The Australian Expat Superannuation Fund

Being an Aussie expat there are some things about back home that you will simply never forget. From the sound of the roaring crowd after a goal at the MCG or a Spectacular try at ANZ, to the tantalising smell of a snag on the barbie out the front of the local Bunnings. However, there is one thing that more Australian expats tend to forget than you may imagine… Their Superannuation.

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Let’s face facts. With the federal reserve dumping $3.5 trillion dollars into the economy, handing out $600 cash cheques to everyone, propping up wall street, GDP down more than the height of the GFC and over 21 million Americans currently out of a job, things are looking bleak.

This is all with the backdrop of bankruptcy’s from multi billion dollar companies such as Hertz and Chesapeake along with household names such as Golds Gym, GNC and many closing doors due to the corona virus.

So where are the stock markets at with all this going on? ALL TIME HIGHS OF COURSE! It does not take an expert to know that it is only a matter of time before the next major stock market crash.

If you are an investor that is looking for a way to generate an income for retirement while diversifying away from the stock market or bond markets what options do you have?

About the Author:

Hi, I’m Ryan Cullinan and I am an Australian qualified Financial Adviser (Kaplan DipFA) who specialises in working with Australian expats. For many years now I have been looking after the financial planning requirements of Aussies all over the world and I am always looking for products and services that can help them achieve their retirement goals. In this article I will provide some commentary and analysis on the Australian Expat Superannuation Fund by IVCM.

*Disclaimer: This article is simply an analysis and report of the AESF product and is not to be taken as financial advice. Please seek professional financial advice before making any changes to your Superannuation.

TRANSPARENT FEES

There are NO HIDDEN COSTS & CHARGES beyond the fees disclosed in our Product Disclosure Statement, Member Guide and Investment Guide.

NO ADMINISISTRATIVE BURDEN ON YOU

Unlike Self-Managed Superannuation Funds (SMSFs), all of the day to day administration and management of your fund is taken care of by us, so that you don’t have this responsibility or potential liability.

CONTINUED EXPERT SUPPORT AND GUIDANCE

Our team of retirement solution specialists are always on hand to assist you with any questions you have, at any time.

INVESTMENT OPTIONS IN MULTI-CURRENCY

We have a wide range of investment options available in GBP, AUD and USD, so you can take advantage of the best currency rates to SAVE YOU MONEY.

QUICK AND SIMPLE TRANSFER PROCESS

If you are looking to transfer your UK Pension or an existing Superannuation Scheme to us, we handle all of the administration involved, so you don’t have to.

Managing your Superannuation as an expat.

Aussie expats come in many shapes and sizes, some are sophisticated experts who have their own carefully curated Self Managed Superannuation Fund (SMSF), others are not quite sure what they have and where it is. One thing they all have in common is that once you become an expat, the rules and structures you need to put in place change.

For example, if you are a ‘non resident for tax purposes’ and have an SMSF, unless you have appointed a Central Manager in Australia it may become ‘non compliant’ and you could be facing a maximum tax rate of 45% on your fund, OUCH!

For most of us it’s simply a case of ensuring that our superannuation fits into our long term goals as an Australian expat which is where the Australian Expat Superannuation Fund (AESF) comes in.

The AESF is a fantastic way for expats to work alongside a Financial Adviser to manage, review and adjust their superannuation on a quarterly basis from one unified account from wherever they are in the world.

Finding your lost super:

If you are like many other Aussies, you may not even know how many superannuation policies you have, their value or even insurances and charges.

The first key advantage of switching your super to the AESF is that using only some basic details and  your TFN they can look up all the different super schemes you may have forgotten about and amalgamate them all into one easily managed central fund. While there are a few other services out there that provide this solution, it’s a handy process to go through.

Investment Strategy:

Certainly, the highlight of the product for myself is the ability to work with a financial adviser to build out a bespoke investment strategy. You can pick from 28 different AUD denominated investments (and a number of GBP and USD ones as well) and assign a % initial and also % ongoing investment.

This is the kind of flexibility that many people living in Australia would enjoy, let alone for an expat to be able to manage at this level from out of country.
For a couple clients of mine who were concerned about a market downturn and demanded a high % allocation to gold in Q3 2019 they were INCREDIBLY happy that they switched to the AESF.

These are all low cost managed and passive investments with some of the worlds largest fund houses including Vanguard, iShares and Russell. This in itself is enough motivation for most people to make the switch.

Rules and regulations:

One of the first questions I almost always get is “can this let me get my hands on my super earlier?” and the answer to that question is always NO! The AESF acts just like every other superannuation and your preservation age remains the same.

Australian Prudential Regulation Authority (APRA) – RSE License Number L0000888 and AFSL License Number 237628.

AESF is a division in the Tidswell Master Superannuation Plan (TMSP), Registration No. R1004953, which was established in 1988 and is a public offer superannuation fund. The Tidswell Master Superannuation Plan can be found on the HMRC ROPS list.

Charges:

Another real positive of the AESF is the simple and straight forward charging structures. Now I will add a caveat that a lot of these charges will come down to the arrangement that you make with your adviser and you should seek professional advice before switching your Super.

Administration Fee:

This is the main charge for the product and you can consider this the ‘cost of the Superannuation setup’.

Fund Type

Charge

Super: With AUD investments only

0.6%  pa

Super: With non AUD investments (USD/GBP)

0.8%  pa

 

Given that they provide you access to the AUD denomination of almost all of the fund types I don’t see much point in holding the USD or GBP denominations for existing AUD funds. However if you are earning in those currencies and wish to contribute to a fund which is in those currencies that may be a suitable move.

Investment fees:

This fee is what is paid directly to the funds you are investing in and typically the returns shown for investment shown is NET of fees. For this reason the ‘investment fee’ is less critical, why? For example, if a fund cost you 10% per annum you may say to yourself “THAT’S CRAZY! WHY WOULD I WOULD NEVER INVEST IN A FUND THAT IS SO EXPENSIVE”, but if that fund had returned 50% per annum (NET of fees) for the last 50 years straight all of a sudden it makes sense.  Given that all the investments on the AESF are ‘clean share class’ meaning no hidden trail paying commissions or crazy up front or exit fees, you have a great range of options.

You simply need to make sure that the charge being asked by the fund houses makes sense when you overlay it with the long term results.

Most investments within the AESF range from 0.03% for passive ETF’s like the Vanguard VTS up to around 0.94% for the fully managed portfolios like Russell High Growth.

Adviser Fees:

This is what is paid to your financial adviser for organising the transfer and management of your superannuation. I suggest you clearly set out the terms of your arrangement and now your adviser should also provide you with a Statement Of Advice (SOA) before you apply.

Typically around 2% on application and then 1% annual management fee from year 2 onwards is fairly normal. But I would caveat that by stating that I believe this should be based on level of service and performance.

Testimonials:

Nothing is quite as good as hearing from someone who has gone through the process themselves.
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*Disclaimer:
This article is simply an analysis and report of the AESF product and is not to be taken as financial advice. Please seek professional financial advice before making any changes to your Superannuation.