Mind the super gapDid you know that about 90 per cent of Australian women will retire with inadequate savings to fund a comfortable lifestyle in retirement, and one in three will retire with no superannuation at all? According to the Association of Superannuation Funds of Australia, women on average tend to retire with $112,000 in super savings – $92,000 less than men.

Women are disadvantaged because the current superannuation system is linked to paid work. They typically earn less than their male counterparts, often work casually or part time, and are more likely to have a career break to raise children. This means it’s harder for women to build up the nest egg they need to retire in comfort.

But the good news is that they still can, by following a few simple steps.

Move all your super into one account Australian Taxation Office records show that 45 per cent of working Australians have more than one super account. If you’ve moved around or had several jobs, you could be one of them.

By tracking down your lost or unclaimed super and consolidating it into one account, you could save thousands of dollars in unnecessary super fund administration fees. Australian Prudential and Regulation Authority figures show Australians pay a median of $532 in annual fees and charges for a low-cost super account.

Over time, the savings you make by only paying for one account can really mount up, and having all your super in one place will also help you better manage it later on.

Issue 47 of the latest market insights from Financial Services Partners includes:

• Mind the super gap

• UK unfunded defined benefit

• Part pensioners get a ‘pay rise’

• So much dieting – but is it enough?

If you are new to reading the quarterly The Key newsletter, welcome. If you are an avid reader of this publication you would be familiar with this forum, delivering relevant and interesting content from the financial planning industry, to help you better manage your financial life. A core value of our business is that every Australian should have access to, and benefit from, good financial advice. In reading this publication, we hope that you find the articles interesting, and perhaps they will provide some talking points for your next review meeting with your financial adviser.

Enjoy reading this edition of The Key.

TheKeyWinter 2015

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Save more nowMaking extra contributions can also help you catch up for lost time, so you should get into the habit of saving more now. The earlier you start, the more you will accumulate. Plus, you will benefit from compounding – earning interest on your interest.

You could save more by making additional after-tax contributions to your super from your take-home salary. Better still, you could get your employer to help you salary sacrifice each month – by making extra before-tax contributions to your super on your behalf.

Depending on your situation, these strategies could have tax advantages. Your assessable income will be reduced by the amount you sacrifice, and the contributions to your super fund are taxed at the concessional rate of 15 per cent, which could be lower than the tax on your salary and other income. But remember, there are limits to how much additional super you can contribute, and contributions above these limits will be subject to extra tax.

Your spouse may also be able to help boost your retirement savings. If you’re not working or you earn less than $13,800 a year, your spouse or de facto partner may be able to claim an 18 per cent tax offset by contributing up to $3,000 a year to your super.

Find the right option for youDon’t languish in a fund you chose years ago for reasons you hardly remember, or in a ‘default’ fund an employer once selected for you, especially if it has performed poorly over the past five years when compared to similar funds.

Super funds come in all shapes and sizes and with different price tags. It really pays to do your research, shop around and get advice before you commit.

Factors to consider include the fees, the investment options available, the extra benefits, the fund’s track record, the insurance options and the quality of service the fund offers.

Also, ensure you have chosen an age-appropriate option that suits your tolerance for risk, your investment timeframe, and your needs now and in the future. For example, if you are many years away from retirement, you have time to weather bumpy investment cycles and might be better off with a higher-risk, higher-return investment option. If you plan to retire soon, a lower-risk strategy may be a smarter choice, even though it offers lower returns.

Get adviceGood advice could be one of the best investments you ever make. Super and tax rules are complex and everyone’s situation is different, so you should always get professional advice before you act.

The new financial adviser’s register on ASIC’s MoneySmart website (moneysmart.gov.au) can give you some comfort that your adviser has the right experience and qualifications to match your needs.

UK unfunded defined benefit: time’s upThe 6 April deadline has passed for members of unfunded UK public sector defined benefit schemes to transfer their entitlements to an Australian Qualifying Recognised Overseas Pension Scheme (QROPS) or UK defined contribution scheme.

This could affect you if you previously worked in the National Health Service as a doctor, nurse or dentist, or if you were a teacher, police officer, fire fighter or in the armed forces, and haven’t yet made arrangements to transfer your entitlements out of the unfunded scheme.

The UK Government says the deadline was needed “to protect the Exchequer and taxpayers” from huge potential financial costs resulting from a mass transfer out of unfunded public sector defined benefit schemes.

If you missed the 6 April cut-off, your funds will now be locked into the UK pensions system and you should start investigating how to transfer ongoing pension payments to Australia.

It’s a good idea to speak with a qualified financial adviser, as you may now be exposed to various risks, including currency risks as your UK pension payments are transferred from British pounds (GBP) to Australian dollars. In addition, a change in government after the upcoming British election could herald more changes to your pension.

It is important to note that the deadline does not apply to members of funded public sector defined benefit pension schemes, such as the Universities Superannuation Scheme or the Local Government Pension Scheme. These members can still transfer their pensions. However, it may be a requirement that these members get independent advice first if they want to transfer more than GBP30,000 to a QROPS or UK defined contribution scheme.

In other recent changes to the British pension system, members of defined contribution schemes can now access their funds from the age of 55; 25 per cent of these accessed funds remain tax-free and the remainder is taxed at their marginal tax rate.

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Part pensioners get a ‘pay rise’What are deeming rates?

Deeming is used to calculate a person’s assessable income for the Age Pension, other benefits and allowance payments. Because investment returns fluctuate and change, deeming reduces the ability for your payments to fluctuate and change.Deeming applies to financial investments such as banks, building societies and credit union accounts and term deposits; managed investments, loans and debentures; listed shares and securities.

There’s good news for pensioners who receive income from financial investments. From 20 March 2015, the social security deeming rates fell by 0.25 per cent.

The lower deeming rate dropped from 2 per cent to 1.75 per cent for financial investments up to $48,000 for single pensioners and $79,600 for pensioner couples.

The upper deeming rate decreased from 3.5 per cent to 3.25 per cent for those with investments exceeding these thresholds.

This means that those who are income tested will be ‘deemed’ to have earned less ‘income’ on their financial investments for their Age Pension eligibility, even though their actual income on investments may not have changed.

With recent declines in the official cash rate, the Government has reduced the deeming rates to better reflect the current interest rates offered by banks on term deposits and savings accounts. Deeming rates last fell on 4 November 2013.

According to the Minister for Social Services, Scott Morrison, the changes will boost the payments of part-pensioners by an average of $3.20 a fortnight, or $83.20 a year.

From 1 January 2015, the deeming rules that apply to financial investments were extended to account-based income streams (also known as allocated pensions and account-based pensions).

But if you were receiving an income support payment immediately before this date and had a superannuation account-based income stream, this income stream will now be ‘grandfathered’. That means this income will continue to be assessed under the old rules.

A real positive to come of the deeming rule changes is that it creates incentives for investors to earn more income from their savings. But, in the current low–interest rate and volatile investment environment, this can be challenging.

One thing to note however is the Government’s previously flagged intention to reduce the deeming rate thresholds. If this happens, it would in comparison result in higher deemed income from the same amount of assets.

Now may be a good time to speak to your adviser to reassess your position.

The questions for you to consider are whether you are making investments suited to your circumstances, and if there is scope to boost the actual income you receive from your investments.

For the latest news and information from Financial Services Partners visit www.fspadvice.com.au/about-us

IMPORTANT NOTE: The information/advice provided in this newsletter is General Advice Only. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. You should obtain a Product Disclosure Statement relating to the products mentioned, and consider the statements before making any decision about whether to acquire products. Performance is influenced by market volatility over time. Past performance is not necessarily indicative of future performance. Contact your adviser to discuss your individual needs.

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So much dieting – but is it enough?The world’s first diet book is Letter on Corpulence by William Banting – father of the low-carbohydrate diet – published in 1864. That means we’ve since had more than 150 years of advice about how to lose weight, gain weight, burn fat or ‘be the best version of ourselves’ so we can enjoy a happier and healthier life.

Some diets are essential for wellbeing, personal health and longevity. Others treat chronic illnesses such as diabetes and heart disease. However, many are fads with few friends amongst dieticians, nutritionists and doctors. But like skinny ties and big beards, diet fashion has turned again so let’s explore two: the Paleo and 5:2 diets.

Were the cavemen right?Proponents of the Paleo diet claim it’s how humans were designed to eat. They laud lean meat such as chicken, pork and beef; non-starchy vegetables such as lettuce, green beans, broccoli and spinach; nuts like almonds, walnuts and cashews; plant-based oils; fresh fruit and seeds; and seafood and eggs.

On the ‘prohibited’ list are grains such as oats, wheat and rice (no cereal, bread or pasta); starchy vegetables such as potatoes and corn; legumes and beans; all dairy products; all processed foods; and sugars, including those in honey, cakes and sports drinks.

Paleo diet benefits are obvious: you eat a ‘clean’ diet – no additives, preservatives or chemicals; you get anti-inflammatory

benefits from the plant nutrients in fruits, vegetables, oils, nuts and seeds; and you will get more iron. The diet is also higher in protein, which is essential for building and maintaining muscle.

The disadvantages? Paleo is expensive. You also don’t eat any grains, which are good for health and energy. And eliminating dairy from your diet puts you at risk of weakened bones and teeth.

On the upside, you’ll feel full between meals due to the higher intake of protein and fats, and most people lose weight because the ‘approved’ food choices are limited. However, dropping foods and nutrients without finding suitable replacements can quickly lead to a nutrient imbalance.

A 5:2 splitA 2012 BBC documentary called Eat, Fast and Live Longer introduced the more radical 5:2 diet, which is based on intermittent fasting. You eat pretty much whatever you like for five days of the week, and fast on the other two (non-consecutive) days, where you eat only 25 per cent of your usual calorie total – 500 for women and 600 for men.

Supporters of the 5:2 diet claim that apart from helping people lose weight, the diet can increase your lifespan; reduce the risk of heart disease, stroke and cancer; strengthen your immune system; lower your cholesterol levels; and help protect you against conditions such as dementia and Alzheimer’s disease.

Science knows little about the side effects of intermittent fasting, but anecdotal reports include anxiety, bad breath, daytime sleepiness and difficulty sleeping at night, dehydration, dizziness, headaches, irritability, low energy and poor concentration.

In it for the long haulThere isn’t room here to cover all the other popular diets – from Atkins, Blood Type and CSIRO to Warrior, Yoga Body and Zone. For the record, William Banting’s strategy for losing weight includes four meals a day; lots of red meat (sound familiar?); little exercise; and drinking claret or sherry with lunch and dinner. He lost 50 pounds (around 23 kilos) after following this plan for three months in his mid-60s, and lived to the age of 82. The Banting eating plan survives to this day in printed form and as a smartphone app.