We had Ian
& Mary here on Saturday for lunch after they went online for our advice.
Their problem was their insurance premiums had increased so much & what
could they do about it.
Here is the
problem that they say 1 million+ Australians have
‘AustralianSuper insurance premiums to rise by 35%
Friday,
14 March 2014 11:35am
|
AustralianSuper will
substantially increase its death and temporal and permanent disability (TPD)
insurance premiums due to rising policy costs.
The 35%
price hike is due to come in at the end of March and was confirmed by
AustralianSuper group executive of membership Paul Schroder.
He told Financial Standard that
the decision made due to the fact that policy costs had increased.
"Australia's super fund
members have had access to relatively cheap insurance and are seeing premium
prices rise across the board," Schroder said.
He added that Australia's largest
super fund was also "thinking about
the right level of default cover for new members" following the increase
of claims and the losses suffered by insurers.
AustralianSuper was working
closely with its insurer, TAL, to "find
a middle ground, to try to reduce volatility and to avoid results changing
dramatically depending on the market condition."
He revealed that representatives
of the fund and TAL recently travelled to Zurich with reinsurer Swiss Re to
look at solutions and strategies to tackle the issues that the sector is facing
at the moment.
"We need to take a different
view into the discussions and we need a good alignment between the trustee, the
insurer and the reinsurer," Schroder said.
This price increase comes after
AustralianSuper and REST lifted the cost of insurance to their members in the
first half of last year.
The two
super funds lifted the cost of insurance to their members increasing the cost
of its death and total and permanent disability cover by around 38%, while the
cost of income protection cover will increased by 25%
Retail
industry fund, REST increased the cost of its death cover by around 45%, with
TPD increased by 30% and income protection increased by 3%.’
Why is this so?
We would
argue lifestyle would be a major contributor as accidents make up a small % of
all claims.
Ian &
Mary are paying for others lifestyles &they are not happy.
Another reason
they may not be happy is this fact we also read this week
Industry funds spend millions on advertising
Monday, 24 March 2014 11:45am
|
Industry superannuation funds are
spending millions of dollars a year on advertising, with some funds'
expenditure even exceeding that spent by banks on their own superannuation
advertising campaigns, figures released by Nielsen show.
However, overall banks'
advertising expenditure across their entire businesses still far exceeds that
of industry superannuation funds.
According to Nielsen, between 6
January 2013 and 4 January 2014, AustralianSuper
spent $9.37 million on advertising. The next biggest spender in the
Industry SuperFund group was Cbus, at
$4.84 million, followed by HESTA,
which spent $2.75 million.
And also
this week
But it does appear that the
funds' actions are defensible. In Cbus'
case all advertising expenditure comes from member administration fees. While
Cbus' member administration fees are comparatively low - $1.50 a week - the
fund has more than 700,000 members, giving an inflow of almost $55 million a
year.
AustralianSuper, with its two million plus
members, garners almost $160 million a year in member admin fees. As
not-for-profit bodies, this money cannot go to shareholders.
Speaking to Financial Standard, a
reader questioned what benefit advertising brought industry fund members.
"If you decide to sponsor something, it's generally because of a
commercial reason. One would wonder what funds expect to get back from spending
that money."
He speculated that the real aim
of advertising was to increase funds under management, and questioned whether that was in the best interest of the members, in
whose sole interest the not-for-profit funds must act.'
These facts
certainly stressed Ian & Mary
when we saw them.
Talk
about a ‘silk purse from a
sow’s ear??
Another
problem & what really concerned them was having some life cover as estate
planning for their children & grandchildren. The above super life cover expires before they probably do.
Ian &
Mary were quite serious on moving to the Philippines where living is
significantly cheaper.
We did
not point out to them but another reason to be concerned is returns that other
fund managers return.
We
attended a Professional day last week & to quote Nicholas ‘Buffett is not the only investment game in town.
You can invest with plenty of other, less well-known, market-beating investment managers.
These managers may have different styles from Buffett. But their biggest advantage may be that they manage a much smaller amount of money’.
e.g.
You can invest with plenty of other, less well-known, market-beating investment managers.
These managers may have different styles from Buffett. But their biggest advantage may be that they manage a much smaller amount of money’.
e.g.
Australian Shares Income
Fund
Dedicated for pension / SMSF investors.
Best suited for investors who want:
Income
focusDedicated for pension / SMSF investors.
Best suited for investors who want:
- 9.1% p.a. gross yield over the past 2 years*
- Over 2.3% p.a. franking credits over the past 2 years
- Over 21.7% p.a. over the past 2 years
All these
returns were very good & these are not mentioned in the adverts that it us
daily on TV or other.
Of course
the past doesn’t mean future returns will be equally good.
Simon did
call in on Saturday & we did show him far better returns that are available
from this fund manager or many others.
Your biggest cost could be the
difference in returns available elsewhere.
For once
in my life we must agree with the world’s oldest profession
