YOUR QUESTIONS

I always read your very informative articles in the Money section. I am a woman who will turn 64 in September and I will be made redundant from October this year. I have approximately $500,000 in my superannuation, which I have in a Defcredit term deposit. I should be getting a redundancy payout of $60,000. Should I leave my super in the Defcredit retirement fund? Do you think it is a large amount in one fund? I am worried about the security of the bank if it should go bankrupt. R.T.

The Retirement Savings Account at Defence Bank, formerly known as Defcredit Credit Union, is subject to the government guarantee on the first $250,000. If bad times were to hit, all banks would be supported by the Australian Prudential Regulation Authority and ultimately by the Reserve Bank, so I think things would have to be pretty dire before you lose any money.

However, it's always a comfort to spread your eggs across more than one basket and if you want to split your super, do so. Just be sure to pick a fund backed by a strong owner and preferably not associated with the Health Services Union.

DON'T BANK ON IT

As we are both 80 years old, we decided to sell two investment properties, worth $700,000. We would like to help our four children and also invest money in a tax-effective way. We are thinking of bank shares as they pay good dividends. Would you agree or should we diversify more? J.B.

Lucky children. Sometimes the best advice is 5000 years old: "Buy low and sell high!" Right now, asset prices, both shares and property, look like they will be cheaper in the near future than they are now. So while I agree with your decision to sell your properties, assuming you do not require the income from them, I suggest holding the proceeds in cash before buying shares and, if you do, go for a diversified portfolio.

I also think there's some truth in the New Yorkers' saying: "Do me a favour, don't do me a favour!" Before you buy anything for your children, find out what they need. It could be that the most appreciated gift you could give would be to place money into a mortgage offset account, or pay private school fees for grandchildren, or simply give them cash for a much-needed family holiday.

BE CAREFUL OF THE CAP

I am a member of a British defined pension scheme and deferred my pension in 1988 when I migrated to Australia. I will be entitled to a pension this year as I will be reaching retirement age as per the British scheme rules (60 years). I have the option of taking a lump sum and a reduced pension, which I plan on taking. If I transfer the lump sum into my SMSF in Australia, will I be exempt from tax? Could you also give me details of tax advisers who specialise in this area? M.A.

If you are taking a lump sum and simply investing this into your SMSF as a non-concessional contribution - without claiming a deduction - you are only restricted by the $150,000-a-year cap, although this can be extended to three years' worth - so $450,000 - in a three-year period.

Be careful you don't exceed the cap as you are then slugged an excess contributions tax of 46.5 per cent. All advisers are familiar with this. It doesn't sound as though you are transferring your pension to an Australian super fund, otherwise this would be affected by the British government's rules for "QROPS" or Qualified Recognised Overseas Pensions Schemes.

FIGHTING AN EXPENSIVE SALE

What recourse do we have with our financial planner? We asked him to sell down our share portfolio and after much to-ing and fro-ing he finally did, but cost my wife and I $200,000 in between times, as the market tanked. Have you any advice? We have written to the firm's complaints division, but they had no interest in helping us. Who can we go to help us in our fight? P.L.

If you are getting nowhere with the planning firm, your next approach is the Financial Ombudsman Service on 1300 780 808, although FOS requires you to first send a letter of complaint to the planner. Sample letters of complaint are listed at fos.org.au.

If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. Helplines: Financial Ombudsman, 1300 780 808 pensions, 13 23 00.