Retirement Savings Accounts: SMSF = bank account

[Big A.D.]

Just saw this: http://www.smh.com.au/money/saving/the-certainty-of-cash-20120710-21s8k.html

The juicy bit (typically at the bottom) caught my eye:

Heritage back-tested its fund over the five years to last December and found that its new RSA would have outperformed not just inflation but the best-performing Australian super fund over that period.

I know maybe half a dozen older people who'd love their super to be as simple as having a bog-standard bank account to dump cash into, but does anyone here have one of these accounts and are they really SMSF "Lite"? These people all have lives and understand the need to save, but whenever I've quizzed them on why they keep their super with crappy industry funds that lose their money they all say dealing with the whole superannuation bureaucracy is in their "too hard basket" (although they do they they plan on chasing it up...next month "when things aren't as busy" i.e. they won't chase it up).

I know the returns aren't fantastic, but Simple + Better Return Than Managed Fund = Win as far as they'd be concerned.

Any thoughts/insights/experiences?

 

[thatguy]

I prefer SMSF=PMDP gold. But anything but industry managed super

 

[BlackSheep]

I've had mine in an RSA for about 7 years (after I sold off all the shares it saved me all the stuffing around with paperwork) - its great as all I have to do is have an occaisional look at the bank statement (which has always shown a postive return)

 

[Big A.D.]

I've had mine in an RSA for about 7 years (after I sold off all the shares it saved me all the stuffing around with paperwork) - its great as all I have to do is have an occaisional look at the bank statement (which has always shown a postive return)

So is an RSA basically just a stripped down SMSF? Can you give the account details to an employer and have them send the regular contributions directly to your RSA account?

 

[nonrecourse]

So is an RSA basically just a stripped down SMSF? Can you give the account details to an employer and have them send the regular contributions directly to your RSA account?

As long as your not in a industry fund where there is an enterprise bargaining agreement that locks you into that fund so the union appointed trustees can milk it dry and charge their "massages' to enteertainment expenses:lol:

Kind Regards
non recourse

 

[Roswell Crash Survivor]

I actually examined this option in the past. The issue with RSAs is the dismally low yield on cash. (Up to 200 basis points below RBA overnight rate!)

For larger balances over longer time-frames, it *really* stacks up.

For larger Superannuation balances, even after the establishment fees, administration, auditing, tax accounting and other up-keep it's actually more profitable to establish an SMSF and put them in accounts with more competitive rates.

List of Institutions offering Retirement Savings Accounts
Last updated: 3 June 2011
Commonwealth Bank of Australia
Queensland Police Credit Union Limited
Bananacoast Community Credit Union Limited
QANTAS Staff Credit Union Limited
Hunter United Employees' Credit Union Ltd
Queensland Country Credit Union
Police Association Credit Co-operative Limited
Defence Force Credit Union Limited
http://www.apra.gov.au/super/pages/list-of-institutions-offering-retirement-savings-accounts.aspx

Noticing a pattern? Except for CBA the institutions offering RSAs are credit unions for government employees.
Defcredit is now Defense Bank and civilians can also join - assuming you can get to one of the few branches not on an Australian military base.

 

[Big A.D.]

I was looking at the Heritage Bank RSA and they're offering a flat 0.5% over whatever the RBA cash rate is.

Am I right that there is some legislation that prevents the fees from being more than the interest earned in any given year? I can't actually find many RSAs that charge fees anyway, but is this really a "can't loose" form of super?

 

[Roswell Crash Survivor]

I was looking at the Heritage Bank RSA and they're offering a flat 0.5% over whatever the RBA cash rate is.

Point taken. However I still stand by my original comment that if anyone with a larger Super balance looking for a cash-only option it'd still be effective to start an SMSF and chase the higher rates.

Looks like the ASIC list of incomplete and/or out of date as Heritage Bank is not listed as an RSA provider.

 

[Big A.D.]

I was looking at the Heritage Bank RSA and they're offering a flat 0.5% over whatever the RBA cash rate is.

Point taken. However I still stand by my original comment that if anyone with a larger Super balance looking for a cash-only option it'd still be effective to start an SMSF and chase the higher rates.

Looks like the ASIC list of incomplete and/or out of date as Heritage Bank is not listed as an RSA provider.

Yeah, it seems like RSAs aren't very well well known or used.

To be honest, I'm starting to wonder if this is because they're so simple and boring that people in the finance sector can't charge ridiculous fees for them and therefore don't promote RSAs at all. The fact that most of the places that offer them are member-owned credit unions goes towards that because credit unions don't have to make a profit - they operate on an "at cost" basis and the savings are passed on to the members.

Oh, and I wasn't having a go. RSAs are obviously very low risk so the returns are going to be pretty low in reflection of that. I'm actually thinking this would be a good first step towards a full SMSF, just to get people away from "professional" fund managers who make a living out of losing peoples' money (start with a just a bank account an go from there.)

 

[Roswell Crash Survivor]

To be honest, I'm starting to wonder if this is because they're so simple and boring that people in the finance sector can't charge ridiculous fees for them and therefore don't promote RSAs at all.

Think you nailed it right on the head there, Big A.D.

 

[goldpelican]

Might be a good option for people living outside of Australia - you can't have a SMSF if you locate overseas, unless you reside in Australia for at least 28 continuous days every 2 years or some similar rule.

 

[Kawa]

What is an RSA?

 

[goldpelican]

It's a referral website for other bank accounts, but this page has a good overview:

http://www.savingsaccountfinder.com...accounts-australia/retirement-savings-account

Worst case scenario is that we get Japanese style 0% interest rates for 20 years, and your capital does nothing. Thanks for bringing this up though, I need to closely look at the residency aspects of SMSF for future planning.

 

[Kawa]

It's a referral website for other bank accounts, but this page has a good overview:

http://www.savingsaccountfinder.com...accounts-australia/retirement-savings-account

Worst case scenario is that we get Japanese style 0% interest rates for 20 years, and your capital does nothing. Thanks for bringing this up though, I need to closely look at the residency aspects of SMSF for future planning.

Thanks.I was not even aware of these.Would suit some people for sure.

 

[nonrecourse]

What is an RSA?

Retirement Savings Account

Yanks also call them 401K accounts and Canadians call them RRSP's Registered Retirement Savings Plan.

The difference between an SMSF and any other countries private retirement scheme to my knowledge Australia is the only place in the world where you are not tied to some financial scum advisor to run your own show. That is why big brother insists it has to be audited every year.

Is it any wonder why the retail and Industry funds hate us. The development of SMSF's originally arose from small company pension plans. A book has been published by a labor hack on the history of industry super but to date no one has gone back and looked at the most amazing and only truely independent self managed super scheme in the world to my knowledge.

Kind Regards
non recourse

 

[Big A.D.]

What is an RSA?

Retirement Savings Account

Yanks also call them 401K accounts and Canadians call them RRSP's Registered Retirement Savings Plan.

You're thinking of "superannuation" generally.

These are specific types of accounts with special rules. From everything I've been reading about them, they're essentially a real, legitimate super fund with a 100% cash option (or perhaps non-option would be a batter description).

 

[nonrecourse]

What is an RSA?

Retirement Savings Account

Yanks also call them 401K accounts and Canadians call them RRSP's Registered Retirement Savings Plan.

You're thinking of "superannuation" generally.

These are specific types of accounts with special rules. From everything I've been reading about them, they're essentially a real, legitimate super fund with a 100% cash option (or perhaps non-option would be a batter description).

Yes you are correct they can be seperate or you can have one of these accounts in your SMSF. If this is all the fiscal pygmies are doing for super it is dumb,dumber, dumbest

and you need to understand that; It is not its own entity, but is an account offered by a financial institution the same clowns who now own most of the financial planners aka ...product pushers and;

The more conservative earning power of a retirement savings account means it can be harder for the account to stay ahead of inflation over a long period............can be? for sure for sure said my Scottish grandmother.

Just think they can give you less than the inflation dross rate and using the fractional banking scam to collect an endless stream of cream while subsidised by the hapless taxpayers.

Oh what a wonderfull idea for the banksters

Kind Regards
non recourse

 

[Big A.D.]

Er, well, as the quote I post from the original article says, one particular example of these accounts would have managed to beat both inflation and the best-performing Australian super fund over the previous 5 years.

Like I (also) said in the first post, the older people I'd be telling about these kinds of accounts don't have SMSFs (and frankly they probably wouldn't be able to manage them properly anyway), but they're getting poor or negative returns from "professional" super funds so I figured that going back to basics and putting their retirement savings in a bank account might not be such a bad idea.

 

[nonrecourse]

Fair enough if they have bugger all and their grey matter has atrophied.

I believe that if you can manage a mortgage you can manage an SMSF, its not rocket science. The break even point for cost is you need $70,000 for a true SMSF and a lot less for esuper but again if your with esuper your filling the banksters pockets.

Kind Regards
non recourse

 

[Club2USilver]

Fair enough if they have bugger all and their grey matter has atrophied.

I believe that if you can manage a mortgage you can manage an SMSF, its not rocket science. The break even point for cost is you need $70,000 for a true SMSF and a lot less for esuper but again if your with esuper your filling the banksters pockets.

Kind Regards
non recourse

this esuper is all over my generations version of TV. (youtube)

Are there any other similar setups available? low cost i mean, doesnt necessarily have to be exclusively online.

and you mention a lot less in terms of SMSF, i am trying to see if my current balance is going to be viable for a low cost SMSF
how much is a lot less but still viable?

Pleased to hear