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4 Your right to support in making financial decisions

Entering retirement can be a difficult time requiring you to make complicated decisions about your money. You have a right to access support as you make these very important decisions. This chapter provides basic information and explains what services are available to help you make sound financial decisions in retirement.

4.1 Financial planning

Planning your finances is an essential step to ensure you will have enough money to fund your retirement. Making financial decisions can be complicated and you may wish to get the help of a financial planner or a financial adviser. There are many risks and dangers in making financial decisions without fully understanding the detail. A financial planner can help you become more financially secure and help you to keep on track.

You can get the most out of a financial planner or adviser if you are well informed and do your homework first. Here are a few simple steps you can take:

  1. Make a list of topics about which you need advice. Do you need simple advice on your immediate needs or broader long term planning?
  2. Choose a planner who is a good fit for your needs by shopping around. Phone around and ask a few advisers for initial information.
  3. Make sure your planner has a valid Australian Financial Services Licence (AFSL) or is an authorised representative of an AFSL.
  4. Find out if your planner or adviser is a member of a professional organisation such as the Financial Planning Association, the Association of Financial Advisers or CPA Australia. Members of these organisations agree to comply with their organisation’s rules regarding ethics and conduct.
  5. Find out if your advisor has much experience advising people in your situation.
  6. Ask how the adviser will be paid. There are restrictions on what sort of fees financial advisers can charge. If you are receiving advice after 1 July 2013, in most cases it is illegal for your financial planner to receive commissions.
  7. A financial adviser has a duty to act in your best interest. Make a complaint if you do not think this is happening.

Where to go for more information

There are a number of ways in which you can find a financial adviser.

The Australian Securities and Investment Commission’s (ASIC) MoneySmart website has lots of guidance on choosing a financial adviser and can give you more information on financial planning. Visit the website at www.moneysmart.gov.au.

Contact your superannuation fund for help finding a financial advisor.

The National Information Centre for Retirement Investments (NICRI) can give you more information on financial planning and seeking investment advice. Phone their telephone information service on 1800 020 110.

The Financial Planning Association can help you find a financial planner. Use their online service at www.fpa.asn.au or phone 1300 626 393.

Contact the Association of Financial Advisers for help finding a financial adviser. Use their online service at www.afa.asn.au/findanadviser. If you need assistance using the online service, call 02 9267 4003.

CPA Australia can help you find a financial planner. Use their online service at www.cpaaustralia.com or phone 1300 73 73 73.

Where to go for help or to make a complaint

If you experience a problem with your financial planner, investments or managed funds, first try to speak to them about your problem. If you are not satisfied with their response, ask the planner for their complaints handling procedure. You can then write them a letter or email which explains the problem clearly. Include copies of relevant documents. Keep the originals and a copy of your complaint letter.

If you complaint is still not resolved you can access a free external dispute resolution service. Your planner or investment company will be a member of one of these dispute resolution services. Contact:

  • The Financial Ombudsman Service on 1300 780 808.
  • The Credit Ombudsman Service on 1800 138 422.

If you would like help with making a complaint, contact:

  • The ASIC Infoline on 1300 300 630.Visit ASIC’s MoneySmart website at www.moneysmart.com.au.
  • The National Information Centre for Retirement Investments (NICRI) on 1800 020 110.

4.2 Free financial information services

A number of financial information services offer free information about finances and investments. These services provide information but not advice.

The Department of Human Services’ Financial Information Service (FIS) officers provide free and independent financial information. FIS officers provide information to help people make informed decisions about investment and financial issues. They are not financial planners and do not give or sell advice or assist you to buy investments.

You can talk to a FIS officer over the phone or by appointment. The FIS run seminars aimed at people in the workforce, people who are about to retire, and people who have already retired. You do not need to be receiving a government payment to access this service. This service is confidential. Information may be used to correct your Centrelink payment rate.

Phone the Centrelink Financial Information Service (FIS) on 13 23 00 and ask to speak to a FIS officer. For more information go to www.humanservices.gov.au.

The Australian Securities and Investment Commission (ASIC)'s MoneySmart website provides financial information for people at all stages of life. ASIC's MoneySmart website offers free, independent guidance so you can make the best choices for your money. ASIC is an independent Australian Government body that regulates corporations, markets and the financial services industry. The MoneySmart website helps ordinary Australians take steps to improve their personal finances. The website can be used to access calculators and print publications on a wide range of financial topics. ASIC also operates an Infoline.

Phone the ASIC Infoline on 1300 300 630 or visit ASIC’s MoneySmart website at www.moneysmart.com.au.

The National Information Centre on Retirement Investments (NICRI) is a free, independent and confidential consumer organisation funded by the Australian Government. NICRI does not provide advice but can assist consumers to find out more about financial products, processes, regulations and general information. NICRI also has information for consumers who are looking to access the equity in their home or who are facing redundancy. NICRI can be contacted through their telephone information service.

Phone the National Information Centre for Retirement Investments (NICRI) telephone information service on 1800 020 110.

Financial Counselling providers offer free, independent and confidential information, support and advocacy to people who are currently experiencing financial difficulty. Services are provided through a network of local community organisations, legal centres and government agencies. You can access services over the phone as well as face-to-face.

Phone the Financial Counselling Hotline on 1800 007 007 for information over the telephone and to find a provider of face-to-face services in your area.

 

4.3 Help with budgeting

Older Australians can find themselves stretched for money in retirement. You can stay out of financial trouble by taking control of your money. Here are a few helpful tips to get started on budgeting:

  1. Keep a record of your spending. Write everything you spend in a notebook every day so that you can see where your money goes. You can also find budgeting tools at ASIC's MoneySmart website: www.moneysmart.gov.au/tools-and-resources/calculators-and-tools.
  2. Create a budget. This will help you understand how much money goes in and how much goes out every month. Work out if you have more income than expenses.
  3. Manage your bills. Mark on your calendar when big bills are due and set aside money for them in advance. Ask if you can make regular payments on your bills.

    If you receive Centrelink benefits, such as the Age Pension, ask about Centrepay. It is a free direct bill-paying service offered to customers receiving Centrelink payments. Through Centrepay, you can choose to pay bills like rent, electricity, gas and phone by having regular amounts deducted from your Centrelink payments. This money can be used to automatically pay your bills.
     

  4. Create savings goals and set aside small amounts each week. Reward yourself for your efforts.

Where to go for more information

ASIC's MoneySmart website has tips on budgeting and budget planners for you to use. Access these online at www.moneysmart.gov.au or order MoneySmart’s booklet, Managing Your Money, by phoning the ASIC Infoline on 1300 300 630.

For more information on Centrepay phone Centrelink on 13 23 00 or visit www.humanservices.com.au.

Centrelink’s Financial Information Service (FIS) can help you develop strategies to better manage your day to day spending, bill payments and debts. FIS can help you develop a plan if you find yourself in trouble. Phone 13 23 00 and ask to speak to a FIS officer.

Financial counselling services offer help if you have difficulty meeting repayments, can’t pay a bill or need assistance developing a budget plan. Phone the National Helpline on 1800 007 007 to access this service.

4.4 When you can access your superannuation

For some retirees superannuation is the primary source of income in retirement. For others it is a way to supplement income from the Age Pension.

Before you decide to access your superannuation, work out how long your superannuation savings are likely to last. Consider how much you will need to cover basic living costs as well as longer term medical and care costs. Compare this to the amount you have in superannuation.

You can access your super when you have stopped working altogether as long as you have reached a certain age, known as your preservation age and you have permanently retired. Your preservation age is between 55 and 60 depending on when you were born. See the following table, Age of Access to Superannuation.

You are considered to be retired from the workforce if you are working less than 10 hours a week.

AGE OF ACCESS TO SUPERANNUATION

Date of birth
Preservation Age
Before 1 July 1960
55
1 July 1960 – 30 June 1961
56
1 July 1961 – 30 June 1962
57
1 July 1962 – 30 June 1963
58
1 July 1963 – 30 June 1964
59
After 20 June 1964
60

If you are aged 65 or over, you can access your superannuation without having stopped working.

There are also options to access you superannuation while still working. However, you must have reached preservation age. You can access your superannuation while you are still working by setting up a ‘transition to retirement’ pension. This means you will be accessing some of your superannuation funds while still earning an income. If you would like more information on accessing superannuation while working, see chapter 6.6.

There are some very limited circumstances when you may be able to access your superannuation before preservation age. These are:

  • Incapacity: if you suffer permanent or temporary incapacity;
  • Severe financial hardship: if you have received Commonwealth benefits for 26 continuous weeks but are still unable to meet immediate living expenses;
  • Compassionate grounds: to pay for medical treatment for seriously illness, or to assist in instances of mortgage foreclosure; and
  • Terminal medical condition: if you have a terminal illness or injury.

If you die before you have received your superannuation benefits, they will be paid to your dependants or your legal representative to form part of your estate.

Where to go for more information

ASIC's MoneySmart retirement planner is a free online calculator that can help you estimate how much money you might have in retirement. Access it online at www.moneysmart.gov.au/tools-and-resources/calculators-and-tools/retirement-planner.

Phone the National Information Centre for Retirement Investments (NICRI) telephone information service on 1800 020 110.

The Department of Human Services' website www.humanservices.gov.au has some useful resources on the early release of superannuation. If you would like more information about early access to your superannuation speak to the Department of Human Services’ Early Release of Superannuation general enquiries line on 1300 131 060.

Contact the Australian Taxation Office Superannuation Info Line for more information on superannuation on 13 10 20.

If you would like to access your superannuation before preservation age or for more information on the specific criteria for financial hardship grounds, speak to your superannuation fund directly.

Where to go for help or to make a complaint

The Superannuation Complaints Tribunal can hear complaints about superannuation. Phone 1300 884 114.

For help finding a financial planner you can contact:

  • Your superannuation fund;
  • The Financial Planning Association on 1300 626 393;
  • The Association of Financial Advisers on 02 9267 4003; or
  • CPA Australia on 1300 73 73 73.

 

4.5 Receiving your superannuation benefits

There are a number of ways you can use your superannuation to give you income in retirement. Superannuation income can be in the form of regular payments; at weekly intervals, fortnightly, monthly, quarterly or annual intervals. Some people choose to withdraw their superannuation to invest privately, to pay off loans or to pay for necessary items. You can choose one or a combination of these options.

Superannuation is complex and requires careful consideration and discussion with a financial expert.

Many people receive a combination of the Age Pension and a superannuation income. There are rules about how much income you can receive each year before the Age Pension is reduced. You should speak to Centrelink about this.

Make sure you are aware of the fees that your superannuation provider charges you and understand the fees and or penalties that may be charged if you change your superannuation arrangements.

The following four options are common ways that people derive an income from superannuation:

(a) Account based pensions

Account based pensions provide you with regular income drawn from your superannuation benefits. This means you can arrange a regular income payment that suits your requirements.

Under this option, your superannuation remains within the superannuation fund and may continue to earn investment returns. Your account balance can go up or down depending on how your money is invested.

You can discuss your investment options with your superannuation fund. Note that different funds offer different investment options. While you have the flexibility to change your investment options or even change your superannuation provider, there might be fees associated with changes, so make sure you are well informed in advance.

You are required to withdraw a minimum payment each year of between 4% and 14% of your total superannuation balance, depending on your age. You can withdraw lump sums at any time, subject to the rules of the superannuation fund.

If you draw too much income or have poor investment experience your account based pension may not last as long as you expected. When you have used all the money in your account, you will not get any more payments.

(b) Annuities

Annuities can be purchased using a lump sum from your superannuation or from other savings. They will give you a fixed regular income for a fixed number of years or for life, depending on which option you buy.

There are many types of annuities. If you want to be protected from inflation, you can buy an annuity that provides payments that increase with inflation each year. This extra cost is factored into the price of the annuity.

You also have the option to purchase a joint lifetime annuity with your partner. The annuity will continue to pay income until the longest living partner dies.

Your income will not depend on how the market is going. The organisation that sells you the annuity takes on this risk instead of you because the cost of the risk is part of the price of the annuity. If the market is strong, annuities may not offer as high returns as other investment options.

Annuities are generally fixed and do not have much flexibility for change. There may be charges and fees if you want to exit the product before the term of the annuity expires, or you may find it impossible to exit the annuity at all.

You do not necessarily need to use all of your superannuation savings to purchase an annuity. For example, the combination of an annuity and an account based pension could be used to balance out the respective advantages and disadvantages of each option. Annuities and account-based pensions can be used to top up the Age Pension.

(c) Withdrawing superannuation as a lump sum

A third option for superannuation is to withdraw your superannuation funds as a lump sum and spend or reinvest the money independently. While this option gives you maximum flexibility, there may be a risk of spending your money too quickly. Managing your own investments can also be very complex and any income that you earn outside of a superannuation fund will be part of your taxable income and you may pay tax on it.

(d) Tax on superannuation income

People aged 60 or older do not pay tax when they withdraw their superannuation benefits as a lump sum from a taxed superannuation source. However, you may pay tax on any investment earnings you make if you reinvest the money outside a superannuation fund.

Account based pensions and annuities are both low tax options and the earnings component of account based pensions and annuities may be tax free. If you are aged 60 or older, the income that is paid to you is tax free if it is from a taxed superannuation source. Tax is payable on earnings of some defined benefit superannuation schemes.

Contact your superannuation fund to find out whether your superannuation is from a taxed or an untaxed source.
Contact the Australian Taxation Office for more information.

Where to go for more information

There are rules on how much superannuation income you can receive each year before the Age Pension is reduced. Phone Centrelink on 13 23 00 for more information.

For more detailed information on how each superannuation investment options is taxed, phone the Australian Taxation Office Superannuation Info Line on 13 10 20.

ASIC's MoneySmart website provides more information on superannuation options. Read their booklet Financial Decisions at Retirement, call the ASIC Infoline on 1300 300 630 or visit their website at www.moneysmart.gov.au.

Phone the National Information Centre for Retirement Investments (NICRI) telephone information service on 1800 020 110.

Where to go for help or to make a complaint

For help finding a financial planner you can contact:

  • The Financial Planning Association on 1300 626 393;
  • The Association of Financial Advisers on 02 9267 4003; or
  • CPA Australia on 1300 73 73 73.

The Superannuation Complaints Tribunal can hear complaints about superannuation and related products. Phone 1300 884 114.

4.6 Investment basics

People in retirement may decide to invest their money. Investing money is risky. Try to understand the risks and be realistic about them. Taking care when you invest is your best protection. Careful investing involves:

  • Having control of your debts;
  • Setting aside enough money and insurance for an emergency rather than investing all your money;
  • Setting realistic goals and a realistic timeframe for investment;
  • Understanding that high returns usually mean high risk;
  • Seeking financial advice to find out what the risks are in a product before making an investment;
  • Not putting all your money in one type of investment;
  • Paying attention to how your investments are going; and
  • Choosing investments that suit your needs and objectives.

 

Where to go for more information

Phone the ASIC Infoline on 1300 300 630 or visit ASIC’s MoneySmart website at www.moneysmart.gov.au.

Phone the National Information Centre on Retirement Investments (NICRI) telephone information service on 1800 020 110.

Where to go for help

A financial adviser can help you invest. For help finding a financial planner you can contact:

  • The Financial Planning Association on 1300 626 393;
  • The Association of Financial Advisers on 02 9267 4003; or
  • CPA Australia on 1300 73 73 73.

 

4.7 Investment warnings

Some investments can look like good investments but carry hidden risks and end up being bad value for the investor. Common poor investments include:

  • Investments that are hidden pyramid schemes. Investors are promised a return but their money is not actually invested in anything. Instead, money is put into a pool used to pay returns to other investors. Eventually the scheme runs out of money because there are no more investors. It collapses and investors lose their money.
  • Investment seminars that promise to share secrets of risk free investments and high returns. Some of these investment seminars charge very high fees after the initial ‘free’ seminar.
  • Investment trading software that suggests you will receive high returns with little knowledge or effort required. Trading is risky and requires specialist knowledge. If you don’t have that knowledge, think about whether you trust the software to stand in its place.
  • Unsolicited offers to buy your shares. The danger here is that the potential buyer could be offering you much less than the current market price. Alternatively they may offer to buy your shares at or above market value but you will be paid slowly for them over a long period of time.
  • Illegal managed investments schemes. Check that the business offering you a scheme is registered with ASIC as unregistered schemes are illegal. Check that the business has an Australian Financial Services Licence. Without a licence you miss out on important legal protections.

Be cautious and seek advice before investing.

Where to go for more information

Contact the Australian Securities and Investment Commission (ASIC) for more information on how to check to see if a company is registered, or has an AFS licence. Phone ASIC on 1300 300 630.

Phone the National Information Centre for Retirement Investments (NICRI) telephone information service on 1800 020 110.

Some investments are really scams. For more information contact the SCAMwatch Infocentre run by the Australian Competition and Consumer Commission (ACCC) on 1300 795 995.

If you are thinking about making a particular investment, seek advice from a financial adviser. For help finding a financial planner you can contact:

  • The Financial Planning Association on 1300 626 393;
  • The Association of Financial Advisers on 02 9267 4003; or
  • CPA Australia on 1300 73 73 73.

 

Where to go for help or to make a complaint

If an investment you have made goes wrong, seek help.

Make a complaint to the Australian Securities and Investment Commission (ASIC) if you think there has been misconduct by a company. Contact their Infoline on 1300 300 630.

If you think you have been given bad financial advice about an investment, complain to your adviser first. You can then make a complaint to the industry body of which your adviser is a member. Your adviser may be a member of:

  • The Financial Planning Association on 1300 626 393;
  • The Association of Financial Advisers on 02 9267 4003; or
  • CPA Australia on 1300 73 73 73.

 

Speak to a financial counsellor if you are in financial trouble as a result of an investment that has gone wrong. Access free and independent financial counselling by calling the National Helpline on 1800 007 007.

Seek legal advice if you think the company you invested in may have breached the law. You might be able to get compensation in some circumstances.

You can contact legal aid for information, referrals, and in some cases advice.

ACT
Legal Aid ACT
1300 654 314
NSW
LawAccess NSW
1300 888 529
NT
NT Legal Aid Commission
1800 019 343
Qld
Legal Aid Queensland
1300 65 11 88
SA
Legal Services Commission of SA
1300 366 424 or 08 8463 3555
Tas
Legal Aid Commission of Tasmania
1300 366 611 or 03 6236 3800
Vic
Victoria Legal Aid
1800 677 402 or 03 9269 0120
WA
Legal Aid Western Australia
1300 650 579 or 08 9261 6222

You can also get a referral to a solicitor or community legal centre by calling the law society.

ACT
The ACT Law Society
02 6247 5700
NSW
The Law Society of NSW
02 9926 0300
NT
Law Society Northern Territory
08 8981 5104
Qld
Queensland Law Society
1300 367 757
SA
The Law Society of South Australia
08 8229 0288
Tas
The Law Society of Tasmania
03 6234 4133
Vic
Law Institute of Victoria
03 9607 9550
WA
The Law Society of Western Australia
08 9324 8600

4.8 Helping family and friends financially

You may be thinking of helping your family or friends financially. You could be thinking of giving away money, a property, or loaning money to family. You could also be thinking about acting as a loan guarantor for a family member or helping them to secure a loan in another way.

Even when you are dealing with close family or friends, you should always think about the consequences for you and your finances if something goes wrong. A refusal may be uncomfortable in the short-term, but it may save a lot of problems in the longer term. Seek legal advice about what the transaction means and what you are required to do to protect your interests. This will help you understand how you can best help your family and friends without hurting yourself in the process.

If you are making a gift:

  • Be aware that the Age Pension may be affected. Making a gift of money or transferring some of your assets could result in the Age Pension being reduced. Make sure you check with Centrelink if you are considering giving away money or assets.

If you are making a loan of money:

  • It is vital that it is recorded in writing. Have a solicitor draw up an agreement. If a loan is not in writing, there is no evidence that the money you gave away was intended to be a loan rather than a gift and you won’t be able to insist on it being repaid.
  • Make a realistic assessment of whether or not you will have your money repaid.
  • Secure the loan so that you will not lose your money if the borrower cannot pay it back. Securing a loan means that you would have the right to an asset if the borrower doesn’t repay the loan.

If you are considering guaranteeing a loan:

  • Ensure you have received independent legal advice because guaranteeing a loan is very complex. Make sure you understand all of the consequences of the agreement.
  • Make a realistic assessment about whether the borrower will be able to meet their repayments. Consider all of their other expenses and the stability of their income. How much income do they have compared to how much they need to repay?
  • Think about what will happen if the borrower is not able to repay the loan. Will you be able to meet the repayments yourself?
  • Consider the safest way to help your family and friends. If your family or friend needs help with debt you can refer them to a financial counsellor. A financial counsellor can help to find the best solution for everyone involved.

In some cases, family and friends may abuse your willingness to help them financially. This is financial abuse. For more information read chapter 5.1.

Where to go for more information

Call Centrelink’s Financial Information Service (FIS) on 13 23 00 and ask to speak to a FIS officer for more information about how the Age Pension will be affected by gifting money or assets to family or friends.

Phone the ASIC Infoline on 1300 300 630.

Where to go for help

Contact Legal Aid in your state or territory for legal information, referrals, and in some cases advice.

ACT
Legal Aid ACT
1300 654 314
NSW
LawAccess NSW
1300 888 529
NT
NT Legal Aid Commission
1800 019 343
Qld
Legal Aid Queensland
1300 65 11 88
SA
Legal Services Commission of SA
1300 366 424 or 08 8463 3555
Tas
Legal Aid Commission of Tasmania
1300 366 611 or 03 6236 3800
Vic
Victoria Legal Aid
1800 677 402 or 03 9269 0120
WA
Legal Aid Western Australia
1300 650 579 or 08 9261 6222

You can also contact a private solicitor. For help finding a solicitor, contact the law society in your state or territory. If you can’t afford a private solicitor, speak to the law society about community legal centres in your local area.

ACT
The ACT Law Society
02 6247 5700
NSW
The Law Society of NSW
02 9926 0300
NT
Law Society Northern Territory
08 8981 5104
Qld
Queensland Law Society
1300 367 757
SA
The Law Society of South Australia
08 8229 0288
Tas
The Law Society of Tasmania
03 6234 4133
Vic
Law Institute of Victoria
03 9607 9550
WA
The Law Society of Western Australia
08 9324 8600

 

4.9 Reverse mortgages and equity release products

A reverse mortgage allows you to borrow money using the equity in your home as security. You must repay the loan with the interest if you sell your home or move into an aged care facility. If you die, the amount owed will be deducted from your estate.

Reverse mortgages can be very difficult to understand and do not suit everyone’s circumstances. Seek legal and financial advice to see if they are right for you.

Calculate how much your reverse mortgage will cost you in interest and fees over your lifetime. Also think about how much equity will be left in your home. The more you borrow the higher interest costs will be. Over time, this will reduce the equity in your home; the part of your home you own. You should think about whether you will have enough equity left in your home to pay for future expenses such as medical and aged care costs.

If you enter into a reverse mortgage after 18 September 2012, you cannot end up owing the lender more than your home is worth. This is called the No Negative Equity Guarantee. If you entered a reverse mortgage before September 2012, check your contract to see if you are protected in circumstances where your loan balance ends up being more than the value of your property.

Check to see if your lender is a member of the Senior Australians Equity Release Association of Lenders (SEQUAL). SEQUAL members agree to follow a code of conduct.

An alternative to a commercial reverse mortgage is the Pension Loans Scheme offered by Centrelink. For more information see chapter 3.5.

Taking out a reverse mortgage may also affect income support payments such as the Age Pension. Check with Centrelink.

Where to go for more information

Phone the Equity Release/Reverse Mortgage Information Service, run by the National Information Centre for Retirement Investments (NICRI) on 1800 615 676 to speak to an information officer. You can also request their Equity Release/Reverse Mortgage booklet.

The Senior Australians Equity Release Association of Lenders can provide general information 02 9858 1179.

Phone the ASIC Infoline on 1300 300 630 or visit ASIC’s MoneySmart website at www.moneysmart.com.au.

Use ASIC’s reverse mortgage calculator to work out how much your reverse mortgage will cost. The calculator can be found at www.moneysmart.gov.au/tools-and-resources/calculators-and-tools/reverse-mortgage-calculator.

Speak to Centrelink’s Financial Information Service (FIS) to find out how your Age Pension will be affected. Phone 13 23 00 and ask to speak with a FIS officer.

Where to go for help or to make a complaint

Speak to a financial planner or adviser for personalised advice.

For help finding a financial planner you can contact:

  • The Financial Planning Association on 1300 626 393;
  • The Association of Financial Advisers on 02 9267 4003; or
  • CPA Australia on 1300 73 73 73.

 

If you are experiencing trouble repaying debt, access financial counselling services by phoning the National Helpline 1800 007 007.

If a dispute arises you can make a complaint.

Contact the Senior Australians Equity Release Association of Lenders on 02 9858 1179. Your lender may be a member of this organisation.

If you would like to make a complaint contact:

  • The Financial Ombudsman Service on 1300 780 808, or
  • The Credit Ombudsman Service on 1800 138 422.

If you would like help with making a complaint, contact:

  • The ASIC Infoline on 1300 300 630.Visit ASIC’s MoneySmart website at www.moneysmart.gov.au.
  • The National Information Centre for Retirement Investments (NICRI) on 1800 020 110.

4.10 Paying for your funeral

Many people decide to pre-pay their funeral in order to ease the burden on their families. Make sure you only pre-pay your funeral if it is absolutely necessary. Some people pre-pay funeral costs without realising that their funeral is already covered. For example, you may be covered through insurance. Be aware of your rights before you sign up for any funeral plan because some of these can end up costing more than they are ultimately worth. Remember you always have the option of saving for your funeral on your own.

The following funeral payment options have advantages and disadvantages. Check carefully before you sign up for any funeral plan.

A funeral bond is an investment used to save for the cost of a funeral. When you purchase a funeral bond of $6000 for example, you agree to pay a lump sum or regular instalments that will eventually add up to the cost of a funeral. Be aware that if you discontinue the bond you may not have the right to get back the money you have already paid. Check the product disclosure statement carefully.

A pre-paid funeral is a funeral that you have paid for in advance as a one off payment or in instalments. Be aware that you may not be entitled to change the funeral provider if this becomes necessary, for example if you move interstate before you die. Some costs associated with a funeral such as flowers and funeral notices may not be covered.

Funeral insurance requires you to pay monthly or fortnightly ongoing payments for a fixed amount of cover. Premiums usually increase with age and grow over time. If the premium payments become unaffordable and you stop paying them your policy is likely to be cancelled. If this happens, or if you decide to end your policy you usually cannot get back any money you have paid. Be aware of what your policy covers. Often your family cannot receive a payout within a couple of years of starting your policy unless your death is an accident. Check your product disclosure statement carefully and seek advice if there is anything you do not understand.

With some providers it is possible to pre-plan your funeral without paying for it.

Where to go for more information

Visit ASIC's MoneySmart website at www.moneysmart.com.au or call the ASIC Infoline on 1300 300 630. You can also order a copy of the booklet, Paying for Funerals, through ASIC’s website or Infoline.

Purchasing any of the above funeral products may affect your income support payment, including your Age Pension. Contact Centrelink on 13 23 00 for more information.

Where to go for help or to make a complaint

For complaints about funeral insurance, contact the Financial Ombudsman Service on 1300 780 808 or the Australian Securities and Investments Commission (ASIC) on 1300 300 630.

To make a complaint about funeral bonds and prepaid funerals, contact the office responsible for fair trading in your state or territory.

ACT
Fair Trading, Office of Regulatory Services
02 6207 0300
NSW
NSW Fair Trading
13 32 20
NT
Consumer Affairs and Fair Trading
1800 019 319
Qld
Office of Fair Trading
13 74 68
SA
Consumer and Business Services
131 882
Tas
Consumer Affairs and Fair Trading
1300 654 499
Vic
Consumer Affairs
1300 558 181
WA
Consumer Protection, Department of Commerce
1300 304 054

If the provider of your funeral product is a member of The Australian Funeral Directors Association you may make a complaint to them on 03 9859 9966.