankly
    johnp
    29th May 2018
    10:51am
    do you work at clime ?
    Old Geezer
    29th May 2018
    10:54am
    No I don't work from Clime. In fact I got this report by clicking a link on a YLC article.
    johnp
    29th May 2018
    10:59am
    have look at the ratings sites inc moneymanagement
    arbee
    29th May 2018
    11:00am
    Good post but you wont convince all of the lefties who will come on here and refute what you say. Doesn't matter if you are right or not, it goes against their doctrine so they will object to your post.
    Old Geezer
    29th May 2018
    11:27am
    It does ask the question though about who is actually getting these franking credits? it also has me thinking about whether the non refund of franking credits could be covering up what is really happening with them in industry funds. I'm asking myself question like if people are being charged 15% to put their money in and if those collecting a pension are not getting the benefit of franking credits where is the money going? It has certainly opened up a can of worms as far as I can see.
    johnp
    29th May 2018
    11:39am
    quoted from the recent Govt Productivity Commission report
    https://www.pc.gov.au/__data/assets/pdf_file/0003/228171/superannuation-assessment-draft.pdf

    - Most (but not all) underperforming products are in the retail segment
    - Not-for-profit funds, as a group, have systematically outperformed for-profit funds. While retail funds dominate the ‘tail’ of underperformance
    - and so it it went on
    Old Geezer
    29th May 2018
    11:49am
    All I'll say is that most of the funds that people have had to sort out for them have been industry funds and they are not as near as co-operative as retail funds. I recently had to transfer funds into a retail fund as the industry fund refused to release the funds for someone with advanced cancer.
    Anonymous
    29th May 2018
    1:10pm
    OG with the charges retail funds charge they should provide dancing girls and a rolls Royce. It's sobering to realise that when all funds are doing badly , in a crash for instance , on top of your expected losses retail funds enormous charges gouge your losses even further. You are selling your shares when they are undervalued to pay their exorbitant charges making your long term results even more disappointing. But I do suggest you stick with a retail fund , anyone like yourself willing to mislead people deserve the charges.
    Old Geezer
    29th May 2018
    2:50pm
    I wouldn't have a retail fund either. I have had both retail and industry funds and their returns have been dismal compared with my returns elsewhere so I ditched them both about 20 years ago and set up my own SMSF. Best thing I ever did.
    TREBOR
    29th May 2018
    6:25pm
    I believe I can answer that for you, Ebergeezer - the fund gets the franking credits because it is the investor - investing on behalf of members and not directly for members.

    The fund then determines the amount of dividend to the member... pretty simple, eh? The franking does not go directly to the member because the fund is the investor - capisce? So you are barking up the wrong tree in two ways

    Now ALL funds do that, not just industry funds (your second wrong bark) - and the reality is that more industry funds give a better result than financial institution ones.
    Old Geezer
    29th May 2018
    6:35pm
    Trebor that is not how franking credits should work at all. Labor has certainly opened a can of worms on this now.
    TREBOR
    29th May 2018
    6:55pm
    What part of 'investor' and fund member' do you not understand?

    remember that franking credits are only tax paid on behalf of the investor... how do you reckon the members are being robbed?
    MICK
    29th May 2018
    10:48pm
    OG - liar.
    You know that industry funds outperform retail funds BY A COUNTRY MILE.
    Alan Kohler put this in perspective tonight. His summary was that retail funds have DOUBLE the fees of industry funds yet industry funds earn 50% more than retail funds. End of story.
    Please peddle your coalition lies to somebody who is easy to con!

    Show readers you are worth the time of day by verifying your claims with factual information. Otherwise please refrain from posting more lies.
    Old Geezer
    30th May 2018
    11:54am
    Alan Kohler is nothing more than a laugh a minute as he gets some many things wrong it just makes for a good laugh. I often wonder if he checks his facts at times as he make basic mistakes like saying a stock had a bad day when all that happened was it went ex dividend.

    I just pointed out a potential rip off of industry funds for those receiving a pension from their fund. However you don't even want to know and are so one sided in your thinking you just abuse me instead.

    If I was receiving a pension from either a retail or industry fund I would certainly want to check that I was getting what I was entitled to and nothing less.
    MICK
    30th May 2018
    1:39pm
    I think you are talking about yourself OG. Kohler does something you never do: provides proof. He crunched the numbers in regard to superannuation returns and they a damning for retail funds.
    You will not accept the above because you are cash for comment for this government.
    You have zero credibility. Like your government.
    Believer
    29th May 2018
    11:30am
    Superannuation is gambling with everyone's money and your paying them to do it.
    Old Geezer
    29th May 2018
    11:37am
    I just do the gambling myself instead without all the fees with a SMSF.
    TREBOR
    29th May 2018
    6:29pm
    They way it is currently managed, that is true. A single national superannuation and social security house under one roof, and managed by an elected body which must include a minimum number of retirees/pensioners, with no party affiliation - and beginning with the return to this nation of the stolen Futures Fund held in The Caymans without tax, and adding to it contributions for super and the usual levies for social security, and all managed as far out of the hands of grasping governments and their mates in the banks as possible, is the way to go.

    The banks and government and industries may request a loan at an appropriate rate of interest on the basis of merit of a proposal, but they may NOT use these funds as their personal slush fund or gambling stake.
    MICK
    29th May 2018
    10:51pm
    Shareholders are gambling on the future of the country and superannuation funds are investing your money to make you are return. If you want 3% return you put your money in the bank. If you want decent returns you invest in the share and property markets.
    Grateful
    29th May 2018
    12:14pm
    Just another example where these vital industries are being rorted by "free enterprise".
    Compulsory superannuation's, supposed, purpose is to enable workers to save for their own retirement and to minimize the call on the public purse from government pensions.
    Yet, it has proven to be a goose that laid the golden egg for banks, insurance companies and fund managers and advisors, who have clearly rorted the system and their own clients.
    That "system" is also a contradiction to the whole purpose of superannuation, the vast majority of their products are nothing short of being gambles with equities and property having very large components.
    These funds should ONLY be held in a fund with the most secure of investments and managed by a government instrumentality where the government guarantees each and every dollar that is paid into that fund throughout the lifetime of the depositor. After all, it's the government wanting to save taxpayers' money in the long run, so, let them be responsible for managing it.
    See how far that idea goes!!!
    Alexii
    29th May 2018
    10:18pm
    can agree with the sentiment, Grateful, but could we trust government (any government here) to NOT get its mealy hands on our funds?
    TREBOR
    29th May 2018
    11:03pm
    The short answer, Alexii, is NO! The long answer is NO, you can't trust them.
    KSS
    29th May 2018
    12:32pm
    People who have multiple small super accounts only have themselves to blame. It is not the job of any superfund to check whether any given member has multiple funds in their name. All funds, industry or retail, send an information pack when you join and then at least annually they send a statement showing all payments, deductions and the balance of the fund, fees changed including insurance fees and the likely benefit of the life insurance, TPD and income protection and usually accompanied by a form to update personal contact details, another form to change the allocation choices for the investment and a third to change insurance choices.

    If the account holder chooses to ignore all this information it is not the fault of the provider.
    MICK
    29th May 2018
    10:51pm
    Yes.
    TREBOR
    29th May 2018
    11:04pm
    So - the two ladies mentioned are making an issue of this? Obviously no systemic change is going to alter the fact that some simply don't do their homework.
    TREBOR
    29th May 2018
    11:15pm
    UNLESS........ the Trebor Scheme becomes reality (with me heading it after a nice finder's fee, thank you very much - just joking) ... in which all super contributions by one individual will be lodged in the same account.

    Problem solved..... yep - a national super scheme out of the hands of politicians and financial institutions and operating by the same standards and rules for all is the way to go.

    No more free rides - no more cruel theft of small accounts - there will be NO small accounts since the minimum amount will be guaranteed by government, which will view that as an offset against future demands on Social Security for retirees, and not as a 'cost' to the 'budget' = an ASSET.

    Jeez - if these clowns ever did a real budget they'd know what the hell they are talking about.
    KSS
    29th May 2018
    12:55pm
    Another issue with industry funds is the hidden 'contributions' to the union movement that most fund members would not be aware of. Given that union membership is at historic lows (about 9% in the private sector and 38% in the public sector) most industry fund members would not be union members and those that were are paying union fees from their salary.

    I wonder just how happy those fund members would be to know that in 2017, $18.5 million was taken from industry superfunds to pay to the unions. That is from people who have chosen NOT to be a union member and those that have joined are paying union fees twice! And that $18.5 million does not include payments to unionists on the governance boards of the industry funds! And what does the union do with these funds from retirement savings? You can be sure it is not for the benefit of the members from whom it was taken, but rather to shore up the political ambitions of Mr Shorten and the like. And the real stinger is that the funds keep this secret from the fund members so even the most vigilant reader of superfund paperwork would not know - unless they also read the fine print buried in annual financial reports which in the main are not sent to every member.
    johnp
    29th May 2018
    1:05pm
    So it transpires there is no viable super alternative available to anyone. If both industry and retail funds are problematic and/or poor performing. Its what ends up in your pocket that counts. Also SMSF funds have generally performed poorly acc to the Govt Productivity Commission report
    KSS
    29th May 2018
    1:30pm
    Johnp I wonder though, that with SMSFs, to whom will the holder outsource blame! :-) Neither the Government nor the unions can be the scapegoat for individual poor decision making ......
    Old Geezer
    29th May 2018
    3:06pm
    Johnp you have just fell for one of the biggest lies they like to tell so people don't set up their own SMSFs. If the returns of SMSFs are poor then the returns of other funds are very dismal indeed.
    MICK
    29th May 2018
    10:55pm
    KSS - a couple of comments.

    1. Industry Funds OUTPERFORMED Retail Funds by 50% and have half the fees. How is that bad?

    2. I have no knowledge of what you allege but if this was true why would this most feral of governments not be using this information as a weapon? I mean they have nothing else other than innuendo and vile smear at present which is not doing it much good because voters are seeing this lot for who and what they really are.
    TREBOR
    29th May 2018
    11:17pm
    Yes - I'd like to see where unions have donated super funds to the party, and not union funds. Remember that unions run as a business and own properties for rent etc in the CBDs.. their income is not just member's dues.

    I think that needs clarification.
    TREBOR
    29th May 2018
    11:21pm
    P.S. All I'm defending here is truth - not Unions, not Labor, not Bill Shorten - not anything but truth.

    If Unions did wrongfully give superannuation funds as donations, they should be charged with fraud.

    As a past Union delegate, I will not vote for Labor, am hostile now to a Union movement that suck-holes to PC and Labor silliness, and repose zero faith in Bill shorten, the Labor Party and the ACTU.

    They ALL let me down and dumped me when management took me out as a delegate as part of their war against unions.

    No wonder Mao said justice/power comes from the barrel of a gun.
    MICK
    30th May 2018
    1:42pm
    Fair enough TREBOR but this discussion is about whether retail funds outperform industry funds, not whether or not there is a union representative on the Board. I guess the issue is if you have representatives from both sides each side keeps the other honest.
    Your choice who you vote for but surely you could NEVER vote for the current batch????
    Rae
    30th May 2018
    4:25pm
    Yes but how much is taken to pay retail bonuses and management expenses. It's a lot more than 18.5 million. Or the huge payments to bankers and board members of retail funds.

    We should really be seeing what all the fees, charges are and where they go. It is after all worker entitlements.

    Those non unionists are happy to cop the pay rises and employment benefit increases that unionists fight for. I always though the increases from union activity should have only been given to union members and let the scabs go begging for themselves.
    Rae
    30th May 2018
    4:37pm
    Let's not forget the bosses representatives on the fund board are paid the same as the union rep. Perhaps fund member representatives should also be a part of the board mix.
    Old Man
    29th May 2018
    1:30pm
    One of the important points in this report is the choice of super funds by the employee as it is, after all, the employee's money even though it can't be immediately accessed. I don't see any evidence of why the statement was made that "it also questions the long-held claim that industry funds outperform retail funds". Conversely I don't see any evidence that the statement is incorrect. I do note that any graphs that suggest one fund will outperform another are often erroneous as the comparisons are not like for like.

    As I have posted here only recently, the insurance premiums that in a lot of funds are opt out as the default position are a rip-off for most people. My example was that I was told that I would be required to pay $1.00pw to obtain a life cover until I turned 65 whereas a reputable insurer quoted me around $0.11¢pw for the same cover. My cynicism suggests that the fund managers were charging the member and paying the insurance company for the policy and pocketing the difference.

    I also applaud any moves to make the financial dealings of super funds more transparent as there is evidence of super funds donating very large amounts of money to political parties. I feel that if funds of that magnitude are available to donate why can't they be spread around members' accounts. What Keating did in 1992 was one of the best decisions for the average working person and I'm sure he didn't envisage that the system would be used for political purposes.
    Sundays
    29th May 2018
    1:46pm
    I agree Old Man. Also, People seem to forget that Super is a low tax environment and paying a lot more than bank rates. Yes, you should consolidate all your accounts. It’s not hard but people can find it all too hard. Anything that makes this easier is a good thing. At the end of the day it is much better to have Super than not especially for those who find saving hard.
    Anonymous
    29th May 2018
    3:23pm
    I suspect you're comparison of insurance policies was not like for like. But having said that I would like to make superannuation more transparent. I would like to see which political party receives the most from banks.
    I've see Plenty of evidence that industry funds outperform retail funds. I've also done the rounds talking to banks about their products looking for the best deal. To be honest the charges by the banks were shocking, I couldn't believe it.
    I also believe Keating did a great job but not perfect. Without it my wife would of done her best to turn every dollar we had into shoes.
    Old Man
    29th May 2018
    3:49pm
    Yes Sundays, sometimes it's too hard to change from one super fund to another and the main problem with that is the super fund's paperwork which I'm sure is made complex so those who get frustrated will just leave things as they are.

    Thank you Marcus for suggesting that I am not telling the truth. Tell you what, you can check it if you wish, the offer from the TWU super fund was a $5000.00 life cover for $1.00pw. I was 49yo at the time and I checked with NMLA and AMP for a quote and they both came up with roughly the same premium. As the cover lapsed at age 65, both companies confirmed that it was not actually a life policy so the TWU super fund was also misleading. I don't normally choose to be too specific in this forum as it stirs up the crazies but I object to being accused of not being truthful.
    Anonymous
    29th May 2018
    5:10pm
    I think you also have a reading problem. I said and I quote" I suspect you're comparison of insurance was not like for like". Without a thorough examination of both policies I am not in a position to say one way or the other. But considering some of you're other comments I am starting to doubt most of your comments,
    MICK
    29th May 2018
    10:58pm
    As I have written above Industry Funds are absolutely slaughtering Retail Funds and calls from this government to remove all union supervision belies the fact that once you do you start getting decisions which rip millions of dollars out of the fund for fees for the top end of town. That is what is wanted.

    To repeat what I stated above: Industry Funds OUTPERFORMED Retail Funds by 50% and have half the fees. That is all that matters!!!!! End of argument and BS from the usual trolls above.
    Old Geezer
    30th May 2018
    11:58am
    If industry funds are so good why are people setting up their own MSFs instead to get better returns?
    MICK
    30th May 2018
    1:46pm
    You can run but you can't hide OG. The numbers you refuse to put up are solid. Industry funds outperform retail funds by a country mile. Scream as you will.
    SMSF? Don't know. Maybe when you won almost 100% real estate it is easy to run. Personally I wouldn't want to do it but some do. Ask them why.
    Old Geezer
    30th May 2018
    6:33pm
    Managing a SMSF is the same as investing in your own name except you have to keep everything within the fund but paperwork is much the same.

    29th May 2018
    3:08pm
    Superannuation is like any other investment. Cant blame anyone but yourself if you make bad investment decisions
    Old Geezer
    29th May 2018
    3:16pm
    Agree all it is is a tax effective way of investing money for your retirement. Once you have met a condition of release it is then just a tax minimisation structure for your money.
    Adrianus
    30th May 2018
    8:52am
    Its only tax effective while you're working or retired.
    If you are unemployed for a while it is the most ineffective tax regime of any investment I know.
    And that is a legacy of Hawke and Keating.
    Old Geezer
    31st May 2018
    5:39pm
    That depends on how much you have in super and how much you have outside super even while unemployed. I have never claimed unemployment benefits as I have never been eligible to do so.
    GeorgeM
    29th May 2018
    3:33pm
    Badly overdue review, given it was another disaster created by Paul Keating (to divert from his other actions - to shut down the pension fund, and to increase women's pension age to 65 from 60) with no sensible structure, hence it became a serious vehicle for enriching the already rich through concessions in this system.

    However, the review has not gone far enough - it is only starting from the point that employers are willing to contribute to super. It misses the many who are shafted by employers who don't pay super by all sorts of avoidance methods. Payroll and Super should be registered with the ATO by employers for every employee, and only then the system can effectively plug loopholes.
    MICK
    29th May 2018
    11:01pm
    Women do not have a pension age of 60 do they?????

    If you really want to know WHO is shutting down the pension system then look no further than the current government which has been after retirees for 6 years nibbling away at their right to retire and have a fair lifestyle for their remaining years. Keating did not do this.
    GeorgeM
    30th May 2018
    12:35am
    Go back and check history - Pension age for women used to be 60, before Keating increased it to 65. He also shut down the pension fund finally. Wayne Swan further increased pension age to 67 for all.
    Of course, there is no argument that the other part of the tag team, the Liberals, then took over to destroy what's left of the pension system.

    That's why (among many other reasons) we need to get rid of both - Liberals and Labor.
    MICK
    30th May 2018
    8:42am
    Apologies. Having a dyslexic moment.
    TREBOR
    29th May 2018
    6:16pm
    St Kelly O'Dwyer, Patron Saint Of the Retiree Community....

    "It also questions the long-held claim that industry funds outperform retail funds."

    Of course it questions this - it's an ideological thing - and the answer is that overall they DO out-perform.

    Well - the answer to excessive costs to low-income earners is No Fees for accounts under a specified amount.

    I see a lot of questions raised here but the every-motherly Kelly and Karen Chester seem very short on answers..... and the suspicion that this is a beginning of 'nationalising' all super funds under the roof of the financial institutions (heaven forbid!), thus placing them at the mercy of those already proven over and over to be unscrupulous, without adopting the Trebor Plan of a fully independent body running the show, and as far out of the hands of those graspers and their government mates as possible.

    Beat the drum with the equally discredited 'productivity commission' -yes - the same one that brought you the 'lower penalty rates for low income workers will promote employment' bullshit - but there is no way any sane investor would hand over control his or her finances to one of those banking vultures.
    Old Geezer
    29th May 2018
    6:23pm
    What about those in the pension phase not getting what they are entitled to get as the franking credits are not being passed onto them? That is certainly more than a misdermamer by the industry funds. Time for a Royal Commission into unions and their super funds. If you think the banks are bad you aint seen nothing yet.
    Sundays
    29th May 2018
    7:53pm
    Come on OG. Drill down into the report and industry funds have lower fees and higher returns! In relation to Franking Credits, are you really saying that it’s only the not for profit industry funds not passing on Franking Credits, but the retail funds are? What proof of this have you got. All funds in pension phase pay interest on the capital, which would include Franking Credits.
    MICK
    29th May 2018
    11:02pm
    You are such a right wing wanker OG. You are talking BS and making it up as you go. Please stop.
    Adrianus
    30th May 2018
    8:59am
    "Of course it questions this - it's an ideological thing - and the answer is that overall they DO out-perform."

    That is absolute rubbish TREBOR.
    Your statement proves only 2 things.

    Firstly, that if a statement is repeated often enough some people will believe it as factual.

    Secondly, if all else fails and confusion sets in, then play the political card.
    Old Geezer
    30th May 2018
    10:44am
    Mick I wish I was making it up about the franking credit rip off but unfortunately I am not. Many people are getting less than they should in their pension from both industry and retail super funds.
    Adrianus
    30th May 2018
    11:48am
    Mick, OG is right about that.
    MICK
    30th May 2018
    1:49pm
    Franking credits? I did confirm that one of the partners has to be on a pension to get these so I guess this is a fair comment. There is more to this than franking credits though and it is still unsure what Shorten will do and where he will draw the line in the sand. Given he is not a rich man's PM I would find it incredible if he penalised retirees who were earning around the pension. We'll all see by the end of the year.
    Old Geezer
    30th May 2018
    2:04pm
    Mick this super rip off with franking credits is happening now.
    MICK
    30th May 2018
    3:17pm
    And so is the gigantic tax cut for the wealthy to be paid for by everyone else. If I had a choice I'd paying down the debt, not handing out the chocolates to those who are already in most cases swimming in money.
    I know which is the worse evil.
    Adrianus
    31st May 2018
    10:24am
    MICK, I don't think you fully understand the important roll franking credits play in boosting the return on super fund investments? It has nothing to do with pensioners. As a simplistic example. Your fund, which pays a tax rate of 15%, holds shares in CBA. CBA pays a dividend of 6% fully franked (30%). In effect an additional 1.8% but the super fund only pays at the rate of 0.9%. When the franking credits are claimed from the ATO, we want to know where they go???
    Old Geezer
    31st May 2018
    5:43pm
    That's exactly what I want to know too. The franking credits of those in the pension phase are also being offset against other contribution tax of those in the accumulation phase. That we know. But does the person in the pension phase still get the benefit of these franking credits? That is what we don't know but suspect maybe they don't.
    Adrianus
    29th May 2018
    6:45pm
    After reading the above posts I think you should all go to the Melbourne Retirement Bootcamp. There are still some seats left if you're quick.
    Old Geezer
    29th May 2018
    7:23pm
    No thanks I find those sort of things very boring.
    MICK
    29th May 2018
    11:03pm
    Better places to go and specialist companies which offer the same service and more.
    Misty
    29th May 2018
    10:47pm
    You are out of touch OG, the latest findings out today condirm that 8 out of the 10 top performing Super Funds are Industry ones, are you claiming to know better then the experts?.
    MICK
    29th May 2018
    11:06pm
    OG is a Liberal Party troll Misty. You'll notice over time he makes statement he will not prove and keeps repeating them.
    I asked OG and Big Al to compare the top 3 funds for both retail and industry. Neither of them did. Why? Because they telling porkies. Alan Kohler put up the stats tonight and they are clear: INDUSTRY FUNDS OUTPERFORM RETAIL FUNDS by a large margin. The reason why is you do not have a whole pile of leeches from the top end of town sucking the life blood out of the funds for their own lifestyle.
    TREBOR
    29th May 2018
    11:08pm
    OG - Ebergeezer claims many things.....

    It's like O'Dwyer saying that the study raises the question of industry funds out-performing... of course it claims to raise that question - but the answer is not in the question.... the answer is that industry funds overall out-perform the others.
    MICK
    30th May 2018
    8:44am
    And this is not permitted under any circumstances. We need CEOs and their fellow leeches bleeding superannuation dry. Liberal Party doctrine!
    Old Geezer
    30th May 2018
    10:54am
    Misty have you had any experiences with industry or retail funds? I certainly have when I have helped others sort out their super. I have found that the industry funds are a lot worse to deal with than retail funds.

    I am very concerned that people receiving pension may be being ripped off as the funds both retail and industry are not passing on the franking credits to them as well.

    If you think the banking industry is bad then you aint seen nothing yet as the super industry is so much worse.
    MICK
    30th May 2018
    3:19pm
    Try the insurance industry. The superannuation industry is a subset of the banking industry these days and the two are connected at the hip. Just like you and the Liberal Party OG.
    Old Geezer
    30th May 2018
    3:51pm
    Mick I will say it again I will not invest my money in either an industry or retail super fund and that includes the insurance industry. There are 2 areas I don't invest in and they are insurance companies and airlines.
    TREBOR
    29th May 2018
    11:10pm
    What's this 'fees and charges' business? The Trebor Scheme pays its way out of profits and the rest is disbursed to account holders, as determined by the elected board.

    No fees.. no charges.... you get what your account earns....
    Adrianus
    30th May 2018
    9:02am
    Why pay an Industry fund $90m pa to run an office?
    TREBOR
    30th May 2018
    9:56am
    Who said 'industry fund'? They would be abolished alongside the retail funds... too much lost to the member regardless of who runs it....

    Astonishing how the 'left' leapt on the 'user pays' band wagon as well as the 'right'.... money talks all languages.
    Old Geezer
    30th May 2018
    11:00am
    If there are no fees and charges then how do the people who run the super get paid?

    Someone also gets paid for each level in a super fund investment. You pay to put your money in and be managed. The super fund then pays for someone to work out where to invest your money, more money is paid for the people to invest in and audit etc. The fees and charges you pay are only a small compared to all the hidden charges ins upper funds.

    That's why many SMSFs earn a lot more than industry or retail funds. My SMSF costs me 0.15% in fees and expenses.
    Adrianus
    30th May 2018
    11:41am
    Old Geezer, you are absolutely correct. SMSFs total the great majority of funds in Australia, by far outnumbering all retail and Industry funds put together. There is a reason for that. They get double the return after expenses.
    Master Trust funds are not honest about the real rate of return. Members will only see the credited rate of return.
    I would do a pretty handy job of running a national office, issuing statements and handling redemptions, rollovers etc if they paid me $90m pa.
    Old Geezer
    30th May 2018
    11:47am
    Why don't industry super funds earn what SMSFs do if they are non profit?
    MICK
    30th May 2018
    1:51pm
    Normal misleading BS OG. Most SMSFs contain almost 100% residential real estate. That has been on an absolute tear for a decade. Read my lips!
    TREBOR
    30th May 2018
    3:21pm
    Out of the operating profits, OG - sharpens their minds exceedingly....

    Not all SMSF earn that much..... some go bust... many fall below the level where they are self-sufficient and then they need some top-up, which from what I hear is sadly lacking - get with it here and stop generalising and distracting from the subject matter.
    Adrianus
    30th May 2018
    5:39pm
    OG, for a start SMSFs don't need to spend a fortune advertising for new members and member retention. Industry Funds have become quite political and the cost of emotional decisions I suppose can effect all fund trustees but SMSFs aren't politically motivated. It would be an extremely rare occurrence to see a SMSF sponsoring a sporting club. Also with a SMSF, WYSIWYG, there is no skimming and redirecting funds. There is no cost for distribution, which can be enormous.
    Plus the prudential investment requirements for a 4 member SMSF are not as conservative as a Master Trust Fund.
    I know a lot of people with their own SMSF and they can easily get to the $1.6m in quick time because of the high earnings.
    If you cant get double the MT fund return then something is wrong.
    Old Geezer
    30th May 2018
    6:26pm
    I set my SMSF up myself about 20 years ago and it has been doing very well. I now have a super specialist accountant doing all the admin work for me as the cost of the annual audit was very expensive and it costs only a bit more to have the lot done.
    Adrianus
    30th May 2018
    8:44pm
    I was in a SMSF with a business partner in the early 80's then I started my own. Hope you're keeping up to date with the changes as they occur . SMSF_News_subscription@ato.gov.au
    Old Geezer
    31st May 2018
    5:37pm
    Yes I certainly do and not only that I have a super specialist account that does nothing but super accounting.
    Adrianus
    1st Jun 2018
    12:58pm
    Super old chap!
    floss
    30th May 2018
    10:28am
    I have tried retail funds and more money went into their pocket than mine.I am more than happy with my industry fund and make a great return. The same fools that are running down industry funds were praising the banks a few weeks ago but are now very silent.We all know who these fools are.
    johnp
    30th May 2018
    10:40am
    I agree Floss. the recent Govt Productivity Report is quite specific about Industry Funds superior performance and the public generally should be made aware. I am leaving political or idealogical issues right out of this. Members of those funds are generally way better off.
    Old Geezer
    30th May 2018
    12:01pm
    OK I'll sum up my thoughts on super for me personally.

    Would I have money in an industry super fund? NO

    Would I have money in a retail super fund ? NO

    Would I have super if I couldn't have an SMSF? NO

    Quite frankly I can earn more outside super after tax so why would I bother having my money where there are strings attached and it costs me more to have it there.
    johnp
    30th May 2018
    12:28pm
    what sort of returns or growth are u getting say in % terms ??
    Old Geezer
    30th May 2018
    1:47pm
    A lot better than industry super funds.
    johnp
    30th May 2018
    1:50pm
    and what do you think the industry funds get in growth ??
    MICK
    30th May 2018
    1:52pm
    Go get yourself a retail fund OG. You deserve the paltry returns.
    Your normal right wing government sponsored post.
    Old Geezer
    30th May 2018
    1:58pm
    Last time I looked it was less than 6% pa over 10 years. Many don't earn even 10% in their good years either. With the long term average return on the stock market at over 10% their returns look very dismal to me.
    Old Geezer
    30th May 2018
    2:06pm
    Mick you can keep your super funds whether retail or industry as I am not interesting in them at all other than to expose them for what they are. I don't support either of them.
    MICK
    30th May 2018
    3:22pm
    I also have money in neither. What I object to is your deliberate attempts to destabilise Industry Funds when they are outperforming Retail Funds by at least 50%...BECAUSE THEY DO NOT HAVE TOP END OF TOWN LEECHES SUCKING LIKE LEECHES. As you well understand Industry Funds have HALF the fees of Retail Funds. Talk all the BS you like but the facts are the facts are the facts. Sorry.
    TREBOR
    30th May 2018
    3:22pm
    Offer the working stiff a choice then, OG - they have no option but to have their employer put contributions into a fund......

    Do try to keep up.
    Old Geezer
    30th May 2018
    3:55pm
    They can always set up their own SMSF and have their employer put their super into it. That's what a lot of people I know do.
    Rae
    30th May 2018
    4:53pm
    I agree Og. I've been making very good returns outside super with index investments through this latest boom. The industry fund that runs my super account are doing well but not as well as can be made without all the fees and charges to run offices, board members, commissions, advisors etc etc.

    Very few funsd do much better than index tracking but the astute and nimble investor can use timing and currency plays as well as shorts and more exotic instruments.

    However SMSF can and do fall into traps and scams if the members are financially illiterate. In that case a fund is the best option.

    Historical returns should be available for the life of the fund and all costs totally accounted for.
    Old Geezer
    30th May 2018
    6:30pm
    I wont go into details here but it suits me to keep my SMSF at present but that may change under Labor.

    It is no different as far as scams go having it in a SMSF or not the scamsters will try anything to get it.

    I have recently found out that a company is selling lists of people with net worth over $1 million and I was wondering where they could obtain such information.
    Misty
    30th May 2018
    11:48pm
    Johnp did you notice OG never gave you an answer when you asked him what sort of a return he was getting from his fund but could tell you what the return was from a Industry Fund.
    johnp
    31st May 2018
    8:30am
    Yep, your right Misty. So lets hear from OG where and what returns he is getting. Bet we dont hear that cos he is a paid stooge for some political org.
    Old Geezer
    31st May 2018
    5:35pm
    Let's just say I'd be very disappointed if I was getting what industry funds get from my SMSF. In fact I set up my SMSF because I was not satisfied with what I was getting in an industry fund.
    floss
    30th May 2018
    1:06pm
    O.G.TOLD US HOW GOOD THE AUSTRALIAN BANKS WERE A FEW WEEKS PAST ,GIVE IT AWAY BEFORE YOU LOOSE ALL CREDIBILITY.
    Old Geezer
    30th May 2018
    1:47pm
    Floss there is nothing wrong with Australian banks at all. They are starting to look very attractive buys now to me. I bought one bank at $5.40 a share and it now pays more than that is dividends a year now. If that is not a good investment I would like to know of better ones.
    Old Geezer
    30th May 2018
    1:49pm
    Floss I also bet your industry super fund is full of banks. My guess is around 30% if not more of it's shares would be invested in banks.
    Old Geezer
    30th May 2018
    1:51pm
    Floss I guess where you are confused is that I am willing to invest in the banks themselves instead of letting the banks invest my money. I don't want them taking the cream off my investments when I can have it instead.
    MICK
    30th May 2018
    1:56pm
    Floss - don't believe a word OG says. He is a cash for comment poster placed on this website.

    Aussie banks? Good returns with 100% franked dividends. Just like Telstra. The dangers of banks is they are highly geared. That is they have borrowed $billion from offshore sources. The real danger for them comes from a hit to the housing market and loan defaults with rising interest rates and also (coming) cryptocurrencies. The big end of town is getting out of banks and Telstra because they view then as a risk! Buyer beware.
    Old Geezer
    30th May 2018
    2:13pm
    Mike you just don't get it all. People like Floss are likely to be getting returns less than they should now because their super fund is not passing the franking credits on to them. If Floss had the money in a SMSF they would get higher returns as they would get the franking credits as part of their returns.
    MICK
    30th May 2018
    3:23pm
    I would have thought 10%+ pa was a good return and I have to question your assertion that franking credits are somehow 'disappearing' into a black hole. That would be fraud. Please present your evidence.
    Old Geezer
    30th May 2018
    3:39pm
    Mick have a read of this article from a YLC article page.

    "Once Labor opened the “franking can of worms” it suddenly came into focus that industry super funds are running their members’ funds with pension money and accumulation money pooled together. Pension members of pooled super funds may not have been aware that their franking credits on their share dividends have been utilised by accumulation members liable for the 15% superannuation tax. We can only guess at what tax credits and benefits have been dispersed from pension members to accumulation members. We can only guess as to how much tax has been lost by the government in this opaque structuring.
    "

    https://www.clime.com.au/wp-content/uploads/2018/05/20180503-franking-booklet-2.pdf?omhide=true&utm_source=clime&utm_medium=email&utm_campaign=frankly
    Old Geezer
    30th May 2018
    3:49pm
    If you take that statement one steep further and the franking credits of those in the pension phase are being used to pay the 15% contributions tax then the members in pension phase are not getting the extra income they should from the franking credits.

    No wonder SMSFs returns are 30% higher and more for those in the pension phase than those in the pension phase in the top industry fund.
    Rae
    30th May 2018
    4:57pm
    Yes Og and it will need to be sorted out. I'd suggest there will be class actions perhaps if pension members can link up as it is theft of income tax returns which isn't exactly legal.
    Old Geezer
    30th May 2018
    6:21pm
    I'd certainly be contacting one of those lawyer who specialise in class actions if I was on a pension from a super fund.

    It is interesting that this rip off has only been exposed due to Labor's unfair franking proposal too.
    Rae
    30th May 2018
    3:36pm
    The forced savings vehicle currently in place is absolutely nothing like the one set up by Keating. Compounding works due to time. By changing the timing of taxes within the fund the main advantage of compounding has been lost.

    If Super Funds can't create wealth during the biggest market boom in history from 2009 to now then it will be a bloodbath come the tail end of the cycle when rates start rising and asset prices pull back.

    It's not as if the Funds take profits in a timely fashion. They just follow a formula.
    Using other people's money to play the markets must be a whole lot of fun.
    Old Geezer
    30th May 2018
    3:53pm
    I too think the returns are quite dismal for such a market boom and I certainly wouldn't want to have my money in them when the boom ends.
    Adrianus
    30th May 2018
    5:41pm
    Correct Rae, they are partly lazy and partly conforming.
    On the Ball
    30th May 2018
    10:36pm
    From now on I am VERY WARY of ANY superannuation related article I read in these pages.
    It us VERY obvious - even for the naive reader, that you are dead AGAINST Industry Super funds.
    It is further blatantly obvious that you are complicite in the LNP's agenda to have the Industry Super funds removed from the market and have the banks take over ALL superannuation.
    This is a payback for the banks, by the LNP to make up for the Royal Commission into banks that the LNP fought so hard against.
    The fact that Industry Super funds have been SO successful, just shows how much rorting and ripping off was being done in the Superannuation arena before Industry finds were set up.
    PLEASE if you want to retain your readership, make the articles factual!!!
    Adrianus
    31st May 2018
    10:10am
    The article is redacted. if you were really On the Ball you would know that. Who are you?
    On the Ball
    30th May 2018
    10:40pm
    Some Ols Geezer wrote: "If you are drawing a pension from an industry super fund it is questionable whether you are actually being paid what you are really entitled to. "

    To that I reply: "Show me the facts"...

    I recently changed to an Industry fund from a retail fund.

    I am now receiving my 5% (as required by law) and my balance is increasing at the percentage rate the fund is earning. Am I being ripped off??

    Old Geezer: SHOW ME HOW...

    I suspect OG is an LNP stooge. Anything he/she says must be either proven or taken and Murdoch inspired rubbish.
    "
    Old Geezer
    31st May 2018
    5:31pm
    If your franking credits are being used to offset the tax payable by those in the accumulation phase then you may not be getting all the income your are entitled to. It is a question I would be asking my super fund if I was in the pension phase and also asking for proof as well. Personally I would be drilling down through their accounts to check.

    That last comment tells me that you really don't understand how you super works and what you should be getting.

    Unfortunately most people just accept what they are given and fail to check if it is correct hence super administrators get away with things like this.
    Old Geezer
    2nd Jun 2018
    10:52am
    There is an article in The Australian this morning about people in the pension phase getting ripped off by their super fund. They are referring to the 15% tax for those in the accumulation phase being applied to those in the pension phase when they should not be paying the 15% tax.

    Retirees are being ripped off by their super funds by their super funds not giving them their tax free income and refunding their franking credits.


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