• Question 1: I’m on a full pension and own my home outright. I looked at the Home Equity Access Scheme and was horrified by the cost of the misleadingly low interest rate because of its application fortnightly. This frequency of ‘term’ (as opposed to the presumption of annual) makes the total cost akin to payday lenders. Please tell me I’m wrong, I would love to be. David

Hi David,

I think you are wrong.

The Home Equity Access Scheme, which is run by Services Australia and allows you to access a loan against your home, has an annual interest rate of 3.95 per cent per annum.

This is a very competitive rate for such a loan. With no fees, apart from legal costs.

Now it’s true that it does compound on a fortnightly basis. Most home loans calculate interest daily and compound them monthly.

Now compare this to payday loans which generally have an establishment fee of 20 per cent and interest or account fee of about 4 per cent per month, i.e. 48 per cent per annum.

Services Australia has a handy calculator in relation to the Home Equity Access Scheme for those that are interested.

• Hi Craig, I look forward to your articles. Just letting you know that I’m sure my mate contributed $110,000 to super in June 2022, then $330,000 in July 2022? $440,000 in one year – not bad. Cheers, Coxy

Hi Coxy,

I recall you have previously submitted a question, good to hear from you again.

You are spot on. When we talk about how much you can contribute to super it’s generally on a financial year basis. But as you point out, you can make a contribution to super just prior to the end of one financial year, and then use the ‘bring-forward rule’, if eligible, at the start of a new financial year.

The bring-forward rule allows you to contribute three years of annual non-concessional (after tax) contributions in one go by ‘bringing forward’ your future annual contribution cap.

In this way you can contribute $440,000 in just two months, $110,000 in June and $330,000 in July.

• I am turning 65 and will be fully retired. My wife will continue to work. Can I use my super to pay off our joint investment property? 

Yes, once you turn 65 there is no restriction on what to do with your super.

However, I would suggest weighing up all options and thinking about obtaining personal advice, as it can only be spent once.

• I want to change super funds. I currently have a Pension Stream account with Australian Catholic Super & Retirement Fund and want to move to AustralianSuper.  Could you please advise steps I need to take and are there any penalties or potential loss of super funds.  Thank you very much. Chris 

Hi Chris,

There should be no loss of funds or fees with this transfer. However, some funds do have buy-sell spreads. A buy-sell spread is a fee to recover costs incurred by the trustee of the superannuation entity in relation to the sale and purchase of assets of the entity.

Also note that you will be out of the market for a few days while the funds move from one fund to another.

You can simply go online to the provider of your choice to complete an application form and they will take care of the details, including obtaining the funds from your current provider.

For instance, AustralianSuper’s online pension account (called a choice income account) can be found here.

You should ensure you read its Product Disclosure Statement and Target Market Determination first before deciding to go ahead. This will also help you to choose an appropriate investment option(s) before opening the new account.

Craig Sankey is a licensed financial adviser and head of Technical Services & Advice Enablement at Industry Fund Services

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.

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