Member news March 2018

Downsizing contributions into superannuation

Downsizing contributions into superThe government’s new policy will allow you to downsize your family home and inject up to $300,000 of the proceeds into your super account.

From 1 July 2018, you’ll be able to make a non-concessional (after-tax) contribution into your super account from the sale proceeds of the family home. This could mean up to $300,000 for individuals or up to $600,000 for couples going into your super.

Your downsizer contribution won’t count towards your contributions caps or be affected by the total superannuation balance test in the year you make it. However, there’s still a transfer balance cap of $1.6 million that you can move into retirement phase.

You’re not required to be in employment, or even purchase another home. Although it may affect your Age Pension entitlements

Eligibility requirements

  • You must be 65 or over.
  • The contract of sale must be entered on or after 1 July 2018.
  • Your home is in Australia.
  • You or your spouse must have owned your home for 10 years or more.
  • Your home is not a houseboat, mobile home or caravan.
  • The home must qualify for the main residence capital gains tax exemption in whole or in part.
  • The downsizer contribution needs to be made within 90 days of the home changing ownership (usually the date of settlement).
  • You must not have made a downsizer contribution to your super previously.

You can find further information on the Australian Taxation Office website at ato.gov.au.

Will it be right for you?

To discuss your needs in detail, speak with one of our accredited financial advisers on 1300 130 780 today.

Hello unit pricing, goodbye crediting rates!

unit priicingUnderstanding why your super balance goes up and down is more than just checking fees, contributions and insurance premiums. It is also knowing how – and when – your super fund calculates and applies investment earnings to your super savings and what those returns are.

Traditionally we have used crediting rates to apply investment earnings to your account. However, on the 26 March 2018 we will be moving to daily unit pricing, which is the methodology used by many super funds and investment trusts. This means we will be reporting daily unit prices in place of weekly and month-end crediting rates.

What is unit pricing?

Unit prices provide an estimated snapshot of what your super or pension investment option is worth at a specific point in time.

Like shares, unit prices move up and down each day, in line with the investment earnings for that investment option. Unit prices increase when investment earnings are positive and exceed the investment fees and investment-related tax for the relevant investment option. Unit prices will decrease when investment earnings are negative or less than fees and tax for the relevant option. All investment earnings are thus reflected in the unit price of each investment option.

For example, if you have a super balance of $10,000 and the unit price for the Balanced option is $1.00, you will have 10,000 units. At the end of the financial year, if you still have 10,000 units and if the unit price has increased to $1.10, you will have an account balance of $11,000. We will be using unit pricing or ‘unitisation’ to work out the changing dollar value of your super account on a daily basis. We are implementing unit pricing as an efficient way of fairly assigning a share of the value of an investment option between all the members who have selected that option.

How does unit pricing work?

Any contributions into your super account ‘buy’ a number of units in your chosen investment option based on the daily unit price when the contribution is received by us. The opposite happens, however, if any money is deducted, or you receive a pension payment. Any deductions from your account (including administration fees) ‘sell’ a number of units in your chosen investment option for the value chosen based on the daily unit price when the request is received by us.

How does this benefit you?

Unit prices will give you more up-to-date information about your account balance.

When you change investment options, rather than having to wait for the next weekly crediting rate to be published, you’ll be able to see your investment change and the relevant unit price allocated within two business days.

If you make a request to change investments before 4pm AEST/AEDT, your account will be invested in your new investment choice using the unit price allocated that day. Requests received after 4pm AEST/AEDT on a business day, or on weekends or public holidays, will be invested using the unit price allocated for the next available business day (which will appear within two business days after that).

When you check your balance online, it does not reflect today’s valuations in the underlying assets as this is not calculated until the end of the business day. For instance, if the Australian share market rises 1% today, it will be one-to-two business days before you will see this reflected in the unit price applicable for today.

Annual returns and unit prices

You may notice a slight difference between your balance and unit price you see on your online account, versus the official annual returns that will be printed on your LUCRF Super statement. Although these variations are usually small, they can be confusing.
These small differences are captured when we calculate the monthly and annual returns a few days after the end of each month, meaning our published returns are more reflective of the month or year’s market movements.

Any questions?

Please call us on 1300 130 780.

Love your life: Grab a super cuppa

Love your life - grab a cuppaDid you know that right now, an Australian woman will retire with a lot less super than an Australian man?

On top of unequal pay, women’s super is further affected by taking time out to have kids, working part-time or becoming a carer for others.

Whatever the case, women who retired in the last two years had 42% less super than men. That’s around $113,000!*

So the next time you sit down with your daughter, your niece or your friend, grab a cuppa, show them the stats and ask them, "Are you doing anything to boost your super?"

Like some super-boosting tips?

Call one of our financial advisers on 1300 130 780. They can talk you through a few ways to help prepare for retirement.

*Clare, R (Director of Research) Oct. 2017, Superannuation account balances by age and gender, ASFA Research and Resource Centre, viewed 26 Feb. 2018, https://www.superannuation.asn.au/ArticleDocuments/359/1710_Superannuation_account_balances_by_age_and_gender.pdf.aspx?Embed=Y

Good news – investment fees are going down

Good newsWe work hard to keep our fees low for members.

Effective 26 March 2018 our investment fee for the following options will reduce:

  • Cash option – from 0.10% to 0.08%
  • Indexed Shares – from 0.18% to 0.15% (fees are shown in after-tax amounts). 

Want to know more about our investment options and what might be right for you?

Simply call us to speak to one of our advisers on 1300 130 780, this advice is included as part of your LUCRF Super membership.

Skip bank fees – save $500 annually

Skip fees

When it comes to saving money it pays to sweat the small stuff. A raft of everyday banking fees could be gouging a hole in your finances.

Reserve Bank data shows the average Australia household is being whacked with close to $500 in bank fees each year1.

Here’s where you can save.

Your everyday account
If you’re paying a monthly account-keeping fee on your everyday account, you’re wasting money. Even if you’re paying just $5 a month that adds up to $60 annually.

Scour your bank statement for any monthly account service fees or sneaky charges for common transactions like own bank ATM withdrawals. If you’re paying any of these, it’s time to think about switching to a better value account.

Your credit card
Research group Canstar says the average annual fee on non-reward credit cards is $42 but for reward cards the annual fee can be as high as $7002. The thing is, there are dozens of credit cards with no annual fee, making it possible to skip this cost altogether.

Your home loan
Home loan application fees can range from $200 to $7003 though the average is around $5024.

Here’s the thing. Not all banks charge a home loan application fee. That’s a valuable saving – and something worth looking for.

However, home loan fees don’t end there. You could also be slugged with ongoing charges either through regular account-keeping fees on the loan or fees that apply each time you use a redraw facility. And they can add up to as much as $7504 each year.

That makes it a no-brainer to look for a home loan with zero account-keeping charges and free redraw – they do exist.

The bottom line is that with some shopping around, and by making the switch to better-value banking, you could be rewarded with savings worth hundreds of dollars each year.

Thanks to ME Bank, you’ve got access to a range of special offers to help you get more from your banking. It’s just another great reason for being a member of LUCRF Super.

This article is brought to you by ME. For more information, please visit www.mebank.com.au. The trustee of LUCRF Super does not recommend, endorse or accept any responsibility for the products and services offered by ME Bank.
Members Equity Bank Limited ABN 56 070 887 679. 


1https://stat.mozo.com.au/images/more-on-mozo/media-releases/MOZO-MEDIA-RELEASE-australians-households-paying-close-to-500-dollars-in-bank-fees-each-year.pdf
2https://www.canstar.com.au/credit-cards/11-credit-card-fees-how-much-do-they-cost/
3https://www.finder.com.au/home-loan-fees
4https://www.canstar.com.au/home-loans/home-loan-fees-you-should-know-about