Millionaire's Pension- The aged pension is on the rise.

As of next week, a retired couple who are the owners of their primary residence and have $1M in other assets will now be eligible to receive a part-pension. The asset threshold will be raised by Centrelink for home-owning couples by $20,000, to $1.018M, allowing millionaires to be eligible for the aged pension.

The income threshold for the aged pension will also rise to more than $2,500 a fortnight. From Tuesday, the full fortnightly rate for an age pension will be $1,129 a couple and $748.80 a single.

To read the full article in the Courier Mail click on: Millionaire's to Receive Pension

For more information on this article or if you would like to set up an appointment with one of our financial planners, call us on (07) 3397 7315.

Changes to Government Deposit Guarantee- A Permanent Cap For Deposit Accounts

Over the weekend Treasurer Wayne Swan announced changes to the guarantee on savings deposits with authorised deposit-taking institutions (ADIs) to be introduced as at 1 February 2012. The Government created this scheme in October 2008 to protect depositors in ADIs from loss on their deposits if their institutions went bust as concerns about credit markets were at their peak during the GFC; a cap of $1 Million was introduced to provide protection for the industry. This cap had been under review since May this year.

Under the new regulation, the guarantee threshold will be $250,000 per entity, per institution (reduced from $1 Million), and will remain a permanent protection for all deposits at ADIs. In the words of Wayne Swan the introduction of the new cap will "ensure that we continue to have one of the most generous and secure deposit insurance schemes in the world, and builds on the Government's record of ensuring our financial system remains among the strongest in the world."

As mentioned, the new cap will take effect 1 February 2012, however for existing deposits, or those taken out from 10 September 2011 and before 1 February 2012, the following transition arrangements are in place:

- Existing deposits continue to be covered at the current level ($1M) from 11 September 2011 until 31 December 2012, or until the maturity date- whichever occurs sooner, after which the new cap will apply;

- For deposits entered into between 11 September 2011 and 31 January 2012 inclusive, will be covered at the current level of $1M until 1 February 2012, at which point the new cap of $250,000 will apply;

- If an existing deposit at 10 September 2011 matures before 1 February 2012 and rolls over, the new deposit will be covered at $1M until 1 February 2012, at which point the new cap of $250,000 will apply;

- Similarly, if an existing deposit at 10 September 2011 matures after 1 February 2012 and before 31 December 2012, and is rolled over, the new cap of $250,000 will apply from the rollover date.

The full media release from Treasurer Wayne Swan can be read at: Press Release: New Permanent Financial Claims Scheme Cap

If you have any questions please do not hesitate to call our office and speak to one of our financial planners on (07) 3397 7315.

Super Made Simple

Make no mistake, when it comes to investments and tax minimisation, superannuation is a vehicle, which offers significant benefits for many people. What other investment vehicle allows you to invest with pre-tax money, pay tax at the lowest marginal rate on the earnings of the investment and have potentially no CGT consequences on withdrawals?  And as an added bonus- superannuation may provide considerable protection for investments within the fund.

The misconceptions that surround superannuation often lead it to being down the list in terms of preference for investors. As a result of this misunderstanding, we often come across people who claim not to trust superannuation for fear that they could “lose everything”.

Superannuation is not an asset such as cash or shares; it is merely a structure that owns these assets. It is the careful selection and monitoring of the assets in your superannuation fund, such as shares, property and cash, which will help protect your money.

Think about superannuation as an empty car shell. Without an engine you will see no performance. However, the empty car shell still exists. To get the performance you then insert an engine, which in the case of superannuation, is represented by the assets within the fund.

Cash is akin to the scooter engine, low and steady performance, cheap to maintain but it’s not going to get you anywhere in a hurry. Shares on the other hand are more akin to a V8 engine, powerful performance that is likely to lead to getting you to your destination quicker; however there may be bumps along the way because of the complexities involved.

As Financial Planners, our role is to provide a tailor made “engine” that suits who you are as an investor and also provide you with the opportunity to achieve your goals.

If you would like to give your “engine” a tune up to ensure you are on the right track with your superannuation, please contact our office on (07) 3397 7315. 

Interest Rates- Where to from here?

After yesterday’s announcement from the RBA many people are asking in which direction are interest rates heading? After months of continuous speculation about interest rates moving up, the most common view is that rates are now firmly on hold with only a slight chance of a movement in either direction.

The 90 bank swap rate is quite often a very good indicator of where rates are heading. For the best part of 2 years the swap rate has been hovering above the RBA’s cash rate which indicates that rates are likely to be moving up. In recent weeks however the swap rates have fallen and now sit in line with the RBA’s cash rate at 4.75%, indicating a period of stability for interest rates.

Whilst the RBA’s stance on interest rates is likely to remain stable for the short term, our medium to long term view is that rates will continue to rise as we see the effects from the mining boom begin to filter out into other parts of the economy.

In the interim though there is some form of relief for households with banks now furiously fighting for consumers as the mortgage market  continues to show signs of coming to a standstill. Fixed rates over a 3 year period have come down to as low as 6.39% for three years fixed and variable rate as low as 7.05% meaning some of the RBA’s work has been done for them and allows Glen Stevens more time to sit on the fence and ponder his next move.