Banking

Superannuation Susan Taylor, Communications Adviser Super SA

Your super might not be the first thing that comes to mind after you make the decision to separate. While you can’t access your super, it is still important to know the facts and what impact action, or inaction, might have down the track. You should consider whether you still want your estranged spouse to be the recipient of your super and insurance (should anything happen to you). In the event of your death, your Triple S super account balance, including any insurance, will be paid to your spouse, or de facto spouse. If you don’t have a legal or de facto spouse at the time of your death, your entitlement will be paid to your estate and distributed according to your will. You can, however, make a choice. As a Triple S member, you can nominate what is known as your legal personal representative (LPR) to receive your super. He or she will distribute it in accordance with your will. This is a legally binding death benefit nomination, valid for three years. So, if you die, your super, plus any insurance entitlement, will be paid to your estate and distributed according to your will, and not automatically paid to your spouse. It is therefore important that your will is up to date and reflects your wishes. If you get married or divorced, or your circumstances change in some other way, you should update your will accordingly.

Nominating your legal personal representative is not the same as nominating a beneficiary. The rules do not allow you to nominate specific beneficiaries.

Family law and property settlements

Super is considered an asset and might form part of any property settlement on separation or divorce. If you have permanently separated or divorced, family law legislation allows you to split and share your super with your former partner in the same way as other property. It is up to both of you to agree on splitting your super or how it is to be shared. Splitting can be done via a superannuation agreement or by a court order. Once a property settlement occurs, your former spouse would no longer be entitled to receive your super benefit on death.

An example

John was a police officer for eight years and married for 10 when he and his wife, Karen, decided to separate. They didn’t divorce or enter into a property settlement under the Family Law Act. John, a Triple S member, began a new relationship with Christina and they had been living together for five years when John suddenly died.

John’s super entitlement is worth $200,000 and, even though he had a will, he never nominated a legal personal representative with Super SA. This meant that Karen was still recognized as John’s legal spouse and was entitled to part of his Triple S super. Christina was also to receive an entitlement as his de facto spouse. Had John not wanted any of his benefit to be paid to Karen, he could have: • Divorced Karen. • Entered into a family law agreement. • Nominated a legal personal representative.

Get advice

Making a binding death-benefit nomination to appoint an LPR is an important decision and can have serious repercussions. You should speak to your financial planner or lawyer if you’re unsure or have questions. • See the Triple S fact sheet (Beneficiaries and your super entitlement) on the Super SA website. • For a full definition of spouse, refer to the online glossary at supersa.sa.gov.au.

The information in this article is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Super SA recommends that before making any decisions about Triple S, you consider the appropriateness of this information in the context of your own objectives, financial situation and needs, read the Product Disclosure Statement (PDS) and seek financial advice from a licensed financial adviser in relation to your financial position and requirements.

Banking Paul Modra, Executive Manager – Member Value and Distribution, Police Credit Union

Are you renting but dreaming of owning your own home? You could make that dream a reality sooner than you think. The repayments on a home loan could be less than the average weekly rent in South Australia. For example, the average house rent in South Australia is $450 per week as at December 2019*, whereas a Police Credit Union home loan of $400,000 over 30 years at 2.99 per cent p.a. gives you a repayment of $388 per week.^ Of course, you will need to have some savings behind you for the all-important deposit, and to cover fees and charges like stamp duty and conveyancing. You might not have reached your deposit-saving goal yet but there are some different options that could help make the transition from renting to owning your own home a lot quicker.

First Home Owner Grant

In South Australia, the state government pays the First Home Owner Grant (FHOG) to eligible first home owners. Applications need to be submitted and approved by RevenueSA.

The FHOG can be helpful for the purchase or construction of a new residential property, which can be a house, flat, unit, townhouse or apartment that meets local planning standards anywhere in South Australia. Unfortunately, FHOG is no longer available for established homes. To qualify, the property purchased must be the principal place of residence for each applicant for at least six months commencing within 12 months of the settlement date. The grant is not available for residential investment properties. Although there are eligibility criteria to be met and capped property value limits, there are still many people who can financially benefit from this grant. (For more information go to www.revenuesa.sa.gov.au/grants-andconcessions/first-home-owners)

Family pledge loans/family guarantor

You might have been saving for a while but are still a little bit away from that full 20 per cent deposit? Consider a loan with a family pledge by asking for assistance from a family guarantor to purchase a home to live in or a home to invest in.

APOLOGY Police Credit Union supplied the Police Journal with historical information for the story Outdoing the big banks for 50 years (December 2019). Owing to an error in our records, we attributed the wrong Christian name to former Police Credit Union chairman Paul Rix and apologize for the mistake. Guarantors can be immediate family members such as grandparents, siblings or parents who own their own home outright and can offer part of the equity in their own home as security for a loan. The security in the property often helps to make up for any shortfall in saving the minimum 20 per cent deposit required to avoid paying lenders’ mortgage insurance (LMI). Not having to pay for LMI can save a borrower thousands of dollars. A guarantor is also helpful as you can increase your borrowing power and you might still be eligible for financial assistance with a First Home Owner Grant. The downside of this strategy is that the guarantor can be held responsible if loan repayments are not met. However, most financial institutions, such as Police Credit Union, will limit this responsibility. In the past, it was standard practice to put the sum value of the guarantor’s home on the line but, today, security on the new home loan can be split and can limit the guarantee without overexposing guarantors to risk. For example, the equity in a guarantor’s property may be used as security for only 20 per cent of the loan, while the property being purchased will be used as security for the other 80 per cent of the loan. Therefore, guarantors helping their kids purchase a property for $500,000 will find that the 20 per cent guarantee is only $100,000.