My wife has not worked in quite some time and previously accumulated a small amount of super. Her super is not growing due to the fees wiping out the returns that she makes. I know that ING has a no fee facility but I think you need to invest at least $20K.
Can someone recommend a fund that she can park her money that preferably has no fees.
Many thanks.
There are always costs of running business to be paid for, but I believe that the industry super funds are the best. EG $20,000 with Cbus total annual fees would range between 0.61% and 1.25% p.a. depending on the investment option. If an investment adviser put you into your super fund he could be getting trailing commissions - that is where you will lose a lot more! Switch from that super fund ASAP. I believe that if you need the money soon, then should be in bonds/cash. (Cash should not go backwards unless interest rates go to zero) If have a long period before need the money, then should be in the more aggressive options. Scale the balance accordingly. If you are in an 'Industry Super Fund' and the balance has been going backwards, and you have a long period of time before the funds are needed, then just hang on for the ride. And never switch investment options based on the emotion of the market prevailing at any one time, because you may miss the lift when they turn the corner. Look at all of those people who change investment options to cash when the 'financial crisis' hit. They will never recover their losses, but the markets have recovered quite a bit.
Yes an industry fund is the go. Minimal fees, but make sure you OPT OUT of insurance attached to the account. The default is usually to include it so you have to be careful when filling out the membership forms. Having only one account helps keep fees low.
Australian Super is a decent fund - not the best performing but they have plenty of investment options and are consistently among the better performers. You also get one free session with an advisor (you can both attend), and they run regular seminars in capital cities.
YOU can contribute funds to your dependent wife's super and I think up to a certain amount such contributions are/may be tax deductible. She may also be eligible for the govt co-contribution if "she" puts money into her super. That is means tested and has limits and eligibility rules - your new super financial advisor can also help with that if required.
Be aware that many non-industry funds take a much larger slice of your return so even though a no fee account might appear a good idea often you will actually be worse off!! If her super isn't growing at a reasonable rate it may be due to the mix of investment options she has. The default is usually okay but all good super funds have historical performance data for most investment options.
This might help:
http://www.superguide.com.au/boost-your-superannuation/boost…
+1 for Australian Super
Thanks all for your detailed replies.
Firstly, my wife's super is parked in an industry fund. The fees are reasonable for most people who have a sizable amount. I'm in the same fund. The issue here is that a small quarterly return she is making is getting gobbled up in the fee.
Secondly, I contacted ING and sadly there is a fee, similar to the fund she is now.
Their response:
Firstly, if your wife’s account balance is below $1000, we will automatically rebate any amount that was deducted in fees that is over the amount that was credited to your wife’s account in earnings
over a 6 month calendar period e.g if the fees deducted from the account between 01/01/2013 and 30/06/2013 were $20 but the account had only increased by $10 in investment earnings, we would
rebate $10 at 30/06/2013.
I will keep investigating and write to see if they will do something in her case.
Thanks all.
If I was you Rick I'd look at 3 strategies.
-Topping up her account AND
-Moving her investment options to a better performing mix (average returns on the 'balanced' option since the worst of the GFC should more than cover costs and inflation. Many funds returned double digit++ results last FY, some as high as 18%).
OR
-Move to a better-performing industry fund
Thanks for your advice. Topping up is a possibility. Her super is invested in a Balanced fund.
If the balance is small then the flat annual fee (be it $65 or $78) works out to a relatively high % fee.
If you're happy putting it into cash/term deposits then ING Living Super should be genuinely fee-free.
If you want shares with under $5,000 (the minimum for ING's balanced fund if not making regular contributions) then Colonial FirstChoice Wholesale funds have no fixed fee and annual investment fees for their index funds between about 0.44%-0.73% and only a $1,500 minimum.
I go through comparisons here:
http://superannuationfreak.blogspot.com.au/2013/07/the-best-…
http://superannuationfreak.blogspot.com.au/2013/07/the-best-…
(I'm not associated with any of these companies, other than a couple as a customer)
What fund are you with? I work in the super sector and can say Australian Super is one of the better funds out there. Being an industry fund means they are more likely to be cheaper than retail funds (colonial first state, AMP, the big 4 banks, etc) but some funds charge a set fee, others charge a % fee based on total account balance.
the main thing is to only have 1 account. If you want life/TPD insurance, you should get it via the super fund rather than buying a seperate policy at retail rates. Other than that, if your wife works full time her super should accumulate at a higher rate than fees can deduct.
Hi. As mentioned in my original message my wife no longer works. She accumulated a very small amount from super from previous jobs.
Her super is parked in a fund for employees of a very large company I work for. The fees are competitive and reasonable. The rate of return on the balanced fund is decent. Obviously not ideal for someone with a very small accumulation.
I'm looking for alternatives that cater for situations such as this.
Being a former Superannuation Administrator myself, albeit 25 years ago, you would think I would know better, but I'm afraid I have not kept up with the state of play.
Have you tried enquiring about a Commonwealth Bank Superannuation Savings Account. I have one and it charges no fee. My account balance was around $2,900 at 31/12/12 and I earned $34 interest for the period 1/7/12 to 31/12/12 with earning tax deduction of $5.
Edit: Sorry I missed the annual admin. fee of $25 by only looking at the December statement.
The $20K minimum only applies if you are setting up a 'Transition to Retirement' ING Living Super account, with regular withdrawals. The standard ING Living Super account has zero fees provided the "Safe" investment category is chosen. Give them a call and discuss it - they don't bite!