Friday 27 November 2015

Employer Health Benefits

One nice aspect of working for an 'international' company that has its HQ in the US is that their standard 'benefits' package for staff includes medical coverage (which is essential in the US, but not so much here in Australia due to universal public health coverage via Medicare). Now that the 'integration' phase has been completed, we are moving to new employment contracts from 1 Jan, and our new opt-in 'Health Plan' becomes available from 1 Jan also.

The Health Plan is a quite generous scheme offering 'top' private hospital insurance as well as a suite of 'extras' cover (such as dental, optical, physio etc.) with most basic options available from 1 Jan and some of the others (such as physio) having a 12 month 'waiting period' unless you are transferring in from another existing health plan.

The company will be fully funding the standard cost of the plan (at lesast for those within the 'base tier' of taxable income -- under $90,000pa for singles or $180,000pa for families, and in cases where there is no 'Lifetime Health Cover loading'). Unfortunately, while we are likely to be well within the 'base tier' in terms of family income (as DW only works 3 days per week), we haven't had any health insurance since 2008, so we currently have a LHC loading of 10%. That will mean our 'out of pocket' premium is estimated to be around $26 per month, which is still excellent value  -- even just by going for routine annual checkups at the dentist we should get back more in benefits than the 'out of pocket' premium cost. Of course our employer will be footing most of the premium (I guess around $200+ per month), so if we had to pay full cost for private health insurance we would probably still continue to rely on Medicare and the public hospital system.

One side benefit of having private health cover under this company plan is that our LHC loading will stay at 10% while we have private hospital insurance, and after ten years the LHC loading will revert to 0%. That could be a major benefit in the long term if we decide to continue with private health insurance after we retire (when we are more likely to need 'elective' surgery such as knee or hip replacements, dentures or hearing aids...). Of course that assumes we stay employed for the next ten years -- one downside of the completion of the 'integration' process is that we have all got new employment contracts that include a clause whereby we can have our employment terminated for 'any reason' with only 4 weeks notice. I suspect if that happens I'd be lodging an 'unfair dismissal' claim though, and might end up with the equivalent of a redundancy payment. It would still not be very nice to find myself unemployed and over 55 though...

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Wednesday 25 November 2015

Employer Superannuation benefits

The takeover of the company I work for has finally concluded the 'integration' phase -- some people have left, some people have been transferred overseas, and some people have transferred in from the US 'head office' to our office in Australia, either permanently, or for a short period to help us 'locals' transition to new systems, processes and policies that are the new standard. The final stage was to dump all our old job titles and get new ones selected from the standard set, and to switch our superannuation from the old Employer Fund to a new preferred Fund.

DW and I currently have our super in a SMSF, so we won't be 'rolling over' our current balance into the new Employer Fund, however I will nominate the new fund to receive our contributions from 1 Jan as the new fund has very low management fees (only 0.2% after a hefty rebate by our company) and has default amounts of Life/TPD insurance and Salary Continuance (Income Protection) insurance provided with the premiums rebated by the company.

Overall the new Employer Fund will provide around $150,000 worth of life/TPD insurance and 21 months of 75% salary continuance insurance (paid for up to two years after 90 days waiting period in cases of temporary disablement eg. a heart attack/stroke/accident etc.). Looking at some quotes from an online insurance broker, these two covers would otherwise cost me around $2,000 per annum in premiums, so it is definitely worthwhile to nominate to join this new Employer Fund for our ongoing superannuation contributions (SGL and salary sacrifice).

Ideally I'd like to have the 9.5% SGL contributions paid into this new fund, and keep my salary sacrifice contributions paid into our SMSF, but unfortunately we aren't allowed to have our employer superannuation contributions paid into two difference funds. However, I can always do an ad hoc 'rollover' into our SMSF if I want to (I'll have to check if there are any exit or rollover fees in the new fund).

Since our SMSF will no longer be receiving employer contributions after Jan 1 I'll cancel the monthly transfer of $5,000 from our SMSF bank account into our Vanguard HighGrowth Index Fund investment, and leave the remaining cash balance to provide for future SMSF tax and annual fee payments. There should also be sufficient cash available to fund the first 'pension' payout once we switch our SMSF into 'transition to retirement pension' (TRP or TRAP) mode once we hit the preservation age (57 for DW and myself). As we intend to 'recontribute' the pension amounts as an undeducted (nonconcessional) personal contribution every six months there only needs to be around 2% of the SMSF balance available in the bank account to avoid having to liquidate any of our Vanguard investment to fund the TRP payments.

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Tuesday 3 November 2015

Net Worth: October 2015

The CFC ('chinese financial crisis') seems to have fizzled out, with global markets apparently deciding that the sky isn't falling (again) after all. The GFC was 'the big one', then the EFC had less impact, with the PIGS not collapsing after all, and now the imminent 'CFC' appears to morphed into just a transition to a more sustainable rate of economic growth. Ah well, I'm sure they'll be another 'crisis' soon enough.

Overall the market recovery during October and the continued rise in the 'estimated valuation' for our home pushed my net worth back above A$1.8m, which is new 'all time high' -- although if you adjust for inflation and debit the value of the hobby farm/weekender I 'inherited' last year I still have a way to go before I'm as well off as I was in late 2007.

My geared stock portfolio gained $32,650 but is still well below the levels of 2007, or even where it had recovered to in 2010 before the end of the 'mining boom'. My retirement account was boosted by the share market gains and also by one monthly employer contribution being deposited during the month. Our estimated house price gained $36,794. Overall my net worth improved $102,586 during the month, which recovered the losses suffered in the previous two months. I make no predictions as to where my net worth might be at the end of this year or next...

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