BGL Update

This has been a tumultuous year for BGL, our clients and the superannuation industry.

During the year, the government introduced another super early release scheme – this time in response to COVID-19.

I have asked our friends at mProjections to do a couple of calculations to demonstrate the impact of a withdrawal and how to engineer a higher retirement. Please check these out.

Example 1

Phillippa, 29, worked in the hospitality industry with 2 jobs, total income (pre Covid) of around $55,000pa, pre-tax. She is single and had built up a Super balance of $25,000.

Shortly after loosing one of those jobs, she withdrew $8,000 without thinking about the consequences to super. Her Super had been invested in a typical ‘Balanced’ Investment Option with 65% in growth assets.

Using the mProjections Report, Philippa moved her post-withdrawal balance to a High Growth Investment Option (85% in growth assets). She saw that, before withdrawal, she would have $55,194 pa annual retirement income for 25 years, but with a move to High-Growth – without additional contributions – she would enjoy a $57,415 projection. Most importantly, her upside for a considerable improvement in retirement spending would increase.

Example 2

Jonathan works as an electrician in the western suburbs of Sydney and had his hours reduced to 20 hours per week for 3 months. He decided to withdraw $8,500. Using figures in our Report, he saw how to increase his $79,747 tax-free pre-withdrawal retirement projection by moving the balance of his fund to a High Growth Investment Option and a consequent retirement income projection of $82,442.

He also noted the greater likelihood of upside. ‘Low’ here is 15% of assets in growth.

If you would like to prepare an mProjections report for your clients, check out their website.

BGL welcomes the release of the Rice Warner SMSF cost of operating an SMSF report prepared for the SMSF Association.

“It’s great to see a proper analysis of SMSF cost and return data” said BGL’s Managing Director, Ron Lesh. “And knowing the vast majority of the data came from BGL’s Simple Fund 360 clients makes me even more proud.”

“The report shows the cost of running an SMSF highlighting that larger balance SMSFs cost less to operate than any other type of superannuation fund or account” noted Lesh. “And for smaller balances, SMSFs are comparable with APRA regulated funds”

The report data was sourced from BGL’s Simple Fund 360 and Super Concepts SuperMate software. “It is great to see 2 industry software companies working with Rice Warner to provide the data required to prepare the report at no cost to the SMSFA” added Lesh. “It is unfortunate that not all industry software companies chose to participate”.

“The other data I also found fascinating was the table on Page 21 of the Report showing investment returns for the last 14 years “says Lesh. “From 2005 to 2018, for 9 of the 14 years returns shown in the table, SMSFs performed better than APRA regulated funds”

“Clearly this shows ASIC’s SMSFs are not for everyone flyer was absolute rubbish” stated Lesh. “I said this flyer was misleading and did not fairly represent the cost of running an SMSF. The Rice Warner report validates my statements and furthermore shows that SMSFs with a balance of less than $500,000 are clearly cost competitive with APRA funds dispelling statements made in the December 2018 Productivity Commission report”