Mum Stopped Working to Become Fulltime Carer, What to Do with Her Super?

Hi all

I'm trying to figure out what or how to help me mum to manage her super, but even i am unsure on what to do.

Hopefully someone here can give me some advice?

Since last year my mum stop working full time to became a full time carer to her mum(which is my grandma)and is paid by Centrelink.

She has reached her preservation age of 56.
Since she doesn't work anymore so there is no contributions to her Super.
Shes currently being charged $36 per month by her Super in fees and TDP/Death insurances etc.

What should i do about her super? leave it as it is? cancel the super insurances? withdraw her super put it in the bank to earn interest?
My main concerns is those fees that is eating away at what she has left in her Super.

Comments

  •  

    One can but doesn't have to take the preserved super out on reaching preservation age. One can rollover to any fund that will accept one as a member. A fund may allow one to cancel or reduce the insurance.

    There are lots of webpages at ATO dealing with super.

  •  

    How much does she have left in there? What's it earning her? Is it making more than $36/month?

  • +1 vote

    Leave it, the tax savings will be more than 36 a month

    Btw what’s the balance? If small may be worth pulling out

  • +2 votes

    My main concerns is those fees that is eating away at what she has left in her Super.

    Well then you need to work out if you want to keep this part

    TDP/Death insurances etc.

    As this is the main cost of this

    Shes currently being charged $36 per month

    You can turn the TDP/Death insurances off.

    Also remember, just because she is being charged $36/m doesn't mean she is losing money.

    Thats $432/yr in fees. So most funds easily bet the cash rate off 3%, so if your mum has $20k in there, while she get charged lets say $450 in fees a year, the fund is going up $600 at a min, more like $1200ish.

    •  

      ^this
      many confuse insurance premiums with fees.
      what is the true fee component and what is the insurance component of the $36?

  •  

    ill give one tip and it is morbid, but if your grandma, or mum are on their death bed then it is time to withdraw all super, to prevent tax on it if left in.

  •  

    "being charged $36 per month by her Super in fees and TDP/Death insurances etc."
    The $36 per month sounds a bit high but then again it depends on the returns the fund is achieving?
    Many funds are poor performing and do over charge. There is a BIG difference between a good and bad super fund.$$$$$$$$$
    Check some of the returns other funds are achieving for a comparison. Some funds quote returns after all fees are deducted so with them you get the fact and not the fiction. Australian Super is one fund that openly displays its rates and it is easy to read.
    You can transfer to other funds without penalty if she wants to do so(AFAIK). I did this many years ago when my employer owned fund started to nose dive and very glad I did. I did this online and all that was required was to give my new fund the details of my old fund and approval to transfer it over.
    Those life insurance fees are not compulsory (AFAIK) and can be terminated. You enter a super fund for income when you retire, not to purchase life insurance. The super fund gets a big kick back for it, that is why they do it.
    I am not sure of the current age at which a super fund can be changed to a pension, it used to be 55. This is simple to do. If she is thinking of doing this it may be best if it is done after she changes to another fund, if she does change that is.
    Income from super fund pensions is usually discounted by a large amount by Centrelink for recipients of the aged and disability pension. Say if the super pension is $300mth they they might only count $100 as income.
    I am not sure if the same would apply to a carers pension? Ask Centrelink for an assessment when she finds out how much her super pension would be paying her if she converted to a pension. There is a minimum percentage of her assett that must be deducted as a pension but it is fairly low.
    Some super funds are good at providing advice in situations like this but Centrelink may be the best option.
    The returns of a good super fund will out perform any bank interest acct by a large amount, could be 3 or 4 times more and with tax benefits.

  • +1 vote

    If your mum were to pass away, is there anyone that would be financially dependent on proceeds of her life insurance?

    If not (for example, if she only has adult children) then she probably doesn't need the life insurance.

  •  

    Do you know
    1. how much is her insured benefit? And how much is monthly premiums?
    2. Does she want/need Insurance? Does she have any financial dependants?
    3. Does her policy offer ins cover up to Age 65 or 70?
    4. Is she generally in good heath?

    U can PM me.

    BTW, if she was born after 1/7/1962, her preservation age is 57. So she cannot access to her super yet (coz she’s 56 years of age).

  •  

    Financial Information Service

    A free service that can inform and educate you about financial matters.

    It may or may not help, but it's free (well, we pay via tax..) and may give some answers / direction.

    being charged $36 per month by her Super

    She can move to a different super fund with less fees. Her super fund should be increasing with shares. Look at the account as a whole, before you take out super as I don't believe you can put it back in once it's drawn out.

  • +2 votes

    Just a warning that money in super does not count towards Centrelink's Income and Assets test. If you withdraw her super and put it in the bank it will count.

    You really need to get financial advice.

  •  

    Beware when seeking financial advice!!
    Most that are "free" are pushing their own investment products. Even the ones you pay are doing it..

  •  

    Wow thank you for the overwhelming response, i will try answer back as many questions as i can.

    Balance is about $30K, i'll need to find out her investments if its making more then the fees she is paying.

    the Fees is made up for $30 in insurances, $6.50 admin fees

    My Grandma and Mum are healthy for their age

    She does not have any financial dependencies for that insurance as my Sister and I are adults(have our own families) and are self reliant

    She has reached her preservation age already of 56 (shes 57 now)

    At this stage it looks like it might be best to leave it in there as long as the investments is paying more then the fees

    Yes i know financial advice can be very expensive hence i asked oz bargain :D
    I have read every single reply here, sorry if i haven't indirectly answered your questions

    •  

      They will have sent her a statement every year. You can see what investment option she's in and what the earning rate is. If it's lousy, consider switching to another fund. But there may be exit fees so factor that in. And of course past performance is not a predictor etc etc.

      She can probably cancel the insurance. You can learn more and get the forms by going to the website of the fund.

  •  

    Good financial advice is not necessarily expensive but most can be very deceitful. Some often frequent forums.

  •  

    Your mum's super fund should have sent her a statement recently and the investment option, return on investment and type of insurance should be on the statement.

    She'll most probably be in a conservative investment option based on her age. As an example, Hesta(Industry Super Fund)'s conservative option return for past year @ 30/6/18 is 6.99% and this return is definitely not achievable with a term deposit.

    Is the insurance just Death/TPD? It might be worthwhile giving a good thought before cancelling it. It doesn't seem like your mum needs any Death insurance as there's no financial dependants and I assume no debts too? Total Permanent Disability insurance will pay a lump sum in the event where the insured is totally and permanently disabled. I' hate to ask you this question as it is usually an uncomfortable question - If your mum gets into an accident and becomes a paraplegic, how much money do you think you'll need for her ongoing personal and medical expenses, house modifications, carer etc? This amount will probably be the amount you might want to maintain for her TPD cover.

  •  

    Hi Guys after investigating her investment return is 7.5%

    $31,000 x 7.5% = $2325 returns P.A
    fees is $36.5 x 12 months = $438

    profit $1887 P.A

    I asked her if she wanted to move to Australian Super for 10%+ returns she said she cant be bothered :(

    Thank you for your help guys
    Taking it out for bank interest is definitely not worth it

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