I am a retired operating theatre manager for Calvary, here in Tasmania. Money, superannuation, wealth creation has always been an interest of mine, which has been an advantage to me and my family, particularly after my divorce. I got 60 to his 40 – his problem. During my 20 years as an OR Manager, at every opportunity I have helped, and made my staff aware of, salary sacrifice into super. I feel that "money management" and "financial awareness", should be a Year 10 subject because, as you would know, this issue underpins your financial management/success over your whole life. My question is that my two grandgirls have more than $1000 each in a bank account, which makes minuscule interest. The best is 2.8 per cent. Do you have any suggestions for a better long-term investment? Ages 7 and 9. Maybe shares that could be added to? A.B.
I thoroughly agree. Perhaps the best place to start is to get each grandgirl (have you talked to Macquarie Dictionary about a new word?) a tax file number or TFN, then sign them up to a discount broker, such as BellDirect, that accepts minors. Being under 18, an adult will need to sign on the account as a trustee.
![The rules on how long age pensioners can spend overseas are changing.](/web/20161115045710im_/http://www.smh.com.au/content/dam/images/g/s/n/7/t/k/image.related.articleLeadwide.620x349.gsn7ud.png/1478833415144.jpg)
This broker has brokerage fees of $15 for an ASX minimum marketable parcel of $500. For your $1000 (plus brokerage), you can then select a couple of stocks providing high yield and/or dividend reinvestment plans. Unfortunately, the ASX now refuses to publish a list of companies offering DRPs, a minor service I would have thought a stock exchange should be happy to provide. The ASX seems to think it does not need to fill a need for small investors.
For your grandgirls, I would start with a major bank, because of their high yields, and, say, a resource stock such as Fortescue, because timing is everything in investments and the company is hopefully at the bottom of its cycle while also paying off its debt rapidly.
Then every time you contribute $1000 for their birthdays and/or Christmas, you can buy two more stocks each. It'll be a while before the girls earn more than $416 and thus be liable for tax. You can also provide them with a regular statement so they can see how they are going in terms of gains or, possibly, losses. But then learning that losses are possible when taking risks is an important lesson in life.
I will retire in the next six months and would like to know how much pension I will get. I am single, own my house and have $400,000 in monetary assets. I have lived in Australia for 25 years. I believe that 35 years are required to get the full pension. I am not entitled to a pension in my country. I plan to live six months of the year overseas. I have tried to get the above information through the internet, but I have not found an informative site with a list of different scenarios, where you just tick the ones that apply to you and then get a final answer. M.C.
Assuming $420,000 in savings, car, personal assets etc, you can expect a part pension of around $365 a fortnight at January rates while in Australia.
To get an age pension, you only need to have been an Australian resident for a continuous period of at least 10 years, or for a number of periods that total more than 10 years with one of the periods being at least 5 years, unless you (i) are a refugee, (ii) were getting partner allowance, widow allowance or widow B pension immediately before turning age pension age, or (iii) are a woman whose partner died while you were both Australian residents, and have been an Australian resident for two years immediately before claiming age pension. You may also meet the residence requirements if you lived or worked in a country with which Australia has an international social security agreement.
You are referring, in Centrelink jargon, to "age pension portability", which you can Google, and changes are afoot, scheduled for January 1, 2017.
Currently, age pensioners (plus those getting the wife pension, widow B pension and disability support pension) continue to receive their pension payments while overseas for up to 26 weeks, that is six months. However, from January 1, this reduces to six weeks for pensioners who have lived in Australia for less than 35 years. Your payments will then be paid at a reduced rate proportional to your period of "australian working life residence".
For example, if you lived in Australia for 25 years between the age of 16 and age pension age, you will generally receive 25/35ths of the your means-tested rate of pension.
The changes will only apply to people whose absence starts after January 1. Those already outside Australia then, will only see future overseas travel affected. Start packing!
I will be turning 61 in December. I have a transition-to-retirement (TTR) super fund of $1.6 million and an accumulation account of $154,000. My wife is 54 and has a super balance of $94,000. In view of the government's potential cap of $1.6 million on tax-free super, I plan to make all my after-tax contributions into my wife's super from now on. As I will still be working for the next few years or so and my super balance would continue to increase, is there any way for me to move my super balance in excess of $1.6 million into my wife's account over the next few years or indeed before the $1.6 million cap becoming effective next July? E.H.
It's an interesting point, which a few lucky people will face.
Assuming you don't retire before June 30 you can (i) withdraw any unrestricted and non-preserved benefits as a lump sum, and (ii) take the maximum 10 per cent of your TTR pension, with no tax payable since you are over 60, and deposit these into your wife's super account. Also, (iii) before next June 30, you can "split" or transfer 85 per cent of your gross deductible contributions made in 2015-16. In 2017-18, you will be able to split 85 per cent of concessional contributions made in 2016-17 but your "pension transfer balance" will be decided next July 1.
Should you retire before next June, and all your benefits become non-preserved, you can withdraw up to $540,000 and add this to your wife's super before next June 30 as a non-concessional contribution, using the "three-year rollup" option. This drops to $300,000 for three-year rollups begun after June 30.
Errata: On September 9, reader G.R., a single homeowning pensioner, quoted $343,000 in assets and asked if his part pension would be reduced by $27.90 a fortnight from January 1, showing his calculation as ($343,000 - $250,000) = $93,000\1000 x $3 = $27.90 a fortnight. I agreed when in fact the decimal point had wandered one place to the left and the answer should be a reduction from the full pension of $279. His current pension (since September 20) of $676 a fortnight will thus drop to around $598. My thanks to readers, RM, LF and others.
If you have a question for George Cochrane, send it to Sunday Money, PO Box 3001, Tamarama, NSW, 2026. Helplines: Financial Ombudsman, 1300 780 808; Centrelink pensions, 13 23 00.