Some push-back is to be expected given account balances struggled to fight the pull of gravity over the last two years, falling lower and lower for what seemed like an eternity to most members.

But what’s really interesting is what’s driving the distrust and scepticism of super. It’s not so much the performance of funds during the financial crisis but instead a fear that the Government will change the rules.

This message came through loud and clear in a recent Focus Group held by CoreData with pre and post-retirees aged 50 to 70.

Brad, a 55-year-old male, says he’s never trusted super because he doesn’t trust the government. He says successive governments keep “changing the laws arbitrarily” and we’re in for another wave of that this year with the election looming.

Brad is not alone in his line of thinking. Indeed there was wide consensus around the table that super is not the safe haven that the industry would have you believe, and while there are tax incentives to saving through super, this is irrelevant if the goal posts keep shifting.

Bruce, a 52-year-old male, thinks relying on super could cause him big problems in retirement. He’s developing his assets outside of super as well because he’s convinced that the Government has dug itself “such a deep debt hole” that they’ll use the superannuation system to recoup that.

The building scepticism is reflected in a recent study by CoreData which found superannuation is the number one financial concern for the average Australian.

Super, including fund rollover, Government super policy, planning for retirement, retirement income options and pensions, ranked ahead of tax, family financial matters, paying off loans, investing and saving.

Industry bodies such as the AIST, ASFA and IFSA have recently repeated calls for a hike of Superannuation Guarantee (SG) to 12% to avoid a $695 billion retirement savings gap.
If the dissent among consumers continues to grow, a legislated increase might just be the only way to boost contributions to the system.

From Burning Pants

In the June 2008 quarter, complaints were up by 23.6% when compared to the same quarter in 2007.

The number of complaints within jurisdiction relating to fund administration continues to rise as a percentage of total complaints received and now comprises the largest category of complaints. Complaints about delays in rollovers or benefit payments and investment option changes comprised over 27%, and disputes regarding account balances representing a quarter of administration complaints.

Ms Furlan said that whilst this increase may or may not be a direct result of negative investment returns, in a falling market trustees should review any undertakings given in relation to the processing time for benefit payments, rollovers, investment switches and other transactions impacting on the member’s account balance.

Falling markets may have implications for death benefit payments.

The Tribunal encourages trustees to review their policies regarding the investment of pending death benefit payments (and any insurance proceeds) during the period of the claim staking process (and resolution of a dispute by the Tribunal if a complaint is lodged) and ensure that this has been disclosed to members.

An explanation to the potential beneficiaries/legal personal representatives of how the account will be invested during the period between confirmation of death and the payment of the death benefit may help to reduce the number of complaints to the Tribunal about any unexpected change in the value of the benefit. The Tribunal is aware that some funds have adopted the policy that any investment choice in place at the date of death continues until the benefit is paid. The Tribunal has received complaints that the trustee will not accept a request to change the investment option, on the basis that, in the Trustee’s view, no one (including a surviving spouse or a legal personal representative of the deceased member’s estate) is authorised to request such a change.

The tribunal has now merged with the Banking Industry ombudsman to form the Financial Ombudsman Service.

Incorrectly claiming deductions can be costly.

Common mistakes

• Claiming deductions for rental properties not genuinely available for rent
• incorrectly claiming deductions for properties only available for rent part of the year, for example a holiday home
• incorrectly claiming the cost of structural improvements as repairs when they are capital works deductions, such as remodelling a bathroom or building a pergola, and
• overstating deduction claims for the interest on loans taken out to purchase, renovate or maintain a rental property. A loan can be taken for both income-producing and private purposes, like to buy a car or go on an overseas holiday. The interest on the private portion of the loan is not tax deductible.

Advice for claiming rental deductions

There are two categories of rental property expenses you can claim:

• expenses for the year you paid them, like council rates, repairs, insurance and loan interest, and
• expenses that are deductible over a number of years, like borrowing costs, creating structural improvements and costs of depreciating assets.

You cannot claim costs associated with acquiring or disposing of a property, but they may form part of the cost base of the property for capital gains tax purposes.

Renovation costs and costs to repair damage, defects or deterioration existing on purchase cannot be claimed as an immediate deduction. These costs are capital expenditure, depending upon what is repaired or improved, and must be claimed as either decline in value deductions over the asset’s effective life, or as capital works deductions over 40 years.

More detail can be found in the ATO publication Rental Properties 2007