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FY25 EOFY investment update webinar
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Show transcript
Good evening and welcome. Welcome to the 2024-25 EOFY Performance Update Webinar. The content of today's webinar has been created based on the questions that you the members have pre-submitted. We received hundreds of questions, wanting to know more about the investment market, the outlook, long-term economic themes and how these factors come into play with AustralianSuper's investment strategy.
If we go back 40 years, 40 years ago, Queen had just delivered a show stealing performance at Live Aid. ‘We don't need another hero’ was the number one song in Australia by Tina Turner. The variable home loan rate was 12.5%. The Titanic was found. Neighbours premiered on Australian TV and a compulsory employer paid super contribution of 3% had only just begun and only in some professions. And some of you watching, joining us this evening may have still been at school, or some of you may not have been born.
40 years ago, AustralianSuper, albeit under a different name, came into existence. And since then, it has provided most of our members, those in the Balanced option with an average investment return of 9.28%. Over those 40 years, there's been some ups and downs, and today we going to look at how the Balanced option achieved 9.52% for the 24-25 financial year.
My name is Peter Treseder. I'm an Education Manager at AustralianSuper and 40 years ago I was three years into my superannuation career. For the past 26 years, I've been with AustralianSuper, helping members understand the super system better so that they can be in a better financial position when they retire.
AustralianSuper acknowledges the Traditional Custodians of Country throughout Australia and their connection to land, sea and community. We pay our respects to Elders past, present and emerging and we extend that respect to all Aboriginal and Torres Strait Islander peoples. Today's speakers, we are on the land of the Bunurong, Wurundjeri and Kombumerri people. And AustralianSuper head office is on the land of the Wurundjeri people of the Kulin Nation.
What we're talking about tonight is general information only. It does not take into account your personal objectives, or your financial situation or needs. So please read the Product Disclosure Statement and Target Market Determination, available on AustralianSuper’s website, or by calling 1300 300 273 before you make any decisions.
These webinars have become increasingly popular, with thousands of members registering to attend. We prepared responses to many of those questions raised, however if we don't get to your question today, we do have a number of resources available to you to explore after the session.
To help me with this evening's webinar, I have with me two senior members of our investment team Sam Weaner, Manager Investment Communications, and Amber Rabinov, Head of Thematic Research.
So firstly to you, Sam. Thank you and welcome tonight. What do you remember from 40 years ago? Thank you, Peter. And when I look back to 40 years ago, I think of Michael J. Fox in the Back to the Future movies. But in terms of finance, I remember the 1980s being a time of a lot of mergers and acquisitions among companies. As well, investing was becoming more mainstream. I remember having school assignments where we got to pick investments to choose from and stocks to invest in.
And Amber the same question to you. 40 years ago, what memories come back? I wouldn't say necessarily memories, but 40 years ago, this was a period of real significant change in the global economy. Particularly in terms of freeing up or liberalising the rules around trade, around finance, and also foreign exchange markets. So as an Australian economist, this was a big time, and a really big event in this country was the incredibly formative for me in my professional career, was the floating of the Aussie dollar back in December 1983.
Thanks Amber. Now Sam, I mentioned before the Balanced option has averaged 9.28% over its 40 years. Can you expand on those, what those numbers were year by year? Because they did vary. I've always been a bit of a historian, so it is interesting to look at the last 40 years and the trends that have occurred over that time frame. This chart shows the financial year returns of the Balanced option, and the first aspect that I notice is that there are a lot more good years with positive returns than negative returns over this time frame. So we often tend to dwell on the on the negative years. We think of the times when international shares sort of sold off in the early 2000s. We think of the Global Financial Crisis in 2008, 2009 and even the recent COVID-19 downturn in 2020. However, history has demonstrated the resilience of many diversified portfolios over this time frame.
And like the last 40 years, the last 12 months has had good days, weeks and months. Looking back with the wonder of hindsight, how did the 24-25 financial year pan out for the Balanced option? And when you look at the returns over the last financial year, it does show a window into the daily volatility that can occur. So this is the cumulative return of the Balanced option. This shows that it has provided a solid result of 9.52% over the year, even while facing the ups and downs. So for example, if you look back at the beginning of the year, a year ago, in August, the markets faced higher Federal Reserve rates in the US. There was weaker tech sector earnings at the time.
And there's even a lot of geopolitical tensions. But then markets continued to advance through February. And in February is when we saw a lot of concerns about US trade policies. And this led to major sell offs in shares. And when a lot of those tariffs were put on hold in April, that's when the markets quickly recovered through the end of the year, providing a solid result for members in the Balanced option. Effectively, a member that stayed invested through these ups and downs received a pretty decent return for the year.
Yeah, and it's important that the return for the year outpaces inflation so that we have real growth on our earnings. How did the performance of the Balanced option compare to its objective to outpace inflation? I find as I get older, I often think of the different prices from things, years ago to what items cost today. And you think 20 years ago a movie ticket would cost about $15, today it could cost $25 to $30. And this is a result of that inflation rate, or CPI, of 2.7% over 20 years. And this is why each of the PreMixed options have an objective to outperform inflation by a certain threshold.
And for the Balanced option, what we show on the screen here, that's CPI plus 4% per year. So to do this the Balanced option invests in a lot of growth assets such as Australian shares, international shares and private equity to help provide these long-term returns. Real assets in the portfolio assets like infrastructure and property can also provide some protection against inflation as many of their revenues are linked to either CPI or economic growth. Overall, when you're investing for retirement, inflation is an important factor to consider. You want to maintain your purchasing power by investing in a way that outperforms inflation. And this can help you live well in retirement.
So Amber I appreciate we're talking about the last 12 months, which in a superannuation lifetime is short-term. And I'm always talking to members about the need to take a long-term view of super. But how does the fund actively manage investments in the short term?
That's right Peter, it’s certainly not a set and forget approach that we take. Rather, we actively manage investments, as you say. We take into consideration material changes in the current market conditions as well as in the outlook. We also have some more nimble parts of the portfolio in highly liquid listed markets, where we can take advantage of some of the more opportunistic investments when they arise.
So if we think back over the past 12 months, we've broadly maintained a growth bias in the asset allocation. And importantly, we stayed invested through the Liberation Day shock around tariffs that Sam mentioned. We did this to benefit from the snap back in equity prices that rapidly occurred afterwards. What does a growth bias mean to us? What this means is we place a greater weighting in our asset allocation, or the proportion of the portfolio that we hold in assets like international shares, Australian shares and private equity. And these assets tend to generate stronger returns over time compared to asset classes like cash and fixed income.
Now Sam, I said before that the content of today has been put together from pre-submitted member questions and this refers to AustralianSuper’s performance over the last 12 months. The question was ‘AustralianSuper doesn't appear in the top ten performing super funds for 2025. Can you provide some insights into how we perform against our peers?’
In addition to the CPI objective, we also do have a peer objective, and this is to outperform the median fund or our peers. And the Super Ratings benchmark provides a group of peers for us to compare against. And effectively the Balanced option aims to outperform the median Balanced fund over the medium to longer term. And this is where we have been successful over five, ten, 15 and 20 years due to our active management approach, as well as investing in unlisted assets like private equity and infrastructure that have added value for members accounts over time.
But to get to the heart of the question, it's really looking at the one-year number. So in the short term, over one year, we did face some challenges compared to our peers, largely due to investment style. A key aspect has been the outperformance of listed markets over unlisted markets in recent times. And so any peer fund that was primarily invested in listed assets performed fairly well and did better in the surveys over the past year. For any funds that had a mix of listed assets and unlisted assets we’re a bit farther down the list. So this is one of the challenges that we faced over this past year. So we do see a big difference between investment strategies that have done well over the long term, say 10, 15, 20 years compared to investment strategies that did well over the recent period.
And on the next slide, we're going to do a deeper dive into the performance of different asset classes in the portfolio. And that's where a question has come from members on this topic. Sam, ‘can you please comment on the performance of these asset classes within the Balanced investment mix? Now we understand some of these might be commercially sensitive, but would help to understand at the high level how they performed and what adjustments we proposed to their allocation and what role you see for them in the near medium term.’
Definitely, so you can think of the asset classes in the portfolio as the building blocks of your portfolio, and these are returns that we do want to share with members that these are the building blocks that make up, the High Growth option, the Balanced option, the Conservative option and the Stable option. And this chart shows the returns of each of those asset classes in the AustralianSuper portfolio over one year and also over five years, as well as ten years.
So it demonstrates how asset classes such as Australian shares international shares, private equity and even infrastructure have provided significant contributions to members accounts over the past decade. Strong consumer demand has led to favourable earnings growth in many assets, which drove these returns over time.
It's also worth highlighting asset classes like unlisted property. And this is an asset class that historically has been a strong performer in Australia. If you go back to the last three decades, returns up to the year 2020 were pretty favourable for property. Just in the last five years, we've been seeing big shifts in demand for retail and office properties that affected the returns in this asset class. So one benefit of diversification by having these different building blocks is that each asset class is affected in a different way by market and economic conditions, and provides a balance between long-term growth potential as well as some downside risk protection.
So ultimately, what we see is that asset class returns can often go in cycles. And these can be driven by different economic themes over time. So that's an interesting point you bring up there Sam, about themes and asset cycles. So if I turn to you Amber, in your role leading the thematic research, what do you see as being the key driver of the current market cycle?
So Peter, from a cyclical perspective regarding asset returns, there are two real key components. Firstly, we've got the traditional macro drivers such as growth, inflation and interest rates. And then we have the more thematic drivers. And for both of these they can be global as well as more local or national influences. If we think back to recent history on the macro front, the low interest rate environment, particularly from the mid 2010s and into the early 2020s, this was really positive for high risk, growth oriented assets such as private equity and listed equities. And these asset classes in turn enjoyed really high returns.
On the thematic front, we can think back to China's infrastructure and construction boom, particularly from the mid 2000s and into the early 2010s, which drove a global boom in resources. And this, in turn, led to outperformance by mining companies in the broader Australian equity market. Likewise, we've seen housing booms in Australia, the US and elsewhere during the 2000s supporting banking and construction stocks. So if we fast forward to today thinking about these factors, whilst interest rates are higher than they were, say, ten years ago, they are on a downward trajectory as inflation pressures have eased from their COVID peaks.
Further, when we turn to the key thematic driver of the market, this is really handed over to the tech disruption of large-scale artificial intelligence and the capital expenditure, or CapEx boom that this has inspired. And you can really see this playing out in the listed equity space, particularly in the US, where the major tech companies are domiciled. Here we're talking about the Magnificent 7 or ‘Mag 7’ tech stocks. And this has been a really important reason why international equities have performed so strongly this year that we saw on the previous slide.
So we've talked about different asset classes. What about the difference between listed and unlisted assets. We had many questions around this topic. One member asking ‘I'd like to know how AustralianSuper's unlisted assets are performing and what are the plans for investing in these for the future?’
Thank you Peter. When you look at the unlisted assets in the portfolio, these include asset classes like private equity, infrastructure, property, as well as credit. And they all have unique characteristics that provide that potential for higher returns compared to their listed equivalents and shares or fixed interest. So unlisted assets often have longer time horizons, more complexity, and less liquidity than listed assets. A benefit of AustralianSuper’s size, our scale, even our investment expertise is that we can invest in a large part of these assets on behalf of members.
Currently, about 25% of the portfolio is invested in unlisted assets, and we continue to look for additional opportunities to diversify the portfolio. Unlisted assets also can capitalise on many of those economic themes that Amber’s team researches. Assets like data centres and towers can capitalise on things like the digital theme, where renewable energy assets can benefit from decarbonisation trends over time.
Thanks, Sam. So we’ve had a fairly high-level view of how AustralianSuper invests and what assets they invest in. If you'd like to know more about what AustralianSuper invests in you can go to australiansuper.com/investments/what-we-invest-in And there you can see a detailed listing of the investments that the fund owns and how they are spread across the different asset sectors. that Sam has spoken about.
Now Amber, Sam spoke about the asset classes being the building blocks of a portfolio, how does the fund choose which building blocks to use and in what quantities? As one member has asked, ‘How do you determine the allocation to each of the investment sectors?’
That's a great question. Look, as you would expect, there are a number of factors that we need to take into consideration when we consider what investment sectors or asset classes are best for us to invest into, to put us in the best position to achieve our inflation plus 4% return objective over that longer-term period. Now firstly, we'd like to take advantage of probably the only free lunch available investing – that's diversification. And what this means is that we invest in a range of assets that perform differently in different environments, to give the fund a higher risk adjusted return than we could achieve by say, investing in only 1 or 2 asset classes. This is really important given the uncertainty of future outcomes.
Look honestly, we just don't know for sure how markets are ultimately going to play out. So this strategy allows us to spread our investment over international and Australian shares, private equity, those real assets such as property and infrastructure, credit, fixed income and cash, as you can see in the figure on your screen. We can then do a lot of research into the outlook for the global economy and also financial markets and into asset valuations. While we don't know how the future is going to evolve, what we can do is assess current conditions and what factors may influence conditions evolving either in a positive or a negative manner. And this allows us to apply further judgment to how we wish to weight our asset allocation according to growth assets versus defensive assets, for instance.
So what would be an example of that approach?
So if for say the economic outlook is positive, inflation and interest rates are falling, employment and economic growth are relatively healthy. And let's say valuations of share prices are judged to be affordable based on history or are rising on a justifiable basis, given earnings outcomes. In that sort of scenario, we would be more inclined to skew our holdings more towards those assets which have tended to do well in similar circumstances in the past. So these more growth oriented assets, such as Australian or international shares or private equity.
To give an opposite example, if say valuations were judged to be expensive after a long period of successive growth in a slowing economy with rising inflation, then we would be more likely to scale back exposures to growth assets and increase allocations to cash and fixed income. Taking a more defensive stance in holding these asset classes. Ultimately, our asset allocation strategy can be seen on a spectrum, and we use judgment to scale these positions accordingly, depending upon say, the market environment and expectations about the outlook.
Buying and selling assets based on these factors I’ve discussed, as well as price movements of these assets, changes the size of the asset allocation pie chunks. One pertinent example that we can see is the small allocation that we have in property. Now Sam spoke earlier about the slower growth in property asset returns over the past five years relative to the other asset classes. And in fact our allocation in property’s actually shrunk over the past few years. And this is because of the less constructive outlook for property relative to the other asset classes like shares or even infrastructure.
Thanks, Amber. So Sam, AustralianSuper is what's called an active manager, what does that mean?
At AustralianSuper we use active management to seek to add value to members accounts, and we do that in two ways. First is asset allocation, and that's what Amber discussed on how we adjust the allocation of the PreMixed options over time.
The second part is security selection. So security selection is where we would want to choose which assets have the potential to outperform the broader market over time. And the easiest example there is the Australian market. So you think of the ASX 200, if you were to follow the market exactly, you'd have about 12% of your portfolio in CBA shares 7% in BHP shares about 4% in CSL shares based on the value of each of these companies in the index. Our investment team will evaluate what drives value across companies and will seek to hold shares that have competitive advantages and have the opportunity to outperform the broader market. So we'll adjust the weighting of different assets in the portfolio based on our research.
Our active management approach being that combination of both asset allocation and security selection, has been able to add value over the long term for AustralianSuper members.
Thanks, Sam. Now Amber, a lot of questions were around how we consider regional weightings when it comes to asset allocation. How they may change, particularly given the big shift in policy coming out of the US. One member asking, ‘How is AustralianSuper managing risk of US tariffs and the global impact on investments?’
So US tariff policy has certainly been a really important driver of markets this year, as well as our research into and the management of the fund's investments. What we've found through our research is that whilst the US exceptionalism story has, I guess, broadly lost a bit of its shine of late, on a relative basis, so comparing the outlook of the US economy and asset markets relative to those in other countries, and when we think in the medium to longer term, particularly when it comes to growth assets, when we take this perspective, the US still looks to retain its outperformance position and therefore US equities will remain an important part of the portfolio. A big reason is because the outlook’s not just about government policy. Remember, I spoke about those drivers being macro but also thematic, a significant positive feature of the outlook and one that's been with us for a couple of years now, continues to be the tailwind generated from the tech AI rollout. Here we've seen corporate earnings remaining healthy, and this has given us confidence in the sustainability of the AI theme in supporting some of the more growth-oriented assets like listed equities and the US equity market.
Thanks, Amber. So Sam, Amber has looked at the US. What about the rest of the world?
So yeah, the number one goal for the investment team is to provide returns for members by choosing investments to improve their retirement. And we can look at it in two different ways. One is by investing in Australia and global markets. And also we're looking to expand the investment team to look for additional investment opportunities. So a major part of the portfolio is invested in Australia. And the map on the screen shows the proportion of assets in different regions around the world.
So we have about 45% of the portfolio, or over $170 billion invested in Australia. And this benefits from the growth of the Australian economy. But also supports local industries and infrastructure developments. But we also look internationally, we look for regions around the globe to help widen the opportunity set of potential investments. This adds to the diversity of the portfolio and also assists with return generation and diversification. The second part is how we're expanding our team globally. We have 70 investment staff in our London office, 40 investment staff in our New York office.
And the benefit of having staff in these locations is it gives us access to local knowledge and investment opportunities that we wouldn't get if we were just sitting here in Australia. We also have a trading desk in London, which enhances our ability to access liquidity and improves our ability to execute on trades. So overall, the team is focused on getting access to assets that can add value and add return and diversity to the portfolio, and also to improve the efficiency of how we manage these assets for members.
Thanks, Sam. Now Amber, another member question, ‘Beyond historical performance, what is your long-term investment strategy and how is it positioned to navigate emerging challenges and opportunities?’ So to navigate emerging challenges and opportunities, we need to take a view on how markets will act and react. You are the Head of Thematic Research. What is thematic research?
Great question Peter. And look, honestly, I do love to talk about myself and my team. What we do in thematic research is look into how the structural drivers of the global economy and financial markets are changing, not just now, but over the next 3, 5 to 10 years and beyond. These drivers include geopolitics – so how countries relate to each other in war, in trade, but they also include technological disruptions. Now here I'm talking about the current boom in and excitement for AI. Also demographics, how are populations changing? How are fertility rates falling as we live longer? And what does this mean for the outlook?
So what is the reasoning then behind this approach?
Look we do it for two really important reasons. The first one is having a solid understanding of the key forces shaping the dynamics of the global outlook helps us to anchor our macro expectations. So accounting for how thematics impact upon or even change the pace of economic growth or employment dynamics, or inflation or even interest rates, both within the global economy, but also looking into the shifts between different national economies. And these are really important factors that inform the asset allocation of the portfolio.
Now the second reason is that understanding thematics feeds into more granular sector or even stock selection decisions that we make for our portfolio investments. Particularly this is powerful when we combine it with more detailed bottom-up research that our asset class teams perform. So here we're thinking about which industries we think will outperform to generate better returns for members or even economies, and where perhaps we don't want to invest into given the outlook for the future. So in a nutshell, that's what thematic research is and importantly, why we do it Peter.
Amber, now this next question, look, I don't expect an answer to it because we haven't got a crystal ball, but it does reflect the uncertainties that members have. I often tell members that investment markets hate uncertainty. What creates uncertainty and how does the fund use the thematic research you spoke about, to adjust the exposure to the different investment sectors?
Look, that's true. Uncertainty is driven by the unknown. Whether it's the unexpected shifts in government policy as we've seen this year from the US under the new Trump administration. And it's on again, off again treatment of tariffs. Or if we think about geopolitical developments such as the outbreak of war, often this uncertainty is due to human behaviour, which is unpredictable – you can’t model it – or due to binary decisions made by others that are incompatible with our and the market’s value set, and therefore come as quite unexpected to us. And this is where thematic research can help by bookmarking and anchoring the outlook.
So putting the thematic research into practice means using this work to gain greater confidence in certain trends in which we can profitably invest in or as I mentioned earlier, avoid investing in. A great example is the research and tracking we've been conducting in the AI thematic, which has driven confidence in our asset allocation positioning into a more growth oriented portfolio, with that higher weighting towards international shares in particular than say, we would have had otherwise, as well as some of our sector and our stock specific investments in areas including data centres and the US ‘Mag 7’ shares.
Now Sam, we've focused on the Balanced option, its performance, its asset mix, as it's the default option that most people are in. However, some watching today might be in some of the other PreMixed options. How does their asset mix differ from the Balanced option, and what levels of return would we expect?
We do have a range of diversified options that members can choose from, and a member can match their return and risk preferences to how they choose these options. These charts show the differences in the strategic asset allocation and the types of assets that each of the options invest in. And the best way to compare them is if you look at High Growth, this would have the highest allocation of growth assets, followed by the Balanced option, Conservative Balanced, and Stable would be the most conservative if a member wanted to reduce their volatility and have higher exposure to defensive assets. So this enables a member to choose an investment option that is most suitable for their situation.
So Sam, how have these options performed over time and does their performance match up with that risk return objective? The differences in the asset allocation that we saw can also lead to the performance outcomes and an option over time. And this chart compares the 1, 5, 10 and 15 year performance of these options. And over these time frames, the returns have been in line with the risk profile. And what that means is if you took more risk, you got more return over these time frame. So those growth assets have been a large part of the driver of returns over the past 10, 15 years. Now, this is worth looking at the flip side as well, that during a market downturn you would see more downside risk in an option like High Growth compared to Stable because of its allocation to growth assets. So a member would want to focus on investing in an option that meets their own risk appetite and their own objectives.
And continuing on this theme, Sam, a number of members asked about our investment options, especially those that cater to members who might be wanting to exclude investments in certain industries.
Definitely, so this slide shows the variety of different investment options that we have, includes our PreMixed options, DIY mix options, and our Member Direct options. But to highlight the question that the member asked, the Socially Aware option is what they're thinking of here, and this is listed under the PreMixed options. So the Socially Aware option is a diversified option that excludes certain assets based on environmental, social and governance screens. And we've conducted member surveys over time to get feedback on member's investment preferences. And this research has helped determine the screens that we apply to this option. And even recently on 1st of August, we've extended the screens that are applied to the option to better meet member expectations. And the best way to get an update on this is to look at the investment guide that provides additional details on those screens.
Thanks, Sam. So we've looked at recent performance, long-term performance, but what does the future hold? Now, I know you can't give an exact answer to this question, but a members asked, ‘What is the forecast for the financial year 25-26?’ I hear this all the time. Amber what are the challenges and opportunities that lie ahead?
Let me start with the challenges and opportunities, and then I'll speak to the outlook. As you mentioned, we don't have a crystal ball, but the team does try to do its best to discern where in the market we may be able to take the most fruitful investment opportunities, and where conditions may be a bit more challenging. We do this to our best abilities by conducting deep research into the most important issues of the day and for the future. And honestly, over our history, this has put us in good stead. The beginning of my career with the fund five years ago, we delved into what was happening during COVID to try to understand the most likely path of policy in response to conditions and therefore how economies, financial markets and asset prices were most likely to respond. And we successfully judged the resulting recession and market drawdown to be temporary and positioned the portfolio to take advantage of the strong recovery in asset prices that we saw.
So turning to the 25-26 outlook. As I mentioned earlier, volatility in US economic policy, including on tariffs, has certainly been keeping us busy in the short term. So let's start here. And it's here on the economic outlook front where we see investment challenges most concentrated. US economic activity has slowed over the past six months, and we expect the impact of the Trump tariffs to be felt further over the second half of this year. We see another leg to come in the economic slowdown, a bit more higher inflation driving weaker consumer spending and softer employment outcomes. Valuations for assets, particularly shares, are expensive at the moment and this environment bodes a more challenging, one from an asset returns perspective. But if we look through the second half of this year and towards 2026 and beyond, we actually see a more positive evolution in the market. And as the tailwinds from the AI roll out continues, cash rates are likely to be cut further in order to support economic activity. And moreover, I think with most deals being done between the US and the rest of the world, the uncertainty that we've seen this year around the trade and the tariff environment will start to fade.
I think overall, these macro and thematic factors, when they're put together, imply that the second half of this year could be challenging in terms of growth momentum, but the environment is expected to be more promising as we head into 2026 and beyond.
Now we've looked at the US, looked at the world, the wider world. What about the Australian economy?
Yep, Australia. So while Australia's remained exposed to changing global trade dynamics, the tone of the near-term outlook here is a little bit more positive. Falling inflation has allowed the RBA to cut the cash rate, including the latest move we saw this week, and the RBA signalled that a couple more rate cuts can be expected in the period ahead. This environment is helping to boost real household income growth after a long period of weakness. Higher real incomes – so here we're talking about incomes after inflation effects are accounted for – these high real incomes are important as they're working to support stronger consumer spending. And they're driving a broader transition away from the public sector growth that we've seen of late, and more towards the private sector.
Look, that said, there are some structural challenges like low productivity growth and the headwinds that we've spoken about to global trade. And these will work to limit some of that upside for the Australian economy in the more medium term Peter.
Thanks Amber and a final question that relates to asset classes. And this is one that many members ask, ‘Do you invest in crypto currencies?’ Very topical.
Look, let me be frank. We don't currently have any cryptocurrencies in the portfolio, but it's a really good question because cryptocurrencies and more broadly digital assets and blockchain technology is, look, it's a really interesting area of financial innovation where we've seen some notable developments in recent years. And certainly from a holistic perspective, we're always looking at new investment opportunities to support returns for our members.
Now thinking more recently, one development in this space that's caught our eye is the evolution in stablecoins. So both private stablecoins and what have been dubbed public stablecoins or central bank digital currencies. If we look at the private side, a significant piece of legislation was passed in July in the US, the Genius Act, and this formalises some really important regulatory, compliance and financial accounting requirements for US issued stablecoins. And most significantly, the Genius Act mandates that these stablecoins must be backed 1 to 1 by the US dollar or US dollar denominated assets such as Treasury bills.
And this is a really important formality, which was only previously implied by stablecoin issuers. Now it's regulated. On the central bank digital currency side, this has also been evolving. We've seen significant pilot schemes having been launched in recent years by major economies around the world. This includes Europe, China, Canada, the UK, even right here in Australia. And the reason we are interested in these developments is that they could have a significant influence on the global financial and cross-border payment systems as volumes grow and as they become less of a novelty and I guess much more mainstream. And this could also drive changes in how exchange rates move against each other. It could create different pressures in bond markets, and even generate an evolution in banking systems as we currently know them.
Thanks, Amber. Now we've had many questions from members ask me about how to choose the right investment options, such as ‘How aggressive should my portfolio be? I'm retired in my mid-seventies.’ ‘At 50, what is the safest way to increase investments in my in my super?’
Look, there are three main things to consider when it comes to making an investment choice. Your investment time frame. How long the money is going to be invested. Your hands on level, how much you want to be involved in that selection. And finally, your risk appetite. What is your attitude towards that risk return that Sam spoke about? Now, as mentioned before, we do offer a range of investment options that may suit your preferences and on our website we have a risk profiler tool, which could help you with your approach to risk and return.
Now, a lot of people have asked questions about which option suits them and given their age when they plan to retire. If you'd like to know more about the investment options available to you, and which options or options may best suit you, please register for and join our investment webinar on the 28th of August at 2pm (AEST). There you can discover how you can tailor your super to suit your goals. The webinar will explore your options from the PreMixed options we've spoken about right through to the Member Direct for those that want to be maybe more hands on. To register for this investment webinar, please use the QR code on the screen on the white section of the screen you can see, and if you use that QR code it will take you to a registration page.
Now, even though today's webinar was focused on investments, we had over 100 questions asking about retirement planning, questions about drawing money out of an income stream in retirement, when you can access your super, when you can access the government age pension estimating how long a million dollars might last if I retire at the age of 60. We have webinars addressing these. So again, please register for and join one of our retirement planning webinars.
To do this, similar to the investment webinar, use the QR code on the right hand side of the screen or the darker side of the screen, and that way you can register and attend, one of our webinars, either to help you with your investment choice or maybe to help you on that journey to retirement that we are all on. Maybe some of us closer to it than others.
We also offer a range of webinars, especially around questions towards not only planning for retirement, but also understanding what transition to retirement might be, a way to ease into retirement. And the magical question that I get asked so often, do you need $1 million to retire? Beyond the webinars, we can also help you, through advice.
Now, if you have further questions, you can ask that via the app, the chat function on the website, or we can call us on 1300 300 273. We also provide you with access to a number of different advice options depending on your needs and how you want to interact with us.
You can speak with an advice team member over the phone, for simple personal advice. Now, simple personal advice when it comes to super, and your AustralianSuper account refers to your investment options. Which one should I choose? Making contributions to super. What might be the best way for me to get money into super? And also insurance and retirement outcomes. For more tailored or more comprehensive advice, you might want to meet with a financial planner, either face to face or by our secure video link.
So there are a number of different ways we want to help you. How it works out for you is really going to come down to what your plans are. Maybe a bit of research, but maybe also a bit of help, from a financial planner. Whether it's through AustralianSuper or through your own resources.
Sam and Amber, thank you for your input around what and how AustralianSuper invests, what the past year has been like and more importantly, what and how has Australia performed over that longer term. Because your super is a long-term investment, maybe 30 or 40 years whilst you're working, but maybe another 20 or 30 years whilst in retirement. So on behalf of AustralianSuper, thanks, Sam, thanks, Amber, and thank you to the members for your pre-submitted questions and for joining us this evening.
I trust that the webinar has met your expectations, and maybe I'll look forward to seeing you, well, you can see me, I can't see you, at a future webinar. So thanks a lot. Good evening.
End transcript
Investment fundamentals
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Show transcript
Hello everyone, welcome and thank you for joining us this afternoon for AustralianSuper’s Investment Fundamentals presentation. At AustralianSuper, we're focused on delivering strong long-term investment performance to members to help you all achieve your best possible position in retirement.
So whether you might have just opened your first super account or perhaps investment is a topic that's interested you for some time, today we'll unpack some of the investment concepts and strategies that will help you make sense of the choices that you have.
My name is Andrew Hambling and I'm an Education Manager at AustralianSuper. My job is to help members better understand how super works so everyone can make the most of it. In the background today, I'm also joined by my colleague Michelle, who will be placing some useful information for you in the chat button. She is also available to answer any questions you might have, which you can type into the Q&A button as we go through the presentation today, or if you do have any questions in relation to investments at AustralianSuper.
AustralianSuper acknowledges the Traditional Custodians of Country throughout Australia and their connections to land, sea, and community. Today, I'm speaking on the land of the Kaurna people.
It's also important, before we do get into the content today, that you understand this presentation may include general financial advice, but we haven't taken into account your personal objectives, financial situation, or needs. So it is important, before making any decisions, that you consider whether or not this information is right for you. You can read the relevant Product Disclosure Statements and Target Market Determinations available at australiansuper.com.
It's also important, because we are looking at investments today, that you understand that investment returns are not guaranteed and past performance is not a reliable indicator of future returns.
Now, we know that investing in our future selves involves looking after our physical and mental wellness, but it's also important to consider our financial wellness. Learning more about your super, which is likely to grow to be one of the largest assets you may ever own, can be a great first step to improving your financial well-being.
Today, we're going to help you understand how investment works, the way you can invest your super, which can make a big difference to how much you have in retirement. So, whilst retirement may seem far away for some members who have joined us today, decisions now can help you shape your future.
We're going to have a look at investing with AustralianSuper and the investment options available at AustralianSuper. We're going to run through three powerful tips for investing and provide some help with choosing the right investment option. Finally, I'm going to outline some next steps and places that we can all go for help, advice, and guidance from AustralianSuper.
To start with, many Australians, when they hear of their superannuation fund — which we can say AustralianSuper in this instance — believe that that is one particular investment option. This can be a common misperception in the community in Australia. However, AustralianSuper is the trustee that looks after members’ money and members’ assets. But within the AustralianSuper fund, there are actually lots of different investment options available for members to choose from.
At AustralianSuper, our default investment option is the Balanced MySuper fund, which you can see on the screen is part of the category we call our premixed options at AustralianSuper. But there is a broad range of different investment options that members can choose to put some or all of their super into specific investment options.
Now, at AustralianSuper, we broadly categorise our investment options into three categories. The first one is our premixed options. These are designed for members to be able to indicate how much investment risk they're prepared to take with their investments, and the AustralianSuper investment team does all the work on managing those investments. So you can see at the top we have High Growth and Balanced, and at the bottom of that list we have Conservative Balanced and Stable.
In the middle, we have our DIY or Do-It-Yourself mix options. Once again, these options are invested and managed by the AustralianSuper team, but this is where members can choose to put a percentage or all of their super into a specific asset class. You'll see we've got Australian Shares, International Shares, Diversified Fixed Interest, and Cash.
Finally, we have an option called the Member Direct option. This is a very hands-on investment option where members can actually choose to buy and sell specific investments across a wide investment menu. We do have a Member Direct investment menu available at AustralianSuper which outlines all the different investment options members can buy and sell within their Member Direct option.
It's also important to note that if members are interested in what the Member Direct option entails and what might be included, all members are actually able to access the Member Direct option by clicking on ‘Investments’ either in the mobile app or in their online portal, and clicking on ‘Member Direct’ to have a look at how that feels. Members can actually have a look inside the Member Direct platform and view some of the news articles and the research is available, but as long as they don't transfer any money into the Member Direct account, then they won't have started that option. So everyone can actually have a look at the Member Direct option and see what that looks like.
Now, how are these different investment options made up? Generally speaking, there are two main types of investment options: growth investments and defensive investments.
Growth investments can actually make more money over the long term, and this is because they are bought and sold. You can see there in the middle we have real assets, and sometimes people think about real estate. Houses are bought and sold in a marketplace, and the price is determined based on what people are prepared to buy that asset for on any given day. That's very similar to all the other growth assets. But as a result, their value can actually go up and down a lot in the short term, and the account balance in the super account with more growth assets can change more frequently.
On the other side, we have defensive assets. Defensive assets are slightly different and they don't tend to fluctuate as much in the short term as the growth investments. So, they're definitely less risky in the short term. They often generate returns from an interest or a coupon return rather than from the increase in value of the asset. But over the long run, they usually offer lower returns compared to growth investments because those growth investments can rise in value. Cash is a defensive asset, whereas listed shares, for example, are an example of a growth asset.
Now at AustralianSuper, we do invest in real assets, and some of the real assets that members hold in the premixed investment options include Perth Airport. Recently, Perth Airport has undergone a multi-billion dollar expansion, and AustralianSuper members were able to support Perth Airport with that expansion. So if you have travelled through Perth Airport recently, you would have noticed the expansion at that airport, and that is an example of an AustralianSuper investment on behalf of members.
Another investment that AustralianSuper has made in recent years is actually investing with a group called Assemble. Members would be aware that there is clearly a housing shortage in Australia, and the Assemble project is an opportunity for AustralianSuper to help address the housing shortage. Through Assemble, AustralianSuper has invested in several projects to add additional housing outside of Melbourne and help address this housing shortage in Australia.
But AustralianSuper is a global investor. Some of the global real assets that AustralianSuper has invested in include King's Cross in London. King's Cross has been a significant urban transformation in London. AustralianSuper has invested in this asset since 2015, and King's Cross is a development of retail, offices, and residential spaces. So if you're ever travelling through London in the United Kingdom, it may be worth going past King's Cross to see an example of where AustralianSuper has invested internationally.
In more recent times, AustralianSuper has also invested in Vantage Data Centers. We see the expansion of digitisation and a demand for data as a theme that shapes investment opportunities for AustralianSuper members. So we are investing in assets like tower networks and data centres to capitalise on this theme.
Now, there are broadly two main ways in which investment managers can invest: active management and passive management. Active management is the process of actually making investment decisions about what investments should be included in an investment portfolio and which investments potentially should be avoided. Passive management, sometimes also called index management or index-managed funds, generally tracks the market but does not make specific investment decisions along the way.
An example at AustralianSuper of our actively managed investment options are our Balanced option, our High Growth option, Socially Aware, Conservative Balanced, and Stable. But we do have a passive option available called our Index Diversified premixed option.
At AustralianSuper, we do actively invest, and as I mentioned, we are a global investor. What you can see on the screen is an illustration of where AustralianSuper invests, not only in Australia but also all around the world. AustralianSuper is Australia's largest superannuation fund, and we use our size to benefit all our members. We have in-house investment expertise, we're active managers, and we do this internationally for our members.
So let's now have a look at some powerful tips to consider when investing. We're going to look at the power of compounding returns, why time is an important factor for investment, and the concept of diversification.
Compounding is a really important part of your super. Put simply, compounding is the investment returns generated on the returns you've already received. When members nominate to invest their money at AustralianSuper, AustralianSuper takes that money and invests it on their behalf. Members then get a return on that investment. In the next year, the members' money is invested along with any returns they've already made. This process continues to repeat like a snowball rolling, gathering layer upon layer as it grows. That's how super accounts grow to become very large assets over working people's lives.
Time is also an important consideration. A consistency of the investment approach will help manage longer-term outcomes. Many people might have heard the saying, "It's the time in the market, not timing the market," or trying to pick winners that matters. Sadly, at the start of the financial year, no one has a crystal ball and knows what the returns will be that year, or if there are periods of market volatility, how long it will actually take for those investments to recover.
A fundamental part of the superannuation system is that generally, superannuation is preserved until Australians reach their legislated preservation ages. This helps all Australians benefit from a very long-term investment horizon, and those reinvested returns can continue to grow over everyone's working life.
AustralianSuper has a lot of experience over decades investing in different market conditions, and we have produced a strong long-term return for members over that time.
Diversification is also an important consideration when thinking about investment. There's the old adage, "Don't put all your eggs in one basket," which simply means if you go out to the chickens, collect all the eggs in one basket, and walk back to the house and fall over, you potentially break all your eggs. The same applies with investing — not necessarily investing all in one investment. Spreading those investments across different companies, different industries, different assets, and also different areas geographically around the world. Diversification helps prevent instances where one asset may not perform as expected in the short term, and the other areas may actually compensate and produce that return for members.
Let's have a look at Jane. Jane is 25 years old. She earns $70,000 a year and her super balance is $20,000. Let's have a look at the outcome for Jane of the power of compounding, time, and diversification in action.
Starting with Jane's current super balance of $20,000, if Jane puts these different principles in action at different levels of investment return, we can see the compounding effects of those different returns over her working life by the time she reaches her retirement age. It's really important to consider those different principles of time, compounding returns, and diversification.
Now that we've looked at some of the principles of investing, it's really important that we all consider how we actually choose to invest our super to reach our financial goals. There are three main things to consider when making a choice: your investment time frame, your hands-on level, and your risk appetite.
It's important to note we do have an investment guide available at AustralianSuper, and Michelle will have put that in the chat for you all today. This is the first place to go to review all those different investment options that I outlined, but also to help with understanding the investment time frames, hands-on level, and risk appetite of each different investment option.
When it comes to investment time frame, often, as I mentioned, people consider how much their super will grow by the time they reach their retirement age. But many people discount the average life expectancy in Australia. So if someone was 65 years old today and a male, their average life expectancy is still 20 years from that day. And for females, who live on average longer than males, it's another 23 years. So it is important to consider how long you need those investment returns to work for you.
We have different time frames which are associated with all the different investment options. Your investment time frame is essentially how long you plan on investing that super savings before you retire and how long you want them to last you in your retirement. But some investments we are unable to invest in if we do have a short-term investment time frame. The reason for that is if we experience a period of market volatility, we might not have time to allow those investments to recover because we actually need access to that money in a shorter time frame. So some investments require a longer investment time frame to make sure that we have better chances of those investments outperforming inflation and producing positive investment returns.
Another consideration is our hands-on level – how much time and energy do we want to spend in making active investment decisions? At AustralianSuper, across our three categories that I outlined earlier, there are different levels of hands-on approach to each different investment option.
Our premixed investment option, such as our Balanced investment option, means that members do not need to take a lot of active investment decisions. They broadly need to consider their risk profile and tolerance, and the investment team at AustralianSuper can do the investment work in managing and keeping those investments in line with members' expectations.
In the middle, we have our DIY mixed options, where members can invest in specific asset classes. However, more time and energy is required because members are deciding to put all or some of their money into specific asset classes. So they do need to monitor how those asset classes are performing over time and any changes that might be occurring.
Finally, our Member Direct option is a high hands-on level. Members do need to consider which specific investment options they want to choose as part of their portfolio and actually monitor how those investments perform over time. So it is definitely not a set-and-forget option – members do need to spend the time and energy to make sure they stay on top of their investment decisions.
Often, as an Education Manager, when we're speaking with members – and especially when our financial advisers are speaking with members – they talk about something called the "sleep well test". That is, whichever investment options members choose, if they are not sleeping well at night and they're staying up because of the level of risk that they feel they have made with the investment options in their super, perhaps they are not invested in the right investment option for their personal tolerance. Everyone has a different level of emotional comfort with the decisions we make about investments. So it is important that everyone considers how they feel about the investment options and the level of risk that they're willing to take.
Another way to look at this relationship between risk and return is to plot risk and return on a graph with our different investment options showing. As you can see at the bottom left-hand side of the graph, we have Cash. Cash is generally considered a low-risk investment, but as a result, the interest rate or the return that's generated on Cash also tends to provide a low rate of return.
In the middle of this graph, we can see our Balanced option at AustralianSuper. The Balanced option is a risk-adjusted option. The AustralianSuper investment team are managing how much risk is taken with the managed investments in the Balanced fund, as opposed to the potential returns achieved from those investments.
As you can see, if we continue to go further down the graph, we also have High Growth. High Growth has slightly more expected risk than the Balanced fund. So it has more of those growth assets that we discussed earlier, but over time, potentially a higher level of return can be achieved.
All members have different ways in which they can get help making a choice. For example, we've got Jane, who's 25. We actually have a risk profile calculator available on our website. As a result of completing a risk profile calculator, Jane may have found that because of the amount of time she has until she retires and her personal preference to try and grow her super, she might be appropriate for the High Growth option.
Angie, who's 35, may take advantage of calling the AustralianSuper team on 1300 300 273, as all AustralianSuper members can, to get some help in relation to which investment option is right for her. This is included for members as part of being a member at AustralianSuper. Angie may have called trying to get ahead with her superannuation account and discovered that the Balanced fund matches her desires between the amount of risk she wants to take with her investments and the amount of return.
However, Greg is looking to retire soon and conducting his own research about which investments he'd like to have as part of his AustralianSuper account. He might have decided that he has the time and energy to spend choosing the investments in his super and wants to continue to track that into his retirement years. So the Member Direct option might be an option that suits Greg's needs.
As I mentioned, the investment guide is a great place to start to get a better understanding of all these different investment options. What we can all do when thinking about which investment option is right for us in our AustralianSuper account is use the risk profile calculator available at AustralianSuper. We can all think about how long we are actually investing for and define that time horizon, and also remember the power that we looked at for Jane – those compound returns over time – because those compound returns are what make our super grow to become a large asset during our working lives.
There are a range of ways that members can get help, advice, and guidance from AustralianSuper in regards to their investment options. As I mentioned, we have our investment risk profile calculator, but there's also a super projection calculator for members that would like to visualise, such as the example of Jane today, how their super is likely to grow with different levels of investment return over time. These are available at australiansuper.com/calcs.
As I mentioned, our team are available on 1300 300 273, where all AustralianSuper members are able to ring up and get help and advice around which investment option will be right for them, and that is included as part of being a member. So there is no additional cost for that service.
We also provide webinars, such as the webinar you've attended today from the AustralianSuper Education team, to help Australians better understand all these different components of super.
Finally, we have comprehensive advisers in our offices around Australia, where members can actually book a complimentary meeting with those financial advisers to discuss their personal circumstances. However, before providing any financial advice, the financial advisers will outline what the costs are involved in their service, because they are a fee-for-service.
And that does bring me to the end of the presentation today.
Super basics - saving for your future
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Show transcript
Hello and welcome and thank you for joining our Super Basics saving for your super session.
My name is Michelle Kelada and I'm an Education Manager at AustralianSuper and I'll be taking you through the content today.
I'm also joined in the background by my colleague Warwick, who will be posting some useful links into the chat as well as answering your questions in the Q&A function.
So if you do have questions as we run through the content today, please feel free to post them into the Q&A function and we'll have those questions answered for you as we run through our content.
AustralianSuper acknowledges the traditional custodians of country throughout Australia and their connections to land, sea and community.
We pay our respect to Elders past and present and extend that respect to all Aboriginal and Torres Strait Islander people.
Our head office at AustralianSuper is on the land of the Warranji people of the Kulin Nation.
Our presentation today does include general financial advice which doesn't take into account your personal objectives, financial situation or needs.
Before making a decision, consider if the information is right for you and read the relevant Product Disclosure Statement and Target Market Determination, which is available on the AustralianSuper website.
If you have any questions, as mentioned, please do feel free to post them into the Q&A throughout today's session, but please do keep in mind that we can't answer questions that are of a personal nature.
So what will we be covering in today's Super Basic session?
We'll start off by looking at what super is and when you can access your super.
We'll then spend some time looking at how super works and some of the ways you might be able to take control of your super.
And then finally, we'll wrap it up by looking at some of the ways you can access help and advice from AustralianSuper.
So what is superannuation?
Super is one of those things that can be easy to ignore, especially if we have a lot going on with our finances outside of super and in life in general.
When we're young, retirement can feel like forever away, so tinkering with our retirement savings that we might not be able to touch for 20 or 30 years mightn't feel like a big priority.
But getting on top of your super at an early age could make a big difference to the lifestyle you lead in retirement.
So let's start by looking at some of the basics.
Superannuation or super is a compulsory saving structure where money is set aside while you're working to support your financial needs in retirement, where you may no longer be having the regular income come through from employment.
So let's have a little bit of a look at how superannuation works.
If you're eligible, your employer pays a percentage of your income into a super account of your choosing, which is called the superannuation guarantee.
And currently this financial year, the super guarantee has gone up to 12%.
You may also consider making additional contributions to super if you wish to do so, and we'll talk a little bit more about how you can go about doing that in a moment.
Your super is also invested in a range of assets to help grow your balance so you can have the best possible retirement outcome.
There are generally a number of different investment options to choose from, and we'll talk a little bit more about that later in today's session.
Generally you can access your super if you're age 60 to 64 and retire or when you turn age 65, even if you are still working at that time.
The meaning of retire depends on your age and how and when you finish work.
Why is super important?
Your super is there to help provide you with an income once you've stopped working yourself.
For many Australians, it could become one of the largest assets that you have outside of the family home and it may also be a tax effective way to build wealth over your working life for your retirement.
Most members may also receive some basic insurance cover within their superannuation account.
This cover is designed to provide a basic level of protection if you die or become ill or injured yourself.
And we'll talk a little bit more about the insurance options that are available for your consideration as we go through today's session.
When can you access your super?
I've mentioned this a little bit already.
And generally you can access your super when you reach your preservation age and retire or meet another condition of release.
The preservation age now in Australia is 60 years old for all Australians.
And if you're 60 years and between 60 and 64 and you change jobs, or if you're between 60 and 64 and you retire, this is when a super condition of release is met and you can access your super.
Otherwise, as already mentioned, once you reach the age of 65, whether you're still working or not at this point in time, you can also access your super.
For more information on when you can access your super, you can check out australiansuper.com/accesssuper.
There are also certain situations where you may be able to access some or all of your super early.
This is strictly limited to special circumstances.
Eligible first home buyers may withdraw a certain amount in voluntary super contributions to put toward a deposit under what's called the First Home Super Saver Scheme.
Other instances include when you may be experiencing severe financial hardship or under compassionate grounds when you don't have capacity to meet certain expenses.
This may include medical expenses, funeral costs, or mortgage repayments if you're at risk of losing your home.
If you're diagnosed with a terminal illness or are permanently incapacitated, you may also be able to claim some or all of your super.
Likewise, if you're a temporary resident who earns super while working and living in Australia, you may apply to have super paid out as a Departing Australia Superannuation payment after you leave.
For more information regarding rules and eligibility you can visit australiansuper.com/accesssuper or visit the ATO website at ato.gov.au.
Although your super can often be thought about as like a bank account that is put away for your future, you can think of this bank account like money coming in and money going out.
Let's firstly look at some of the ways that money comes in to your superannuation account if you're eligible.
As mentioned earlier, when you start working, your employer needs to contribute a minimum of 12% of your pre-tax income to your super account and this is known as the superannuation guarantee.
Generally, you can add more money to your super by choosing the option that works best for you, like before or after tax contributions, and we'll delve into this a little bit further in a moment.
In addition, there are the investment returns your super fund may generate for you.
When you join AustralianSuper, you'll automatically be invested in the balanced option unless you choose another investment option.
Now let's have a look at some of the ways that money comes out of the superannuation environment.
Some money comes out to cover the fees, costs, and taxes that are applicable to your superannuation account, and there may also be some premiums for the insurance that you hold within the superannuation environment.
Your balance may also drop due to market volatility if investment returns are negative for a particular time period.
It may sound a little complicated, but we will break it down so it makes a bit more sense.
Broadly speaking, there are generally two ways that you can make additional contributions to superannuation.
This is either by adding money to super before tax, which is otherwise known as concessional contributions and these have a limit of $30,000 this financial year.
There are also after tax contributions, which are otherwise known as non-concessional contributions, which have an annual limit of $120,000 for this financial year.
Let's break these down a little bit further and have a look at what's included for each.
Before tax contributions include what employers are required to make under the super guarantee and these are probably the most well known.
Salary sacrifice contributions are additional contributions you can get your employer to make directly into your super account before you pay tax on your income.
If you choose to, then there are tax deductible contributions.
These are voluntary contributions you can make, such as when you transfer funds from your bank account into your super that you can then claim a tax deduction for when you do your tax return.
The maximum amount you can contribute in before tax contributions is currently $30,000 for this financial year and it is important to bear in mind that this includes the employer contribution, so the super guarantee and the amount that your employer is contributing to your super account on your behalf.
Separate to that there are the after tax contributions which includes voluntary contributions that you make after tax.
This could be from savings in a bank account, proceeds from the sale of an asset or an inheritance.
The limit on these is $120,000 for this financial year.
In certain circumstances, you may be able to contribute more than the annual limits under what's known as the Carry Forward and the Bring Forward rules.
For more information on these rules, you can visit our website or you can register for one of our webinars on contributions.
We've spoken about contributions as a way to increase your super.
Now let's look at the investment returns your super fund may generate for you.
Super funds typically invest in a range of assets with the goal of growing member balances over time.
Compound returns play a big role in this, and put simply, compound interest or returns is the investment returns generated on both the money you've saved and the interest you earn.
Here's an example on the screen of what $20 a week could do to your super balance over the period of a decade when compound interest is involved.
As you can see, adding to your super in your 20s could make a big difference to your final super balance later on.
The earlier you get the ball rolling, the longer your money will have to accumulate compound returns and grow for your benefit in retirement.
Before adding to your super, do weigh up your financial circumstances, contribution caps that may apply and any potential tax issues.
Later on, I'll talk about the ways you can access advice and more help and information from AustralianSuper.
The money put into your super is invested by your super fund and the aim of this is generating returns to help your retirement savings grow over time.
As part of this, choosing the right investment option for you is important as it could affect how much your savings grow and how long they might last.
The investment option you choose will come down to a few things such as how hands-on you want to be, how long you plan to invest for and how comfortable you are with investment risk.
For instance, some people may choose to take on more risk with the potential for higher returns in their younger years, but then change to more conservative options with lower returns as they get older and closer to retirement.
A good place to start in making the right decision for you is to read the AustralianSuper Investment Guide, which is available at australiansuper.com/investmentguide.
This guide lists your investment options with AustralianSuper in a little bit more detail and as mentioned, if you are after more personalised advice, I'll talk a bit more about how you can access that from AustralianSuper towards the end of today's session.
Here we've got an example of our balanced option, which is our default investment option at AustralianSuper and we can see the different types of assets that make up the pool of investments.
That is the balanced option and the weightings that the investment team stay within and the ranges that they look at.
When they look at how they build this pool of investments out, we can see that there are growth assets including Australian shares, international shares, private equity, infrastructure and property, which are the kinds of assets that generally help to grow your super over the longer term.
That can be more volatile in the short term.
Then there are also defensive assets like cash and fixed interest, which generally fluctuate less in the shorter term but are more stable over the longer term.
As I mentioned, there are a number of different investment options that you can choose from and this is just an example of one of our premixed options at AustralianSuper.
It is also important to consider performance through markets and how markets perform over extended periods of time.
Here we have an example of how $100,000 invested from June 2005 would have grown up until June 2025 had it stayed invested in AustralianSuper’s balanced option.
We can see highlighted on the screen here the global financial crisis and COVID-19 as two global events that impacted markets around the world.
And we know that there are a number of other events that happened between and since COVID-19 as well.
We know that market fluctuations can be a normal part of market cycles and movements, and here we're demonstrating the importance of considering riding out market volatility when you are investing for the long term, like we do when we are with our superannuation.
If you aren't sure how your super should be invested, it may be worth considering getting some personalised advice about what might be right for your situation, your investment time frame, and your risk tolerance and attitude towards risks and investments.
Let's also have a look at some of the fees and costs that are associated with having a superannuation account.
There are different types of fees at AustralianSuper.
There is the investment fee, which helps cover the transaction costs of managing your investments.
It's charged as a percentage of your balance and can vary depending on your choice of investment option.
Transaction costs are incurred when buying and selling underlying investments for certain investment options.
These are deducted from pre-tax earnings and reflected in the daily credit rate, so they are deducted before returns are paid into your account.
Then we've got the administration fee which covers the general cost of managing your account.
It covers things like the contact centre and maintenance of the mobile app.
You will see these fees as part of the transaction cost listed on your account when they are charged against your superannuation account.
The administration fee is charged as a combination of a fixed fee and a percentage of your account balance up to a certain limit.
Additional fees and costs for things like insurance, if you have it, may apply, and you can find a full rundown of these costs by visiting australiansuper.com/fees.
If you have more than one super fund, you may want to consider whether consolidating accounts is appropriate for you.
Consolidating into one account could mean fewer fees plus easier account management, which might mean more money in your super as well as less paperwork.
Before you do, it is important to get the full picture.
Ask your super provider for information about fees and charges that may apply or the effect consolidating may have on your benefits, such as insurance cover, before making a decision.
If you do close an existing superannuation account without considering your insurance, you may lose the insurances that are attached, so this is an important consideration before you consider consolidating or closing any superannuation accounts.
AustralianSuper provides most members with basic age-based insurance cover with their super account.
Some age and eligibility conditions do apply and this cover provides a basic level of protection if you die or become ill or injured.
For eligible members, this includes basic age-based death, total and permanent disablement or TPD cover, and income protection cover.
Age-based cover is designed to provide a minimum amount of cover for your changing needs as you get older.
Death cover can help ease financial stress by paying a lump sum to your beneficiaries if you die.
TPD or Total and Permanent Disablement cover can provide you with a lump sum payment if you become totally and permanently disabled and can no longer work.
And income protection can help if you become ill or injured at or outside of work and can't work temporarily.
It can provide monthly payments to help you get by while you're not earning your regular salary.
And you can adjust your level of cover and get income protection on up to 85% of your income with either a 30-day or 60-day waiting period, with benefits paid for up to two years, up to five years or up to the age of 65.
You can access more details on insurance by reading the Insurance in your Super Guide, which is available on the AustralianSuper website at australiansuper.com/insuranceguide.
You can also calculate an estimate of your insurance needs by using the insurance calculator on our website.
This is a great way to estimate how much cover you should potentially have and how much your cover might cost as well.
To make sure your super and any life insurance you may have attached to it goes to the people you'd like it to, keep your super fund up to date by nominating a valid beneficiary.
You'll have a couple of different options, and these are important given that the type of nomination you choose could give you greater control over how your super benefits are distributed.
So you can make a lapsing binding nomination.
A lapsing binding nomination is a legally binding nomination that you put in place to tell the super fund what you'd like to happen if something were to happen to you.
It is a legally binding document.
So as long as it's valid, the super fund will honour that nomination.
And if you choose for this to be lapsing, what that means is that every three years that nomination will expire and you'll have the opportunity to renew that nomination.
You can also choose to have a legally binding nomination that is non-lapsing, which means that nomination will stay in place indefinitely until such time you choose to change it down the track.
You can also choose to make what's called a non-binding nomination, which is essentially a preference.
It is not legally binding and the trustee of the super fund will ultimately make the final decision about where those funds go, considering who is most dependent on you at the time of your death.
There is also the option of making a reversionary nomination.
This is available to those that are drawing an income in the pension phase of superannuation and by making a reversionary nomination, this means that your regular income payments would revert to your beneficiary at the time of your death and those regular payments would continue to be paid to the beneficiary.
It is also important to consider who you can nominate as a beneficiary for your superannuation.
Not everyone is considered a superannuation dependent and not everyone can be nominated as a super beneficiary.
So let's look at who can be nominated.
A spouse or partner can be nominated.
This includes a legally married spouse or de facto spouse, both same sex and opposite sex.
Your child of any age can be nominated.
This includes an adopted child or a stepchild.
Interdependents can be nominated.
This is someone who lives with you and shares a close personal relationship where one or both of you provide financial and domestic support and personal care of the other.
Any other financial dependent can be nominated, and generally a person is financially dependent on you if the level of support you provide them is necessary and relied upon so that if they didn't receive it, they would be severely disadvantaged rather than merely unable to afford a higher standard of living.
And finally, you can nominate your estate or legal personal representative.
This will mean your super benefits could be paid as per the intentions of your will.
It is important to keep in mind that your super and your will are treated separately, so if you are considering the appropriateness of your nomination, this is important to keep in mind and you may want to consider getting some professional legal advice around your own estate planning requirements.
If you do want to know more about who inherits your superannuation, we do run another session titled Who Inherits Your Super and you can find this on our website.
So what can we do on the back of today's session?
You may want to consider contributing a bit more to super if you can afford to do so.
You may also want to consider reviewing your investment options and considering if the default investment strategy is the correct strategy for you at this point in time.
If you haven't reviewed how your super is invested in quite some time, this might be a good prompt to review your investments and make sure that they still remain appropriate.
You may also want to review the insurance cover that you have within your superannuation account, as this is generally something that you pay a premium for, so you do want to ensure that it is continuing to be appropriate for your situation and your needs.
Consider nominating a beneficiary.
If you haven't nominated a beneficiary before, or this is something you haven't reviewed in quite a while, it is important to consider reviewing your beneficiary nominations and making a nomination that is appropriate for your own circumstances.
We also have a tool on our website where you can estimate your future super balance.
This is a great interactive tool where you can put in your age, put in your balance and when you plan to retire and it will tell you what your projected balance at your retirement age might be.
You could also tell the calculator to calculate, “Well, if I put an extra X amount into my nominated super account, how much better off might I be at my planned retirement age?”
So it's a great interactive tool and you can find that at australiansuper.com/projectioncalculator.
AustralianSuper provides you with access to a number of advice options depending on your needs.
You can speak with an advice team member over the phone for simple personal advice covering topics relating to your AustralianSuper account, including your investment options.
So, if you are unsure about what investment option might be right for your situation, you can receive advice on this over the phone as part of your membership.
Similarly, if you are thinking about making additional contributions to super and you're not sure about what might be best for you, you can get advice on contributions over the phone as well as your insurance and retirement income options.
For more tailored and comprehensive advice you can meet with a qualified financial advisor face to face or via secure video link as well.
If you would like to proceed with that personal financial advice, a one-off fee will be payable for the preparation of that personalised advice and the cost of this does vary depending on the nature and complexity of the advice and will be agreed upon upfront in writing.
Thank you for joining our Super Basics session today.
We do hope you found the information valuable and that you have some action items to take away after joining with us for today's session.
I will pause now and have a look if there are any questions remaining in the Q&A function.
I can see that Warwick has been busy posting links into the chat, so if you would like to continue referencing those links after today's session, please copy them to a separate document so that you can have a look at that information after today's session.
I can also see that all of the questions that have been posted have been answered.
I will just wait to see if there are any more questions coming through and we'll have those answered in a moment.
OK.
I can't see that any more questions have come through.
So again, thank you for joining with us.
We do hope you found today valuable and we hope to see you along again next time at one of our sessions.
Thanks.
Get your super sorted
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Show transcript
Hello everyone, welcome and thank you for joining me today for AustralianSuper’s presentation.
Get your super sorted.
Today’s presentation is designed to simplify the ways Australians can take control of their superannuation or super.
Superannuation is a vital part of all Australians’ financial future and understanding how to manage it effectively can make a significant difference in our retirement planning.
My name is Andrew Hambling and I’m an Education Manager with AustralianSuper and my job is to help all Australians better understand how super works so that everyone can make the most of it.
Our goal with AustralianSuper is to help all Australians achieve their best possible outcomes in retirement.
AustralianSuper acknowledges the Traditional Custodians of country throughout Australia and their connections to land, sea and community.
We pay our respects to Elders past and present and extend that respect to all Aboriginal and Torres Strait Islander people.
Today I’m speaking and talking from the land of the Kaurna people.
It’s also important before we start the presentation today that everyone understands that this presentation may include general financial advice, but we haven’t taken into account your personal objectives, financial situation or needs when preparing this material.
So it is important that everyone considers whether or not this information is suitable for them before they make any decisions.
People can review our product disclosure statements and target market determinations at australiansuper.com.
We’re going to have a look at consolidating super, insurance in your super, ways that everyone can add more to their super and where to go for help, advice and guidance from AustralianSuper.
To start with, let’s have a look at consolidating super.
Many Australians have had more than one job and that means potentially they have more than one superannuation account.
And we’re going to have a look at what should we consider if we are in a situation where we do have more than one superannuation account or we’re thinking about changing our superannuation fund from one fund to another fund.
Today we’re going to follow along with James.
So James is 36 years old.
He’s earning $90,000 as an IT consultant.
He has a wife and a child.
And he has accumulated $90,000 across multiple different super funds during his working life.
So James needs some help getting his super in order.
When we think about consolidating super funds, and you might be like James and haven’t paid a lot of attention to the multiple accounts that you didn’t even know about.
Consolidating your super into one account could mean that you could potentially save money by reducing fees and insurance costs across multiple accounts, potentially save time and actually mean that you have less administration and also greater control.
So by getting control of your superannuation accounts, it’s easier to keep track of how that superannuation is performing and your superannuation balances.
But there are some considerations when thinking about consolidating super accounts.
There may be costs involved with exiting old super funds.
There might be insurance costs, so you might actually have insurance cover with super funds that you weren’t aware of.
There’s also personal contributions and tax deductions.
So it is important if someone is considering consolidating super accounts and moving to a new super fund that they do inform their employer but also update any periodic payments that they might have that were going to those superannuation accounts.
Now there are a number of different ways to consolidate.
We do have a consolidation tool available on our website at AustralianSuper, but the other way that Australians can consolidate super is simply by logging into their myGov account.
Within the myGov account, Australians can link the Australian Taxation Office portal to their myGov account, and within the ATO portal, the Australian Tax Office keeps a record of all the super funds that are attached to someone’s individual tax file number.
Within this tool, not only does the ATO help people understand which super funds they have and how much is in each of those super funds, but individuals can actually choose to transfer from a super fund to a new super fund.
Once again, it is really important that if people are considering clicking that button and transferring from a super fund to a new super fund, that everyone does consider the insurance they might have in their super account.
Because by giving that instruction to close an old account and transfer through to a new super fund, that instruction is also informing the old super fund to cancel any insurance policies that might be in that old super fund.
So it is really important that everyone considers that they have the right insurance cover in the new super fund prior to cancelling any old superannuation accounts.
Now I have been mentioning insurance in super, so it is really important we look at all the different types of personal insurance cover that is available in superannuation.
Generally, there are three different types of insurance that are available for Australians in their superannuation account.
The first type of insurance is life insurance.
So life insurance provides a lump sum of money alongside whatever’s in the superannuation account balance through to individuals’ loved ones or families.
In the instance the unfortunate was to occur and they were to pass away, there’s total and permanent disablement insurance.
And once again, this is a lump sum of cover.
So this is paid alongside any money in the superannuation account out to individuals if they suffer a totally and permanently disabling event and are no longer able to work.
And finally, there’s another type of insurance and this is called income protection insurance.
And income protection insurance is designed to pay a monthly payment through to individuals if they find they are unable to work due to injuries or illnesses for a temporary period of time.
Now, there are some conditions around income protection insurance.
There is a waiting period which may be 30 days or 60 days, and then there’s a benefit which can be two years, up to five years or even up to age 65 for some individuals.
So we do have an insurance guide available at AustralianSuper which outlines more information about these different types of covers that we all may have in our superannuation accounts.
Now it’s important to note why we might have insurance.
So what are these insurances designed to help Australians protect themselves and their loved ones from?
And that’s really to make sure that Australians can pay their day-to-day expenses if something unfortunate occurs, potentially pay off any debts.
They have income to live comfortably so that they are still earning income if they were temporarily injured or have an illness or find themselves in a situation where they may no longer be able to work.
And obviously future costs for themselves and their loved ones that may rely on their support financially.
Now it’s important to note, while some members do receive default insurance cover through their superannuation when they start with a new employer, all Australians have the ability to increase, reduce or cancel insurance.
Now the more insurance that individuals have, the higher the premiums or the costs associated with those insurances from their super account.
At AustralianSuper we have an insurance calculator which is designed to help Australians with two main considerations.
The first one is how much insurance we may need.
So there is a tool to help people think about the sorts of reasons that we all might have these insurance covers.
And the other part of the insurance calculator is to help people understand what the costs of a certain level of cover are.
One of the things that does impact how much insurance costs is our work rating attached to our occupation.
At AustralianSuper, our default work rating for all members is the blue collar work rating.
And this is the most expensive type of work rating because it covers all the different occupations that our members might do.
There are work ratings for white collar workers or professional workers, with a professional rating actually being the least expensive.
So if members are eligible to apply for a white collar rating or a professional rating, then they can actually update their rating and it would reduce the cost of that ongoing insurance.
We do have a work rating tool available at AustralianSuper to help members consider whether or not they are actually eligible to change their work rating.
If we cast our mind back to thinking about James’s situation, as James may have never actually looked at his superannuation account before, he would have been considered a blue collar worker or his occupation rating would be blue collar at AustralianSuper.
However, if James actually applied for a white collar rating, given the nature of his work as an IT consultant, it’s likely he would be accepted as a white collar work rating given the definition around professional rating.
At this stage, James might not be eligible for a professional work rating, but he does have the option in the future if his work circumstances change to apply for that professional work rating.
It’s easy for members at AustralianSuper to update their work rating.
They can do this simply by logging into their member portal, clicking on Insurance or My Insurance and then clicking on Change My Insurance.
We do also have paper-based forms available for members who may prefer to complete this process in writing.
It does mean that there is a reduction in take-home pay, and the reason for that is the tax in superannuation, as a concessionally taxed environment, may be less than the tax that people pay on their income.
The sacrifice component of a salary sacrifice is important to remember—any contributions made into superannuation accounts are preserved in that superannuation account until people meet their preservation requirements.
There’s also government co-contributions.
A government co-contribution is for people who earn an income of $47,488 per year as taxable income.
They’re able to add $1,000 from their bank account as an after-tax or non-concessional contribution, and after they do their tax return for that financial year, the government would actually put an additional $500 into their superannuation account.
There is a scale that shades out at $62,488, so people who earn between $47,488 and $62,488 may be eligible for some of the government co-contribution, but the closer they get to $62,488, the less they would be eligible for.
We do have more information available at australiansuper.com/cocontribution.
The third way that people can add more to their super is something called a spouse contribution.
A spouse contribution is where you have two people in a domestic relationship and one may be a higher income earner than the other partner in that relationship.
If the partner in that relationship is earning less than $37,000 per financial year, the higher income partner can deposit $3,000 into the lower income earner’s account—the spouse’s account—and claim a tax offset on that payment.
The tax offset is 18% up to a maximum of $3,000.
So the higher income earner can contribute less, but the maximum benefit can be achieved at the limit of $3,000, which works out to be a tax offset of $540 when the higher income earner does their tax return at the end of the year.
Now there is once again a higher limit at $40,000.
So individuals with a spouse earning between $37,000 and $40,000—the closer that individual gets to $40,000—they will be eligible for a part offset but not the full amount.
And once over $40,000, there is no spouse contribution tax offset applied because the spouse’s income is too high.
So we’ve only spoken about those three different ways that people can contribute to their super, but there are actually a range of other types of contributions that everyone can consider.
We have our Grow website at australiansuper.com/grow, and some of the other types of contributions that everyone might want to consider are something called split contributions or before-tax contribution splitting.
It’s called contribution splitting, where individuals can split contributions between their partners—and that’s for those before-tax contributions, such as employer or salary sacrifice contributions.
There’s something called the bring-forward rule, which is attached to these after-tax contributions that individuals can make in Australia. It allows individuals to use more than one year’s worth of contribution limit at the time they make the contribution.
They can actually use up to three years’ contributions.
There’s a downsizer contribution.
This is for people who sell their house after reaching age 55.
There are a range of eligibility requirements around the downsizer contribution, but it is a separate category of contributions into super.
And finally, there’s something called a transition to retirement strategy, which involves opening transition to retirement income accounts and then taking advantage of different types of contributions such as salary sacrifice or potentially tax-deductible contributions to help everyone achieve their best possible outcomes in retirement.
So a transition to retirement strategy is another type of contribution strategy that people may want to consider.
For more information, visit australiansuper.com/grow.
So when thinking about James and all the things we’ve discussed today, James has the ability to take some action with his super.
The sorts of things James could do include consolidating his accounts.
He might do that via his myGov account, or he might do it through a consolidation tool such as the one on the AustralianSuper website.
James has the ability as an employee to discuss with his employer making additional salary sacrifice contributions to take advantage of the differences between the tax in the superannuation environment versus the tax he pays on his personal income.
James is in a situation where he is able to do a spouse contribution because his partner has recently had a child and is earning under the $37,000 threshold.
He’s also thinking about doing a binding death benefit nomination to make sure his super goes to his loved ones and family in the instance he passes away.
So there are a number of benefits for James to take action on his account.
The first one is he can save on fees—having multiple super funds means multiple sets of fees, and that can potentially reduce the amount his super can grow over time.
By taking advantage of salary sacrifice, James is able to increase the amount he has in his superannuation account for his retirement years by around $127,000 by the time he reaches age 67.
But his immediate benefit from salary sacrificing is saving around $510 in the first year alone.
James also gets to take advantage of the spouse contribution tax offset and receives the tax offset of $540 on that $3,000 contribution to his partner’s superannuation account.
And finally, James has peace of mind.
He knows that he’s had a look, understood where his superannuation is and which fund he’s with, and also made that nomination on his account—making sure that his super goes to who he wants it to go to in the instance he passes away.
So we’ve been through a range of different areas that individuals can take control of their own super, and some of the actions we can all consider as a part of watching this video today include contributing extra to super, reviewing any insurance covers we might have in our superannuation accounts, and nominating beneficiaries—the way in which we would like to nominate beneficiaries on our superannuation account.
As I said at the start today, AustralianSuper aims to provide our members with the guidance, help and advice they need when they need it, and we do this in a range of ways.
We have our calculators available online, such as the insurance calculator discussed in today’s topic.
Our team at AustralianSuper, available on 1300 300 273, can give members advice in relation to their AustralianSuper account, and that cost is included as part of being a member.
Members can reach out and get help with their investment—choosing the right investment. If they are thinking of making an additional contribution, they can reach out to the team and get help deciding which type of contribution is going to give them the maximum benefit.
The team can also help members think about how much insurance they might want for themselves and their families, the associated costs of that insurance, and how to make sure they apply to get the right level of cover they’re looking for.
AustralianSuper also has comprehensive advisers in our offices around Australia, and people can book an appointment with an adviser and have a complimentary meeting to discuss their personal affairs.
As they are full comprehensive financial advisers, they can provide advice on a range of different super funds—not just AustralianSuper—and help members with that comprehensive advice.
It’s important to note they are a fee-based service, so there is a fee associated with the work they do for members, and they will let people know what that cost is prior to proceeding with that financial advice.
And finally, we have our education team. We provide a range of different education webinars, topics and video recordings available at australiansuper.com/webinars.
Thank you very much for attending today.
We hope you’ve found this valuable and learned some things to consider around ways to take control of your superannuation account.
Thank you very much.
Preparing for your retirement journey
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Show transcript
Hello and welcome. The journey to retirement is different for everybody.
Whether it's in the next few years or still a number of years off, it can be a time of excitement.
And today, with my fellow Education Manager, Kim Heironymus, we're going to take you through the journey to retirement and help you prepare for retirement whenever it may be.
As I said, it may be next week, it may be next year, it might be ten years down the track.
But what we're going to run through today is going to help you navigate your way through to retirement.
So, hello Kim. Thanks for joining me.
Hi Peter. Hi everyone. Welcome. Thanks for joining us today.
So, AustralianSuper acknowledges the Traditional Custodians of the land on which we work, and we pay our respects to their Elders past, present and emerging, and we extend that respect to all Aboriginal and Torres Strait Islander peoples.
AustralianSuper's head office is on the land of the Wurundjeri people of the Kulin Nation, and today we're speaking to you from the land of the Bunurong people.
That's where the Traditional Custodians of the land I'm on, in the southeast of Melbourne.
And Kim is on the land of the Quandamooka people up in southeast Brisbane.
What we're talking about today is general information.
We don't know your personal circumstances, wants, needs.
We will talk in generalities.
We will talk about what the average member might think.
We will talk about what you can and can't do.
We can't tell you what you should or shouldn't do.
And we'd always ask you to refer to the Product Disclosure Statement or the Target Market Determination, both available from the AustralianSuper website.
So this journey to retirement, where do we start?
As I said, you might be starting this journey today.
You might be thinking about it for the future.
But for most people, the first step is planning or thinking about what is retirement going to look like?
What is that journey to retirement going to look like for me?
When do I want to retire?
What age am I going to retire?
There's no retirement age in Australia.
You can retire whenever you want.
However, there are some key ages that people tend to think about retirement.
Is it going to be before the age of 60?
Is it going to be somewhere between 60 and 65?
Or is it going to be after the age of 65?
These are questions that you might be asking yourself and maybe the first question you ask yourself about your journey to retirement.
If you do have questions today, we do have a fellow Education Manager behind the scenes, Yen, who will be able to answer your questions.
And Yen will also be putting some links in the chat that link to the topics that Kim and I will be talking about, and you can explore those topics at your leisure.
So once we've worked out when we want to retire, what's retirement going to look like?
What am I going to be doing in retirement?
What are the things I'm going to be taking part in now I'm no longer going to work?
What am I going to be doing with a partner if I have them?
What am I going to do by myself?
What are we going to do together?
All those sort of things tie into my picture of retirement.
So is it travel?
Now that's what we see stereotypically, you retire and you start to travel.
But is the travel going to be the grey nomad caravanning around Australia or is it going to be the world cruise retirement where you spend your life on a cruise ship visiting exotic places around the world?
They're both travel, but both of those ways to travel are going to have different costs.
Are you going to go straight into retirement?
Are you going to ease your way into retirement?
Are you going to finally get the garden put together?
Are you going to do volunteer work?
Are you going to make sure you stay active?
Because all the health experts talk about staying active in retirement.
Are you going to study?
Are you going to do those things, those hobbies that you always wanted to take up but you didn't have time to do because you were working?
Are you going to learn to play a musical instrument?
Maybe learn a foreign language.
So if you are a jet-setting travelling retiree, you'll be able to speak the language of where you're going to go.
Once we know when we're going to retire, what we're going to do in retirement, it's going to come back to dollars.
How much do we have to spend to fund the lifestyle that I want to have?
As I said, it's going to cost more to be a jet-setting retiree than a grey nomad.
What are we going to need at home?
What are we going to need when we travel?
What are we going to need if we're looking after children, grandchildren, maybe great-grandchildren?
All those come down to costs.
The more you want to do, generally, the more you're going to need.
So, how much do you need?
And this is the most common question that Kim and I get asked.
How much should I have to retire?
Now, that varies for everyone because everyone's going to retire at a different age.
Everyone's going to have a different look to what they're going to be doing in retirement.
So maybe to draw a line in the sand, let's look at what the Association of Superannuation Funds of Australia, ASFA, have put together to give you a guide of how much you might need for various lifestyles.
And you can see all the details of how these numbers have been put together by going to the ASFA website.
And you can see the assumptions behind these numbers.
So the assumptions are you've paid off the house, you're in reasonable health, but the lifestyle you're going to have, and they call it modest and comfortable.
But looking at modest here, you can see you're probably missing out on a few things in retirement.
Yes, you've got the basic essentials.
You've got a car, you've got a house, you're eating out occasionally, you've got clothes, you've got a bit of technology, but there's some things missing.
And this modest lifestyle for a single is going to cost a bit over $33,000 and for a couple a bit over $48,000.
Now, remember I said you can go to the ASFA website to find all the assumptions behind it, but modest is fairly modest.
If I want to have a comfortable lifestyle, if I want to fill in the gaps, you can see the cost of that comfortable lifestyle increases.
A single, it's now up to $52,000 and for a couple nearly $74,000.
But those shaded-out areas I have now filled in for that lifestyle.
I maybe have a second car.
I'm eating out more.
I've got a passport, so my travel is going to be international.
I've got more IT equipment, maybe the latest iPhone or whatever technology I'm using.
I might have a bigger clothing budget.
All those sort of things tie into or give rise to a higher cost for this comfortable lifestyle.
When I compare that with the government Age Pension, you can see where you have to make up the difference.
So, the full Age Pension for a single is about $30,000 and for a couple about $45,000.
So, if I'm aiming for that modest lifestyle, I've only got to find another three or four thousand from my own sources to get me to modest.
If I want a comfortable lifestyle, you can see I need to provide a lot more of, let's call it my own money, to have that lifestyle I desire.
So, we talk a lot about how much you've got to have each year. What are you going to be spending on? That's your budget for each year.
However, it's most common when Kim and I are talking to members that the question is, how much do I need to have that lifestyle?
So again, if we look at the ASFA numbers, to have that comfortable lifestyle, they're talking about having a lump sum, a superannuation balance of about $600,000 for a single or about $700,000 for a couple.
And having that amount in super is going to give you that comfortable lifestyle. So that may be a target you're aiming for.
So once you're there, how will you fund that retirement? What's the income source going to be?
Because if this is retirement, which can be anytime you want, and this is your working life, money is going in the bank. As soon as you stop work, money is no longer going to the bank. Where's my income going to come from?
And we find for most people, income in retirement comes from these four sources. What you've built up in super. You may be eligible for some government Age Pension. You might have some money in the bank. You might have other investments. You might have a share portfolio or some property or an old coin or stamp collection that is going to provide you with income in retirement.
But all of these income sources are like building blocks to get you to that retirement income you want to have in retirement.
So, if my retirement income is at that level, what building blocks have I got? How big are those building blocks going to be to get me to that retirement income that I'm aiming for?
So, it's a matter of saying, well, what have I got? What could I be eligible for with the government Age Pension? How much is the pension? When do I get the pension? We're going to talk about that a little bit later on.
So now we go back to, now I know where my income might be coming from. Now we go back to that question of when am I going to retire, because there are key milestones that you reach that allow you to access your super or the government Age Pension.
So if we start at the end, the government Age Pension, you're not eligible to apply for the government Age Pension until you're 67.
Once you're 65, you can access your super whether you're working or not working.
You can only access your super if you cease work and have attained the age of 60.
So those of you who, when I asked the question before, when you want to retire, if you were saying before 60, you don't have that superannuation building block, you don't have that pension building block because you're not eligible to access those.
Once you're 60 and you've ceased work, you have access to your super.
Once you're 65, you've got access to your super whether you cease work or not.
And then again, once you're 67, you've got access to, potentially, the Age Pension. So that building block might be there.
So retirement milestones are key to decide when retirement's going to happen.
So if we go back and look at the journey of where we've come from, we think about, well, I'm going to think about retirement. When's it going to be? What am I going to do? How much am I going to need to do that? And am I eligible to have all those sources of income?
And maybe it's a good place to see if you're on track to start with. Am I on track? Is what I've got now going to give me what I want, whatever number of years it is, into the future?
So to explore that a little bit more, we're going to look at a case study here and we're going to talk about Richard and Lucy. Now Richard and Lucy are a case study. It's probably a bit manipulated on our behalf because we want to get a lot of messages across of the options that Richard and Lucy might have.
So, they're both working. They've both got income. They've both got money in super. They've had their discussion about planning their retirement and decided that 63 is when they want to retire. So, five years down the track, they want to retire.
They've done their calculations to look at the lifestyle they want to have in retirement, and they've worked out that that's going to need $75,000 a year to fund that. And they've got a little bit of money in the bank as savings, maybe tucked away for a rainy day.
Now, if Richard and Lucy were to look to the future of what have they got now, what is it going to be in the future, this is sort of the scenario we see.
So, here's Richard and Lucy. They're 58 now, want to retire at 63, $450,000 in super.
Let's let the super system work. So the super system says their employer's got to put in 12% super. That's going to have growth over those years.
So five years down the track, they've now got $585,000 in their super account and they've retired.
Now they're not eligible for the Age Pension until they're 67. So, the first four years of retirement, that $75,000 of income they want in retirement is being totally funded by their super.
Once they get to pension age, they can go down to Centrelink, apply for the Age Pension, and behind the scenes, they would be receiving the full Age Pension because they'll meet the various asset tests and income tests that we'll speak about a bit later on. They're eligible for the Age Pension.
So that building block of pension wasn't there until they were 67. Their income was coming from their super.
Now with some income coming from the Age Pension, that pension building block kicks in. It takes the pressure off their super because they don't need as much of it to get to their $75,000.
Because the Age Pension, as we said before, is about $45,000. Instead of their super funding $75,000, their super now is only funding $30,000.
So they've got this $75,000 lifestyle from the age of 67. It's super funded, it's Age Pension funded.
However, it runs out at 82. Their super runs out, not the Age Pension, but because their super's run out, their retirement income goes from $75,000 now to $45,000.
And we're talking in today's dollars. We've factored in inflation and all those things into these numbers. So, we're talking about today's dollars.
Moving from a $75,000 lifestyle to $45,000 lifestyle will be a light change of lifestyle. They might be happy with that because they've ticked everything off their retirement bucket list, but life expectancy is another three years down the track.
So, it's not a bad story for Richard and Lucy. They've got some money in super. They've built that money up in super. They've worked out how they're going to retire, what they're going to do in retirement, what that retirement's going to cost.
It gives them that lifestyle in retirement for about 19 years, but it doesn't get them to life expectancy.
So, here's where we start to think about, well, how can Richard and Lucy improve their situation?
So, Kim, I'm going to throw across to you now to see how can we change Richard and Lucy's outcome from good to better. What are some of the things that they might want to think about?
Thanks, Peter. So for Richard and Lucy, there's a number of things that they could consider.
Perhaps they could consider working longer to increase the longevity of their funds and continue earning that superannuation for a longer period of time.
They could consider perhaps spending less in retirement. So perhaps reducing that $75,000 income per year down a little bit.
Or if they've got surplus cash, they could consider adding additional contributions to their super in the lead-up to their retirement.
So for Richard and Lucy's situation, when we had a look at the case study at the beginning, we saw that they do have some surplus cash there, and so they're thinking about making these extra contributions.
There's a number of ways that they could add to their superannuation.
Firstly, we have what we call before-tax contributions, also known as concessional contributions. The annual cap is $30,000 for this financial year.
The second type of contribution they could utilise is what we call after-tax contributions, also referred to as non-concessional contributions. The annual cap is $120,000 for this financial year.
So they're the two different types of contributions. Let's have a look at this in a little more detail.
With concessional contributions, or before-tax contributions, these types of contributions are concessionally taxed at 15%.
Included in these concessional contributions are any employer contributions. As Peter said, that's the 12% that your employer is mandated to pay as the super guarantee.
That includes employer contributions, salary sacrifice contributions, and tax-deductible contributions.
Salary sacrifice is an arrangement you might make with your employer to have some of your before-tax salary redirected into your super account before it hits your bank account.
Tax-deductible contributions are voluntary contributions you can make. You might have some money sitting in your bank account, transfer that into your super account, and then claim a tax deduction for it.
These are concessional contributions, and as mentioned earlier, the cap this financial year is $30,000.
A bit more detail around tax-deductible contributions: this is where you transfer money from your bank account into your super account, and once it's sitting there, you claim a tax deduction when you do your tax return.
This could be beneficial if you've received extra income that you might otherwise pay tax on at your personal income tax rate, which is often higher than the concessional rate of 15%.
It can also help if you've sold shares or simply want to reduce your tax.
There are a few steps you need to take for tax-deductible contributions. Once you've made the contribution, you need to fill out a Notice of Intent with your super fund.
You generally need to lodge that notice and have it acknowledged by your fund before you do your tax return for the year the contribution was made.
If you don't fill out that Notice of Intent, the contribution will be classified as an after-tax contribution. So it's important to complete that step and include it in your tax return.
A couple of rules around tax-deductible contributions: people aged between 67 and 75 need to meet the work test to be eligible, unless they qualify for an exemption.
The work test requires you to have worked at least 40 hours over 30 consecutive days in the financial year to make a tax-deductible contribution.
Regarding the annual cap that applies to all concessional contributions, there could be instances where you can contribute over that limit. This is known as the carry-forward rule.
The carry-forward rule looks back five years to see if you have any unused concessional contributions. If you haven't reached your cap in those years, the unused amounts carry forward for up to five years.
This financial year, you may be able to exceed the $30,000 cap.
This can help boost your balance if you've taken time off work to study or care for children.
A few rules apply: your super balance must be less than $500,000 on 30 June of the previous financial year.
Here's an example of how the carry-forward rule works:
Looking back three years (though it can go back five), in the 2023–24 financial year, the cap was $27,000. The member had an available concessional cap of $27,000.
Their employer paid $10,500 into their super account, leaving a remaining cap of $17,000. That $17,000 carried forward to the next financial year.
In 2024–25, the cap was $30,000. Adding the carried-forward $17,000 gives an available cap of $47,000.
The employer contributed $11,000, leaving a remaining cap of $36,000. That $36,000 carried forward to 2025–26, where the cap is $30,000. The available cap is now $66,000.
They made a tax-deductible contribution of $20,000, plus $11,000 from their employer, using $31,000 of the available concessional contributions. They still have a remaining cap of $35,000.
This might be something Richard and Lucy could use, depending on their circumstances. It's important to check whether you're eligible to utilise the carry-forward rule.
You can check this in your MyGov account. Log in, click on the ATO section, then the super tab, then the information tab. Under "Carry-forward concessional contributions", it will show red or green.
Red means you're not eligible, generally because your balance is over $500,000. Green means you are eligible, and it will show the amount of unused concessional contributions available.
Now, looking at non-concessional contributions, also known as after-tax contributions, these include any voluntary contributions you make into your account from your bank account without claiming a tax deduction.
With non-concessional contributions, you've generally already paid tax on the money, so there's no contributions tax once it goes into your account.
This also includes spouse contributions and the government co-contribution.
The non-concessional cap is $120,000 for this financial year.
Different to the carry-forward rule, the bring-forward rule may allow you to make up to three times the annual cap amount using this year's cap plus the next two years' caps.
It looks to the future and brings those two years' worth of caps into this financial year.
This means you may be able to top up your super by up to $360,000 in this financial year.
You might use this if you've received an inheritance or sold a large asset and want to get that money into your super.
A few rules apply: if your total super balance is $2 million or more, you can't make non-concessional contributions.
Individuals aged 75 at any time in a financial year can take advantage of the bring-forward rule, but your total super balance as at 30 June of the previous financial year plays a part.
It's really important, if you're considering any of these types of contributions, to check your eligibility and seek advice around your own situation.
Now, I mentioned spouse contributions. You might be wondering what these are.
A spouse contribution is when you make an after-tax contribution on behalf of your partner, adding to their super account to help grow their balance.
By doing this, you could be eligible for an 18% tax offset, which may apply to a minimum amount of $3,000.
To be eligible for the maximum tax offset of $540, your spouse's annual income needs to be $37,000 or less.
The offset progressively reduces and cuts out at $40,000. If your spouse earns more than $40,000, you're not eligible for the tax offset, but you can still contribute to their account.
Any spouse contributions you make count towards their non-concessional contribution cap, which is $120,000 for this financial year.
Now, your spouse does need to be under the age of 75. But as I said, essentially, if your spouse's income is $37,000 or less, let's say you transfer $3,000 into their account, then you could be eligible for a tax offset of $540.
Now I also mentioned in the after-tax contributions, government co-contribution. You might have heard about this. It has been around for a very long time now.
Essentially, how this works is if your income is $47,488 or less and you make an after-tax contribution of $1,000, you could be eligible for the full co-contribution of $500.
If your income is between $47,488 and $62,488, the co-contribution progressively reduces. If you are earning over $62,488, you won't be eligible for the co-contribution.
It doesn't have to be a lump sum amount. You could have a direct debit coming out regularly from your bank account, but whatever you've put in after tax, if you're under this amount, $47,488, once you do your tax return, the co-contribution will go into your super account in a couple of weeks.
So, that's the co-contribution.
Now, if we think back to Richard and Lucy and all the different types of contributions I've just spoken about, they've sought some advice and what they've decided to do is Richard's going to make a one-off tax-deductible contribution of $20,000.
If you remember, they had some surplus cash sitting in their bank account. They've decided to do a $20,000 tax-deductible contribution.
We've checked that Richard actually has available unused concessional contributions as part of his carry-forward rule, and they've worked out their budget. They can afford to make extra contributions to their super as well.
The kids have left home, they've got that surplus cash sitting there.
So Richard has commenced salary sacrificing $18,000 a year into his super. He really is maximising that cap this financial year of $30,000, as well as that carry-forward rule.
He's gone into his MyGov and double-checked that he can utilise that.
He's also decided to contribute to Lucy's super. He's going to make that $3,000 spouse contribution to be eligible for that tax offset we spoke about, that $540 tax offset.
Then Lucy is going to make an after-tax contribution of $1,000 to be eligible for the co-contribution of $500.
By doing this, let's have a look at their scenario now. Richard and Lucy, again, they're age 58 and they've got the same starting balance of $450,000, but they're going to start making those salary sacrifice contributions, the spouse contributions, the tax-deductible contributions, and we can see the effect that this has had on their super balance.
They're now starting retirement with a much larger super balance, $706,000.
Again, they're going to retire at the age of 63 and start self-funding their retirement, that $75,000 per year until they're eligible to apply for the government Age Pension.
At 67, they'll apply for the Age Pension and start receiving Age Pension to supplement their superannuation and provide them with that income of $75,000 per year.
What we can see is that, as we said, their life expectancy was 85, but they're not running out of super now until age 91.
So their super is now lasting well past their life expectancy.
And whilst perhaps in their late 80s they may not need that $75,000 a year, it just provides them with more flexibility in their retirement in what they want to do.
Some benefits here for Richard and Lucy around receiving that advice: Richard's actually paying $7,145 less tax just in that first year alone. Lucy's receiving the co-contribution of $500 per year, and their super has increased by $121,000 and is going to last them an extra nine years.
So, Peter, that's Richard and Lucy in the lead-up to retirement, but what if you're ready to retire now? What options do we have?
Look, there's many options that people have, Kim, and thanks for going through what Richard and Lucy could do. There are options there for them in their choice to put more money into super, but get it into super in the most effective way. As Kim said, there are a number of ways you can look at that and how to get it into super that's going to benefit you and your partner, if you have one.
But once you get to retirement, where to now? That's the ultimate aim of super, to build money for retirement. But when you get there, what can you do with it?
Most of us would understand that our super is this bucket of money that's been building up during our working life, and we get to that age 60 or 65, that point in time where we can access our super. What can I do?
You can leave your money in super. There is no compulsion for you to take money out of the superannuation system. It can sit in your bucket. It can sit there and wait until you want to take the money out. You can take the money out as lump sums. You can take it out as quickly or as slowly. You can take out big amounts, small amounts. Keep taking money out until it's empty. It's like a bank account. I can get it when I want it.
Most people tend to leave their super in that format. What a lot of members don't understand is what an account-based pension is.
An account-based pension is still super, but it's super treated in a different way. It is still a bucket of money, but that bucket of money has a tap on the side, and that tap gives you regular income.
The benefit of receiving regular income in retirement is that we had regular income whilst we were working. It makes sense to continue getting regular income in retirement because we may have budgeted during our working life. It allows us to keep on budgeting in our retired life.
It's up to you how much you move into an account-based pension. The other difference between an account-based pension and super is that if it is in an account-based pension, that bucket with the tap on the side, you must take a minimum amount out each year. That minimum amount depends on your age. It starts at 4% from age 60 to 65, goes up to 5% until you're 75, and keeps on increasing.
The other difference is that when my money is in a super account, that bucket I've used all my working life, and it's building up investment earnings, those earnings are taxed at a maximum of 15%. So if that bucket earns a dollar, I keep 85 cents and 15 cents goes to the ATO. When it's in an account-based pension, there is no investment earnings tax. If that bucket makes a dollar, that full dollar stays in my bucket.
So, there are some differences in the way it's treated from a tax point of view. With my bucket of super, with my account-based pension, I choose how it's invested, just like I do with my AustralianSuper bucket. I choose how it's invested with my account-based pension bucket. The difference being that there are no investment taxes on the earnings.
I choose how often I get paid. I choose how much or how hard I turn on the tap. As long as I take the minimum out each year, I can turn the tap on as hard or as soft as I want. I'm also able to take lump sums out of that regular income bucket when I need it. So I might be getting $1,000 a month to live on, but I want to have a holiday, buy a car, a boat, whatever it might be. I can put my hand into my account-based pension and take out a lump sum to fund whatever I want to buy.
So it's a matter of saying, I've got money in my super account. How much do I want to move into an account-based pension? AustralianSuper's account-based pension is called Choice Income. So, how much do I move from my super account into the Choice Income account?
There is a minimum of $50,000 to start a Choice Income account. Then it's up to me to determine how often, how much, how it's invested. That Choice Income account now puts money into my bank account. As I said before, that might mean I still have that budgetable level of income coming into my account each fortnight, quarter, however I decide.
The benefits of this Choice Income are flexibility around income, keeping my money within the superannuation system, receiving the tax concessions that super gets. I can set up my Choice Income account to pay me maybe one fortnight, and the alternate fortnight, if I'm eligible for the Age Pension, I might get money from the government.
So again, it's about budgeting and creating cash flow in my retirement years. The benefit from a tax point of view is that the money in my Choice Income account, its earnings are tax-free.
All these things are methods of drawing down on your income or your super that you've spent your life building up, like contributing in the best way. How do I withdraw money the best way? What is the best way that money is going to come back to me to suit the lifestyle that I've chosen?
Some of that money coming back to me is my own money through super. It might be money in the bank, investments. But I might also be eligible for the government Age Pension that we spoke about before.
I spoke about before, Kim, I've got to be 67 before I can apply for the Age Pension. But there are a couple of other rules that also kick in, and really, visiting Centrelink, knowing what you're eligible for and when you're eligible is a key part of this journey to retirement.
Absolutely. Thanks, Peter.
So, what we can see, and Peter did cover it earlier, is what the government Age Pension is currently paying. The maximum fortnightly payment for a couple is $1,732 combined. If you remember back to Peter's slide, that was just over $45,000 per year. For a single person, it's $1,149, which is just under $30,000 per year.
To be eligible for the government Age Pension, you need to be 67 years or older. You need to be an Australian resident. You need to meet the age test, the residency test, and also the income and assets test.
With the income and assets test, they call it means testing. They're going to look at what your income is, what your assets are, and whichever provides you with the least amount of government Age Pension is the one they will go with, if you receive anything at all.
It's important to keep in mind that over time your income and your assets are going to change. So even if you don't qualify now for the government Age Pension, once you actually get to retirement, it's important to keep checking to see if that changes.
How is the Age Pension calculated? Centrelink will do a couple of tests. There are two separate parts to the assessment: the income test and the assets test. Once both of these are calculated, whichever test provides you with the lowest government Age Pension amount is the test that is applied. Should you fail either of these tests, you're not eligible to receive the Age Pension. But as I said, that doesn't mean you may not be able to in the future.
Let's look firstly at the income test threshold. You may be able to earn up to a certain level of income before your Age Pension payments start decreasing. Centrelink is going to assess yours and your partner's income from all sources, including financial assets like savings, shares and superannuation.
You're entitled to a full pension when your income, if you're a single person, is equal to or less than $5,668. For a couple, it's $9,880. According to these thresholds, if your income as a single person is above $65,416, then you're not eligible for the Age Pension. For a couple, it's $99,944 or more.
An important point to understand, and often misunderstood, is that Centrelink does not assess the income you actually receive on your financial assets. They use a process called deeming, which calculates the income they include in the income test from your financial assets.
With deeming, they apply a simple rate to deem the amount of interest you've earned from your financial assets. This calculation is used to determine how much income to include under the income test.
If you're a single person, the first $64,200 of your financial assets has the deemed rate of 0.25% applied. Anything over that is deemed to earn 2.25%. For couples, the first $106,200 is deemed to earn 0.25%, and any amounts over that are deemed at 2.25%.
This is not what you're actually earning. It's a simplified method Centrelink uses.
That's the income test. The second test is the assets test. Under the assets test, most things are assessable, pretty much everything except the family home.
They will assess your investments, property, shares, bonds, superannuation accounts, pension accounts including transition to retirement accounts, household contents, and other possessions like cars, boats and caravans. They're looking for market value, not insured value.
Gifts are also assessed. In Australia, you can give away as much money as you want, but Centrelink will assess gifts over $10,000 in one financial year, limited to $30,000 over five financial years.
What's exempt? The family home, including up to two hectares of land, super accounts if under pension age, funeral bonds and cemetery plots.
Thresholds under the assets test for homeowners: you're entitled to a full pension when your assets are equal to or less than $321,500 for a single homeowner or $481,500 for a couple. If your assets exceed $704,500 for a single person or $1,059,000 for a couple, you're not entitled to the pension. If you're in between, you may be eligible for a part pension.
For non-homeowners, you're entitled to a full pension when your assets are equal to or less than $579,500 for a single and $739,500 for a couple. The upper limits are $962,500 for a single and just over $1.3 million for a couple.
A few tips when applying for the Age Pension: it's not paid retrospectively, so it's a good idea to plan ahead and submit your application up to 13 weeks before you turn 67 to help minimise delays. The government won't come knocking on your door when you turn 67, so you need to apply yourself.
Applying online may be faster, though not guaranteed. You can apply through your MyGov account or go into Centrelink if you don't have one. Make sure your documents are ready: bank account details, tax file number, Australian residence status, and income and assets information.
Centrelink will evaluate your gross income, not net. Income includes overseas pensions, consultancy payments and more. Assets should be assessed at current market value, not insured value or what you feel they're worth.
Review these regularly. You may not be eligible now, but as your income and assets change, you may be eligible in future. Keep your MyGov account updated.
So Peter, we've been through a lot in this session today. What are some next steps for our members after attending today's session?
Thanks, Kimmy. Yes, we have given you lots of information and we don't expect you to be experts at it all, but we are prompting you to take a few more steps and learn a bit more about your situation and what your options are going to be.
It might be starting with that calculator to see if you're on track. It could be making additional contributions if you're not tracking towards the lifestyle you're after. Knowing your eligibility for the Age Pension is essential.
Kim went through a lot of information about when you're eligible and what all the rules are. Centrelink has Financial Information Service Officers, FISOs, who can help you and give you information around all things Centrelink, more clarification around the rules Kim spoke about, and what other options are available, including concessional cards if you're not eligible for the Age Pension.
Finally, how are you going to draw your money out of super once you've got to retirement? We spoke about the Choice Income account and account-based pension.
Just to clarify, with a Choice Income account, when you move money from your super account to a Choice Income account, you can't put any more money into that Choice Income account. If you're still working, you might want to keep a super account open so it can receive contributions. If you have a windfall gain, those contributions cannot be made into a Choice Income account. They must go into a super account. Then at some point in the future, you can combine your existing Choice Income account and your existing super account.
Once you've started a Choice Income account, new money from you or from an existing super fund can't go into that same account. It sounds a bit complicated, but it's something you might want to receive advice around to get the best outcome.
With Richard and Lucy, they looked at the calculator, got some more money in, looked to see where they were heading, and whether it matched what they were after. They educated themselves, attended a webinar like this, watched educational videos on our website, and sought financial advice.
Financial advice can be simple or comprehensive. We will interact with you how you want to interact with us. It might be simple advice over the phone, covering investment choices, contribution strategies, insurance needs. More comprehensive advice might include retirement planning, asset allocation, estate planning and more.
That journey with AustralianSuper financial advice starts with our 1300 number. From there, we can direct you to the method of advice that suits you best.
We also have a landing page, https://www.australiansuper.com/journey, that has all the information Kim and I have spoken about today, plus more. It includes detailed links to various pages on our website and government websites around the rules affecting super and the Age Pension.
So that brings us to the end of this webinar. Thank you for joining us.
End transcript
Who inherits your super?
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Show transcript
Well, good afternoon everyone and thank you for taking the time to join today's presentation.
My name is Warrick Clout and I'm one of the Education Managers here at AustralianSuper and my role is really just to help you better understand how superannuation works.
And in particular today I'll be running through this Who inherits your superannuation presentation with you.
I would like to acknowledge the Traditional Custodians of the land in which we work, and we do pay our respects to Elders past, present and emerging and extend that respect to all Aboriginal and Torres Strait Islander peoples.
And today I'm speaking to you from the land of the Gadigal people.
So it is important to be aware that all information contained in today's presentation is general information only.
This presentation does contain some general financial advice which does not take into account your personal situation, financial needs or objectives.
And I would recommend that before acting on anything that you do see in today's presentation that you do consider what is right for you.
Have a read about Product Disclosure Statement and Target Market Determination documents which are available either on the AustralianSuper website or by giving us a call.
And you may also wish to seek independent financial advice as well.
If you are an AustralianSuper member, you do have access to financial advice through the fund and I can talk about how you can go about getting that at the end of today's presentation.
So a bit of an agenda what I'll run through in today's presentation.
Firstly, we'll look at what is estate planning, look at nominating beneficiaries and the importance of nominating a beneficiary.
Beneficiary being the person or people that you nominate to receive your super in the event of your death.
Look at understanding tax implications and that'll be really important depending on where your super, any other insurance may go in the event of your death.
So just being aware of any potential tax implications and then we'll finish off with how you go about getting that help, further guidance or advice after today's session.
So a common thing we do hear from our members is it's OK, I have a will.
I don't necessarily need to worry about where my super will end up.
But making sure that your assets go to the right people after you pass away is not always as simple as just stating your wishes in your will.
And that's because your will typically only covers assets that you own personally, such as houses, cars, any other investments you may have.
Whereas super is actually held in a trust for you by the trustee of your chosen superannuation fund.
And where many people think their super does form part of their estate, this is actually a common misconception, which means your super is not necessarily subject to the terms of your will and will not necessarily form part of your estate in the event of your death.
So it's really, really important that you do have an estate plan in place and you have got a nominated beneficiary or beneficiaries in place as well.
Look at some estate planning considerations, first one being drawing up a will.
And a will is a legal document that sets out how you want your assets that you own to be distributed when you do pass away.
Just be aware you do need to have both legal and mental capacity to be able to make a valid will.
Next one, there being a testamentary trust.
So these could potentially provide some additional asset protection and taxation benefits.
This can be quite a complex area, so I would suggest or encourage you to seek some specialist legal advice before setting up a testamentary trust.
Also, another consideration might be an enduring power of attorney, whether that be either financial or medical, which allows or authorises someone to make both financial and legal decisions for you when potentially you are unable to do so yourself.
For example, maybe if you're overseas or possibly incapacitated.
We have a letter of wishes which is also known as a statement of wishes.
This is an informal document that does accompany your will.
It helps to explain your will in a bit more detail and make it easier for your executor or your administrator of your estate. A letter of wishes, just be aware though, is not legally binding but it is easier to make changes to than your official will.
We also have a health directive which is a legal document that enables you to make decisions now about the treatment you would want or potentially would not want to receive if you maybe became sick or injured and were incapable of communicating your wishes.
And the last one there being nomination of any potential beneficiaries in the event of your death.
So it is really important, as I mentioned earlier, to provide instructions to your chosen super fund around what you would want to happen to your super in the event of your passing.
And there are a few options available to you when deciding what happens to your money in the event of your death.
Three main types of beneficiaries listed here being a binding nomination, a non-binding nomination, or a reversionary nomination as well.
So a binding nomination, as the name suggests, means legally binding because it is such a powerful document.
In order to make a binding nomination, you'll actually need to download, print off and complete a binding nomination form and have that form witnessed by two independent people that need to be over 18 and cannot be anyone that you've nominated.
A non-binding nomination is still a preference or a direction from you as to your preference.
Just be aware that a non-binding nomination is not legally binding upon the trustee of the fund.
And then we have a reversionary nomination which is only currently available if you have a retirement income account and just allows you, in the event of your death, if you do have a retirement income account and you are drawing that regular income, to revert that regular income onto a chosen beneficiary.
When it comes to that binding nomination, as I mentioned, we have both a lapsing and a non-lapsing binding nomination.
So a lapsing nomination—for anyone that's been with the fund for quite a while—this was the only type of binding nomination we offered up until December of last year.
And what this means if you did have a lapsing binding nomination in place is that it would lapse three years from the date that you signed the form.
At the end of that three years, AustralianSuper would write to you and simply advise that that binding nomination is about to lapse.
And if you would like it to remain binding, you simply need to fill in another binding nomination form.
But as of December of last year, AustralianSuper actually introduced what we call a non-lapsing binding nomination which means it will never lapse.
So as opposed to lapsing which would lapse three years from the date you signed the form, a non-lapsing nomination does not have an expiration date and only needs to be changed or cancelled if potentially you make changes to that nomination.
Be aware you can change either the lapsing or the non-lapsing option at any time just by completing another form.
Non-binding nomination, on the other hand, you actually nominate who you'd prefer your super to be paid to.
Difference obviously with this one and binding is that a non-binding nomination is not legally binding and although AustralianSuper will consider who you've chosen, ultimately your super fund is legally responsible and will need to consider the relevant laws when making a decision.
And you can see you can make a non-binding nomination firstly by completing the Change My Details form or you can do it through your online account or simply by calling the fund on 1300 102 273.
Reversionary nomination, as I mentioned.
So if you do have a pension account, whether that be a transition to retirement account or Choice Income account in which you're already receiving that regular income, you may be able to put in what we call that reversionary nomination.
Which means that simply in the event of your death and you had been previously receiving those regular income payments from your account.
In the event of your death. If you do have a reversionary nomination in place, those regular payments will then continue to be paid to your chosen reversionary nomination until the balance reaches $0.
OK.
And you can set up a reversionary nomination by completing the appropriate reversionary nomination form that is available on the AustralianSuper website.
It's also really important, I've just covered the type of beneficiary nominations available, but really important to be aware there are only certain types of people that will be seen as valid nominations under what we call superannuation law.
So include your current spouse or partner, whether that be married, de facto, same sex — does not matter.
And a spouse can be a person you're legally married to but estranged or separated from.
You also have a child, so any children of any age, including any adopted children or stepchildren.
You can also nominate anyone that's in an interdependent relationship with you.
This is where two people are living together and providing for both the domestic and the financial support of one another.
You can also nominate anyone else who is potentially financially dependent upon you at the time of your death or the last option there — you'll see you have the ability to nominate your super to be paid to what we call your legal personal representative, that then being the executor of your will or the person responsible for administering your estate.
So you'll see there's only a very small number of valid nominations available.
So just be aware in order to directly nominate someone, they need to fit into one of these categories.
Also, it's important to be aware a superannuation death benefit needs to be paid out to what we call a dependent. OK.
And when we talk about dependents, there are actually two different types of dependents.
So a dependent under what we call superannuation legislation, also known as the Superannuation Industry Supervision Act or the SIS Act, is someone who is eligible to be a beneficiary of your super benefits, while a dependent for tax purposes is someone who can actually receive those benefits tax free.
And the SIS Act does determine who can receive your super directly from your super fund without having to go through your estate.
And these are called your SIS dependents.
And then tax law determines who may be needing to pay tax on the taxable component of any death benefit payments — and tax dependents will receive your super tax free.
But as you can see from this slide here, your current spouse is considered both a SIS dependent (so they can receive your super benefits directly) and they can also receive those benefits tax free.
You will note though that a former spouse is not considered a SIS dependent or a superannuation dependent, so is unable to receive the super benefits directly from your super fund.
But if they did receive it, for instance via your estate, they could potentially receive those benefits tax free.
If we look at a child under 18 years of age, they are considered both a SIS dependent (so they can receive your super benefits directly) and also receive those benefits tax free.
Important to note though that a child over 18 who is not currently financially dependent is considered a SIS dependent (so they can receive your super directly).
But because they are not financially dependent upon you, they are not considered a tax dependent and therefore would be required to pay tax on what we call the taxable component of any superannuation benefit.
So a financial dependent is considered both a super dependent as well as a tax dependent.
So they can receive your super directly as well as tax free.
And also an interdependent — the same: considered a SIS dependent as well as a tax dependent.
So they can receive the benefit tax free and can be directly nominated through your super account.
So who is the dependent?
As I mentioned, any potential tax implications — this is really important.
So it will be dependent on both the taxable component within your superannuation account, which I'll talk about in the next couple of slides.
Whether or not your beneficiary is dependent for tax purposes will have an implication on if they're needing to pay any tax on the death benefit, whether the amount is taken either as a lump sum or an income stream, whether the age of the deceased and the beneficiary might also be coming into consideration, as well as any transfer balance cap considerations as well.
But if we are looking at the tax implications when we talk about the potential tax being payable on the death benefit, it's important to know what that actually means.
So the tax-free component of any superannuation account is the sum of the value of any after-tax contributions, including any voluntary contributions that you make or after-tax contributions, as well as any spouse contributions.
Also includes any government co-contributions that may have been made to your account.
As well as any tax-free component of a rollover from another superannuation fund.
Whilst the taxable component — this is probably going to make up the majority of most people's superannuation balance — includes any employer contributions that have been made.
So currently as that stands, the compulsory employer, what we call superannuation guarantee amount.
So currently, as of this financial year, 12% of your income going in from your employer also includes any salary sacrifice contributions that you've made into your account, as well as any personal contributions that you've made where you have claimed a tax deduction on those personal contributions.
And investment earnings also make up part of that taxable component as well.
But just to give you a bit more flavour around this, what we're going to do is run through a quick case study of John and his family here and just have a look at an example of the tax implications potentially payable with John and his family.
So John is currently aged 60.
He has a wife, Laura, who is 58.
They have a son, Ben, who is 20.
He's currently studying at uni and Ben's actually still financially dependent on both of his parents.
John and Laura also have a daughter, Meg, who is 28 and is married.
And Meg has a daughter, Ava — obviously being John's granddaughter — and Ava is currently four years of age.
So if we have a look at this, sadly look at this example of John passing away.
And if we assume for the purpose of this example that John's total super benefit of $400,000 is made up of 100% taxable component.
If we now look at what are the tax implications if that full amount of $400,000 were to be paid to each of John's family members.
So we look at Laura.
Laura is John's spouse and is considered that SIS dependent.
So she can receive the full super benefit directly and as she is that tax dependent as well, Laura can also receive that benefit tax free.
Ben as you can see, being a student and financially dependent on John, Ben is therefore considered a SIS dependent.
So Ben can receive the full super death benefit directly and also tax free.
Because he is financially dependent.
Ben would also be eligible for an income stream as long as he remains financially dependent, but that would cease at age 25, in which time Ben would then receive a lump sum.
Meg as you can see, being a child over 18 and not being financially dependent would be considered the SIS dependent so she could receive the super benefits directly.
But as I mentioned, as Meg is not considered a tax dependent and therefore she would be required to pay tax on the taxable component of John's super benefits.
So taxable component would be taxed at 15% plus Medicare levy.
So you can see that if the money was to be paid directly to Meg that she would pay $68,000 in tax on that taxable component being $400,000.
So if it went to Ava, as I mentioned earlier, she's not currently considered a financial dependent.
So she would not be eligible as it stands right now to receive John's death benefit and also not considered a tax dependent either.
So Ava would have to pay tax on those benefits.
However, if Ava was considered a financial dependent, say for example, if she was maybe living with her grandparents, she could be potentially both dependent for super and tax purposes as well.
So you can see really important to be mindful of, if you are nominating or who you are nominating, just to be aware of any potential tax implications depending on who you decide to nominate as a chosen beneficiary.
So if you look at what's next, we have discussed how important it is to plan and consider all of your options when nominating a beneficiary.
Today you've made that first step in planning and preparing by attending today's presentation.
However, there are still just a couple of steps that you may wish to take.
First one, as I mentioned earlier, if you do not currently have a nomination in place, regardless of your chosen superannuation fund, I would encourage you to nominate a beneficiary, whether that be binding or non-binding is really going to come down to your own personal situation.
If you do currently have a beneficiary in place, obviously a good idea as well just to regularly review those beneficiaries to ensure that that person or people still remain valid.
Second point, really important to consider your estate planning requirements.
Probably a good idea as well to have those conversations with loved ones and family just to ensure there's no confusion and that everyone's on the same page if something were to happen to you.
Communicate those wishes, as I mentioned, to all relevant parties to make sure that there is no confusion or uncertainty in the event of your death.
And a great idea, as I mentioned at the start of the presentation, is to consider some financial advice or to potentially seek some specialist legal or tax advice around potential tax strategies when planning around your estate.
What we do have at AustralianSuper is what we call an Elements of Retirement guide.
So if you are thinking about retirement, it's good to know some of the simple steps that you could take right now to make the best decisions for your future.
And the Elements of Retirement guide is an online guide that is packed with tools, tips and real-life stories. You can learn about the elements that make up retirement.
You see there are five elements of retirement all the way from super and investments — making sure that your super goes the distance, planning for your retirement — being mindful that it's never too early or too late to start planning, moving into retirement — finding your way into life after retirement, because that can pose some uncertainty or anxiety when you move from working life into retirement, income in retirement — you probably have a range of different sources of income, and lifestyle retirement — looking at the multiple ingredients that make up the elements of retirement confidence.
I'm sure Kim would have posted that link into the chat, but a really useful tool is our Elements of Retirement guide when it comes to getting help, guidance or further advice after today's session.
We do have a range of calculators available on the AustralianSuper website, including what we call a super projection calculator, which allows you to put in your current age, income and super balance to do a projection as to how much super you may have at retirement.
It's a really useful tool.
You can model your own differing scenarios around that, whether that be bringing forward or pushing back your retirement age, changing your investment mix, or even just showing you the difference of making some additional contributions — the difference that may make over the next 10, 20, 30 years to your overall retirement balance.
When it comes to getting help or further guidance, we do have a range of other educational materials available on our website, whether that be on-demand videos or other webinars upcoming that you can register for.
We run a range of webinars on a whole range of different topics all the way from the basics of super to well-being in retirement.
We run those webinars on different days of the week, different times of the day.
So if interested, I would encourage you to register for an upcoming webinar.
If you are with AustralianSuper and you would like some basic advice around things like contributions, which investment might be right for me or how much insurance should I have — basic, simple over-the-phone advice will not cost you anything.
It's already covered as part of your membership fee.
If you find, having spoken to one of those phone-based advice team members, you recognise that the scope of advice you require is a bit more comprehensive or tailored, they will then be able to refer you on to one of what we call our comprehensive financial planners.
We do have comprehensive financial planners in most of our capital city offices around the country.
Initial consultation with that comprehensive financial planner, whether it be on the phone, virtually like this or potentially face-to-face, will not cost you anything.
It's already covered — just a bit of a fact-finding conversation.
And whilst they will not give you any personal advice in that initial fact-finding conversation, they'll simply be able to run through the sort of services they can provide you.
If you do decide to go to that more comprehensive or tailored advice path, there will then be a cost involved.
But that would be a cost that you would negotiate directly with that financial planner yourself.
That pretty much brings an end to today's presentation.
Understanding transition to retirement
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Show transcript
Welcome and thank you for joining our presentation today. At AustralianSuper, we want members to achieve the best possible outcome at retirement. Today, we'll be delving into one of the options that could help you do this—something known as a transition to retirement strategy.
My name is Michelle Colada, and I'm an Education Manager with AustralianSuper. My job is to help you better understand how super works.
Before we get started, AustralianSuper acknowledges the Traditional Custodians of Country throughout Australia and their connection to land, sea, and community. We pay our respects to Elders past and present and extend that respect to all Aboriginal and Torres Strait Islander people. Our head office is on the land of the Wurundjeri people of the Kulin Nation, and our meeting today is held on the land of the Wiradjuri people.
Our presentation today may include general financial advice which doesn't take into account your personal objectives, financial situation, or needs. So, before making a decision, do consider if the information is right for you and read the relevant Product Disclosure Statement and Target Market Determination, which are available on the AustralianSuper website.
Towards the end of today's session, we will also talk a little bit about where you can access help from AustralianSuper, as well as where to access more personalised advice.
Everyone's journey to retirement is different, and today we're going to explain how you could transition to retirement. Some people might retire before they plan to, while a number of Australians might work for longer than they plan to. You might work longer to save more for retirement, or you might decide to reduce your work hours to give you more freedom ahead of retirement.
By understanding how a transition to retirement strategy works, you could uncover ways to create greater financial flexibility while also taking advantage of potential tax benefits depending on what you do.
So, let's start by looking at what TTR income, or transition to retirement, may allow you to do.
The first of those is it may allow you to reduce your hours of work—perhaps to get a taste of what life after work could look like by reducing your work hours and topping up your take-home pay with a regular payment from your TTR income account.
It may also allow you to ease into a retirement lifestyle—to perhaps take up a new hobby or enjoy the freedom of some well-deserved 'me time'.
Transition to retirement could also ease financial pressures as you transition into retirement and gain some peace of mind as you sort your finances and expenses.
And finally, you could consider using a transition to retirement to grow your super savings through any personal contributions to your super account.
There are a few different ways that a TTR can be used, but today I'm going to focus on two ways.
Firstly, we'll have a little bit of a look at how a TTR account could be used to help you save more—grow your super savings through any personal contributions. This may help accelerate your super savings and potentially pay less tax.
You could also consider using a TTR to work less—that is, reduce your hours of work, get a taste of what life after work could look like, and perhaps top up your take-home pay with a regular income from your TTR account.
Before we have a look at some examples of how a TTR income account could be used, let's have a little bit of a look at how a TTR account works.
Now, before a TTR income account is set up, for most people you've got your employer contributions being paid into your super account—that is, the Super Guarantee—and then you've got your income being paid into a bank account.
In order to start a TTR income account, which is a separate account to your super accumulation account, you do need to make a once-off transfer into your new TTR income account, which is at least $25,000 from your super account.
If you are using a TTR income account to work less, this is where—if you're reducing your working hours—you may need to supplement your income from another source. This is where a TTR income account can pay a regular income into your nominated bank account to top up your take-home pay because of your reduced working hours.
If you are looking to use a TTR income account to save more, this is where you may want to make or consider making additional contributions into superannuation to top up your superannuation account.
Let's take a closer look at how the 'save more' option of transition to retirement works.
In the years before you retire, you could save more super and potentially pay less tax by adding to your super from your before-tax salary—for instance, through salary sacrifice.
So, let's start by recapping some of the ways you can contribute into your super. You can make concessional contributions. These are also known as before-tax contributions, and these include things like employer contributions.
So, the Super Guarantee contributions you might make as part of a salary sacrifice arrangement, as well as tax-deductible personal contributions.
The cap on concessional contributions is $30,000 this financial year. There are certain circumstances where you may be able to contribute more than the annual limit if you haven't reached the concessional contribution limit in previous years, under what's known as the carry-forward rule.
You can also make non-concessional, also known as after-tax, contributions. These include things like after-tax voluntary contributions and spouse contributions. The cap on non-concessional contributions is $120,000 for this financial year. Again, you might be able to contribute more than this under what's known as the bring-forward rule. This allows you to make up to three years' worth of non-concessional contributions in a single income year—so $360,000 if you are eligible.
Now, if you've made the decision to top up your super with your before-tax salary, and you're using a TTR income account to save more, you would then consider receiving payments from your TTR income account. This way, you could potentially get the same take-home pay—or top your take-home pay back up to what it was—before you began making before-tax salary contributions into your nominated super account.
The tax savings you may receive could mean you save extra super in preparation for retirement.
Now, to get a clearer idea of where the tax benefits may lie in this type of strategy, let's take a look at Charlie.
Charlie has just turned 60 and is keen to add to his super balance, which is currently $175,000. Charlie's earning an income of $90,000 per year, and he wants to retire at age 65—so he's got about five years to go until he plans to retire.
Importantly for Charlie, he's not in a position to make additional contributions out of his take-home pay. He's spending what he's currently earning—it’s going towards his existing expenses. And as much as he'd like to be able to boost his super currently with money from his take-home pay, he's just not able to do that.
So, the most important thing for Charlie here is that he's looking to maintain the same take-home pay.
Let's have a little bit of a look at how a TTR strategy might work for Charlie.
Charlie currently has a gross salary of $90,000. His employer is contributing into his super at the current super contribution rate of 12%, which means $10,800 is going into his nominated super account.
This leaves Charlie with a taxable income of $90,000 and an income tax of $19,588 for this particular financial year. This means that Charlie has a net income of $70,412, which is the amount that he'd like to maintain moving forward.
Charlie is paying tax on the contributions that his employer is making into his super account, and that is at 15%, based on how much he is earning and the money going into super pre-tax. This means that currently Charlie has a net super increase in this financial year of $9,180.
Now, let's have a look at what Charlie's situation might look like using a TTR account to save more.
Now, Charlie's still earning the same level of income—he hasn't reduced his working hours. So, he's still earning $90,000 per year, which means that his employer is still contributing $10,800 into his nominated superannuation account.
The difference here is that Charlie is now salary sacrificing. He's increased his salary sacrifice from zero up to $19,200. So, his employer contributions together with his salary sacrifice are maximising the concessional limit for this year of $30,000. We're assuming that he's not using the carry-forward rule in this example.
What this means for Charlie is that his taxable income has reduced by the amount of salary sacrifice. So, he now has a taxable income of $70,800 as opposed to $90,000. This does mean that his income tax for this financial year has gone down from $19,588 to $13,444. So, this is good news for Charlie.
However, what this also means for Charlie is that he needs to replace the income that he's salary sacrificing into super to ensure that he can continue to meet his regular income needs. And we know that he needs to maintain that $70,412 per year of net income.
So, Charlie has started a TTR income account, and within his TTR income account, he's going to be withdrawing a regular income of $13,056. This amount will take him back up to the take-home pay he was receiving before.
As we can see here, there is no difference in net take-home pay, but Charlie has begun making these salary sacrifice contributions and topping his income back up with his TTR income drawdown.
Now, the tax on super contributions has increased. This is the 15% tax that is paid on contributions going into super before tax. Because he is making additional contributions into super, the tax on these contributions has increased.
But overall, we can see what this means for Charlie is that he's got $3,264 extra going into his super in this particular financial year, when there is no real underlying difference to Charlie's day-to-day needs. He's still receiving the same take-home pay each fortnight—he’s now just from a combination of his employment income and the regular income payments from his new TTR income account.
By implementing a TTR strategy, Charlie has been able to maintain the same take-home pay that he would have had without the TTR. He's been able to increase his super balance by $16,000 over the five-year period that he's used this strategy up until retirement. And he's also been able to save around $3,200 in tax in the first year through salary sacrificing, which has cost him an additional $200 in fees and charges.
So, as we've touched on, TTR strategies are not just for those wanting to save more super, as we've seen with the example of Charlie. They may also be used to supplement income if you decide to reduce your work hours and work less in the lead-up to retirement.
Working fewer hours as you get older may be a good way to ease into retirement and could mean you're able to stay in the workforce longer than you otherwise would if you continued to work full-time. So, it may allow you to work fewer days or hours per week and receive payments from a TTR income account so that you can top up your income if you need to. You could even decide to match the same take-home pay as you were receiving before you decided to reduce your working hours.
As you are still working, you can continue to grow your super with contributions, as there will still be contributions from your employer entering your superannuation account.
Let's now take a look at Bella.
Bella is aged 60 and earns an income of $67,335 per year. Bella's current take-home pay is $55,000. She has a super balance of $150,000 and she's planning to retire at 65.
So, five years left in the workforce and has a take-home pay of $55,000.
Now, Bella would like to reduce her work week to four days. However, she'd like to maintain the same level of income. So, she's planning to start easing into retirement—working a little bit less, one day less per week—but she'd like to continue earning the same level of income or taking home the same level of income as she was when she was working full-time.
She's decided she would like to start using a transition to retirement to allow her to do this.
The first step for Bella is starting a TTR income account. Bella has decided to transfer $120,000 of her existing super into a new TTR income account. She then reduces her working days to four days per week, and she's going to supplement that one day a week of income with her new TTR income account.
On her four-day-a-week income, her net income has now reduced to $45,843.
She's going to supplement her income with a TTR income payment of $9,157, which will take her back up to the same take-home pay that she was receiving before she decided to reduce her working hours.
Let's have a little bit of a look at what this looks like for Bella.
With no TTR, we can see her gross salary of $67,335 and her employer making contributions of $8,080 into her nominated super account. This means Bella has a taxable income of $67,335, resulting in income tax of $12,335, which gives Bella the net income that she requires of $55,000.
She is paying tax at 15% on the employer contributions being made into her account, which means that before using a TTR, Bella's net super increase is $6,868.
Now, let's have a look at how Bella's situation looks with a TTR.
The first difference you'll notice here compared to what we looked at with Charlie is that Bella's gross salary has reduced—gone down from $67,335 to $53,868.
So, she's reduced her working hours—she's working one day less per week.
Now, what this also means, as the Super Guarantee is tied to salary or earnings, is that her employer contributions have also reduced. So, her employer is making a lesser contribution into her nominated super account, and she has a lower taxable income based on reducing her working hours, which means that her income tax has organically reduced here—down to $8,025 per year.
Now, because of reducing her working hours, she does need to look to supplement that income. And as we showed on the previous slide, she's required to draw down from her TTR income account $9,157. That's the amount that will take her back up to meeting her net income needs of having an income of $55,000 per year.
The tax on super contributions has also reduced due to the lower employer super contribution.
Now, as you can see here—different to Charlie—the net super increase is in the negative. So, she's going to have $3,663 less going into her super with the TTR. This means $10,531 less than what she'd have if she just continued working full-time.
So, this is a negative outcome to achieve a lifestyle choice, which may have an impact on long-term retirement savings for Bella, but it's allowed her to meet her objective of being able to transition or ease into retirement.
As we can see here, if Bella decided to continue working full-time up until when she planned to retire at the age of 65, she would have a balance of $216,000. But by using a transition to retirement strategy to allow her to ease into retirement with reduced working hours, that's going to result in her having $173,000 available at the age of 65 when she retires—so around $43,000 less at her planned retirement age.
Now that we've had a look at a couple of examples of how this might work in practice, let's actually look at how you go about starting one of these accounts.
To open a TTR income account, you need to have reached your preservation age of 60 and be between the ages of 60 and 64 and still working.
To start one of these accounts, you must move at least $25,000 to your new TTR income account. The amount that you move into your new TTR income account will determine your minimum and maximum drawdown limits.
When you are under the age of 65 and you commence a TTR income account, the minimum that you must draw in the financial year is 4% of the balance. The maximum that you can take from a TTR income account when you're under 65 is 10% of the balance per financial year.
It is also important to consider that a minimum balance of $6,000 must be left in your existing super account to ensure that it remains open and active, and ready to receive your employer and any other contributions that are made into your super account.
Now, why choose a TTR Income account? There are a number of considerations here. The first is flexibility to set up your account to suit your needs.
As mentioned, there are minimum and maximum drawdown limits that apply and must be adhered to with a TTR Income account. However, there is some flexibility around the payment amount within those limits. You can also amend the payment frequency, choosing to have payments made fortnightly, monthly, quarterly, or in a number of other ways that suit your individual needs.
Your investment options can also be changed in the TTR Income account, and your TTR account can be stopped and moved back to accumulation if your circumstances change down the track.
We've spoken about the minimum and maximum drawdown limits, and these do reset when your balance is recalculated at the beginning of the financial year.
Your account remains invested in a TTR Income account, so you have the same investment options in both the accumulation account and the TTR Income account. Your funds remain invested in this environment.
It is important to be aware that administration fees also apply to the TTR Income account. There can be some tax savings after the age of 60—any funds drawn out of a TTR Income account are tax-free. So, those regular payments that come out of the TTR Income account are not taxed on the way out of superannuation.
When you retire or stop working for an employer and tell us, we'll switch your TTR Income account to a Choice Income account. When you turn 65, this will happen automatically.
With Choice Income, your investment returns are tax-free, as opposed to being taxed at 15% in the accumulation phase. There's no maximum income payment amount in Choice Income, unlike the 10% maximum drawdown limit we spoke about in TTR.
However, it is important to keep in mind that your account balance will count towards the transfer balance cap, which is a lifetime limit on the amount of super you can transfer into any tax-free retirement income account.
Now, there are some helpful resources you can refer to for more information on transition to retirement. You can learn more by visiting https://www.australiansuper.com/ttr.
You can also download our Preparing for Your Retirement Journey booklet from our website. You may want to consider registering to attend a Preparing for Your Retirement Journey presentation, where we expand a little more on not just transition to retirement, but other aspects of preparing for your retirement journey as well.
AustralianSuper provides access to a number of advice options depending on your needs. You can speak with an advice team member over the phone for simple personal advice, which can cover topics relating to your AustralianSuper account such as your investment options, making contributions to super, insurance, and retirement income options.
For more tailored and comprehensive advice, you can meet with a qualified financial adviser face-to-face or via secure video link. The first meeting is complimentary and is all about understanding your situation and what's important to you. They'll discuss your personal and financial circumstances and what's important now, as well as into the future. It is important to point out, however, that no personal financial advice is provided in the first meeting.
You can also view our online calculators at https://www.australiansuper.com/education-advice/calculators/ and find more of the webinars that our team run at https://www.australiansuper.com/webinars.
Now, we also have our Elements of Retirement guide. This is an interactive resource to help build your knowledge and plan for retirement. This online guide is packed with tools, tips, and real-life stories so you can learn more about the elements that make up retirement.
Thank you for joining us for our Understanding Transition to Retirement session today. We do hope you found it useful and had something to take away from today's session. We hope to see you along with us again next time.
Women and super: Accelerate action
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Show transcript
Well, good afternoon everybody and thank you for joining AustralianSuper's Women and Super Accelerate Action presentation. Now, growing your super savings might be an important step in building your financial future and that is because one day superannuation could become one of our largest assets. That's why here at AustralianSuper we would like to see a change in the fact that women approaching retirement currently have around 33% less super than men. We want all members to achieve their best possible outcome in retirement. So today's session we're going to work through some information regarding super at different stages of your retirement journey to understand what things you could do to accelerate action with your own superannuation. My name is Rebecca BMA and I'm an Education Manager here at AustralianSuper. I've spent the last 20 years in the financial services industry helping people to understand superannuation better to help them to achieve longer-term better financial outcomes.
Now we have over 60,000 years of history to learn about from the traditional custodians of the land and we should be privileged to be sharing in their rich culture and heritage. I would like to pay my respects to Elders past, present, and emerging and extend that respect to all Aboriginal and Torres Strait Islander peoples today. I'm joining you on the land of the Larrakia people in Darwin. So I just encourage you to take a moment to acknowledge the land on which you're joining us today. Now I do need to point out before we get into the presentation that today's presentation does cover off on a lot of information but it is general advice only. What that means is it doesn't take into account your own personal needs or circumstances. So we just encourage you to do some more research, have a look at the product disclosure statement, check out the target market determination, and please seek financial advice if you feel necessary for your situation. We will be showing you where you can go for extra help and advice at the end of the presentation. Now I have my colleagues in the background, Yen and Michelle, who will be popping some links in the chat box for you. So please feel free to save those for viewing later on or opening a new window. It will also give the opportunity in the Q&A box to ask any questions throughout the presentation. So please feel free to pop any questions in there and Yen and Michelle will do their best to answer those throughout.
Now in this session today we're going to cover off on a number of things and that is the super gender gap and we'll have a look at the statistics surrounding the gap. We'll have a look at setting financial goals and the format that you can use to help you in your goal setting. Then we'll have a look at the First Home Super Saver Scheme and we'll have a look then at ways that you can grow your super and we'll have a look at how that works. Finally, we'll look at where you can go for extra help and advice.
Now according to life expectancy tables, on average women live an extra four years longer than men so that may mean that they need more money in their retirement to last those extra years. If we have a look at average super balances for men and women between the ages of 60 and 64, we can see that for men it's over $410,000 and for women it's a little over $300,000. So we can see where that gap lies. These statistics are based on the Australian Bureau of Statistics. Let's have a look at what those indicators are and why the numbers don't stack up. The Australian Bureau of Statistics has determined three key indicators and you can see those up on the screen. So let's have a look at those in a little bit more detail. On average, women earn less than men throughout their working careers and to be specific the gender pay gap is currently at around 14%. How does that impact longer-term superannuation balances? Well, if we think about employer contributions being paid currently at the rate of 11.5% on employment income, the lower the salary the less employer contributions that are being received and therefore less money within the superannuation environment to take effect of compounding interest over time. The next indicator is that women are more likely to be working in part-time or casual or maybe even unpaid work throughout their life. How does this have an impact on their overall super balance? Not only are we thinking about the impact with the employer contributions that we just discussed, but also if there's less money coming in through either part-time or casual means there's less money set aside to be able to afford to save for their financial future whether that be outside of super or through the superannuation environment. The third factor is time out of the workforce and a woman's working life may be interrupted at various stages throughout her career and that may be due to a number of factors such as taking time out of the workforce to care for a family, taking parental leave, and maybe it's taking time out of the workforce to care for elderly parents or sick loved ones. So that too can have an impact on longer-term super balances.
Now we know that the gap won't close without significant policy change and we've had a step in the right direction with the introduction of superannuation that's being paid on parental leave so that's excellent. What we're going to do today is follow along Kate's journey and we're going to see her at different stages of her career and check in with her to determine what are the things that Kate could do to boost her financial position for her future self. We'll check in with Kate when she's starting out in her very first job. We'll have a look at what are the things that she could do at that point and then Kate takes some time out of the workforce to care for a growing family. We'll then check in with her as she resumes full-time work when she's ready to return and then finally when she starts to think about retirement and how she may be able to go about easing into retirement. Before we introduce you to Kate we wanted to start by discussing the importance of setting financial goals. There might be certain times throughout your life where finances can cause some stress or anxiety and by having dedicated financial goals can help with that stress or anxiety in that setting those goals and knowing exactly what money you have available to direct to these certain goals throughout your working life then that will help to ease the anxiety associated with it. If we're thinking about goal setting we're thinking about short, medium, and long-term goals. Just for a few examples, a short-term goal might be something such as paying off a credit card or it might be starting to save for an emergency fund. Then we're thinking about medium-term goals, it might be buying a new car or it may be saving for a home deposit. Then longer-term goals being planning for retirement. What age would I like to retire? Starting to think about what level of income I might need to live the lifestyle I would like to when I'm finished working. When setting goals it's really important to follow this format, the SMART goal setting format, and that will just enable you to be able to create goals that are direct and detailed. They're quantifiable so easily tracked so that you can track your success and progress and that can give you more inspiration that if you know that you're starting to achieve your goal as you move through it you're more likely to stick to it. Are your goals attainable? So it's realistic, it's meaningful to you and it also has a deadline so it's time-based so we know exactly what you're planning for and when. Why does a budget fit into goal setting? Well, thinking about a budget can help us to understand rather not a restriction of where our money is being spent but if we think of it more as a tool to be able to help us feel more in control of what money we have and where it is going. By doing that and knowing where every dollar is being spent it can help us to understand what we have to set aside to meet each of our financial goals that we may set. It's really important when budgeting to think about going back through past bank statements and having a look at actually where your money has been spent. Sometimes if we're jotting down exactly what our expenses are it can be easy to miss out on the extra coffees or the meals out. So important to go back and get a realistic view of what money you do have available for your goals. Now let's meet Kate. Kate is 26 years old, she's earning $70,000 per annum and she has a super balance of just over $36,000. Kate sat down and done a budget and has set aside a goal of saving for a home in five years' time. She's determined through her budget that she has $200 per week that she can afford to put towards her goal of purchasing a home.
Now Kate's heard about the First Home Super Saver scheme and she's unsure if it's worthwhile for her. So what is the First Home Super Saver scheme? Well, what it does is it allows people to save for their first home by utilising the superannuation environment and the tax concessions that come along with that. So there are some rules around how much you can save towards this scheme and how much you can withdraw out of it. It is very specific in terms of it must be used to purchase a first home, so it can't be used to purchase an investment property. Also, you need to be saving through either salary sacrifice or voluntary contributions. It doesn't allow us to use already pre-existing money that is in our superannuation account. So some things to consider there. There'll be a link in the chat box that you'll be able to have a look at some more information on the scheme.
Let's have a look at Kate's situation. She's determined her budget, so she has $10,400 before tax that she has available to save towards her home deposit goal. Now if Kate was to save her money into a regular bank account, she would have $7,400. The difference there is her tax rate. Kate's in the 30 cents in the dollar tax rate, so therefore she's paying tax on her income, allowing her to have her $7,400 saved in the bank account. Now if Kate was to save her same $200 per week via salary sacrifice, she's arranged that between herself and her employer to sacrifice her $200 before tax. So rather than that being paid to her, it's being paid into her superannuation and she's able to save $99,000. We can see what the difference there in her savings are, and that is due to the tax savings through the superannuation environment.
Let's look at Kate's position after a 5-year period. Kate had been saving through her bank account and she has just over $40,000 saved. Now through Kate's superannuation, she's been able to save an extra just over $10,000, and that is through the tax savings through using the salary sacrifice for her. A great outcome for Kate. Now let's check in with her again. She's now 32, so she utilised the First Home Super Saver scheme and she's taken her $50,000 of savings out of her super to put towards her first home. She's now a homeowner and she now has $888,000 left in her super account after she's taken out her $50,000 for her first home. She's now earning $85,000 per year from her employment income and she's expecting a child and is going to be taking some time out of the workforce for parental leave. Kate's had a few significant changes to her circumstance here. She's purchased a home, she has a child on the way, and she's wanting to know what she can do to continue to boost her super savings while she's in this stage of her life.
Now whilst on parental leave or working part-time or when income is lower, something that can be considered is the government co-contribution. How this works is if a member's income or an individual's income is less than $45,500 in that year and they made an after-tax contribution into superannuation of $1,000, then the government would give them a 50% return on their money. So once their tax return had been lodged and they can check off the box to say yes, their income was under $45,400, yes, they paid in $1,000 after tax to their super, then the government will pop in the $500 into the superannuation account. It's a really good incentive for lower-income earners to be saving towards their financial future and utilising this co-contribution.
The other thing that Kate could consider while she's taking some time out of the workforce is spouse contributions. How this works is if her income is under $37,000 in that financial year, her spouse could make a contribution of $3,000 into her superannuation. Then her income is under $37,000, check there's been the $3,000 of after-tax contributions that have been made, then her spouse may be entitled to an 18% tax offset. That could be up to $540 as a tax offset. As long as the eligibility criteria have been met, it's another incentive to try and boost superannuation for a spouse who may be taking some time out of the workforce or on a lower income at that particular stage of their life.We did mention that Kate's situation has changed significantly. She has a home, so she has a mortgage now. Now she has a dependent, so it's really important that Kate checks in with her insurance cover to ensure that it's at the right levels for her change in her circumstance. There are three types of insurance cover that you can have within the superannuation environment, and that is death cover, or in other words, life cover. That is a lump sum that's paid out on death or on terminal illness. Then there's total and permanent disablement or TPD for short. That is also a lump sum payment that is paid out if you're never able to work again in any occupation. Finally, income protection cover, which is a monthly replacement of income if you are off work for a waiting period, and then you would be paid a monthly benefit until either you went back to work after sickness or accident or until you'd met what's called the benefit period.
Now AustralianSuper does issue default levels of insurance cover within a member's account when they join the fund. It's important to think about the levels of cover that are available and the levels of cover that you have. Let's have a look at first the way that you can calculate how much cover you may need. Different stages of your life will require different levels of insurance cover, so it's really important to continue to check in as your circumstances change throughout your life to ensure that you have the right levels of cover. We have an insurance calculator available on our website and that will allow you to pop in some information and it will let you know how much cover you may need. Then you can go away and check what cover do I have now, do I need to increase my cover, is it the right levels as it is, or do I have too much or do I not need it at all. Keep in mind that the insurance premiums that are being paid are paid from your superannuation account when the cover is held through the super environment. If the cover is not needed, then just keep in mind that those premiums are being paid from future superannuation or retirement funds.
Now default insurance cover through AustralianSuper is issued based on age. You'll be able to have a look at the insurance guide or check the member portal or the app and you can easily see there if you have insurance cover, what types, and how much. When default insurance cover is issued, it is issued at the highest risk work rating, which is a blue collar. If somebody is working more than 80% of their time in administrative type duties, they may be able to change their work rating to a white collar and in turn, they'll still have the same level of default cover based on their age. It just means the price that they pay for that is less. If somebody is earning more than $100,000 of income and they have a university qualification or they have a management role, they may be able to apply for a professional work rating and then the cost of that cover reduces again. You can jump onto AustralianSuper's work rating tool. It's a series of four questions, so it won't take you long at all and you can determine what work rating you are and if it's anything other. If you do have a blue-collar work rating and it spits out to say you could apply for a white collar, it will lead you through the steps to be able to make that change to reduce that cost for you.
Now really importantly, we're thinking about Kate's scenario. She has a mortgage and she has a family, so it's really important that Kate considers who will receive her superannuation on her death. A lot of members aren't aware that superannuation doesn't form part of your estate, so it's really important to let the super fund know who you would like to receive your money when you're no longer here. There are a couple of ways that you can nominate a beneficiary within superannuation, and that is through a binding nomination or a non-binding nomination. If we talk first about a binding nomination, we spoke about super not forming part of one's estate. Therefore, to have a binding death benefit nomination, we need to fill out a form that is like a legal form. It needs to be signed by two witnesses and have all the information completed correctly. On that form, you are able to select if you would like a lapsing binding nomination, which means it would expire in three years. The fund would write to you as you're nearing that three-year expiry and then it will encourage you to review your beneficiary and update that. Non-lapsing allows a member to select that they would like to put a benefit in place under a binding nomination and keep that in place until they make a change later on in the future.
A non-binding nomination may be a member's jumped online and nominated a beneficiary that way. A non-binding nomination is more like a preference. If you think of it that you prefer that your superannuation and any associated death benefits are paid to this particular person or persons on your death. There can be a little bit more time taken in the payment of this depending on who you nominate. The trustee is obligated to determine who the best, the most appropriate people to receive your money are. Just have a think about the different types of nominations, have a look at who you have nominated and under what type, and then you can make a decision as to whether you need to update that.
I would like to touch on who you can nominate for it to be a valid beneficiary nomination. You can nominate your current spouse or partner, you can nominate a child of any age, somebody who's in an interdependent relationship with you, so maybe you're caring for someone and they're living with you and you're looking after them, a financial dependent, or your legal personal representative. There are different tax dependents that may apply or tax considerations that may apply for different dependents. We have a really good webinar that discusses that in detail if it is something that you're interested in. We have an estate planning webinar, so please feel free to jump onto one of those and learn more about what the different tax payments may be depending on the beneficiaries.
Let's fast forward. We're going to check in with Kate again. She is now 42 years old. She's been working part-time for the last 10 years and her super balance is now $171,000. She's now earning $95,000 of income per year and she would like to know what are the things that she could do now to continue to boost her super savings for her future. One of the things that Kate could consider is salary sacrifice contributions. What is salary sacrifice? It's an arrangement between yourself and your employer to say that rather than that income being paid to me and paid to my bank account, I would like to sacrifice X amount into superannuation. The benefits of doing that can be saving on income tax. Of course, it does depend on what your marginal rate of tax is, so the rate of tax that you pay on your income. Within the superannuation environment, if somebody's income is under $250,000, then they would pay 15% contribution tax on any salary sacrifice contributions. There is a concessional contribution cap and this financial year it's $30,000. What's included in that cap? It is salary sacrifice contributions, it is also employer contributions. That is currently the rate of 11.5%. Some employers may pay more than the standard rate of 11.5%. If you're not sure on what your concessional cap is or how much has gone into your own super for the year, you can check your MyGov account and you'll be able to keep track of what that is. It's worthwhile to go and check that out as it will be specific to you as it's linked through your tax file number. Something that Kate can consider is making this arrangement to try and build her super for her future and to minimize some tax.Let's have a look at what the scenarios may look like in Kate salary sacrificing different amounts. You can see there that if Kate was to make no extra contributions, so she was just receiving her standard rate of employer contributions from age 42 till she retires, she would have $681,000 as her projected superannuation balance. If Kate was to salary sacrifice $50 a week, we can see there that her projected super balance has increased to $760,000 when she finishes work. Finally, if she is to salary sacrifice $100 per week, we can see that there's a significant increase in Kate's financial super balance when she stops working. That gives her greater flexibility in regards to the income that she may draw when she finishes working and the things that she may like to do through retirement.
Let's check in with Kate again. She's now at the magic age of 60. She's now considering what her options are and she's thinking about maybe working less and utilising a transition to retirement strategy. How does a transition to retirement strategy work? It can be used in a couple of ways. I say the magic number 60 because when a member has reached that age, it opens up the opportunity for them to commence a transition to retirement strategy if they are still working. If a member ceases work and they completely retire from the workforce at age 60, they can withdraw their superannuation or move it into a choice income account and any drawdowns after age 60 are tax-free. In Kate's position, she's thinking about reducing her working hours but she would like to keep her same take-home pay. By utilising this strategy, what Kate could do is set up a TTR income account. She's effectively transferring some of her accumulated super savings into a TTR income account and drawing an income stream from that account. She's reduced her working hours, which means she's getting less money from her employment income, but she's topping that up with the income that she's receiving from the TTR account. That enables her to reduce her working hours and start easing into retirement but still keeping the same take-home pay. If you would like to learn more about how a transition to retirement strategy works, we have a really good webinar that explains it. There's also a link on the screen that will take you to further information.
Now it can be a good time or a good opportunity now that we've had a look at the various stages of Kate's journey to think about your own position and the things that you could do to accelerate action. So the first thing would be is set some financial goals. Think about the formatting that we talked about. Have a look at a budget. So if you have one already, review the budget. Make sure that it's still remaining current for your change in circumstance. If you don't have a budget, there's a really good one on the Money Smart website. It's a budget planning tool, so go and check that out. It's a very useful website for various resources. You can consider using the First Home Super Saver scheme if you are in the eligibility criteria, or maybe it's that you have a child or someone you know who is looking to purchase their first home and starting to think about what their options are. You could consider contributing a little bit more into Super. So thinking about different ways to contribute into Super, we spoke about some of the different types of contributions such as after tax, the co-contributions, or spouse contributions. We also spoke about salary sacrifice. So have a look at whether you can afford to contribute a little bit more and think about the power of compounding interest over time. Review your insurances. So have a look at what levels of cover you have, if any, what you're covered for in the levels. Maybe you'd like to jump on and have a look at the insurance calculator to determine if the levels that you have are right for your stage of life. And then also really important to have a look at your beneficiary nominations. So you can do that via the member portal or via the app, and you can have a look at who you've nominated and under what structure. And then think about the things that we discussed and make sure that that is kept current as your circumstances change. And then finally, learn about your retirement and your options. So we have plenty of resources available on our website, so please check those out. Lots of calculators and tools, and I'll show you where you can go to find those in just a moment. Now before I show you where to go for extra help and advice, there is a QR code up on the screen, and I'm sure there'll be a link that's popped in the chat box, but you can download the Women and Super brochure by following the link, and it will go through all of the items that we discussed in the presentation today. So please feel free to save that for further viewing. Now here's where you can go for extra help and advice. I referred to the insurance calculator throughout today's presentation. There is also a really good retirement projection calculator that's a bit of fun to play around with. You can pop in what your existing super balance is and when you would like to retire, and then it will project out what your expected or projected retirement balance will be at that point. And then you can play around with what if I put in some extra contributions, how does that impact my longer-term retirement savings. I referred to a couple of webinars as well, which you'll find on our website, so please go and check those out. There are many different webinars, and they will be suitable for different stages of your retirement journey, so go and check those out if you're interested. You can also call our 1300 number, so 1300 300 273, and you can request to speak to somebody over the phone for simple super advice. So that might be insurance you're not sure on, levels of cover, maybe it's talking about beneficiaries or investment options, for example. If you are after more tailored comprehensive financial advice, you can request to speak with a financial planner by following the link that you can see on the screen or by calling our 1300 number. Now you can request to speak with a financial planner who will go through your personal situation in detail, and then they will provide you with a statement of advice document detailing how you can achieve your goals. I know there are costs involved in that, but the financial planner will discuss all of that with you before you proceed. So thank you for joining us today. We hope you've taken one piece of information away with you today that you can go and do as an action point to set yourself up for your financial future.