[AMA] I Work for a Superannuation Fund. Ask Me Anything

I work for a superannuation fund. Ask me anything. A large industry fund. Have been there 11 years in the trustee services area with a good view of most business areas of the fund. Also worked for a bank owned fund for 5 years.

Any advice is general advice. Consult your financial adviser.

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  • jv>Any bargains?

    • +1 vote

      Consolidate multiple accounts but check your insurance cover before you do

  • What’s your opinion on the Banks ‘fee for no service’ as uncovered by the Royal Commission?

    • +1 vote

      It's criminal

      • +36 votes

        If I laundered 700 million dollars for drug dealers and terrorists I would get 20 years to life in jail.

        The Commonwealth bank gets a fine totalling less than it made carrying out the criminal actions and no one goes to jail.

        I heard the pigs at the Commission today discussing why they think it won't happen again.

        No seriously. They're going to be ethical this time, promise.

        It's hilarious watching the Government carry out a Royal Commission into businesses it has guarenteed to bail out if they ever need it. Just shocking conflicts of interest in this stupid puppet show they're putting on for everybody while they don't change anything.

        • Wait till you hear about the bail-in legislation they snuck through last February while no one was watching. Of Australia’s 76 senators, only seven were present when the government rushed the bill to a vote, which passed “on the voices”, with no opposition from the Labor or Greens senators present. The process was hurried to ensure that senators who planned to move an amendment, to stipulate that the bill’s “bail-in” provisions must not apply to bank deposits, did not have the chance, and weren’t even present when it passed.

          Anyway…back to super and it's multi-trillion dollar bag that has politicians and corporations drooling at the mouth…..

          • @EightImmortals: lols, and right on cue….

            " A government Senator has contradicted Treasury and the ex-banker who controls the Senate Economics Committee and confirmed that the APRA crisis resolution powers legislation sneaked through Parliament in February is a “bail-in” law.

            Queensland LNP Senator Amanda Stoker’s explanation of the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 proves that there is confusion in the government on this law, and therefore it needs urgent clarification through an amendment to explicitly state what the government claims—that it will not bail in bank deposits. (See below for instructions on demanding an amendment.)

            Senator Stoker, a top barrister who has been a prosecutor as well as a judge’s associate in both the Queensland Supreme Court and High Court of Australia, explained in a 5 November 2018 letter to a constituent:

            “The legislation facilitates bail-in as a type of resolution power which is available for dealing with financial institution distress. This was done after the G20 leaders endorsed a new Financial Stability Board standard for Total Loss-absorbing Capacity. Specifically, it builds on the Key Attributes which specifies that Financial Stability Board jurisdictions should have in place legally enforceable mechanisms to implement a bail-in. The purpose of the Total Loss-absorbing Capacity standard ensures there are mechanisms in place to stop the ‘domino effect’ and reduce loss on [sic] bank shareholders, creditors and the Government.”

            This is the most accurate description of the Act ever to come from the government or a parliamentarian of either major party. Senator Stoker confirms: a) the law does implement bail-in for Australia; b) the bail-in mechanism is based on the Financial Stability Board’s (FSB) “Key Attributes”; and c) the intent of bail-in is to prop up a failing bank with the money of its creditors so it doesn’t trigger contagion in the wider banking system, i.e. it sacrifices the customers of a failing bank or banks to supposedly save the banking system. "

          • @EightImmortals: Yep, the bail-in legislation lets APRA or the minister rescue the banks by confiscating saver's deposits. Pretty much what happened in Cyprus after the GFC.

            • @RedHab: So the 250k guarantee is a lie? I did see the episode of walktheworld about this and they were questioning it, they did mention something about bailing in savers money into the bank to protect them constitutes the 250k guarantee. I think that is disgusting, it probably would be wise to get deposits out of Australian banks and put the funds somewhere else. Maybe buy Perth mint certificates instead,.

              • @freemoneyhunter: The 250k has always been a lie.

                From wakeup.land/four-things-the-australian-public-doesnt-know-about-banking-but-should/:

                Your trustworthy government, media, family and friends are not entirely telling the truth — omitting a very large detail. The guarantee has a caveat of $20 billion dollars per bank. In the event of a major banking collapse, that is any of the big four, consider your money lost. This fact is hard to find. You can’t even find it if you wade through the 1959 Australian Banking Act. You have to go to the “Financial System Legislation Amendment (Financial Claims Scheme and Other Measures) Bill 2008”, “Activation of the EAFD” 1.20. It states,

                A declaration outlines the total amount available to make payments to depositors of a declared ADI. For the first three years of the scheme, the amount that can be appropriated for the purposes of meeting depositors’ entitlements is unlimited. After three years, the maximum that can be appropriated is $20 billion. The declaration must also outline the amount available for the administration costs for implementing the scheme up to a maximum of $100 million. [Schedule 1, item 15, section 16AD]”.

                The Reserve Bank of Australia are also well aware of this, outlining in their “Depositor Protection in Australia”,

                “Payouts of deposits covered under the FCS [The Australian Government’s Financial Claims Scheme] are initially financed by the government through a standing appropriation of $20 billion per failed ADI [Authorized deposit-taking institutions]

                According to the Big Four’s annual reports the size of deposit accounts totaled $2 trillion (Commonwealth Bank — $581 billion, ANZ — $467 billion, NAB — $407 billion and WESTPAC — $533billion). This includes savings, term deposits, chequing, debit card, transaction accounts, mortgage offset accounts, pensioner deeming accounts, retirement savings accounts etc… So only $80 billion (or 4%) out of this $2 trillion dollars is actually covered by the guarantee. Good luck getting your money back, especially before the public start yelling “BANK RUN!” in your branch. What makes this whole thing even worse is that the guarantee first needs to be activated first by parliament.

        • Sounds like it's safer to put that money in ASX: VHY then ?
          Higher yield and partially franked anyway (vs paying the full tax rate on deposits)

  • Is it worth putting my super into an actively managed fund or should I go with a low fee index fund instead?

    • -3 votes

      There is some research that indicates that the average active manager consistently underperforms the index. However good active managers can out perform the index, the fund trustee just needs to select the right managers.

      Check out the performance of some of the funds who have both an indexed balanced option and a balanced option and you will see the difference in returns. The returns should be net of fees and tax for an appropriate comparison.

      • However good active managers can out perform the index,

        So can lucky ones. Last year's winner might be next year's loser.

        Stick with the index, it performs better than average and the fees are lower.

        • This is the advice of the Barefoot investor and I am considering changing my super fund to follow this.

      • If you put money into a index fund over the past 10 years, you would have done well riding the bottom of the cycle to the peak, which we are in now.

        but along the way, there’s a lot of bullshit being accumulated in the index and when the economy falters, bad businesses will drag the overall market.

        When you buy an index fund, you are buying the good with the bad.

        so active managers do play a role in times like this and they may perform better when a market correction occurs

    • My advice would be to have an appropriate balance of indexed and active managers.

      For example, my super balance is currently structured to be approximately 65% Australian equities and 35% international equities. Within that, it's about 40% Australian indexed, 25% Australian active, 15% International indexed, 20% International indexed.

      Whether or not this is the right mix is up to debate and preference, but the point is to consider it not as either/or as getting the right balance. I've biased the international side to active as I want the managers to (hopefully) move investments across borders as much as across stocks according to macroeconomic factors. On the Australian side, it's not about macroeconomics for the managers as it is specific stock selection.

      Therefore, the philosophy of my investment in this regard is that I'll back managers to be better at picking macroeconomic trends than specific stocks.

      My advice, if you are serious, is to consider the philosophy behind your investment choices. A simple one-dimensional view of indexed vs. active may not meet your objectives.

  • Why does it take so long to produce the EOFY statement? I enquired and they said they are legally required to send one by the end of the year but PHI and all managed funds send one very quickly.

    Why is the option to do direct share investment so limited in most funds?

    • +2 votes

      Yes funds have until 31 December to issue the statement. Managed funds need to issue earlier because of the tax implications.

      Regardless, when yoh get the statement it is out of date anyway. Your fund should offer an online portal where you can see your daily balance and transactions.

    • I actually work in this area (one of the two major administrators of superfunds in aus) and can provide an answer to the EOFY statements:

      The statements themselves are a project each year which span a good 6 months:
      *Which is taken up by the superfund deciding on the design of the statement and the legislative/approved wording that appears on it.
      *Final Rates are decided on after 30 June, as Superfunds need to ensure when they payout interest they still have enough capital to run the business for the next year.
      *Operations need to finish processing all the updates members put through by 30 June - this only happens after 30 June.
      *All the data and calculations are run through checking processes as there complex calculations for about 10 million members to ensure the accuracy of the statements.
      *There is a lodgement schedule of funds for statements, which is agreed on by the superfund - this is always dependant on when they can finalise their accounts for the end of the year and produce their annual report which usually goes into the September period.

      Usually you should receive your statement around the same time every year.

  • What are your thoughts around the insurances provided by superannuation funds? Are the death, TPD and income protection insurances good value compared to buying it directly from a broker?

    • +1 vote

      It does depend on your fund and occupation. Insurance offeres by a fund is what is called a group life policy. The insurer will underwrite the entire member base as opposed to just one person which is the case with on adviser. Some funds offer one set of premiums regardless of occupation (with some exceptions). So if your fund has lots of white collar workers and you are a heavy blue collar worker, your premium would most likely be much cheaper in the fund than it would if you were individiually underwritten through an adviser sold policy.

      The insurance in a fund is usually much cheaper because of the scale. But you really need to get into the details in the policy document to decide if its right for you. Also group policies usually guarantee premiums and terms for say 3 to 5 years. So it can change.


    Should I stay in defined benefit or move across to accumulation. I know there are a squillions factors but is DB still king?

    • +2 votes

      Yeh two squillion factors. A lot of people i know moved from DB to accum at the height of the GFC. They took their db funds with no market loss and put it into dc at the bottom of the market and rode it all the way up.

  • +14 votes

    Is an A200 AMG still a good pick for a high yield investment?

  • Why do funds follow the market closely down but not up. Is it the exodus effect?

    • +2 votes

      You are probably not comparing the same things. Show me an example

  • +5 votes

    Do you put the fun in superannuation funds?

  • SMSF Or Go with one of the big players?

    • +1 vote

      Depends on your balance and how much time you can devote to being a trustee

      • a balance of around 100k? what is your view on moving to SMSF and investing in property?

        • Don't. Not nearly enough to make it. average costs of about $6k per year, you do the maths.

          • @MercSal: What are these costs you mention? More government theft for managing our own money?

          • +1 vote

            @MercSal: Yeh dont.

          • +1 vote

            @MercSal: It can be done for way, way less than that

            • @R4: I have an smsf with 150k between 2 of us….we were able to buy a 400k property (unit). The smsf set up was around $3k and costs around $1200. I used a mob in melbourne called Redwood Advisory - they are really good and very honest and unbiased. They are all based in australia too and you call them anytime you want with questions……smsf worked well for me instead of asic telling me what balance i should have i made my own decision - happy to share more details if needed.

              • @Senatekill: esuperfund.com.au are good too. They offered me the first 3 years fees for free.

                SMSF can work well if you go into it with a proactive attitude - you've got to keep on top of things.

                For me, one of the big advantages of a SMSF is the ability to have your kids in as members and being able to pass it on to them.

                • @R4: @R4 looked at them but i like to talk to a person, there is no one to ring at esuper…with redwood they don't offer gimmicks with free stuff, but i am happy to pay for the service so its not all do it yourself…..

                  as a fyi i have referred a few friends to redwood advisory from esuper - as it got too hard when they were trying to buy property as esuper restricted who they could use for a smsf loan…..

                  everyone for themselves, i am happy so all good

                  • @Senatekill: Fair enough - there will always be an argument over cost v personal contact. I'd never buy a property through a SMSF but that's just me - it might work for others

  • Thanks for taking the time out for an AMA. Do you think its worthwhile taking a separate life insurance while on an insurance provided by superfund. Are there any catches with a life insurance provided by superfunds?

    • +1 vote

      A policy outside of super can usually be paid out quicker.

  • Do you have your own super with the company you work for?

  • Why do you think the Government allowed funds with any fees at all to operate in the superannuation system if the goal was to fund people's retirements given the devastating effects even low fees have on compounding wealth?

    To me superannuation looks like a scheme to rob every working person of ~$600,000 over their lifetime by levying a %1 fee on their earnings so that banks and other businesses enrich themselves at the expense of everyone else.

    This is by design obviously, our politicians are not idiots.

    • I agree with all but the last clause.

    • If there are no fees, how do you expect the people who work at the fund to get paid?

      • +4 votes

        What MrHyde said. If it was government run you would still be paying for it, just through your taxes.

        Take the future fund as an example, not a superannuation fund as such but set up to fund the future public service retirement liabilities. It still has employees and appoints actuaries, investment manager, asset consultants and a custodian.

        Running a fund is an expensive business and someone has to pay.

        • My understanding is that we had this for the average punter 'Retirement Fund'. It was a tax that was added years ago and then Malcolm Fraser absorbed it into consolidated revenue and left the tax there.
          If that is the case then it is so typical of the Politicians to protect their retirement Funds and disolve the publics so we are theoretically left to fend for ourselves. I feel for the people in their 70's, 80's and 90's who had no Super, paid their taxes and are treated like unemployed bludgers. Rant Over :-)

          On a specific question thou, I have been thinking of moving my funds from a balanced to conservative as I feel the winds of change are a coming. I lived through the recession of the 90's and if this occurs…yikes! Any thoughts on this?

    • Do you know anyone or any company who would manage the funds without charging fees?

      • Yourself

        • I was actually responding to this comment above…

          Why do you think the Government allowed funds with any fees at all to operate in the superannuation system if the goal was to fund people's retirements.

          I happen to work for the industry too and I charge a lot! :p

  • I never clicked a forum discussion so fast.
    I thought you're working as a supernatural.

    (I just watched Fantastic Beasts)

  • I'm 21 still a student still, I have just over $1000 in my superannuation from when I worked but currently unemployed. Any tips in general?

    • Put it all in a shares fund with the lowest fees you can find. At your age, you have a long time for systematic risk to even out and you'll be rewarded with the highest returns.

    • +1 vote

      Best is just to put it in a low cost industry fund, where the admin fee shiuld be only $1.50 max per week. If there is any insurance, consider if you really need it now. Premiums are deducted from the balance.

      • thanks, I'll look into it. I'm getting charged well over $100 a year.

        • +3 votes

          Hey bkhm - he's a hint I'd take up at your age. Each year you can deposit up to $1000 of your own (after tax) money into your super account and the government will match it by 1/2 eg $1000 = $1500 through your tax return.
          So $1000 is less than $20 per week that you can miss.
          And if you find an online calculator to calculate the compound growth at an average of 10% over 10, 20 or 30 years - you'll be on to a winner.

          Note that things do change over time eg it use to be $1 for $1 up until a few years ago. Still it's free money though.

          Appreciate you're a struggling student.

      • So… AustralianSuper charging no more than $78 a year?

        I'm with them and oh they tried to sneak in quick one or two, I see a $1.8 one and a $2 one……

        Which fund do you work for?

        Oh you're in penalty box……let me guess…..this is a ghost account so that you could post anonymously……?

      • thoughts on Unisuper?

        • One of the best out there in terms of returns, fees and services. It's one of the few funds that still offer a formula based product that is almost recession proof. You may not be able to join though unless you work for an eligible employer or has a family who's a member.

    • Move to a super fund with NO fees.
      IE. EISS.

      • how could a fund have no fees? Are they working for free?

      • Indirect cost ratio

        Conservative: 0.77% p.a.

        Balanced: 0.93% p.a.

        High Growth: 1.02% p.a.

      • If you compare with someone like AustralianSuper with a fee then EISS will work out more expensive as the fee with AustralianSuper is fixed at $78.

        Compare the pair

        Both with $50,000 balance

        EISS = 0.93% for the balance fund (shown below)total cost of $465 per annum

        AustralianSuper = $78 member fee + balanced fund fee of 0.66% ($330) total cost of $408

        The difference gets larger as the balance increases too.

      • I googled them and read some google reviews one of which was:

        Ken Parker
        Ken Parker
        4 reviews
        a year ago
        A horrible & expensive mistake. Google "Energy Industries Superannuation Scheme Scandal" save yourself a lot of pain & money & go somewhere else.

  • A few months ago had to start the process of claiming my spouses death benefit. I was the binding beneficiary but still had to jump through several unreasonable hoops to get pay out. After providing all required paperwork proving ID, death and marital status, still had to get a stat dec from someone who had known spouse for over five years answering rediclious questions eg. did they have a last will ( even though I had already provided it), in addition to the trustees wanting a stat dec from all my adult children 30+ yrs stating that they were not financial dependants and would not be making a claim. My questions are: Is there any benefit to the fund withholding the payout as long as possible? Am I entitled to a detailed statement regarding the account including payments in and out?

    • Just updated my Will with the public trustee they told me to update my super beneficiary to them to make things easier.
      They pretty much said what you described would happen if I don't

      • +1 vote

        Public trustee can be a painfully slow process.

      • Hi Hawkeye, perhaps you missed the point: I was the “binding” beneficiary so it had been updated. This was the next step up from being the “nominated” beneficiary which is the default option when applying for a new super account. To become a binding beneficiary requires a separate form which has to be signed off by two witnesses. In the end I had less hassle with another super account where I was only the nominated beneficiary. Being a “ nominated” holds very little power once the person is deceased whereas a “binding” holds for 3 years regardless.

    • +5 votes

      Im sorry you had to go through that. If it was a binding nomination they only need to verify that it is valid (ie financially dependent) to pay the claim, which sounds like what they did when asking for a stat dec from someone who new your spouse. The process of asking you adult children is what is called claimstaking. This is only required if there is not a binding nom.

    • Sorry for your loss.

  • Wife is a stay at home mum.

    Won't be returning to work in the forceable future.

    What should we be doing with her Super?

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