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Our education videos cover a range of topics with expert guidance on how to make the most of your super. Each video runs for around 20 minutes and can be watched whenever it suits you. Check back again soon for more on demand videos.

Super basics - saving for your future

Sometimes trying to understand super can be confusing. We’ll break it down in simple terms so you can feel confident knowing how to make the most out of yours.

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Super basics - saving for your future

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Hello and welcome to AustralianSuper's Super Basics - Saving for your future presentation.

A lot of statements we get from members when they're almost at retirement or at retirement is I wish I had have started sooner. So, we're hoping that today you take one piece of information that you weren't aware of or an action point that you can take from the information we provide to you in today's session that will help you to achieve a better retirement outcome.

So, in today's session, we'll be covering off on the basics of super.

Now my name is Bec Barmer and I'm an education manager here at AustralianSuper and I've been in the financial services industry for the last 20 years. So, my job is to help you understand superannuation better, so that you're armed with the tools and the knowledge to help you achieve a better retirement outcome.

I would like to acknowledge the traditional custodians of the land on which we work and pay my respect to Elders past, present and emerging, and extend that respect to all Aboriginal and Torres Strait Islander peoples. Now I'm talking on the land of the Larrakia people today, and I would like to say Walawan, which is good morning in native Larrakia language. I understand it might have just gone lunchtime for some of you in other parts of Australia, but we are still morning here in the Territory.

Now, before we get into the presentation, I would like to note that today's session is general advice only. So, what that means is it doesn't take into account your own personal circumstance, what your own goals are, and your needs. So, if there is some information that we cover off on today that you feel might be relevant to you, I'd encourage you to jump onto our website and have a look at the product disclosure statements and have a read of our financial services guide. And if you feel like you are still looking for further tools and advice, at the end of the presentation, I'll be directing you where you can go for that.

In today's session, we'll be covering off on four key areas and then also where to go for help and advice. And what we'll be covering off on is, what is super? So, let's talk about what it is and how it works. We'll also talk about when you can access your superannuation. It can be a little bit of confusion as to when age pension age is, where you may be eligible to receive an income from Services Australia, as opposed to when you can actually access your own superannuation that you have accumulated throughout your working life. We'll also talk about how superannuation works and have a look at some of the types of contributions that can be made and contribution caps. And we'll also talk about the ways that you can take control of your superannuation. And then finally, where you can go for help and advice.

So, let's start with, what is superannuation?

Well, superannuation is money that's set aside for you whilst you're working to provide you with either a lump sum or an income stream for your retirement. So, to fund your retirement. Now as it stands, superannuation guarantee or your employer contributions is paid at a rate of 11.5%. So that increased on the 1st of July this year, it was 11% that your employer paid in. But as of the 1st of July this year, you received a little bit of a pay rise into your superannuation and it's now 11.5%. Next year on the 1st of July 25, that superannuation guarantee contribution rate will go up to 12%. So that's what's paid into your superannuation from your employer to accumulate through your working life to fund your retirement.

Now you are able to also pay into superannuation on top of that and we will talk about what those contributions can look like and what the cap limits are for those. You can also choose where your money is invested within your superannuation account. Now super is a long-term investment. So, where your money is invested in your superannuation is important because with the power of compounding returns, those that income that you receive. So, the returns on where your money is invested helps to create the snowball effect in your superannuation. Where that will continue to grow with employer contributions and potentially other contributions that you might make. To snowball and create a larger account balance to fund your retirement.

Now there is taxation within superannuation, but it is a concessionally taxed environment. Now within superannuation, when you're in the accumulation phase, so you're accumulating wealth for your retirement, your investment earnings and your superannuation is taxed at a rate of 15%. So, if you think about what your rate of tax is that you pay on the income that you earn outside of superannuation, if it's anything more than 15%, well then you can see where that concessionally tax environment is within superannuation. Now it really does depend on what level of income you're earning outside of superannuation as to what your marginal tax rate would be. So, and then you can compare that to what that concessionally rate of tax is within super being 15% and that will help determine what tax savings you might be eligible for, for any contributions to super.

Now you can find some more information on what is superannuation on our website at australiansuper.com/superannuation/what-is-super.

Now, when can you access your super?

This is, as I mentioned earlier can be a little bit confusing as to when you can access your superannuation as opposed to when you might be able to apply or claim for the government age pension through Services Australia. Now when you can access your superannuation is based on conditions of release and one of those is called preservation age, which is currently age 60. So, you can access your superannuation once you've met preservation age, so age 60 and you've met one of those other key bullet points underneath there. So, you've either you've stopped working permanently or maybe you've stopped working for an employer after you turned 60. So maybe you had two jobs and maybe you ceased one of those employment arrangements. Well, that would classify that condition of release.

So, preservation age and accessing your superannuation. If you haven't completely stopped working or stopped working for an employer after you turn 60, you may be eligible to have a look at whether a transition to retirement strategy might be suitable for you. Once you've met that preservation age where you might not be able to access to all of your super. But there are some helpful ways that you may be able to use a transition to retirement strategy in those years after you turn 60 until you either reach 65 when you can access all of your super, or until you stop working. There are some limitations on a transition to retirement strategy. And if it is something that is of interest to you, we do have a really good webinar that discusses all of the ins and outs of understanding transition to retirement.

But if we go back to when you can access your super. So, we've talked about those factors between the ages of 60 and 64 where if you've met that preservation age and you've ticked off one of those bullet points, well, once you reach age 65, whether you're working or not, you can access your superannuation. Now keep in mind as well that age 60 is a magic number in the world of superannuation because once you reach age 60, any drawdowns, so any withdrawals or drawdowns from superannuation are tax free.

Now I will cover off on some of the other conditions of release.

So, accessing super early.

So, there are some other ways that you may be able to access some of your superannuation, but these are really limited and special circumstances that you may be able to access your superannuation under.

So, one of those is the first Home Saver Super Scheme.

And so, what happens with that scheme is it allows first home buyers to make contributions into superannuation where remembering there could be those tax concessions to allow additional savings in, in terms of saving on tax. To save into super, to save for a deposit on a home.

Now there are some rules around that, in terms of, it must be for that person's first home and utilising those contributions that have been made.

But that is one possible scenario.

Then other circumstances might be severe financial hardship, terminal illness or permanent incapacity, and then finally permanently leaving Australia, would also be one of those conditions of release.

So, you can find more information on those at australiansuper.com/accesssuper

Now, how does super work?

Well, if you think of superannuation like a bank account, that money goes in and money goes out.

So, what goes into superannuation is employer contributions or maybe their contributions that you make as well, or if you're just making those contributions, depending on what your employment position is.

Also, money going in, that's accumulating, would be any of the positive investment returns.

So, your money would be invested within your superannuation account of your choice.

You'd have an investment menu with available investment options that you can select. So, depending on the performance of that particular investment option that you're in or options depending on your position.

If returns are positive, well then that also helps to accumulate your superannuation.

Now what comes out of super things such as your, your fees.

So, within a superannuation account, there are administration fees.

So that's the cost to do all of the administrative type duties that the fund has to perform and then there would be any taxes.

So, we spoke about the 15% tax within super and tax on contributions as well.

So that would come out of the account. Any costs.

So, there might be investment manager fees as well that are associated depending on where your money is invested, there would be investment manager fees that are payable for that particular portfolio, also insurance costs.

So, if you have insurance cover through super, and we'll talk about insurance a little bit later in the presentation, but any of the premiums or cost for that insurance cover through super that you might hold, that would also be money out of your superannuation account.

And then of course, if investment returns are negative, that would also come out of that superannuation account.

Now contributions. So, let's talk about how you can get money into superannuation.

And there's two main contribution cap types that that you're eligible to use.

And the first one is a concessional contribution and that is before tax contributions.

And there is a cap limit that I'll refer to on the next slide to show you what those cap limits are.

And I'll break down what types of contributions fit into that concessional contribution cap band.

Then you also have after tax or non-concessional contributions, and you have another cap limit for that as well.

So those after-tax contributions is that you've, you've received your pay and you've already paid tax on that money.

Now you're deciding to pay money into superannuation.

So that would be an after-tax contribution because you've already paid tax on that money.

So, we'll have a look on the next page in terms of what those cap limits are.

So, you can see here on the left-hand side we have the before tax or concessional contributions and then on the right we've got the after tax or non-concessional.

So, if we look at concessional contributions, that's made up of your employer contributions.

So, your superannuation guarantee that's that rate of 11.5% that your employer would pay into your super on your salary and then any salary sacrifice arrangement that you have made with yourself and your employer.

So, a salary sacrifice arrangement is that arrangement that you have made with the payroll department or your employer to say I would like to sacrifice X amount of money from my pay before tax into my superannuation.

And there can be some, again, depending on what rate of tax you pay on your income, there could be some tax concessions there in terms of saving tax because you're paying that money into super before you pay tax on it.

And the savings come from the fact that there is a 15% contribution tax on these before tax contributions.

If you think about what that might be outside of superannuation, so tax on income, there can be a saving there.

So, let's just give a quick example of you had $100 and you received that $100, let's say that your tax rate is $0.30 in the dollar, so 30% tax rate.

So, you have $100 and if you receive that money outside of superannuation, $30.00 of that would go to the tax department and you have $70.00 in your hand.

Well, if you had that same $100 and you were to contribute it to superannuation because there's a 15% tax on contributions as opposed to that 30% tax that you would have paid on outside, well, you actually have $85 of that 100 going into your super.

So, $15 of that goes to the tax department.

So, with those tax savings, that's where superannuation can accumulate more. And then also tax-deductible contributions.

So that would be that you decide to put in an amount of money into your superannuation and then claim a tax deduction on it.

Now they all form part of the concessional contribution cap and that is currently a cap limit of $30,000 per year.

And that cap limit has just gone up on the 1st of July this year.

So, all of those types of contributions would fall into that concessional contribution cap limit.

And then on the right-hand side, we have our non-concessional after-tax contributions.

And you can see there that the cap limit is $120,000 per year, so a lot higher than the concessional.

And that would form any of the voluntary I'd like to pay into my superannuation.

I've already paid tax on that money, and I would now like to pay into my superannuation.

So that would form part of your non-concessional after-tax contributions.

Now if you're not quite sure where to keep track of your contributions that have gone into your super, myGov is a really good place to keep track of that because it'll be for you specifically and it will show you exactly how much contributions have been paid into super under those cap limits.

And then there is also something called a carry forward of concessional contributions.

It'll keep track of that as well.

And that is where if you haven't used all of your cap limit over the last five years, as long as your super is under $500,000, you might be eligible to then carry forward those unused concessional contributions into future years.

So, you'd find all of that information on your myGov account, which would be specific to you.

So, a really good place to have a look at if you haven't already.

And we just want to demonstrate on this shot on this slide about how compounding interest works really.

So, I spoke earlier about the snowball effect of accumulating money throughout your working life in terms of adding into superannuation and then investment returns, you know, snowballing and creating that bigger pool of wealth for your retirement.

Now what this demonstrates is just an indication that if somebody was to add in $20 per week for a 10-year period.

This is how much their superannuation could accumulate by doing that for that 10-year period.

And what it's also demonstrating is that the sooner that this occurs, the more money there is potentially able to grow through superannuation to fund retirement.

So, we look on the far-left hand side, you can see there that there's the $29,000 and it's the bigger, bigger bag of money.

So, you can see there that's the 10-year period from age 20 to 30.

So, this person at age 20 said I'm going to put in $20 a week into my superannuation and that superannuation balance has grown by $29,000.

Now that's a 10-year period.

So, you can imagine if that person kept that up for their entire working life, what that could potentially do to their final retirement balance it would be very beneficial for them.

Now you can see there on the sliding scale, if somebody started that same $20 a week for 10 years at age 30 to 40, their super balance will grow by $22,000 and so on.

And what it's trying to demonstrate is the sooner that you start, the better.

And it doesn't matter how much, but every little bit counts into superannuation because it's the power of compounding interest.

So, the bigger that that pool of wealth is, the more that that snowball can potentially grow and provide you with more flexibility throughout your retirement.

Now I referred to investment options within super.

So, you have choices to where your money's invested within Super and there is a range of options available.

And it really comes down to how you feel about risk versus return because there are high growth options and there are conservative options and everything in between.

So, what is a really good place to start is understanding how you feel about risk versus return.

How would I feel if the market dropped tomorrow by 20%?

You know, would I be, would I freak out and think, oh my gosh, I just want to sell everything?

Or would you say, you know what, I know that supers a long-term investment.

I've got time on my side, and I know that at some point that will grow again.

That's a good starting point to understand how you really feel about the risk, because the higher risk that you take, the higher the potential return, but also the more potential there is for that money to, to have a downturn or a greater downturn.

And on the conservative side, you know, maybe you're someone who doesn't like taking risks and you don't feel like you need to generate those returns for that, that retirement pool that you're after to fund your lifestyle.

And maybe you'd like to just take a lower level of risk, you know, knowing that there's lower potential return, but you know, in the downturns of the market, there's, you know, your, your portfolio is not going to drop by as much as if you were in, you know, a high risk, for example.

So, it's getting a really good understanding of one, what's your time horizon?

How long have you got left before you are going to retire or need to access your money?

And then thinking about how you feel about the risk side of it as well.

You can find more information on our investment options at australiansuper.com/investmentguide

Now just to demonstrate how money is invested, and this is using the balanced option, which is our default portfolio.

So, if you haven't made an investment choice, you'd be invested in our balanced portfolio.

So, you can see here, this is the strategic asset allocation from the 1st of July this year and it's showing that within the balanced portfolio, there's exposure to Australian shares, international shares, private equity, infrastructure, property, credit, fixed interest, cash and, and that's makes up the portfolio.

Now the balance portfolio is roughly about a 70% split to your growth assets.

So that's your Australian shares, international shares.

And then that range can vary depending on what the investment managers see that outlook to be.

So, you can see there at the moment the Australian shares at the exposure is 23.85% and to international shares it's 30.65%. and you can see there's a lower exposure to those defensive assets, but you can see that exposure level there.

So, it's just showing you that within you might see balanced portfolio on your statement, but underneath that there is exposure to a range of asset classes and investment managers that the investment team are looking out for.

And they are actively managing that to determine what they see the best outlook for that portfolio is.

And that goes for all of the other portfolios that are available.

But this just demonstrates what that might look like under the hood.

So, performance through market events.

So, this just shows $100,000.

It's invested for 20 years and that starts from June 2004 all the way up to June this year, 24.

And what it's demonstrating is this is the balanced option.

So, an example of that.

So, if $100,000 was invested 20 years ago, even though we've had market downturns.

So, if you think back to the global financial crisis around 2008 and then more recently COVID, well, markets were impacted, financial markets were impacted.

So, there were some downturns, but you can see that that $100,000 has still grown over 20 years to 453.

Or just under $454,000 even with those market downturns.

So, this is just demonstrating that time and when you need to access your money is important when thinking about investment options, but also the power of growth and time.

We'll just discuss here some examples of what the fees are within an AustralianSuper account.

And I touched on the fact that within superannuation, any superannuation account, you would have administration fees and also investment fees depending on where your money's invested and maybe some other costs associated with that as well.

But this gives the investment fees there in the in the top bar, it shows that depending on where your money is invested in investment options that could range from 0.07% to 0.55% depending on which investment option you're invested in.

And you can see there specifically for the balanced option, which is the default option, the investment costs are 0.52% per annum.

Then you can see the next line down there is transaction costs.

So, this is demonstrating the balanced portfolio again, it's 0.05% per annum.

And then you'll see the next line there showing the administration cost.

So that's the dollar a week flat fee plus .10% per year of the account balance.

So, you'll find all of the fees in the product disclosure statements.

If you have another investment option outside of the balanced fund, you'll also find that specifically in the product disclosure statement.

But this is just demonstrating what the fees are within an AustralianSuper balanced portfolio more specifically.

So, consolidating super, if you have more than one super account, it's a good idea to do some comparisons, excuse me, to understand whether consolidating super is appropriate for you. Things to consider what are the costs, what are the fees that you're paying in your account?

What are the available options, investment options, what are the potential loss benefits of consolidating any cover?

And most importantly, thinking about whether you hold any insurance cover under your account and then you can do on, on our website, there's a really good tool to compare so you can compare funds and it would compare those types of things for you.

Now, if you are consolidating super, you can do that through your myGov account and it's a good place to check as well because it will detail any potential lost super.

But also, if you're not sure where your superannuation is, myGov will be that source of truth to list where that superannuation might be held.

If you are considering consolidating and you're not quite sure and you want some advice, I'll direct you to our 1300 number at the end of the presentation and you can call and, and request some advice, but it's really important.

The main thing is to just make sure you're not losing any key benefits or features when you're rolling over funds and most importantly in insurance cover.

Now onto insurance.

There are three types of insurance cover available through super, and that's death cover, payable a lump sum on death or terminal illness.

And then you've got total and permanent disablement cover or TPD for short, that's also a lump sum payment if you're never able to work again.

And the key here is in any occupation, and then you also have income protection, or you might have heard income replacement, where generally it's a 75% of your income paid monthly after you've met a waiting period.

So, you've been off work because you're sick or injured for, for that waiting period time.

You then make a claim.

If the claims assessed and completed and they say yes, you're eligible for a claim, then you would be paid a monthly benefit until you are able to return to work or until you've met what's called the benefit period.

So, a really important thing to check is do you have any insurance cover?

AustralianSuper does issue default insurance cover which is age based if a members over 25 and their balance is more than $6000.

But it's a really good place to start by just understanding if you have insurance cover, how much do you have?

And or if you're not sure if you have the right amount, there's a really good calculator available on our website that you can run some numbers and see if the levels that you have are appropriate for you.

Now nominating superannuation is a very important part of super.

And first of all, again, it's understanding.

Do you have a beneficiary nominated?

If you have a beneficiary nominated, what type of nomination do you have?

Is it binding or non-binding?

And then also looking at who you've nominated and making sure that that's kept up to date and still current with your wishes.

Because super doesn't actually form part of your estate.

So even if you have a will in place, then because your super is held in trust for your retirement, it's it's separate to your estate.

So very important to ensure that you know who will be receiving your super on your death.

So, within the accumulation phase or super phase, you can choose between a binding or a non-binding nomination.

A binding nomination, think of it as a legal document because the trustee will be bound to pay your beneficiary or beneficiaries, your super and any associated death benefits.

And that will happen in a timely matter because matter because it's, it's bound to, to those to pay those beneficiaries.

You must have two witnesses to sign on that form and it has to be completed correctly.

I would encourage if you are doing a binding nomination to just have someone run their eye over the form to make sure that you haven't missed anything because we can easily overlook things when we're completing forms because it has to be completed in full and it has to be a valid nomination for the trustee to accept that.

A non-binding nomination is think of it more like a preference.

You prefer this person receives your money.

There can be time delays with a non-binding nomination because the trustee is obligated to have a look out there and say who, who may be, who might be eligible or should be eligible to receive this money.

So that can cause some time delays and might not give you that surety that who you've nominated under that non-binding nomination is going to receive your money.

Reversionary nomination, that refers to pension phase.

So, when you're receiving an income on your super and if you're receiving income payments, you can put in a reversionary nomination so that that beneficiary continues to receive your pension payments on your death.

You can find more information about beneficiary nominations on our website.

Now, who can you nominate?

This is very important.

So, for it to be a valid beneficiary nomination, it can be your current spouse or partner, a child of any age, someone who is in an interdependent relationship with you.

So maybe you're caring for someone, maybe they live with you when you're looking after them.

That would be an interdependent relationship.

If somebody's financially dependent on you, that would also be a valid nominee.

And then finally, your personal legal representative.

So that would be your estate.

You can find more information about these types of beneficiaries on our website.

Consider though that these are superannuation nominations, so dependents for superannuation. There are also tax dependents, so there's some considerations there in terms of who might pay tax on money even though there might be a dependent.

We have a really good webinar called Estate Planning, so I'd encourage you to join one of those if you would like to know some more information in regards to tax.

Now, what can you do today to help your superannuation and your position?

We've spoken about contributions to super, so maybe you'll consider whether you can add a little bit more into your super.

Is that affordable?

What types of contributions could you make?

It might be checking your investment options.

Maybe just start with having a look at online or on the app and saying where, where's my money invested?

Does that align to my values?

And then also having a look at what insurance cover you have, understanding the levels of cover and then maybe doing a calculator to determine if they are actually the right levels of cover or appropriate for you.

And then finally checking your beneficiary nominations as well. Really important. Do you have a beneficiary nominated? Who are they and is that still current in accordance to your wishes?

Now you can have a look at a retirement projection calculator, it's very interesting available on our website and you can put in what your super balance is now when you expect to retire, and it will project out what that expected retirement capital will be. And you can have a play around with what if I add in some more contributions to my super, what does that do to my final retirement balance? It's very interesting activity to go through and it might also give some encouragement to maybe add a little bit more into super because you can see what that potential outcome could be for your retirement. So very interesting one to check out.

Now, I promised you I would let you know where to go for help and advice. So, there's plenty of options here on the screen. I referred to a few of those calculators throughout the presentation, so you'll find those australiansuper.com/calculators, that's the super projection calculator, the insurance calculator, so you'll find those on there.

I also referred to a few other webinars that are available. We have a range of many different webinars depending on where you are in your retirement journey that may be of interest to you, so I'd encourage you to go and have a look. Just like you've joined today, there are other options for different topics, so that's available at australiansuper.com/webinars.

You can also call our 1300 300 273 number. If you're an AustralianSuper member, you can request free simple super advice on things such as insurance, investment options and beneficiaries. So that's all covered in your administration fee. And if you're after anything more comprehensive in terms of advice, you can request to speak to a financial advisor and you can see there's a link there on the screen as to how you would find an advisor.

You can also call and request through the 1300 number for comprehensive advice and have a meeting with an advisor now for comprehensive advice. There is costs involved, but that would all be discussed with you and the financial planner. And then if that's agreed upon, they would look at your personal situation, what your goals are, and see how they can help you to achieve those and provide that to you in a statement of advice document. But that would all be discussed between you and the financial planner.

Now, before we wrap up, I would just like to reference our podcast. So, if you are like me and you like listening to a podcast when you're cleaning the house or driving somewhere, then you can have a look at our moments that count podcast. Very interesting with some interviews with members and different people who work in the fund. So, you can find the QR code there, or you can go to Spotify or wherever you listen to your podcast and search that in.

So, thank you for joining us today. As I said at the start of the presentation, I hope that you've taken at least one piece of information away from today's session that makes you feel more confident with your superannuation in understanding how it works in maybe a task that you can do to better your retirement outcome. So thank you for joining us today.

Get your super sorted

There are simple things you can do that can make a big difference to your super for retirement. Discover some practical steps to help you take control of your superannuation.

Get your super sorted

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Hello and a very warm welcome to our AustralianSuper Get Your Super Sorted webinar. Today, my name is Meline Gun. I’m part of the Education team at AustralianSuper, and I’ll be presenting our session today.
Before we get started, I will first of all acknowledge the Traditional Custodians of the land on which we work and pay respects to Elders past, present, and emerging, and extend that respect to all Aboriginal and Torres Strait Islander peoples.
I also want to make sure everyone understands that today is a general information session. This is very important because there will be some material that might sound like a very good idea, but whether or not it is will depend on your own individual circumstances. So please have a think about your own financial situation, objectives, and needs before taking any action based on today’s presentation. For decisions around AustralianSuper, please check our product disclosure guide, our target market determination document, and our financial services guide. These are all available on the AustralianSuper website, along with lots of other really useful information. It’s probably a good idea to have a look and cross-reference with material on the AustralianSuper website.
With that in mind, what we’re going to be looking at today is consolidating super, insurances in super, ways to add more to super, and how to get some help and advice if that is going to be useful. We’re going to do this by working with a case study, a real-life, lifelike situation, because I think it’s helpful to see each of these topics in the context of someone navigating their superannuation in the same way that we’re all doing during the course of our working lives.
Let’s start by thinking about consolidation and what this means. We’re going to do that by first meeting our case study, James. James is 36, he’s working as an IT consultant, and he earns $90,000 a year. He has a partner and a young child, and his partner is taking time out of work to care for their young child, so their circumstances have changed over the last few years. James is aware that he’s got super spread across several funds. The balance altogether is about $90,000, and he’s really looking now, having not thought much about his super in the past, to make the most of the super system and get his super in order so that he’s positioned well for his long-term financial security.
We’re talking consolidation because James is aware that’s probably something he should consider. If you’re in that position, like James, of having a few super accounts, maybe as a result of working for different employers, and it’s all just seemed a bit too hard, maybe now’s the time to stop and think about the benefits of bringing funds together. A lot of people find they save money on fees once they bring super into one consolidated fund. They certainly get less super-related correspondence, which is a plus, and there’s that feeling that “Now I’ve got my money together, I’m more likely to be in the driver’s seat and in control of my long-term savings.”
When we’re thinking about consolidating and hoping it doesn’t feel too hard, we should be aware of fees and costs when we’re looking at the different funds that we have and where we might consolidate to, because we want to put ourselves in a strong position going forward. Another area that’s important to consider is our insurances. As we’re looking at our different super funds, if we have insurances in several of the funds and they’re important to us, so we’d like to keep them, then we may sort of stop and think about what we’re going to do with that.
At AustralianSuper, we can apply to AustralianSuper to literally transfer that amount of cover from another super fund into our AustralianSuper fund. So we’re effectively increasing that cover in AustralianSuper. When we go back, after that’s been received and acknowledged by AustralianSuper, and we can see the change has happened in our AustralianSuper account, we can go back and consolidate the funds knowing that we are not losing insurance cover that may be important down the track. For people who are unsure, it might be useful to seek some financial advice around this.
Once we feel we’re in a position and ready to consolidate, and maybe we’re consolidating into AustralianSuper, we’re comfortable with our insurances, we can use the tool on the AustralianSuper website. We can use the online tool by logging into our account to consolidate. If we go to australiansuper.com/consolidate, there are listed things that we can think about first, including insurances.
So it’s quite a nice way to make sure that we’ve covered things off that are important to us. We can consolidate through our online account, or many people find it’s easier just to go into their MyGov account, where maybe they’ve done their tax return. Going into that link to the ATO, there is a super comparison tool in there, and there is a consolidation tool as well.
This is a much more straightforward process than it used to be in the past, and I think once people have consolidated funds and have their super in one account they can focus on, there’s often a feeling of achievement that “I’ve done this.” This is what James is going to be considering as he’s trying to get his super accounts in order.
We’ve talked about insurances. When we’re thinking about our super, quite often the insurance piece gets parked to the side for later. Most of us don’t like seeing the insurance premiums coming out of our super account. We certainly hope that we’re never going to need to use these insurances. So all in all, it’s a topic often of “I’ll look at that later,” but really it’s important. It’s protecting these insurances: death cover, total and permanent disablement cover. These are lump sum amounts that are paid in addition to our account balance in the event of our death or our total and permanent disablement. You can see these insurances are there to protect ourselves and our loved ones while we are building our long-term financial security within our super account.
Income protection we can have as well, and that’s designed differently. Its structure is that it can provide a regular income in the event that we can’t work due to accident or illness and hence don’t receive an income. Income protection insurance can step in and replace that income. Default cover in super is generally for a maximum payment period of two years, but we can apply to change that if that suits us. So having a look at our insurances and what might be useful, usually when people join AustralianSuper, they’ll receive a default level of cover. It’s really looking at: is that what I need? If I don’t want that cover, I can cancel it. If I want to keep the cover, that’s fine. Maybe I want to change and increase the cover depending on where I am in my working life and my current circumstances.
That often leads to people thinking, “Well, how much cover do I need?” This can change over time as well. We think of James, who now has a partner who’s not working at the moment, caring for their young child. He’s probably thinking that his insurance needs have changed and thinking about how much cover he might need.
It's something he may not have thought about in his younger years, so maybe James could check out the insurance calculator on the AustralianSuper website to help look at his needs at the moment and the costs involved.
When we're thinking about the costs of insurance through an AustralianSuper account, we can see that the costs will depend on the amount of cover that we have. Also, our age will be a determinant in the premiums. There's another factor which people are sometimes not aware of, and that's what we call our work rating. It's a type of risk rating. When we join the fund, the insurer knows nothing about us, and we generally default to what's termed a blue-collar work rating.
This is the most expensive set of premiums, and for a lot of people, they may be eligible to pay less for their cover. So, we would encourage members to think about what they do and, if they're thinking that doesn't sound like their role in the workforce, to perhaps have a look at their work rating eligibility by using the AustralianSuper.com work rating tool. It's a very straightforward tool where I think there are about four questions to answer, and we can see then whether we would actually qualify for a white-collar or professional work rating.
A white-collar rating would reduce the costs, and a professional work rating would reduce the costs further. We can apply for a change of work rating, and if we're successful, we would see those costs reduce, with the deductions coming out of our super account.
In James's circumstance, his current rating is the default blue-collar, and he probably, like most of us, didn't pay much attention to this. He can apply for, and if accepted at, the white-collar work rating, he can reduce the cost of his cover. Of course, there's also the professional work rating, which would reduce the cost further again. Currently, he wouldn't be accepted at that professional work rating level, but he has the option if, down the track in his future, he fits into this niche, he can reapply and maybe be accepted at that future date.
We talked about changing an individual work rating. We can log on and do that through our online account by going into "My Insurance" and then "Change My Insurance". Again, we encourage everyone to have a look by going online to their account, either on their laptop or through the app on their phone, and seeing through "My Insurance" what their work rating is and, if it's not appropriate, taking some action to lower the cost of premiums, which is a win straight away.
Another important area, and one I think James would be aware of with his changed family circumstances, is letting the fund know who he would like to receive the balance of his super account. This might include insurance payouts in the event of his death. Again, this is an area that tends to be put off for later, but it's very important that we all understand that our super doesn't automatically form part of our estate.
We need to tell our super fund who we would like to receive the funds. We can advise them to pay to our estate, in which case, in our will, we can state what we would like to happen. But it's important for that financial administration process that happens after a death to run smoothly, and that requires us to have advised the fund of our wishes.
We can do that in a couple of ways. While we're working and having contributions going into our accumulation account, we can tell the fund our nominated beneficiaries via what's termed a binding or non-binding nomination. The reversionary nomination you can see on the screen is a third option available for people who have a retirement income account. We call that our choice income account. They can choose a reversionary nomination, but for people in the workforce with a super account that's receiving contributions, we talk about a binding or non-binding nomination.
If we go online and advise the fund of our nomination, that will be considered a non-binding nomination. As the name suggests, it's not binding on the super fund. If, in the event of death, there are disagreements within the family, AustralianSuper may need to follow a due process and change the outcome. This is important, as it can take some time when these things happen.
Understanding that, if I've gone online and put my preferred nomination in place, I know it may not be the final outcome. If I want to make sure it's a more straightforward and faster process, and I want to determine the outcome, I might choose a binding nomination.
To do that, I can't do it online. I need to download a binding nomination form, complete it, and sign it in front of two witnesses who are not beneficiaries. I can then scan and email that into the fund.
A binding nomination is a very powerful document because it’s binding. Provided it's valid, this is how the super fund will pay out. In the past, all AustralianSuper binding nominations have been what we term lapsing nominations. This is because it's such a strong document that the fund has felt it preferable for people to renew them every three years. With a lapsing binding nomination, AustralianSuper will contact you as the three-year period draws near and ask you to renew that nomination.
It's an opportunity to have a bit of a think and, if circumstances have changed, to update the nomination now. Just as we speak, in fact, in the next week I think it's happening, AustralianSuper will now have a choice for members. So, for new binding nominations, you'll see on the form that there is now a choice. You can tick if you want it to be lapsing, in which case you'll hear from the fund in three years' time asking you to renew that nomination. Or you can choose a non-lapsing binding nomination, in which case it will stay in place until you change it. So, thinking in terms of your own circumstances and what's going to suit you best, you can decide binding or non-binding, and if it's binding, you can choose on the form between lapsing and non-lapsing.
On these nomination forms, you'll see clear instructions of who you can nominate, which is prescribed by super legislation. So, you follow those instructions and send those into the fund. We have been thinking in terms of items that someone like James may not have thought about in the past. Now that he wants to set his super up for success, he's thinking of each of these items to go through and make sure they are in place.
Another area for James to think about is whether he should add a bit more to his super. He's aware that investment time is important and can be really advantageous. He's thinking about whether he should take advantage of that and add some funds to super now to help it grow and compound over time. So, he's wanting to know the different options that he has. He may be thinking about making what we term a salary sacrifice contribution via his employer. What he's talking about here is, at the moment, his employer is making the compulsory contributions to super.
So, his income is paid, of course, into his bank account. When it's paid into the bank account, his employer is withholding tax and paying that to the ATO, and he gets the net amount in his bank account. When his employer is paying the super, it is 11.5% across to the super fund. They don't withhold tax at all; 100% goes to the super fund because it's a before-tax contribution. The super fund withholds tax at its concessional rate of 15%, so we see that contribution tax on our statements. That means he's got 85 cents in the dollar invested in his super.
So, that's a nice tax deal for James because ordinarily his marginal tax rate is higher than that. He might decide to ask his employer to pay some more to his super, so he gets a bit less in his bank account, but the tax difference works in his favour. We call this salary sacrifice. So, he can build his super and save on tax because of this tax preferential situation — the fact there's less tax paid through going into super than into a bank account. There is a limit to how much the government will allow people to contribute pre-tax into their super, and that limit this financial year is $30,000. So, James is sort of mulling this over and thinking about that.
We'll also want him to be aware and understand, because as circumstances change within his family unit, that a government co-contribution strategy at some stage might be appropriate for him or his partner. We're talking here about someone whose income for the year is less than $45,400, and if they make an after-tax contribution into super, they can be eligible to receive a co-contribution of up to $500. People whose income is more than $45,400 but less than $60,400 may be eligible to receive a partial co-contribution. So here, we're thinking to get that maximum amount: my income would be $45,400 or less, I make a $1,000 after-tax contribution into super, and I can receive a government co-contribution into my account of $500.
Another mechanism for James to consider is a spouse contribution, and you may have heard this term before. What we're talking about is putting some funds into our partner's super account. James might think of this because he could save on tax by putting up to $3,000 into his partner's account, and he can then receive a tax offset of up to $540 off the tax that he would normally be due to pay. It has the added benefit of growing his partner's super at a time when her balance is pretty stagnant because she's not working at the moment.
So, when they look at their overall position and their nest egg for their future financial security, this can sometimes be a useful strategy. When we're thinking of that, we need to remember that to be eligible for that maximum, the contribution needs to be $3,000, and our spouse's annual income receiving those funds must be no more than $37,000. There is an age limit as well.
While we're thinking of strategies that may or may not be appropriate at the moment, again, we like people to know that these strategies are there so that we can find out more about them and tap into them as our circumstances change.
Something to consider would be, maybe if we can't afford to make additional contributions into our partner's super account, or maybe we are doing that but would like to do more, we can actually split our before-tax super contributions that have gone into our account this financial year. We can apply to the super fund to pay up to 85% of those before-tax contributions across into a partner's super account.
It's also helpful for people to understand that there is what's termed a carry-forward rule. What we're talking about here is the fact that we might be in a position at some stage to have used our $30,000 contribution limit pre-tax when we add our compulsory contribution, maybe any salary sacrifice, and maybe we've made some tax-deductible contributions. We've used that limit, but maybe there are some periods in the last five years that we haven't used the cap, and we're in a position this year where we'd like to be able to add more.
We can look back over that period if our total funds in super are less than $500,000. We can look back and use some of that cap we haven't used. We can use this for this financial year, and for someone that thinks, "Oh, that might suit me either now or at some time down the track," we can go onto our MyGov site, again into that link through to the ATO, and have a look in the super area. Look for the carry-forward concessional contribution. Within that website, within that tab, you'll see listed quite clearly if we have any remaining for each of the last five financial years.
It's worth having a look and having a look at also the other contribution information that's there. Also, as we're going through our journey towards retirement, people might have heard about a transition to retirement strategy. Sometimes in those years leading up to retirement, we can find that using a transition to retirement strategy, where we're actually drawing some tax-free income out of super to help with our cash flow, allows us to make pre-tax contributions into AustralianSuper and literally have more funds going into AustralianSuper by paying less tax. It doesn't work for everyone, but it's worth understanding that for some people, this is a helpful strategy in that pre-retirement period.
Finally, on the screen, we can see reference to a downsizer contribution. What we're referring to here is that for people who are aged 55 and older, if they downsize their home and, in the process, have some excess sale proceeds, instead of looking at how they're going to invest these funds, perhaps to help with their retirement living, they can now add these to AustralianSuper. Each person can add up to $300,000 to their AustralianSuper via this mechanism. There are some discrete rules around this type of strategy, so if we were looking to do this, we’d want to have a look at the rules at the time to make sure we comply with those.
Very importantly, we need to be at least aged 55. There is no upper age limit, and we can do this type of contribution once in our lifetime. So, they are important barriers or criteria, but as well as that, I would encourage people who are thinking of using that strategy to have a look at the rules, either considering the fact sheet available on the AustralianSuper website, checking on the ATO site, or maybe seeking financial advice. These are all mechanisms that look at different circumstances that people can be in during the course of their working lives and strategies that are going to fit these different circumstances at different times. The more that we know about the different strategies available, the more that we can reach out, find out more about them at an appropriate time, and use them if it's going to assist in our journey towards retirement.
So, let's go back and have a look at James's circumstance. James has looked at each of these items and decided to take some action. As a result, he has saved on costs by consolidating his multiple super accounts. He's only got one set of administration fees, and he's very happy about having less paperwork to manage as well. So, that's been successful. He's also applied to change his insurance work rating from where he was sitting at Blue Collar. Now he's been accepted for White Collar, so this has reduced the cost of his insurance premiums. After some consideration and looking at his financial circumstances at the moment, he's decided to start salary sacrificing $250 a month. This results in an additional $127,000 expected into his super by age 67 and a tax saving of $510 in the first year. So, that's a nice outcome for James as well.
He's really now tapped into the benefits that are available within the super system, and the more he interacts, the more he understands how his super can benefit from these steps that he's taking. He also makes a
A one-off contribution of $3,000 into his partner's account so he boosts a super balance and receives a tax offset of $540. Finally, James has put in place a binding nomination, so he wants to make it as easy as possible for his partner in the event of his death, so that the financial administration process is clear and is more likely to be a straightforward process in this circumstance. So we're talking about some straightforward steps that have a strong impact, both in the short term if something happens to James, but also planning for that longer-term financial security for both himself, his partner, and of course his child growing up.
When we're thinking about a few simple steps we can take, we can think in terms of maybe adding a bit more to super over the long term as a very powerful strategy. We could also have a look at our investment options and think about whether the way that we're invested is appropriate. We all start as default balanced option members, so having a look and seeing what that means and whether that is appropriate. If it is, that's fine; if it's not, altering our investment option to suit us better.
As we mentioned, having a look at our insurance cover to make sure that it's the right cover for us, remembering the importance of the work rating—the fact that we've defaulted into a blue-collar work rating. If that's not appropriate, changing that and maybe saving on premiums, and also looking at the amount of cover we have, of course, to make sure that it's right for us. Very importantly, and quite often overlooked, checking to see that we have nominated beneficiaries for our account in the event of our death. If we have, whether they're appropriate; if we haven't, thinking in terms of putting that documentation in place to make the financial administration in the event of our death as straightforward as possible for our loved ones at that time.
So we have covered quite a few strategies today and things for us to think about. If you think it might be helpful to seek some financial advice around converting this sort of general information that we've presented today into something more meaningful for your own circumstances, I think a really helpful start is possibly to contact the fund and organise a time that's convenient for you to speak with a financial advisor by phone. A phone meeting with a financial advisor is part of our simple super advice channel, and here that advisor can provide financial advice that's personal to you.
For advice around insurances in your super, maybe contribution strategy in super, or maybe an investment strategy, there is no additional cost involved because this service is funded as part of the member fees that we all pay. So, getting the best value from the fund would be seeking some help and advice, maybe as we need it over time. Of course, if you receive personal financial advice, you would receive that in writing.
You can see on the screen we have online calculators that can be helpful. I referred to our insurance calculator, and there are some other calculators if you have a look that you might find useful. We do also have face-to-face financial planning available, and you can see the link on the screen now. You can go in and find an advisor to suit you in that capacity. We have advisors in our offices around the country, and you can call the fund to organise to meet with an advisor.
Importantly, face-to-face financial advice is provided at the member's own expense. There would be an initial meeting to discuss circumstances generally, and an advisor would be listening to you, thinking about how they can help, and talk to you about that and provide you with a quote for financial advice.
This really brings our presentation to a close. One last thought is to let people know that we have a podcast now, The Moments That Count, and people find it useful to have a listen to. Our Head of Member Products, Guidance and Advice, Shane Hancock, speaks with members about how they plan for retirement, the steps they took while planning for their future, and he also speaks to super experts from around the country. So, have a look at australiansuper.com/podcast or scan the QR code if you think that might be helpful or of interest to you.
So now, I will bring the presentation to a close. Thank you very much for your attendance today.

Do you need $1 million to retire?

How much money do you need to retire? It’s a question most Australians ask themselves at some stage. You might have heard you need $1 million – it’s the figure that’s often thrown around as the financial retirement ideal. But the truth is, there’s no one-size-fits-all. A comfortable retirement will look different for everyone.

Do you need $1 million to retire?

Show transcript Hide transcript

Hello and welcome to our presentation this evening.

Do you need $1,000,000 to retire?

My name is Madeline Gunn, I'm an Education Manager with Australian Super and I'll be presenting your session this evening.

With me today, I have some colleagues who are ready and waiting for any questions that might come up during the presentation.

So if while we're going through tonight's presentation, if some questions arise or if you have other super questions on your mind, remembering we're talking general questions.

We can't provide personal financial advice of course, but certainly general super questions.

Please feel free to type those in the Q&A box, which you'll find either at the top, maybe the bottom of your screen and my colleagues will answer those for you.

At the same time, keep an eye on the chat box.

You'll see that's also in in the bar either at the top or bottom of your screen because they'll also be posting some links there where you can find further information about some of the topics that we cover.

So you would think about opening those in another window or maybe copying and pasting them into a Word document for later.

So with that background, let's start our presentation, first of all by acknowledging the traditional custodians of the land on which we work and paying respects to Elders past, present and emerging, and extending that respect to all Aboriginal and Torres Strait Islander peoples.

I also want to make it very clear to people that today is a general information session, and this is important because I'll talk about things that might sound like a very good idea.

Whether they are or not is going to depend on individual circumstances, your financial situation and your needs.

So please, when considering what's been presented today, think about your own circumstances.

Check out further information on the Australian Super website.

Also looking at our product disclosure statement, our target market determination document and our financial services guide which are available on the website.

So getting started with our presentation, when we're thinking about, we may well have heard people talking about retirement and how much is needed and niggling away in the background, we might remember hearing that we probably need about $1,000,000 to retire.

That number we might have heard recently may well have gone up.

And as we look at our own super, we might be thinking maybe I'm just not going to be able to retire.

How, how does all this work?

And it's a very good idea to come to a session like today to just find out a bit more about exactly that, how this is likely to work and how much am I likely to need?

What does this actually mean?

And when we're looking at a topic like this, what we're going to be doing initially is to be considering the various factors that are going to come into play here so we can see on the screen.

There are a number of them.

Thinking first of all, about the sort of retirement I'd like to have, and then from there, how much income I'm likely to need.

Where's this possibly going to come from?

And if I'm going to be using my super, when can I access my super?

Does that fit in with my retirement plans?

And when I do that, how long is my money likely to need to last?

I know that Australians are living longer on average than previous generations, so is it realistic to have funds lasting that length of time?

Again, there's a lot of pieces of the puzzle here to think about and put together as I'm looking at my own plans for my future self as I finish work and have choices about the things I'll be doing and the lifestyle I'll have in those future years.

So probably the first thing I'd be thinking about is the sort of retirement I'd actually like to be having.

Am I someone that's really planning to do all that travel I haven't had a chance to do?

Am I someone that's really wanting to go bush or maybe spend more time with family?

Who knows?

But importantly, of course, I probably won't be doing everything on my own.

So if I have a partner, close family, loved ones probably need to be having these conversations with them so that we're not going off on completely different tangents and discovering our plans for retirement are actually completely different.

So on a practical level, thinking in terms of what it is I'd like to be doing is very much a starting point.

Because from there we think about how much that's likely to cost, How much am I going to need to, to meet my living expenses in these later years.

And quite often as I start to think in terms of how much I'll need, it all sounds a bit too hard.

And this sort of tends to often stop the process.

So we want to get past this point and think in terms of well, where can I look for some information to help me look at well how much are retirees on average spending at the moment.

That would give me a starting point at least.

And this is where we can use the work that ASFA the Association of Super Funds of Australia, look at the work they have done in just that reviewing and analysing expenditure for retirees currently and they have put together what they call their retirement standards.

They're looking at firstly how much retirees are spending at the moment, for what they term a comfortable retirement.

Now there is an assumption in these numbers that people retiring own their own home, which on the whole has been a valid assumption in the past and probably at the moment.

But we may need to think about how valid that is going forward.

But for now, we're looking at active retirees who are healthy and able to go out and do activities owning their own home.

And we can see on the screen, couples are spending just over $73,000 a year and singles for this sort of lifestyle, just over $52,000 a year.

If you're someone that would like a bit more detail that sits behind that.

And our graphics on the screen showing money being spent eating out, perhaps buying those new shoes, a bit of travel, maybe updating our cars, our technology.

If you'd like a bit more detail than that, you can have a look on the ASFA site at their retirement standards and you'll be able to see a detailed budget sitting underneath these numbers.

And these get updated each quarter and adjusted with expenditure and inflation.

So it's, it's quite a current number and we know it's increased in recent times due to the inflation that we've all experienced.

Now ASFA also provide a second retirement standard, which they term to meet a modest lifestyle.

So what they're talking about with their modest retirement standard is having sufficient funds to meet basic income needs.

So here we can see some of our graphics have been greyed out.

We can see that maybe some of those nice to haves aren't there.

We're talking about people that own their own home, that are relatively healthy but having more limited expenditure, but sufficient to meet what are termed basic lifestyle needs.

And again, those details are on the ASFA website, so we can see the numbers there.

Now some people we're talking about average expenditure here and some people will feel I tend to spend less than the average person.

So I probably might not need as much as that.

Other people are thinking, well, I'm probably a higher spender than that.

I intend doing a lot of travel initially.

I'm possibly going to be spending a bit more than that.

But at least we've got somewhere to start in our planning process, which is what we're after.

Because we want to actually walk through this process, which can be fine-tuned over time.

But we want to actually make some progress and get an outcome so we can have an idea of the way we're heading and what it's looking like and how we might be tracking.

I think it's helpful as well, having considered these lifestyle retirement standards to just compare those to a full aged pension.

I think it's sort of helpful to to look at both the comfortable and the modest lifestyle numbers and remember ASFA see the modest numbers, those amounts as required to meet what they see as basic living standard living needs.

And we can see the full age pension is a few $1000 less than that.

And we can really see the benefit here of at least having some super saved so that we can generate a few $1000 each year to perhaps add to the full age pension we might be receiving in retirement if we haven't had an opportunity to build a substantial balance.

So then of course what comes into play is understanding how age pension and super income streams can work together to provide us the income we need in those later years.

So we're thinking in terms of the level of income on average that Australians are spending at the moment.

And if we were going to sort of model numbers going forward, we could then start with these sorts of numbers and factor in inflation as intrinsic in those numbers.

And now we have a pathway forward.

So then we'd be thinking, well, if I'm thinking about my income in retirement, have I really thought about where my income is likely to come from?

Have I been sort of connected into my super and assumed that as I save into my super, I'm going to have a sufficient balance there to generate the income I need?

Or maybe I have other investments or savings that I'm planning on using, or should I do that?

So these are all going to depend on our own circumstances.

But thinking in terms of where my retirement income may be coming from, we tend to think in Australia of funds could come via government age pension, from our super savings, maybe from other savings we have, or other investments that we might hold.

And we know when we look across the community that most retired Australians are receiving some government age pension at some stage during their retirement.

And often this can be combined with some income from their super generating income needed to meet the sort of living standards that they'd like from the two income sources or maybe a bit from other savings and investments as well.

Tonight we're going to focus on that mix of government age pension and superannuation.

So as we are thinking in terms of our retirement income in our later years, it's probably well it definitely is helpful to have an idea of what you're spending now.

And quite often this is the the point that people find difficult and stops the process that we're on our planning journey.

So it's thinking in terms of the power it gives me, the control over my future self of having an understanding of my expenses at the moment.

So it's finding a tool that's going to be helpful for me.

Everybody's different.

We know that the Government Money Smart site has a nice budgeting tool, but there are certainly other apps available that you can find or for some people they keep a spending diary and it's as simple as that.

Just noting down what's being spent at at that level.

I think it can be helpful if we run things through credit cards to certainly that helps looking at income and expenditure to give us an idea.

But the putting effort in to put together a budget, it does give us a lot of control over a pathway forward and that information to make good decisions as we're deciding how we go to track forward.

So we're thinking if the more we know about what we spend, the stronger our route forward is.

But I think initially we can rely on those averages that we talked about at the beginning.

That's a good starting point which we can fine tune with our own expenditure as we go forward.

Another feature that's going to become important, of course, is if super is going to be central to my income in retirement, then, well, when can I access my super?

And we can see here that if I'm thinking in terms of retiring before I can access my super, then part of my planning is going to, of course, be having another source of income until I reach the stage when I can now start drawing from my super savings.

So as we can see on the screen here, we can access our super if we've reached age 60 and stopped working permanently.

So retired or if we change our employers so stop working for a particular employer, we could then start working for a different employer, but that will provide us with access to our super.

Once we turn 65, we can access our super whether we're working or not.

So no one is going to ask us if we're working.

We just need to show that we have have turned age 65 and then we can decide if we want to to access our super.

We don't need to.

The super can just stay exactly where it is.

But now we've reached the age of 65, we have some choices around how what we do with our super and how we manage that going forward.

So these rules, we talk about them as the terminology is 'conditions of release' and it's really those we've met those conditions and it releases the funds, they're not preserved anymore.

So that is part of these thought processes as I'm tracking through working out how much I need to fund my retirement.

When I start that process is is going to be part of that journey because it will also be part of, well, how long does my money need to last?

And when I'm thinking about that, here are some numbers for us to have a look at and realise I think we're talking quite a long time.

So we can see for someone who is aged 65, for a male the average life expectancy is aged 85 and for a female aged 88.

So that is quite a long period to fund when you think of drawing income to meet living expenses.

As I mentioned, Australians are living longer than previous generations and the numbers you can see on the screen are average life expectancies.

So there are many Australians who live past the ages that you can see on the screen.

So being prepared for that outcome, which is a nice outcome to be having that time at the end of our lives to enjoy and do things that maybe we've been too busy to do while we're working is a nice thing.

But you can see the importance of having the funding to enjoy that time in our lives.

So I think having looked at the components that are going to be important as part of this planning process, it's going to be helpful to have a look at putting these together in a case study.

And we're going to do that with our couple here, Nick and Anne, and look at how this effects them and how the pieces fit together.

So our couple, Nick and Anne are both aged 53.

So Nick, we can see earns $80,000 a year and 70.

And we can see together their super is about $400,000 and they've done a bit of planning and their retirement income goal, we can see there being $76,000 in today's dollars.

So they're expected to keep that buying power.

So it will increase with inflation during their retirement.

And they're hoping to be able to retire at age 67.

They've heard that you need considerably more than that sort of dollar amount to retire.

So they are a bit anxious that they'll ever be able to retire.

So if we do a bit of modelling on their numbers and see what we come up with, that might be a good starting point.

So if we look here, we can see schematically on the screen aged 53, their super balance together is about 400,000.

We can see that they're planning on working to age 67 and retiring at that stage.

And when they do that we estimate their super balance will have grown to about $838,000.

And at that stage they would retire.

They plan to start drawing that level of income they'd like as a combination of funds from super and having applied and and received some age pension that together give them the income they'd like.

They then start their retirement years.

And so that's where we look at expectations going forward and we can see we expect them to be able to draw the level of income they'd like adjusted for inflation past their average life expectancy.

So that's a nice outcome for them to feel a level of confidence that that looks like it's going to work quite nicely.

It's a bit of a relief.

They didn't really feel that the funds that they had would be sufficient.

And it's really that interaction of super and age pension that's enabling them to be in this position.

So then they're probably thinking, well, that's quite good.

I wonder if we could retire a bit earlier or maybe things happen and they need to retire earlier, perhaps to look after one of them through ill health and the other one looking after their partner.

And this happens to members more than we realise.

And so if there was an earlier retirement happening, it would look now at what the ramifications of that might be.

So what if they retire early?

So now if we run another modelling scenario, we think in terms of, OK, they're starting super balance at 400,000, working until age 62 when they both retire.

And we would expect then a super balance of about $662,000.

Retiring then means that they're not yet at their age pension age, so they will be funding their retirement from their own resources from their super.

So they're drawing out more heavily from their super.

So they're retired, drawing the income that they'd like.

And when they reach age 67, they can apply for age pension and they do that and draw and ease back on the funds being drawn out of their super because now they've got the two income streams and continue in their on their retirement.

And that's the big question of how long would we expect their funds to last.

And when we look at this, we can see that we expect their super to run out from about their age 83.

And from then we would expect them to rely on the full age pension.

There's not really much safety net sitting there for them and they might feel a bit uneasy about this outcome.

So then the question would be, well, are there, is there an action they can take now in this lead up to their retirement to alleviate this?

What difference would it make if they added some funds to super now?

And so they decide both of them to make before tax contributions of $100 a week to their super.

So let's model that and see the difference that that makes for them.

And here we can see they're at 53, they're now working, but making those additional contributions to super and retiring at age 62.

And now we expect their super balance to have increased to about $752,000.

They're retiring on their own.

There's no age pension yet, so they're drawing their income until age 67.

When they apply for some age pension, they receive that and can ease back on the draw downs from their super.

And the big question is how long do we expect their super to last?

And here we can see an expectation of having the income they'd like past their average life expectancy and we think to about age 90.

So that's a pretty nice outcome.

And in their scenario, they would probably feel very comfortable about this.

They're really looking at either they've decided they'd like to retire early or the potential for something to happen that means that they need to, they've got that base covered and it looks like they'll be comfortable.

So we can see that they've in the process, they've saved tax with their contributions to super, They've got additional funds in their super and it's lasting an extra 7 years.

So if we come back to our original question and what we're really focused on is, do I need $1,000,000 to retire or how much do I need to retire?

We can see that drawing that level of income may use that level of funding, but for most Australians they're not doing it on their own.

They've got funds from their super and for many Australians they can supplement that with income from Centrelink age pension.

And even if they don't qualify at retirement, for most Australians at some stage during their retirement, they, as they use their super, their assets up, which is what it's designed to do.

The balance will be starting to come down.

And the requirements for Centrelink asset testing is going up.

And they'll find often at some point during retirement that they'll qualify and can apply, receive maybe a small amount initially of age pension, which may increase over time, which that means they can ease back on the draw down from super.

And that nice combination of the two income streams will enable them to generate the income that they would like to have throughout their retirement.

So we can see the importance of understanding this dynamic, what it might mean for us and getting a feel for how these systems can work together.

So when we're thinking of well, what can I do now to sort of have a look at my own circumstances.

It looked very nice for our couple on the screen.

But then I really want to convert what that might mean for me.

And I think it's very helpful to start thinking about the spending I'm doing at the moment and create a budget.

So it's a helpful scenario to have a feel for how much we're spending now and the sort of expenses that are going to continue into retirement.

And there may be some that don't, that might be work related or debt related that won't be there.

And thinking in terms of fine tuning the sort of spending that I'd like to have in those years.

And thinking in terms of is my retirement income likely to come from super, remembering that I need to reach the age of 60 usually to be able to access my super.

If I'm thinking of retiring before that, maybe I need to be thinking about having some other savings and investments to cover that off.

And then I think finding a modelling tool that we can put our own numbers in to give us a bit of an outline as to what my scenario looks like and what I'm on track to receive.

And there's some things I can do to perhaps make a difference in that lead up towards my retirement.

And certainly on the AustralianSuper website, we have our online calculators, we have a super projection calculator.

We can put our numbers into the system and generate the first screen.

We'll see.

We'll be looking at our balance over time and expectations of how long it will last.

But if we click onto the second income stream, we can then have an estimate of income from super and any potential age pension that we might be eligible to receive at some stage during our retirement.

And I think the beauty of these calculators is of course, that over time as the rules change, those updated rules are embedded in the calculator for both age pension and super.

So if we tapped into a calculator like this, there's also one on the government money smart site, There's one on the ASFA site.

They have a nice calculator.

Here is finding the one that we are most comfortable with and like to use so that maybe each year at tax time when we do our tax, we're in MyGov.

There's a lot of our super information now in our MyGov site in the tax area.

It's a bit of a reminder.

I'm going to go in and see how I'm tracking.

I know that any updated rules are in these calculators so I can see how I'm going and make sure I'm on track for the sort of retirement outcome that I'd like to have.

So that's a pretty good outcome from learning how this works and having a look at calculators.

And the pathway forward is really me on the front foot now working on just tapping in each year and checking in to make sure that I'm on track for my future financial security that I'm looking forward to.

If I'd like a bit of help with some of this, particularly as members are often asking, but for my circumstances, what might be the type of contribution strategy for me or often an investment strategy that's suitable for me or maybe about my insurance, as in super that style of advice.

I can contact the fund either on the 1300 number or through the website and organise a phone meeting with a financial advisor and there I can receive personal financial advice.

Today is a very general session and this sort of converts this information to something that's meaningful for my circumstances.

And there is no additional cost for that service as it's funded as part of the member fees that we all pay.

So I think getting best value from your super fund is tapping into this assistance perhaps as you need it over time.

We also provide access to face to face financial planning for people who would like more comprehensive financial advice.

And you can see there the link on the screen for that.

That's at members own expense on a fee for service basis.

So it's really making sure that we're gaining an understanding of how this works, how this fits together, taking the steps that I can around using calculators and making sure I'm on track and where I need a hand, Making sure that I reach out and get a hand so that then I'm on track for the sort of retirement that I'd like to have.

And that's really what this is all about.

I'll also just mention that on the AustralianSuper website, a relatively new feature is our Elements of Retirement guide, a self-guided group of we can see the topics here.

You can see them on the screen when we're planning a path to retirement.

They're a very helpful tool for covering off areas and working through this planning and the pathway towards retirement.

That can be a very useful mechanism, again, to get acquainted with the things that are going to be important to know about and to tap into things that will be suitable for us.

So that brings to a close our presentation today.

If you have any questions that you'd like answered, please type those into the Q&A box.

We've we'll stay open for a few more minutes.

If people are still thinking about questions that they would like answered, I can see my colleagues are typing out answers as as we speak.

Just having a look at some of the questions here.

An interesting question I think someone is asking, can they keep some of their funds in super rather than the Super pension so that it keeps growing?

I think it's important to know that when we retired and if we choose to move our funds across to a superannuation income stream in retirement, it's a choice.

We can leave our money in super if we want to, but in actual fact we have the same investment options in the income stream and it often earns a little bit more in the income stream because there's no tax on those investment earnings inside the fund.

You might remember in our super where we're got our contributions being paid into, it's nice in our working lives because those investment earnings are concessionally taxed, not like out in the real world for us.

So there's concessional taxation.

The Super fund's marginal rate of 15% is the the, I guess marginal rate that's applied across the Super fund.

However, when we move our funds into a retirement income stream, that's not part of the funds taxable income.

So it's a zero rate of taxation on those investment returns in a retirement income stream.

So it's weighing up what's going to suit us best as we're looking at our own circumstances.

There's a question here I will also mention because it's often asked is if I retire or leave my employer now and I'm over 60 and I convert to an income stream, I'm happy and then I might go back to work again.

Is that OK?

And that's fine.

I could just open up another super account and have my contributions paid into that account.

And at some stage down the track, I might want to pull everything together and I can do that as well.

I can't add to a current retirement income stream, but I can move everything, the retirement income stream, my super across to a new retirement income stream down the track if I want to bring it all into one place.

So we've still got some questions coming through, but we're sort of finishing up now.

I think we'll come through to the last ones here.

Just one question asking for asset testing for age pension.

Is our residential property considered as part of the assets?

And the the answer to that is generally not so generally, our home is exempt from the Centrelink assets test.

Someone's asking, do you need 2 super accounts to take advantage of the recontribution scheme?

I think what they might be referring to is sometimes people draw funds out of super and decide to put it back in again for tax purposes.

And it doesn't need to be in two separate accounts.

But depending on the strategy that you're pursuing, sometimes it makes sense to use two different accounts.

So I would seek advice about that, about my own circumstances if that was me.

OK, so I think we're finishing up now and I will thank everyone very much for your attendance today.

Thank you for joining us.

I hope that it's been helpful as you can go away and have a little look further into some of these things and see how they apply to you.

And don't forget, if you need a hand, please contact the fund and organise to receive some help and advice using our phone advice team.

So I'll close the session now.

Thank you very much to everyone for your attendance.

It's been lovely to chat to you tonight.

Thank you and goodbye all.

Preparing for your retirement journey

No matter where you are on the road to retirement, it’s good to know the right steps to plan your future. Boosting your super while you’re still working, finding different ways to fund your retirement and keeping engaged with your super can all help you retire with confidence.

Learn more

Preparing for your retirement journey

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Well, welcome everybody to this webinar about preparing for your retirement journey. My name is Peter Treseder, I'm an Education Manager at AustralianSuper and I've been helping AustralianSuper members for the last 25 odd years and with me to help me with the content today I have a fellow Education Manager, Michelle Kelada. Hello Michelle.

Hi, Peter. Great that you could join us on this topic that it comes for us all sooner rather than later for some. But the earlier you start preparing, I think that's the best way you can set yourself up for that retirement you're after.

So AustralianSuper recognises and acknowledges the traditional custodians of the land of 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. Our head office in Australia, AustralianSuper is on the land of the Wurundjeri people of the cooler nation. And today Michelle and I are speaking from the land of the Bunurong and the Wadawurrung people.

What Michelle and I are talking about today is general information. We don't know your personal situation, objectives, needs, etc. So before making any decisions, please read the Product Disclosure Statement and Target Market Determination. These can both be found on the AustralianSuper website.

So planning for retirement? I suppose it starts with, well, what age do you want to retire? Before 60? Somewhere in your 60s. A little bit later in your 60s. Most people like the idea of retiring earlier rather than later. Most people plan for retirement around 65. But there are some key retirement dates, some milestones on that journey to retirement, and they are 60, 65 and 67. 60 is the age that you can access your super if you've ceased an employment arrangement, 65 you can access your super if you're working or not working, and 67 is the qualifying age for the government age pension. So those dates, 60, 65 and 67 may give you some guidance around when you want to retire, but more when you can access income in retirement.

And we're going to talk about the sources of income you may have in retirement. So it means starting this journey to retirement and most of us start this journey the same way. We followed the same steps and that are, well, what is retirement going to look like for me? What am I going to be doing in retirement? What am I planning for? And once I've worked out what I'm planning for, how much do I need to tick those things off my bucket list? Where's that income going to come from? Because in my working life, this is retirement. This is my working life. Money's going in the bank. Once I go past retirement, there's no future source of income. I've stopped work. Where's my income going to be coming from in those retirement years? And am I on track to get that level of retirement or that retirement income that I'm aiming for? If I'm aiming for a retirement income of that high, am I in the right place now to be able to get there? And if I'm not, what action can I take to improve my situation, put myself in a better financial situation when it comes to retirement?

And I suppose, Michelle, this is where we asked the question. Go back to that first number one here. What does retirement look like?

Great question, Peter, and I'm glad you asked. And often what we find is that people start planning for retirement at Step 2 of the journey, which is do I have enough? But the really important thing to do is actually start with how am I going to spend my time once I've stopped working? What does that time look like? If I was working from the hours of nine to five and working full time, well, how am I going to fill that time once I've stopped working or once I start easing into retirement? If I plan to travel well, what do those travel plans look like? Does it look like domestic travel or does it look like regular overseas holidays? Is there some form of work involved? We know that retirement has evolved for Australians over the last few decades and often retirees now are looking to do some sort of work in retirement. Not always, but some are looking to do some sort of volunteer work or perhaps even a career change as they start thinking about retirement or moving into that next stage of life.

So it's really important to start thinking about how you are going to fill that time once you've stopped work as you know it. My mum helps with my children and she is semi-retired and while she really enjoys doing that, that isn't for everyone. So it's important to think about how you're going to spend that time but also share those plans with your loved ones as well. As you start thinking about what retirement's going to look like because it does look different for everyone and how you spend your time is going to directly feed into the next part of that. Starting to plan for your retirement journey, which is how much will you need? This is going to look different for everyone. If I met someone that was planning to spend 6 months of every year travelling overseas in retirement, compared to someone that perhaps wanted to hitch up the caravan and do a trip around Australia. Well they're going to have really different income needs. And you've probably heard ideas thrown around of how much you might need in your superannuation to be able to retire comfortably. But the reality is that this looks really different for everyone depending on what Step 1 looks like, how you are going to spend that time.

ASFA who is the Association of Super Funds in Australia, they survey retirees to work out on average what they are spending in retirement and they broke it down into two measures. So they've broken it down into a modest lifestyle in retirement, which we'll look at first, which is essentially designed to provide a level of income that is a little bit more than what the age pension offers. The full age pension in Australia and is designed to cover the necessities. Perhaps a little bit of domestic travel and just really cover off on the basics and look at having quite a modest lifestyle in retirement. You can get an idea on the screen of the types of things that may or may not be included in a modest lifestyle, perhaps basic private health cover, a takeaway meal every so often as well. Then what they've also shown us is how much retirees in Australia are spending that are looking to have a more comfortable lifestyle in retirement. This might include regular domestic trips, having an overseas trip irregularly, staying connected with family and friends virtually and a number of other things as well. So these figures are designed to give us a little bit of an idea as what retirees are spending in Australia. But this again, is going to be different for everyone. And there are also a number of assumptions that sit behind these standards, things like home ownership in retirement. So you can look these up yourself online to get a little bit more of an idea of the types of things that are included in these standards. But these are designed to give us a bit of an idea on what retirees in Australia are currently spending. But it's going to look a little bit different for everybody.

This here is showing us how the full age pension in Australia compares to the ASFA retirement standards we just spoke about. So as you can see, there is a little bit of a gap between the full age pension, which is on the far right hand side of the screen and what it entails to have a comfortable or modest lifestyle in retirement. And this is where your own savings, perhaps your superannuation or other assets can help to fill that gap to give you the type of income that you might need in your own retirement.

So where will your income come from? So we've spoken about how you're going to spend your time in retirement. We've spoken about how much you might need being dependent on how you've decided you're going to spend time. And the next part of planning for your retirement journey is starting to think about, well, where is that income going to come from in retirement? Peter spoke about those key retirement milestones. So superannuation being accessible from preservation age, which is 60. And superannuation is one of the building blocks that forms retirement income in Australia. So that's one of the sources of income that we see retirees tapping into once they've start reducing their working hours or moving into the retirement phase. We've also got the government age pension, which Australians are eligible to apply for at the age of 67 in Australia. Then we've got our own savings. So our own savings can form part of our retirement income and then if we've got other investments outside of superannuation then this can form part of our income or the building blocks of our income in retirement as well. Currently in Australia there is a high number of age pension age Australians receiving some form of age pension, whether it's a full pension or part pension. And often these people are topping up their age pension with the other the other items we can see on the screen. So things like your superannuation, your savings or other investments. The part that can be sometimes difficult to navigate is the timing of these payments because they often come in at different times. We're often used to being paid in regular intervals, whether we get paid weekly, fortnightly or monthly as employees. But moving into retirement can be a little bit different and somewhat of an unknown quantity because often these payments can come in at regular irregular time. So that can be a little bit of getting used to. But this is when we start to look at the different source of income in retirement and starting to again think about those key retirement milestones and when we start to become eligible to use different types of income sources in retirement. Obviously our superannuation, we know that we can start to access that from 60. Government age pension is 67, but our own savings and investments we may be able to access sooner than that. So this is where starting to plan early for retirement, depending on when you plan to retire, what that looks like can be fundamental in being prepared for your own retirement.

Thanks, Michelle. I do like the idea of building blocks. I'm after this level of income. What building blocks have I got to get me there? And when am I eligible for those building blocks? Because if I'm retiring at 56 or 57, because there's no retirement age in Australia, you can retire whenever you want. My super building block isn't available till I'm 60.

The pension super block is not available till I'm 67. So you're right, there are some key dates, there's some key strategies to think about. And you're touched on the government age pension. For the majority of age pensioners in Australia who are eligible for the age pension, the majority of them, their biggest source of the income is still the government age pension. And as you mentioned, super tends to top that off.

So we started with some figures from ASFA a line in the sand. What we're going to look at now is a case study and our case studies about Sam and Lucy. Now this is just a line in the sand, a way to start to get you thinking about your situation. You may be exactly the same as Sam and Lucy. I highly doubt it, but at least we're putting a line in the sand and you can think in your situation how you may differ.

So Sam and Lucy, both 58, they're both working. Lucy's working part time, so she might be like your mum, I think Michelle, doing a bit of looking after the kids and working part time. They've both got some money in super, they both want to retire at 63. So they had that discussion about what retirement's going to look like and it's starting from 63. They've worked out what that retirement funding is needed at $75,000. They've got some money in the bank if they put those numbers into a calculator and most superannuation funds have a calculator. You can look at the Australian super one online. They put in their age, their income, what they've got as assets, what they've got in super, into a calculator. This is the story it prints out or spits out for Sam and Lucy.

So it's saying at 58 now they've got $450,000 in super if they let the system work for them. So that's the compulsory contributions. Their employer has to pay in 11.5 % this year, 12% from the 1st of July next year. By the time they're 63, their super balance has grown to $585,000. They're now retired. They're not eligible for the government age pension. They're eligible to access their super. So their super payments are going to fund that $75,000 lifestyle for the first four years of their retirement because at age 67, they're now eligible for the age pension. They can go to Centrelink and apply for the pension. And Centrelink is such a vital part of this journey to retirement. It's going to probably provide you with income. How much and when are important is important information you need to know for your retirement plans.

The pressure now is off to some degree. Sam and Lucy's super because the age pension is now going to provide the majority of that $75,000. But their super runs out at 82, so their super finishes at 82. Their lifestyle becomes now funded by the full pension, so their income is the full pension amount and that may change their lifestyle. They may be happy with that change of lifestyle. They may have ticked everything off in their bucket list in the early years of their retirement, but life expectancy for Sam and Lucy is 85, so it's not a bad story. They're not in a bad position. They've got a retirement that they're aiming for that's going to last them a number of years but won't last them through to life expectancy and beyond. And most financial planners, when talking to someone about incoming retirement, would plan five years, typically beyond life expectancy.

So not a bad story, Michelle. What could they consider to improve their outcome? Well, some of the things that Sam and Lucy could consider is working a little bit longer, which they may or may not want to do. They could consider reducing their retirement income needs, so perhaps reassess how much they are going to spend in retirement, which may lead to their superannuation and other assets lasting a little bit longer as they move through that retirement journey. Sam and Lucy could also consider making extra contributions into superannuation while they're still working. They are currently 58 years old. We know they want to retire at 63, so they've got a good five years to really make their assets and their income work for them to ensure they can get the best possible outcome for themselves in in retirement. So they could start consider considering putting a little bit extra into superannuation.

And when we're thinking about putting extra into superannuation, broadly there are two categories that we're looking at. We can look at putting money into superannuation before tax, which is also referred to as concessional contributions and this has an annual cap of $30,000 per year. Then we've also got after tax contributions or non-concessional contributions and these have an annual cap of $120,000 per year. Let's break these down a little bit further. So let's firstly look at the concessional or before tax contributions.

And the simplest way to think of this is any money that's going into superannuation before you receive it or before you pay tax on it. The important part here is that this includes the Super Guarantee. So the amount that your employer is putting into your superannuation on your behalf counts towards this $30,000 annual cap. Salary sacrifice contributions also count towards your concessional contributions cap as well as tax deductible contributions. When money goes into superannuation before tax, it's generally taxed at a flat rate of 15% depending on your level of income when it goes into superannuation rather than paying your personal tax rate. So depending on your level of income, there can sometimes be tax benefits in getting money into superannuation under the before tax limits. We've also got catch up contributions available for some people depending on eligibility criteria, and this is where you may be able to accrue unused concessional cap amounts for up to five years. And this could help for those that have potentially taken time out of the workforce and haven't contributed actively to their superannuation over the past financial years. But essentially the way it works is that if in the previous five financial years you didn't fully utilise the contribution cap at the time, you may actually be able to go back and utilise those unused limits. There are eligibility criteria of course, like most things and one of those is that you need to have a super balance below $500,000 on 30 June of the previous financial year to have eligibility criteria. And I'll talk in a moment about where you can go to check if you've got eligibility for using catch up contributions under this carry forward rule.

Let's have a little bit of a look at how this works in practise. So here's a bit of an example and just bear in mind here that we're starting with the 22/23 financial year. So you can actually go back five years, but just for the for the purpose of the example, we're starting in the 22/23 financial year. Now in that year, the concessional contribution cap was $27,500. So if in this example, we've got a member that's contributed $10,500 through compulsory employer contributions, which would mean they had $17,000 that they didn't utilise in that financial year, which would then carry forward into the 23/24 financial year and add to the general annual cap, which was again $27,500, giving this individual now $44,500 that they are able to contribute to superannuation under the concessional contribution cap. Again, their employer has contributed to super. This has gone up slightly because the Super Guarantee went up in this year. So that's decreased what they've got available. They now have $33,500 remaining, which will carry forward into the current financial year we're in now where the annual cap is $30,000. So if we add the $33,500 they had remaining last financial year to the $30,000 cap that we have in this financial year, this would give this particular member $63,500 that they have available under the concessional contribution cap and carry forward rule. So this particular, in this particular example, this person has gone and made a tax-deductible contribution, so contributed the some of their own money or savings into super and claimed it as a tax deduction. And in this example, we've used $20,000. So you can see that how that's reduced their total concessional contributions down together with their employer contributions and they now have $32,000 remaining and this goes on a rolling five year basis. So it's accumulates for five years at a time and it goes on a rolling five year.

I mentioned where you can go to check if you've got eligibility for the carry for the use of the carry forward rule and how much you have available. And MyGov is really your source of truth when it comes to understanding your eligibility for things like the carry forward rule. So as we can see here on the screen, if you visit MyGov and go into the Australian Taxation Office portal, you will have a drop down section for superannuation. If you hover over the information section, you will see carry forward concessional contributions and if you go in, yeah, it's going to tell you whether or not you are eligible and how much you are eligible to utilise when it comes to the carry forward rule. It's really important here to think about or understand your marginal tax rate when it comes to utilising the carry forward rule and concessional contributions because the amount of income you're earning is going to determine or help you to determine the type of benefit there might be from a tax perspective. If you are thinking of increasing your concessional contributions to super.

Let's move across now on to non concessional contribution. So we've spoken about putting money into superannuation before you pay tax on it. Now let's look at putting money into superannuation after you've paid tax on it. So this could relate to things like savings you've accumulated in the bank an inheritance you've received, proceeds from the sale of an asset, or even spouse contributions, which I'll unpack a little bit as we go. But when money goes into superannuation after tax, importantly there is no tax on the way into superannuation because this is taxed money, it's money that's already been taxed or considered from a tax perspective somewhere along the way. And the annual cap for non-concessional or after tax contributions is currently $120,000 per financial year.

Now we spoke about before tax contributions and the ability to go back up to five financial years, but with after tax contributions, you may actually have the capacity to go forward up to three years worth at one time and this is called the bring forward rule. So again, if eligible and there are eligibility criteria for this, you may be able to put three financial years worth of contributions into superannuation all at once. This could be really valuable for those that perhaps may have received an inheritance or sold a large asset and give them the ability to put up to $360,000 in which would be this year's annual cap, next year's cap and the year after all at once. It's important to remember that if this is something you are considering, it does lock you into the Bring forward rule and you mightn't be able to make any additional contributions to super after tax under the non concessional cap for the next two financial years. So that is something to be aware of. Eligibility does depend on your total super balance and the cut off age for the Bring Forward rule is 75.

Spouse contributions also fall under non concessional contributions and this is where if you contribute to your spouse's superannuation account and they are on a lower income or perhaps working part time or not working, that you may be eligible for a tax offset by contributing into your spouse's superannuation account. So the full tax offset that you can receive is $540 currently and that can be, you can be eligible to receive that on up to a $3,000 contribution into your spouse's account. Your spouse must be under the age of 75 to be eligible for that tax offset. But this can be a way to not only help grow your spouse or partner's superannuation account, but again, if you're eligible, also receive a little bit of a tax offset, which could be helpful as well.

The government co-contribution is also something to bear in mind and consider. And this is where for every dollar that's contributed to superannuation after tax, you may be eligible for a government co-contribution of $0.50 up to a maximum of $500.00. So again, there are eligibility criteria that apply to this, but to be eligible for the full government co-contribution currently you need to have an annual income of less than $45,400 and then it does start to taper off up to an upper limit. So I do suggest referring to the ATO website for a little bit more information on the eligibility criteria and limitations here, but this could be something worth considering as well.

Now, the downsizer contribution is a little bit different. We've spoken about the before tax contribution limits and the after tax contribution limits, but the downsizer contribution actually sits outside of those limits and doesn't count towards any of those contribution caps. This is for those that are over the age of 55 and have downsized their home. There are eligibility criteria for this like period of home ownership and you can find these by looking at the ATO website. But essentially what this would allow someone eligible to do is contribute up to $300,000 into superannuation from the sale of your home. If you are a member of a couple, this is $300,000 each. So it could be up to $600,000 for a couple to be able to contribute to super if they met the eligibility criteria for the downsizer contribution. And this does fall outside or separate to the caps that we've already spoken about.

Thanks, Michelle.

And look, it is a matter of have I got spare money to put into super? If I do, how do I get it in in the most effective way? And Michelle's gone through a number of different examples here. And there's more information on AustralianSuper website australiansuper.com/grow. So there's a lot more information there to help you determine how to get that money most effectively into super. And of course, you may want to seek financial advice.

Well, Sam and Lucy went and got some financial advice and they're going to take advantage of all the rules, all the provisions that Michelle spoke about. So Sam's going to make a one off tax deductible contribution to the Super. He's going to start salary sacrificing into super. He's going to put some money into Lucy's super as a spouse contribution and Lucy's going to put some of her own money into super as an after tax contribution because she'd be eligible for the government co-contribution. So they're going to do all this for the next 5 years.

So how does that change their future? Well, their start point is no different. They're still 58 and they've still got $450,000 in super. But with the extra money going to super over those five years, when they get to the age of 63, they've now got a bit over $700,000 in super. It has really pumped up their super in those five years. They are still going to fund those first four years of retirement out of their super because even though they've got more super, they're not eligible for the age pension still at age 67. So at age 67, they can apply for the pension. They've received some pension. As I mentioned before, having some pension income takes the pressure of the amount they need to draw off their super as income. So now we see that their super goes beyond life expectancy. That $75,000 income that they were looking for now goes beyond life expectancy. And this may open up other ideas or other options for Sam and Lucy. They might retire a little bit earlier. They might draw more down. All that does is gives them more flexibility to what they want to do down the track when it comes to retirement.

So having that retirement aim, seeing if they're on track and in the case here was a good story. Now with a bit of advice, extra contributions into super has made it a really good story. So the advantages of the benefits of the advice they got about contributing meant that Sam paid less tax in the first year, a bit over $6000 less. Lucy's getting $500.00 from the government. They're super accumulation has gone up by over $120,000 and that super has lasted an extra nine years, or that more they had in super has allowed them to have that $75,000 lifestyle for an extra 9 years, taking them beyond life expectancy.

So in Sam and Lucy's situation, they had the ability, they had the resources to put more money into super Michelle. What if I'm not like Sam and Lucy? What if I need every dollar I'm earning? Are there some strategies for me to still boost my super? Great question, Peter. And you're right, Sam and Lucy was an example of where they actually had capacity to put a little bit extra into superannuation based on their situation. But we know that's not the case for everyone. Not everyone's got that little bit extra laying around to boost their superannuation, and there are strategies that people can look at or consider when they don't have that additional cash flow to boost their superannuation.

And one of these is called transition to retirement, which I'm going to refer to as TTR for the remainder of the session today. So TTR was introduced in around 2005 and it was introduced as a way to allow people to start to transition into retirement. So work a little bit less. So perhaps someone once meeting their preservation age is thinking, well, I want to keep working, but I don't want to keep working in the same capacity that I have been. Perhaps you're working full time and looking to start reducing your working hours, but you know that if you reduce your working hours, then you mightn't be able to meet your income needs any longer. So TTR was introduced as a way to allow people to begin accessing their superannuation while they're still working to top up their take home pay and start to ease or transition into retirement.

Now TTR can also be used to help you save more. So it can be used as as a strategy to help grow your superannuation faster and potentially payless tax depending on your situation and give you a regular income from your superannuation. And we'll start unpacking how that works in practise now. So how does TTR work? Well, we know that your employer makes those regular contributions into your superannuation under the Super Guarantee and your income is paid into your bank account. Now, in order to start a TTR account, you do need to transfer or move some money from your super accumulation account across into a new account called a TTR Income account at Australian Super. To start a TTR Income account, it does need to have a minimum balance of $25,000 and it's important to remember that you need to leave your existing superannuation account open and active to receive those regular contributions from your employer.

Once a TTR income account is set up, there are limitations on this account. So under the TTR rules, you are limited in drawing 10% of the balance of that TTR out per financial year. And if you are under the age of 65 when you start a TTR, the minimum drawdown requirement rules specify that you must draw at least 4% of that balance out per financial year. So you are limited in how much can come out, but it can mean a regular income being paid into your bank account and this can be at different intervals depending on what your preferences are. Once that money is sitting in your bank account, it can allow you to do some of those things we spoke about. Perhaps reducing your working hours and having your income topped up from that TTR. Or perhaps allowing you to have extra cash flow to be able to re contribute back into super as salary sacrifice, which can in turn lead to a reduction in tax, which can help to grow your superannuation.

And to help unpack this a little bit further, we're going to go through an example or a case study with you now. So here we've got Charlie. So Charlie has just turned 60 and is keen to add to his super balance which is currently $175,000. He's earning $90,000 per year and wants to retire at 65. So it's got about five years to plan or use this TTR strategy. And importantly for Charlie, he's just not in a position to make additional contributions to super out of his take home pay. As much as he'd love his super to grow and make the most of it in the next 5 years, he just doesn't have that additional cash flow right now.

So let's have a little bit of a look at how a TTR can help Charlie to grow his superannuation, and we'll start looking at Charlie's situation without the TTR. So let's look at what his situation is looking like currently. So he's working. He's earning that salary of $90,000 per year, and based on the Super guarantee, his employer's currently putting $10,350 into his superannuation. That leaves him with a taxable income of $90,000 and an income tax of just under $20,000. After that income tax has come out, Charlie's got a net income of just over $70,000. So this is the amount that Charlie wants to maintain. He can't afford to reduce his net income any further. There is tax on the Super contributions that his employer is putting into superannuation, and the net increase to his super balance currently is shown there on the bottom of the table.

Now let's have a look at how Charlie's situation will change with a TTR strategy. His gross salary remains the same, so he hasn't reduced his working hours. He's still earning the same level of income, which means that his employer is still making the same level of super guarantee on his behalf into his nominated superannuation account. The difference here is Charlie is now going to begin salary sacrificing into super and we've worked out in order for Charlie to to maximise the $30,000 contribution limit, he needs to salary sacrifice $19,650 a year. And that would happen usually through his pay. Now if Charlie does that, that's obviously going to mean he's going to have a reduction in net income, which is what he didn't want. So in order to replace that salary sacrifice, we have worked out that Charlie needs to draw an income from a TTR of about $13,300 a year. That, together with his income, is going to top him back up to the income level he had before. The tax on his super contributions has increased because he is making additional contributions to his superannuation, but you can see that the net increase to his superannuation is now over $12,000. So that's an extra $3,341 going into Charlie's superannuation without anything actually changing for Charlie. So Charlie's still receiving the same level of income per pay. It's just now coming from a combination of his employment income and the income that he's drawing down from his TTR. And because Charlie is over the age of 60, the income is drawing down from his TTR account is tax free. So this strategy is working for Charlie in the background in those final years in preparation for his retirement between the ages of 65, helping to reduce his taxable income and actually grow his superannuation because that tax saving is sitting inside of his superannuation.

So if we have a little bit of a look at how this strategy has worked for Charlie in those five years in preparation for retirement, it's going to help to grow the superannuation from $175,000 at the age of 60 up to $275,000 over that five year. And nothing's really changed for Charlie during that, still receiving the same level of take home pay while this strategy is working for him in the background, which which equates to about $17,000 extra going into his superannuation and being invested on his behalf, plus about $3,300 in tax savings in that first year of using the TTR strategy.

Thanks, Michelle. So again, it's a matter of knowing what the rules are, what the different strategies to take advantage to keep you in the situation you want to be. Sam and Lucy had the ability to put more in. Charlie found that he could put more in, keep the same take home pay by using a transition to retirement strategy. So again, I'd stress that you find more information on the Australian Super website and talk to a financial planner. But a lot of people don't understand what they can do with their super once they retire. Most people know that superannuation is a bucket of money and it builds over their working life and then when they retire you take the money out as you need it and that's what most people do. However, there may be advantages for people to put their super into what's called an account based pension. It's still in superannuation world. All you're doing is moving it from a superannuation account to an account based pension and Australian super account based pension is called Choice Income and Choice Income gives you potentially some more flexibility around your super payments. It is still super money, but it's flexible where you can say I want to draw so much out per fortnight, year, month. You choose how often you get those payments, you choose how that money's invested. If you're over 60, as Michelle said before, what you're drawing out is tax free, but what's in there and growing is also tax free. So when my money's in super and building up a super fund pays up to 15% tax on the earnings. So if it earns a dollar, we pay up to $0.15 off to Canberra and 85 cents stays in your super account. With an account based pension like Choice Income, if it earns a dollar, that whole dollar stays in your super account, in your Choice Income account. So there are some advantages there. There is a minimum amount that I've got to take out each year and increases as I get older. I've still got the ability to take a lump sum out if I need it. So I might be drawing $1,000 a week a month, but I want $20,000 to to buy a boat or have a holiday. I can still take that $20,000 out. I'm over 60.

That $20,000 I take out is still tax free. So there's flexibility around a choice income account. And as Michelle said before, this is where sourcing income, OK, I might be eligible for the age pension, I might be eligible to draw down my super. How do I set it up that I'm consistently getting income into my bank account?

And that leads us to the government pension. As I said before, majority of Australians who are pension age receive the government age pension, The government age pension. There's a number of different rules, Michelle, around how old, we've discussed that at 67, but how much can I get? And what are the rules around how much the government's going to give me?

Certainly, Peter, let's talk a little bit about that. So we know that the age pension age in Australia currently is 67. And once you've reached 67 years age, you are eligible to apply for the government age pension. So that's step one. If you think you might be eligible or if you want to see what you're eligible for, Step one is actually going through the process of applying to Centrelink. And once you've applied to Centrelink, they'll apply some means testing, which we'll talk about in a moment. But the maximum fortnightly pension payment in Australia for a couple is shown there on the screen and we've got the amount there for a single person as well. So this is the full age pension.

So when we're talking about eligibility for the age pension, we know that they're looking at first of all our age, reaching age pension age, but then we're actually means tested by Centrelink. And once we do go through the process of applying to Centrelink for the government age pension, they apply two different tests, but they apply what's called an assets test and they apply an income test. Now whichever of these tests give us the lesser result is the one that is applied. So let's have firstly a look at how the asset test works. Let's have a look at what's assessable and what's not assessable when it comes to Centrelink and the age pension.

Now when it comes to assessable assets, they are looking at things like investments. So any property, shares, bonds, term deposits that you may have, they're also looking at super accounts. So whether the Super account is in accumulation phase in TTR or Choice income like Peter spoke about, this is assessable by Centrelink. Once you reach age, pension age, they are also looking at your household contents. Now, importantly with household contents, Centrelink isn't looking for your insured value or what you paid for your home contents. It's essentially a fire sale or garage sale value when they're looking at household content. So that's really important to keep in mind because often times people can overvalue their own assets or they might be wearing their rose coloured glasses when they're thinking about what their own contents might be worth. So it's important to keep that in mind with household content, any other possessions that you've got. So things like cars, boats, caravans are also included in accessible assets by Centrelink.

Then there's also gifting. Now we can gift as much money as we'd like to, but for the purpose of Centrelink or the assessment of eligibility for the age pension, there are rules when it comes to gifting. And what the rules say is that any $10,000 gifted in a given year will reduce your assessable assets by that amount, or $30,000 / 5 years. If you gift more than $10,000 a year or $30,000 / 5 years, then the amount above those limits is actually what's called a deprived asset, which mean that Centrelink will continue to count that as your asset for the next 5 years. So you can gift as much as you like, but it's important to bear in mind that if you're gifting over $10,000 in one year or $30,000 over five, then it may continue to be considered an asset by Centrelink for five years. So when it comes to planning for the age pension, it's important to keep these things in mind and plan well in advance.

Let's have a little bit of a look at what's exempt or not included by Centrelink and firstly, the family home. So the family home is exempt from the Centrelink incoming assets tests so long as it's under 2 hectares of land. Once over 2 hectares of land, it may be included as an accessible asset or partly included as an assessable asset. Super accounts if underage pension age aren't included. So let me break down what that means. So if you are a member of a couple and one member of the couple is age pension age and applying for the age pension, and the other member of the couple is not yet age pension age and still has their money in the accumulation phase of super, then their super account isn't actually counted until they reach age pension age or convert that account into a income or pension account. Funeral bonds and cemetery plots are also excluded under the income and assets test up to a certain limit, which you can find on the Services Australia or website.

Now, once Centrelink have added up all of your assessable assets and worked out how much you have in assessable assets, they're then going to look at a couple of measures. They're going to look at whether you are a single or a couple, a homeowner or non Homer homeowner, and they're going to apply your assets to these limitations. Now, if your assets are below the maximum pensionable amount, then you may be eligible for the full age pension. Once your assessable assets go above the maximum pension amount, your age pension amount will start to reduce up to the no pension limit or the upper threshold that you can see on the screen there. So it does start to taper off. And it's important to keep in mind that these limits do change regularly and are indexed over time. So if you're looking at these limits and thinking I might not be eligible, perhaps you might not be eligible right now. But it's important to keep in mind that these do change regularly over time.

Now that's the asset test. Now let's have a little bit of a look at the income test. So when we're looking at the income test, Centrelink is looking at how much income you are earning and they look at again, whether you are a single or a couple. Once your income is over the maximum pension threshold, your eligibility starts to reduce until the no pension or upper threshold, which you can see there on the screen. Now, the income text is a little bit more complex in that it's not actually looking at the income that your financial assets are earning. So it's looking at applying a deeming rate to all of your financial assets once they are added together. And these same deeming rates are applied to everyone depending again, whether you are a single or a couple. So Centrelink's not going to look at how much income your supers making, how much income your term deposits making, and then work that out for each individual. They instead Add all of your financial assets together and then apply the deeming rates that you see on the screen. So this can certainly help from an administrative perspective, I'm sure, but also help for fairness so that the same deeming rates are applied for all individuals rather than calculating what each individual has earned over a period of time.

There are also other concessions when it comes to the age pension. And I'm sure everyone knows someone that's applied for the age pension or wanted to apply to the age pension just to get their hands on a pensioner concession card, which can have great benefits, things like discounted rates and discounted health care. So we've got a number of different cards that there could be eligibility for. The pensioner concession card is the main one that people are aware of, which applies to those that are age on the age pension and age pension age. But there are other cards as well, things like the Commonwealth Seniors Healthcare card, which you do need to be age pension age for, but not necessarily receiving an age pension. And there's also the low income healthcare card as well. So this is where it can be really beneficial to visit servicesaustralia.gov.au website to have a look at some of the eligibility criteria for these cards or perhaps look to meet with a, a Financial Information Services Officer at Centrelink that can help unpack some of the options available to you when it comes to the age pension and other concessions.

Yeah, thanks, Michelle. And as I said before, Centrelink is such a vital part of this journey to retirement and especially as Michelle said, talking to a what's called a FISO, a financial information service officer at Centrelink, like Michelle and I, they can't give you advice, but they can tell you all the rules and the criteria about government support, whether it be concession cards or the age pension. And Michelle touched on a good point as well, is that the thresholds that that low threshold and high threshold, they move over time. So you may not have been people in the past, you may be eligible in the future. If you do need some further help, whether that be just using the calculators, coming to a webinar like this one or speaking to a financial planner. We have the resources to help you there and it starts with 1300 300 273 our phone number and from there they can triage you through the various sources of advice that you may wish to receive.

There's a lot more information available on our website at australiansuper.com/journey, a lot more information that we spoke about. We touched very lightly on many areas in this webinar. There's some more there that you can search at your leisure and you may be interested in looking at our Elements of Retirement guide. This is a guide we've set up recently where it looks at those steps moving into retirement, taking a bigger interest in your super and investments because they're going to be your income in retirement. What's my retirement going to look like? Am I going to be able to fund that retirement? Am I going to move into retirement cold Turkey or am I going to ease my way into retirement? And once I'm in retirement, what are my sources of income going to be? Have I done the research to make sure I'm maximising those sources of income? And finally, what's my lifestyle going to be in retirement and am I going to keep healthy? Am I still going to be active in retirement? All these things are addressed in our Elements of Retirement guide.

That brings us to the end of this webinar. So thanks Michelle for your time and your insights today, giving us a little bit more about this, this journey to retirement. Thanks Peter. It's been a pleasure. No worries. And thank you for watching this. And hopefully you'll walk away a little bit richer in knowledge and maybe in a more confident situation to plan your retirement.

Thank you.

End transcript

Understanding transition to retirement

Less work, more play. Sounds amazing, doesn’t it? Learn strategies to work less for the same take home pay. Or save more super and access a tax-free income when working after 60.

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Understanding transition to retirement

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Welcome and thank you for joining our presentation today, Understanding transition to retirement.

At AustralianSuper, we want our members to achieve the best possible outcome in retirement. And by understanding how a transition to retirement strategy works, it could be something that helps you to either boost your super in the lead up to retirement or give you the flexibility to work less. And we'll talk how through how those work throughout the presentation.

My name is Bec Barmer, I'm an education Manager here at AustralianSuper and my job is to help you better understand super and explain it to you in easy to understand terminology.

AustralianSuper would like to acknowledge the Traditional custodians of the land on which we work and we pay our respects to Elders past, present and emerging and extend that respect to all Aboriginal and Torres Strait Islander peoples. Today, I'm joining you from the land of the Larrakia people. It's still morning over here, so I just encourage you to acknowledge the land on which you're joining us today. And in some parts of Australia, it might be lunchtime or it could be morning for you as well.

Now, our presentation today covers a lot of information, but just keep in mind that this information is general advice only. And what that means is it doesn't take into account your personal circumstances, what your needs are, what your goals are, your objectives. So just keep that in mind before making any decisions. You might like to jump onto our website and have a look at our product disclosure statements that will give you more information. You can also call our 1300 number, which is 1300 300 273 and request to speak to a financial advisor. Please also keep in mind that past performance isn't an indicator of future performance now. Everyone's retirement journey is different. Some people might end up retiring before they plan to, and that might be due to a redundancy, or maybe you need to care for a family member. And some people might end up working longer than they had planned to. And that might be because they've reached retirement and just determined that, well, they're not quite ready to retire yet. Or maybe it's because they've realised that they might not have enough to do the things that they want to do throughout their retirement. So by understanding how a transition to retirement strategy works, it's going to arm you with the information that you need to be prepared as circumstances might change in the lead up to retirement.

So what we'll cover off on today is understanding what actually is a transition to retirement strategy. We'll talk about how it works and who is eligible to start a transition to retirement strategy. And we'll look through a different a couple of different ways in which you could utilise a transition to retirement strategy. And then we'll also talk through what the potential benefits of starting a transition to retirement strategy might be. And at the end of the presentation, we'll also go through where you can go for further help and advice.

So let's start with what is a transition to retirement strategy. Well, throughout your working life, your superannuation is accumulated and that's by receiving employer contributions. Maybe you're you already have done some salary sacrifice or made extra contributions, but a transition to retirement strategy allows you to utilise some of that superannuation that you have accumulated throughout your working life to transfer into a transition to retirement pension income account. And that can be started whilst you're still working. That might be casually, maybe you're working part time or full time. What happens is when you transfer your some of your superannuation in a into a transition to retirement pension account, you then start to draw an income stream from that transition to retirement account and that income then allows you to top up your take home pay. So those income payments would be paid into your bank account. And then that allows you to either utilise the strategy to work less because you've got that extra income coming in from the transition to retirement account, where your income from your employment might be less if you've reduced working hours. Or it might allow you to be able to pay more into your super account. And that might be through salary sacrifice or through tax deductible contributions by giving you that same take home pay because now you're receiving income from employment, but also from a transition to retirement income account, that might allow you to be able to salary sacrifice or pay more into your superannuation. And we'll talk through how that works in more detail as we move through the presentation. But when you start a transition to retirement, you need to have met what's called preservation age. And that is age 60 is also a bit of a magic number in, in terms of when you receive withdraw or take withdrawals or receive income from a pension account after age 60. Any of those withdrawals are tax free. So there are minimums that you need to draw down from a transition to retirement income account and there is also a maximum that you need to keep in line with. So the minimum is dependent on your age and that's the same pension minimum as if you were starting a regular choice income or account based pension. So you must draw a minimum pension and that depends on your age, starting at 4%. But the maximum in a transition to retirement account is 10% that you can draw down from that account. Now that 10% does reset on the 1st of July each year. So it's important to keep that in the back of your mind that it's 10% is the maximum you can draw down from a transition to retirement account.

So let's have a look through a couple of different ways that you can utilise a transition to retirement strategy. Well, you might utilise this strategy to save more. And how it works is you would set up that transition to retirement account by using some of your super and start receiving that income from the TTR account. Then you might decide to do some salary sacrifice into your superannuation account. Now, depending on what your tax rate is, you might be able to save tax by doing this. Now we spoke about after age 60, any of those draw downs from the transition to retirement income account will be tax free to you then if you're doing a salary sacrifice. Let's use a 30% tax rate as an example. So if you had $100 and your tax rate was $0.30 in the dollar, we'd have $70 left in your hand out of that $100, and then $30 of that would go to the tax department. Well, in that same scenario, if you had $100 and you contributed into superannuation, you would actually pay 15% contribution tax. So therefore $85 of that goes into your super and those tax savings. So that $15 tax savings you could use to accumulate your superannuation.

Now the other option to use this strategy for is maybe you would like to work less hours. So maybe in the lead up to retirement, you would like to spend some more time with grandchildren or do the things that you'd like to do. You're not quite ready to cease work completely. And maybe it's that easing into retirement that you'd like to to do. And it might be that you either work less hours or maybe reduce your working days. So in turn, that means that you're receiving less income from employment because you've reduced your working hours or days. So the transition to retirement account allows you to top up your take home pay by now receiving an income from the transition to retirement account.

Now let's look through visually how a transition to retirement strategy works. So we have our super account. So that will continue to receive employer contributions. Now the employer contributions, the superannuation guarantee rate has increased on the 1st of July, so it was 11%. It's now 11.5% that your employer would pay into superannuation. So this is the base foundation in this visual chart. So it's showing the super account, the employer contributions are going in, and then the employment income gets paid into your bank account. Now this next slide shows that some of that superannuation is then transferred into a transition to retirement income account. So you're still receiving that employment income into your bank account. And what you can see here is now a regular income stream is now also being received from the transition to retirement income account. So you can see that there on the right hand side of the slide, the income is being paid into the bank account allowing somebody to be able to then pay more additional contributions into superannuation. And that might be by way of salary sacrifice or it might be through tax deductible contributions.

So we're going to take a look a closer look at both of those different strategies. And we'll first look at how we can utilise a transition to retirement strategy to save more. So in the lead up to retirement, by using a transition to retirement strategy, it might allow you to minimise some of the tax that you're paying, and that's through paying in before tax into superannuation. So I gave that example before of the $100, well, depending on what your marginal tax rate is and the tax that you pay on your income, if it's a higher tax rate than the 15% tax that you'd pay on contributions going into superannuation, then you might be able to save some money through a salary sacrifice or by paying in pre tax into super. Now keep in mind that within a superannuation account or also in a transition to retirement account, you do pay tax on any of the earnings within the Super account. And that's also a concessionary tax rate of 15%. So 15% tax on contributions and then also 15% tax on any of those earnings within the fund as opposed to tax. If you had money outside of super, it would be taxed at your marginal rate of tax. Now just to recap on the types of contributions that you can pay into super, there's concessional contributions that cap limit. So this is your pre tax contributions that has increased from $27,500 thousand to $30,000 per year that you can pay in pre tax and that is made up of any of your employer contributions. So now 11.5% plus any salary sacrifice arrangements or tax deductible contributions. There are some carry forward rules that you might be able to take advantage of depending on your position. Good place to check that is your mygov account. But a carry forward rule allows you to utilise, if you haven't maxed that concessional cap over the last five years to maybe increase what you can pay in to superannuation. Now your balance must be under $500,000 at the 30th of June the year before. There's also non concessional. So after tax contributions, that cap limit has also increased. It was $110,000 and it's now increased to $120,000 per year. Also with the after tax contribution cap limit. There's also what's called a bring forward rule. So it allows you to bring forward two of those future years. So you can put in three years worth of of after tax contributions in One Financial year and that allows you to put in up to $360,000. But then you would forgo any of those non concessional contributions for the next two years. So just recapping there on what the other types of contributions are that you can pay.

So saving more with the transition to retirement income account. So that allows you then to receive payments from your transition to retirement income account into your bank account so that you can either receive that same level of take home pay if you need it to stay the same whilst also salary sacrificing into superannuation. And again, if we looked back at that example of the $100, those tax savings that you receive by utilising the strategy, it might mean that you can save some extra into your superannuation by minimising the tax that you pay.

So let's excuse me, have a look at Charlie. And Charlie's just turned 60 so he's reached the magic age of 60 and he would like to add more into his superannuation. He has currently $175,000 in his superannuation, he's earning $90,000 a year and he would like to retire in five years time at age 65. So, Charlie would like to keep his same take home pay but he would like to try and increase his super in those years to retirement. So in that five year period. So let's have a look through how Charlie can achieve that. Now keep in mind here, the superannuation guarantee rate is now 11.5%. So you can see on this slide here that this first scenario shows Charlie's income with no transition to retirement strategy. So this is his baseline, his existing position. So his gross salary is $90,000 per year. His employer superannuation contributions that are being paid into his super account at the rate of 11.5% gives him $10,350. That's going into his super through employer contributions. Now Charlie's income tax on his $90,000 of income is $19,588. So that gives Charlie in his hand a net income of $70,412. Now you'll see there there's tax on superannuation contributions. So that's the 15% tax that's paid on Charlie's employer contributions. So it's 15% of that $10,350. Now Charlie's superannuation is increasing. After that tax is paid on the Super contributions by $8,797 dollars. So let's have a look side by side If Charlie was to start a transition to retirement strategy, Let's look at what the difference might be for Charlie. So his gross salary doesn't change. He's still working his same hours.

The employer contributions don't change because he's still earning that same level of income. What you'll see next is that Charlie is salary sacrificing $19,650 in that year, which means that his taxable income has reduced to $70,350. So you'll see there if you look at that income tax section and it shows that Charlie is now paying less income tax because through those salary sacrifice payments, their pre tax, he is now paying less tax on his income. Now Charlie is also drawing down a transition to retirement income of $13,362. So that's allowing Charlie to top up his take home pay so that his net income remains exactly the same. You'll see that Charlie's paying more tax on super contributions. That's because he's now paying in the $19,650 of salary sacrifice, plus he's receiving $10,350 of employer contributions. So that $4,500 is the 15% tax on both of those contributions combined. So you'll see at the bottom there that Charlie's net super increase has now increased to $12,138. Now that is allowing Charlie to keep the same take home pay, but he has more going into his super simply by saving tax. So you can see there that that's an extra $3,341. So in summary, Charlie has maintained his same take home pay which was his goal that he would have liked to achieve. He's increased his super balance by $17,000 over the five year. He saved $3,341 in tax through in that first year through salary sacrifice. So you can see how this benefits Charlie in terms of building his superannuation in those five years till he retires. It's not impacted Charlie's take home pay. You can still continue to live the lifestyle that he had before utilising this strategy because his income is still the same, but he will have more in his super to give him that greater flexibility through his retirement.

Now let's have a look through how working less might. You might be able to utilise a strategy if you decide you'd like to work less in the years to retirement. So what working less with a transition to retirement strategy will allow somebody to do Well, you could cut back on the hours that you work. So it might be that you work less hours each day, or maybe you decide that instead of working a five day week you'd like to work four days or less. Now, how this works in this scenario is that by reducing those working hours, it means that less employment income is going to be paid into your bank account. So the transition to retirement account allows you to top up your bank account by receiving an income now from employment, which has reduced because you're reducing those hours, but now you're topping up that income through the transition to retirement pension account. So because your superannuation is is still open, remember that is still receiving some employer contributions as well.

Now let's have a look through this case study with Bella. So here we have Bella. She's also reached the magic age of 60. So tick she can she's met her preservation age, she can start a transition to retirement strategy. She's also at the magic age of 60 where any of those draw downs that she receives from her TTR account are tax free. Now Bella's take home pay is $55,000 per year and her current super balance is $150,000 and she would also like to retire in five years time when she turns age 65. Now Bella has decided that she would like to reduce from a five day working week down to a four day working week. But she still needs to pay her bills and her living expenses so she can't afford to change any of that take home pay of $55,000. So she would like to understand how she can utilise this strategy by reducing her working days per week. Now Bella has transferred $120,000 of her super into a transition to retirement income account. So you can see there the Super has been transferred to the transition to retirement. She's kept the superannuation account open to receive her employer contributions and potentially pay for any insurance that she may still have through her super account. Now Bella is now able to reduce her working days down to four days a week because she's now receiving that income to top up her take home pay from the transition to retirement account. Now what you can see here is by reducing Bella's working days down to four days a week, her net income. So the income that she receives in her hand has now reduced from that $55,000 to $45,843.

Now Bella needs to receive $55,000 in her hand to still continue to pay her living expenses. So now rather than receiving that money from her employer, she's now topping up her take home pay through the transition to retirement income account. So she's now drawing down $9,157 from the transition to retirement account and she's allowed to reduce her working days so that she's got that same take home pay. Now we'll have a look at Bella's position as a baseline so we can no transition to retirement. So Bella's gross salary is $67,335. Now Bella is also receiving employer contributions paid into her super at a rate of 11.5%. So she has $7,744 that's paid into her super through employer contributions. Now Bella's taxable income is $67,335 and she pays $12,335 in income tax on her income and that gives Bella $55,000 in the hand each year as her net income. You'll see there the tax on super contributions. Again, that's the 15% tax that's paid on Bella's employer contributions. And then that gives Bella her net super increase of just over $6,500, so that her super is increasing from those employer contributions less the tax on the contributions. So let's have a look side by side now what Bella's position would look like if she started to utilise the transition to retirement account. Now remember, Bella's situation is different to Charlie's. Charlie wanted to increase his superannuation and boost those retirement savings in the leader, but he kept his same working hours. Now with Bella, her main goal is to spend more time with her grandchild. So she's decided to reduce her working hours or working days rather per week. So you will see that difference here when we look through her strategy. So because Bella's reduced her working days, it does mean that she's receiving less employment income. So her gross salary was just over $67,000. But now that she's reduced to four days a week, her gross income is now just under $54,000 per year.

That also means that Bella's superannuation guarantee, so those employer contributions, have reduced because she's working fewer days per week.

So now employer contributions are going into Bella's super at just over $6,000 per year, and you'll see that Bella's taxable income has reduced, so she will pay less tax on her income because she's working fewer hours.

Bella is now drawing down just over $9,000 from her transition to retirement income account.

Now, drawing down that amount from the transition to retirement has allowed Bella to top up her take-home pay.

So she's still receiving $55,000 per year in hand now through a combination of her employment income and also now by utilising some of that income from her transition to retirement account.

Now you'll see there that Bella's tax on her super contributions has reduced because there is less going in.

And it also means that in Bella's circumstance, there is a lower amount going into Bella's super.

But remember, this for Bella was a lifestyle choice.

Rather than trying to build her super, Bella's main goal was to reduce her working days in the lead-up to retirement.

So she's foregoing some of those superannuation increases by being able to reduce her working days.

But she's happy, she has the same level of income, and she's able to spend more time with her grandchild.

So you'll see in Bella's scenario that she has $10,474 less going in, but it's a lifestyle choice.

So here you'll see Bella's balance at retirement.

If she didn't do a transition to retirement strategy, she would have $216,000 in her accumulated super account.

Now, with the transition to retirement strategy, Bella has less in that five years' time.

When she turns 65, she will now have $166,000.

But she has achieved her goal of having that extra day off over that five-year period.

As she eases into her retirement, you can see how those two different scenarios of utilising the strategy might meet somebody's different goals in terms of what their plans are in the lead-up to retirement.

And whether those plans or whether that situation is planned or whether it's unplanned.

It's good to have this in the back of your mind to know that there are options to utilise these strategies if circumstances change or to start planning for what you would like to achieve with your superannuation and your retirement nest egg.

Now, there are some things to consider when opening a transition to retirement income account.

You must have reached preservation age, which is age 60.

Remember, that's the magic number of 60, so preservation age, but also any of the drawdowns from super or the transition to retirement pension are tax-free after 60.

So you can move with Australian super.

You can move at least $25,000 from your super account into a new transition to retirement account.

That would be the minimum balance to start a transition to retirement account with Australian super.

Now, you also are required to have a minimum balance of at least $6,000 in your superannuation account if you're starting a transition to retirement pension account.

That $6,000 is there to retain the super account open to receive any of those employer contributions or potentially salary sacrifice or tax-deductible contributions.

And you may have some insurance cover underneath your super account that still would need to be paid.

So there needs to be that account balance to continue with that.

So some things there to keep in mind if you are considering whether a transition to retirement strategy will work for you.

Now, the payments are flexible.

When you're receiving an income stream from the transition to retirement, remember there is a minimum amount that needs to be drawn down from the transition to retirement account, which starts at 4% and it does increase per age band, and it is a maximum of 10% that you can draw down from your transition to retirement.

You can choose your payments how you're paid.

You can choose your payment frequency.

You might like to be paid fortnightly or monthly or quarterly, or maybe it's even yearly.

And you can choose how your money is invested.

As you have a choice in your superannuation account to choose your investment options, you also have a choice in your transition to retirement account to choose where your money is invested.

Once you've reached age 65, your transition to retirement account can move into a Choice Income account.

You can also open a Choice Income account or an account-based pension if you've changed jobs after age 60, if you retire, or when you turn age 65.

These are all called conditions of release to access super.

If you've met one of these conditions of release, then that 10% maximum in your transition to retirement account, that cap is then lifted.

Once you move into a Choice Income account or an account-based pension, then that 10% cap is lifted.

You still need to draw down a minimum pension, but now there is no maximum on how much you can draw down from a Choice Income account.

The other benefit of moving to a Choice Income account is that any of those tax on earnings.

Once you're in the Choice Income, that is minimised as well.

So instead of 15% tax on earnings through super and through transition to retirement accounts, there is then no tax on earnings in a Choice Income account.

These are the conditions of release.

Have a look through those.

Turning 65 is another one there as well.

Now, something else to keep in mind is that there is a transfer balance cap.

It means that there's a limit on how much you can transfer from super into an account-based pension.

That transfer balance cap is currently 1.9 million and it does depend on your personal circumstance.

You will find more information about that on the ATO website if you would like some more info.

Now, where can you go for some helpful resources?

You can learn more about transition to retirement at australiansuper.com/TTR.

You can have a look at the transition to retirement booklet which is available on our website as well.

You might also like to register for a preparing for your retirement journey presentation.

That's a longer webinar, but it does go through a lot of helpful information in preparing for your retirement.

In terms of government age pension, it will go into the income and assets test.

Quite a lot of information there in terms of the things that you might like to think about when preparing for your retirement.

Another good one to have a look at and there's a lot of calculators available on our website so you can have a look at australiansuper.com/calculators.

We have retirement projection calculators on there, which is very interesting if you wanted to have a play around with what your balance is now and when you would like to retire and what your projected balance might be.

You can also then play around with what if I put some extra money in?

What does that look like and how does that change your final retirement balance?

There's some other good calculators available as well in terms of calculating insurance and things like that, if that was of interest to you.

We have a range of other webinars just like the one you've attended today on a range of different topics.

So you'll find those on our website at australiansuper.com/webinars.

Have a look at that.

If you are wanting to speak to a financial advisor and receive financial advice, you can either call 1300 300 273 and request simple super advice.

As an AustralianSuper member, you can receive free simple super advice on things such as investment options, you're not sure where to invest your money or beneficiary nominations or insurance.

You can speak to a financial planner.

If it's anything more comprehensive, then it would be more tailored comprehensive advice that you might need to be receiving.

You can ask to speak to a financial planner or you can search for a financial planner in your area.

If you do decide to go down the road of financial advice, the financial planner would go through a comprehensive fact-finding meeting with you, get a really good understanding of what your base position is.

So assets, income, what your goals are and what you want to achieve.

Then they would, once it was agreed upon that they could help you and you wanted to go through with the advice and you'd agreed on fees, then they would provide you with a statement of advice document which will then detail all of those recommendations and how you can achieve your goals.

The planner would talk to you about what those costs are involved if it is advice that you're seeking.

You can find a planner on our website or you can call and request to speak to one over the phone.

But before we wrap up, I would just like to mention this.

We have Elements of Retirement guide.

It's a really good interactive tool.

If you haven't been on to our website, australiansuper.com/elements-of-retirement, I'd encourage jumping on and having a look.

It's a really good tool and it's interactive in terms of where you might be in your retirement journey and you can drill down into certain points in your retirement journey and find extra pieces of information as you go.

Have a look at that and see.

It's quite an interesting tool that you can work through and find more information relevant to your point in your financial journey.

So thank you for joining us today for our understanding transition to retirement presentation.

We hope that you've taken away at least one piece of information that has made you feel more prepared in planning for your retirement or explain something that's a little bit easier to understand.

Supercharge your income in retirement

If you're retired, or approaching retirement, hear about strategies and government benefits that may help to boost your superannuation in retirement.

Supercharge your income in retirement

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My name is Bec Balmer and I'm an Education Manager here at AustralianSuper and I've spent the last 20 years in the financial services industry helping people become more confident with their finances and then intern in their retirement so that they can actually enjoy those years that they've worked so hard for.

Today's presentation should last for about 30 minutes.

We have over 60,000 years of history to learn about from the traditional custodians of our land and waters and we should feel privileged that in this country we are sharing in the rich culture, the heritage and also the continued relationship with those land and waters. I'd like to pay my respect to Elders past and present, and extend that respect to all Aborigines and Torres Strait Islander peoples. Today I'm joining you on the land of the Larrakia people. So I just encourage you to take a moment to acknowledge the land on which you're joining us today.

Now, before we get going, I do need to point out that there is a lot of information we'll cover off on today, but it is general advice only. So what that means is it doesn't take into account your own personal needs and circumstances. So if you do feel like something sounds like a great idea, then just do some research. Have a look at the product disclosure statement and the target market determination and just make sure you do some research before going ahead with anything to make sure it is suitable for you.

So today we'll cover off on three key areas. We'll follow along with a case study and we'll look at different ways that you can boost your retirement income. We'll also have a look into different government benefits and incentives. And finally, we'll have a look at where you can go for extra help and advice.

So let's kick it off by meeting Jim and Sandra. So they're two of our members who've been retired for a couple of years now. They're a happy couple, as you can see in the photo, and they own their own home. So they have determined that to live comfortably and to do the things that they would like to do in retirement, they need $75,000 per year to live comfortably. So they have combined $200,000 in a bank account. So that does include some money in an offset account. They do have a small loan against their home of $5000. Now Jim has $350,000 in a Choice Income account and Sandra has $80,000 also in a Choice Income account. They are unsure if their level of income will be sufficient to last them throughout their retirement.

So what we'll have a look at is Jim and Sandra's position as it stands now and to support their $75,000 of income per year, they're receiving just over $29,000 of income from the Government age pension, which means that they are topping up their $75,000 of income requirements from their Choice Income accounts and they are receiving just under $46,000 combined from those. Now it's projected that their income will last to age 86, and that means that it'll be about 17 years before that money will run out. Now, whilst this is a good a good outcome for Jim and Sandra, we're going to look at some of the other possible strategies that they could consider to increase the longevity of their funds so that their money lasts them well beyond their life expectancy.

So the first thing that Jim and Sandra could consider is topping up their retirement savings. So first we'll have a look at some different types of contributions and we'll have a look at the cap limits that apply to those. So first of all, we have our before tax contributions and they are otherwise known as concessional contributions. There's a $30,000 cap limit per year currently on those. Now what makes part of that cap limit It's any employer contributions. So that is the amount required under the Super Guarantee for an employer to pay into the employee's super account. That is currently paid at a rate of 11.5% which increases to 12% on the 1st of July next year. Also included in this cap are salary sacrifice arrangements. So that would be you have gone to your employer and said I would like to sacrifice X amount of my income rather than that getting paid in my bank account. I'd like that to go to superannuation also any tax deductible contribution. So that is that you've decided to pay some money into super and then you've decided to claim a tax deduction on that money. Now it is important to note that you if you're between the ages of 67 to 74 to do one of those types of contributions you need to do need to meet a work test and that is to work at least 40 hours in 30 consecutive days.

The other types of contributions are after tax and they are also known as non concessional. Now there's a higher cap limit for that per year and that is currently $120,000. Now what makes part of that cap is any voluntary contributions. So you've already paid tax on this money and then you decide to put some money into superannuation. It also includes any spouse contributions and the Government Co Contribution also falls into that. Now just thinking about Jim and Sandra, so they've been retired for two years, so they're not currently working. So they may consider whether doing some after tax contributions might be suitable for them because that means they don't need to meet a work test under that after tax contribution cap limit.

Now the bring forward rule is where you were thinking about our after tax contributions here, so non concessional. So that amount was $120,000 per year. This bring forward rule allows us to bring forward the future two years of that cap limit and pay in a total of up to $360,000 in one financial year. So maybe it's that somebody's received an inheritance or like Jim and Sandra, they have some money in their bank account that they might be considering to move into the super environment.

So it does need to be a consideration with what your total super balance is on the 30th of June of the previous year. But please research some more information if you are considering using this bring forward rule.

Now, as we could see, Jim and Sandra receive a part government age pension, and we know that many members find understanding how the age pension works sometimes confusing. And it's a really good opportunity for us to touch on that now and just have a refresh as to what government benefits and incentives are out there and how they work. So the first we'll have a look at is the age pension. And to apply for it you need to meet some eligibility criteria that are set out by the Australian government. And the first one is age. So you must be aged 67 now to apply. Your residential status is also assessed, then it'll also be an income and an assets test assessment. You'll be determined on which test you are assessed under and then you'll need to disclose all of your assets and income. We'll talk a little bit more that about that as we move through the presentation. But just to note that your assets and income may change over time. So maybe you've applied for the government age pension and maybe they've said you your assets or income is too high and you you aren't eligible now. Well, that doesn't mean that in future your circumstance might change and maybe you'll be eligible in future years. So it is worthwhile just checking back to check what your accessibility is. Also, if you are receiving a pension, it's important to let Services Australia know if there's any change to any of your assets or income level and then your age pension will be adjusted accordingly.

So as you may know, the government age pension, it's a fortnightly payment and it's designed for Australians to pay for basic living expenses. So if you're eligible, the age pension can supplement your super or other forms of income that you may have once you've finished working.

So let's have a look here at the assets test. So if you're assessed under the assets test, any investments that you have that could be an investment property, maybe there's managed funds, any shares in a share portfolio, any bonds or maybe you have term deposits will all be assessable. Any superannuation accounts, if you're over the age, pension, age of 67, anything you have in in so super and pension that includes your transition to retirement accounts. Household contents. Now think of that more as a fire sale value, which is often different to the amount that someone might have insured under a contents insurance. Cars, boats, caravans are also accessible and then there are gifting rules to adhere to as well if you are giving away some money. Now what's not included is your family home. So the principal place of residence, any super accounts that somebody is underage pension age. So think of an example where there's a member of a couple and say one person is is 70 and the other person is 60. Well, the person who's 60 under the age pension age, their superannuation account wouldn't be accessible, but the person who's 70 would be. So there are some considerations there. And then of course the funeral bonds and cemetery plots are exempt.

Now if you're assessed under the assets test, this shows what the maximum assets you can have to receive either a full pension or a part pension or no eligibility for a pension. So if we just have a look for an example at a single person who's a homeowner, so if they had assets under $314,000, they would be eligible to receive the full age pension under the assets test. If their level of assets was between that lower threshold and $695,500, then they'd be entitled to a part government aged pension. And any assets above that higher threshold would mean that they wouldn't be eligible for any age pension. And you can also see the figures there for a a single non homeowner and then also both of those for members of a couple.

Now if you're assessed under the income test, this shows us how much income that you can receive before you will be eligible for either a full pension, part pension or again, no pension. So let's have a look at the members of a couple this time. If they had $372 or less than that per fortnight of income, that's assessable and then they would be entitled to the full age pension. And then you can see the upper threshold for members of a couple is $3822 per fortnight. So anywhere in between that a part pension would be payable and then of course that higher threshold and no pension.

Let's just stay on the income test for a moment. Now when Services Australia are assessing income, it can be a little bit confusing for our members because if you think about a term deposit for example, maybe the income that's being earned in that term deposit for example sake is 5% interest. Well, the deeming rates that are actually assessed is that for the 1st $62,600 of assets that income is assessed at a rate of 0.25% and any amounts over that are deemed income of 2.25%. So it's a more concessionary considered rate of income, but something to keep in mind there as well. And you'll also see members of a couple and those figures there now whilst their age pension rates determined through the assets and income tests. There are some tips that you can consider that can help you to get the most out of your government age pension. And the first one is checking your asset values. So just confirming that those figures that Centrelink have are correct. And I'll use an example here.

My mum's been retired for a few years and she was getting a certain level of age pension income and then all of a sudden that income level dropped significantly. So she checked the details that Services Australia had and they had actually incorrectly recorded her assets to be a higher value, which in turn meant she was getting less age pension. She was able to adjust that and then continue to receive the right amount. So it's important to check your asset values and just make sure that they are as they should be throughout your journey.

You can consider gifting, but just keep in mind that there are some rules and limits that apply with that. It allows you to gift $10,000 in one year or $30,000 over 5 years. If you gift more than that, it means that anything above those limits will be accessible through the means testing process.

You can consider whether you have some money sitting in bank accounts or in other assets that you would like to start doing some renovations around the home. Remember, the principal place of residence or your home isn't accessible. So if you do some home modifications, you may be able to reduce your asset value by putting that into some modifications to the home.

Consider whether, if you've got any non-deductible debt, you should pay that down. Remember the interest rates to consider on any of those non-deductible debts. Think credit cards or maybe car loans or personal loans. But if you think about a credit card, then paying off that amount is not usually subtracted from the amount or the assessable amount from Services Australia.

Finally, consider the structure of your assets. When we were talking about members of a couple and there might be one younger spouse who hasn't quite reached age pension age, maybe it's some consideration there in terms of what you can do from a strategy perspective to take advantage of that younger spouse and maybe super not being counted at that point in time. But of course, for any of these strategies, it is important to think about your own personal circumstance and also consider seeking financial advice if you are thinking about doing any of these things.

So let's have a look at Jim and Sandra now. They've decided to seek financial advice and it's been determined that they're going to add $110,000 into superannuation. They're going to do some renovations to their kitchen at home, spending $40,000 to do that. They had a $5000 home loan, so they're going to pay that off to get rid of all of their debt and any associated interest payments. They're also kindly gifting $10,000 to their grandchildren to help with some of those school fees. They've decided that they would like to have an emergency fund of $35,000 kept in their bank account that they can easily access.

Here we'll see what Jim and Sandra's position looked like before they received financial advice and then after advice. What you can see is that Jim and Sandra's asset value reduced by $55,000, which meant that their age pension increased by just over $4300. This is through doing that $40,000 renovation to their kitchen, the $5000 debt, and also gifting $10,000. So what does this mean? It means that Jim and Sandra can draw less from their superannuation account because now they're getting more from the government age pension. What happens here is the longevity of their accounts lasts for an extra 8 years. So that's a great outcome for Jim and Sandra simply by changing how they're doing things in terms of their asset position and income position.

Our case study had a look at using an Account Based Pension for Jim and Sandra's needs. What are the benefits of an account based pension within Australian Super? We call it a Choice Income account. You must take a minimum pension from the account per year. That minimum is reset on the 1st of July every year. Depending on what your account balance is, keep that in mind. You can have a look online at Services Australia to see what those percentages are and it does change per age category. You can withdraw money anytime. Even if you have set up a regular income stream from a Choice Income account and maybe you needed some extra money to go on a holiday and you needed a lump sum, you have access to that at any time as well. Any money that you draw down from a Choice Income Account after age 60 is tax free and also within that pension account any earnings that are generated are also free of tax. If we compare that to the accumulation or super environment, there is a 15% tax on any earnings. Well in your account based pension there is no tax. So a great place for your money. You can also top up any of your age pension amounts. If you're receiving a certain amount from Services Australia and that changes due to different positions, then you have the ability to change the amount that you take from your Account Based Pension.

Now following financial advice, Jim and Sandra received advice to pay some money into superannuation. But remember we said at the start that both Jim and Sandra had Choice Income accounts. So how are they going to get that money into super? Because we can't directly contribute into a Choice Income account. What they can do is set up a new superannuation account. They've decided that they're going to set that up in Sandra's name and contribute $110,000 into a new super account for Sandra. They've moved that money from their bank account into the new super and then what they are doing from there is rolling back Sandra's $80,000 that she had in her Choice Income account into the super account. They're consolidating all of that $190,000 together and then opening a new Choice Income account. Keep in mind here that because a new Choice Income account has been established, with a higher amount, any of those pension minimum amounts are also reset. Just something to think about there. But any income that's drawn down is tax free because she's over age 60. That is how you do it. We get questions from members all the time in terms of, well, how can I add more into the Super environment if I have a Choice Income account? Just keep that one in mind. If you do need extra help, I'll show you where to go to seek advice at the end of the presentation.

Not all members have extra money that they can pay into super, so let's have a look into another case study where we can consider some of the other things that somebody could do if they can't put more money into superannuation. Here we have Sally. She's 74, she does own her own home and she's retired. She's determined that she needs $44,000 of income to meet her living expenses per year. She's already retired and she has now exhausted all of the money that she had in her Choice Income account and she's receiving a full age pension. Just to put a little note here, Sally's receiving a full age pension, which is currently just under $30,000 per year. We can see that there's a $14,000 per year shortfall that Sally has to meet her living expenses. The value on her home is $600,000. Let's have a look at some of the things she can consider.

The first thing is the work bonus. This is an incentive from the government which reduces the amount of assessable employment income under the income test when thinking about the government age pension. What are the benefits of this? It allows somebody to return to work maybe on a casual basis or maybe they're missing the social aspect of being around workmates and want to go back to work for that reason. This allows them to do that. The first $300 per fortnight of that gross income is exempt under the income test. That's something to think about if you are thinking about returning to work on a casual basis and you have already retired and are receiving the government age pension.

Another thing to consider is downsizer contributions. We spoke earlier about the two types of contribution caps and that was concessional and non-concessional. If we just move those to the side for the moment, we also have the one-off opportunity to use a downsizer contribution.

And it's if there's a member of a couple, it allows a total of $600,000. So they can both do it from the proceeds of the sale of a home. Now there are some considerations there. So if this is some something that you're thinking about, make sure you do some more research on it. But it does need to be done within 90 days of the property sale and there are some considerations there with CGT and it being exempt for a certain period now.

There's also the Home Equity Access Scheme, which enables those who are eligible to take out a loan against the equity in their property. So this can be done under circumstances where, you know, maybe somebody doesn't have any other source of income and and like Sally, she's not able to fund her living expenses. It is important to note though that you do need to repay the money and interest will apply. So if it is something that you're considering again, please seek some financial advice and you'll see there's a link up there on the screen as to where you can go For more information. But things to consider with this that the interest that's charged can change. It also can reduce the equity in your home and impact any potential ability to pay for aged care facilities. And also think about, you know, if there was an inheritance to leave that you wanted to, how that might impact that.

So what can you do next? Well, you can review the value of your assets if you're receiving any age pension at the moment and just make sure that they are listed correctly. If you are considering contributing more into your superannuation account, do some research as to how you can pay in thinking about the types of contribution cap limits and also the different ways you can make a contribution and think about also those age limitations and whether a work test needs to be met or not. You can find out more information on topping up your superannuation through australiansuper.com/grow. If you are thinking that the Home Equity Access Scheme is something that you'd like to consider, we just suggest doing some more research on it and you will find more information on the Services Australia website.

Review your estate planning. So have a look at your whether it's a super account or or an account based pension and look at the beneficiaries that you may or may not have nominated and make sure that that is how you would like your super savings to be distributed when you're no longer here. Think about, you know, your other estate planning needs as well and seek some advice on that if you need some help. And then finally consider where to go for extra help and advice. Now we have a range of different calculators. On our website is a really great super projection calculator that you might like to have a look at. You can pop in what your super balance is now and the age that you would like to retire if you haven't already and look at the longevity of those funds. You can also have a look at other webinars that we have. No matter where you are on your retirement journey, we have webinars that can help provide you with more information, so check those out. You can call 1300 303 273 and request to speak to a financial planner for simple super advice. If you do require more comprehensive advice, you can find a financial planner in your area. You can request to speak to a planner and they will go through the process of talking to you about how they would tailor financial advice for your specific circumstance and of course the costs involved to do so.

Now another really good tool that AustralianSuper has is the elements of retirement guide. Now this is an interactive tool that allows you to no matter where you are on your retirement journey, you can delve into different tools and tips and and real life stories. So case studies like we've run through today that can help you to find out more information. So if you haven't had a look at it already, go to the link that's on the screen and you'll find out some great information there as well. And finally, if you're like me and you like listening to a podcast, AustralianSuper has one called The Moments That Count. And this is hosted by the head of member products Guidance and Advice, Shane Hancock. It's very interesting to listen to and he talks to different members and industry experts about all things superannuation to listen to now. Thank you for joining us today. We hope that you've been able to gain some useful tips or information that can help you to supercharge your income in retirement.

So have a lovely afternoon and thank you for joining us.

Who inherits your super?

What happens to your money when you're gone? Learn about nominating super beneficiaries and tax treatment of death benefits.

Who inherits your super?

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Hi and welcome to our Who inherits your super

webinar. The concept of beneficiaries can raise lots of questions who should I nominate what happens to my super when I pass away and will my superannuation be taxed in the event of my death today we're going to unpack some of these questions and explain how you can ensure your super ends up in the right hands my name is Michelle Kelada and I'm an Education Manager at AustralianSuper and it is my role to help you understand how your superannuation works. I would like to start by acknowledging the traditional custodians of the land on which we work and pay our respects to Elders, past, present and emerging and extend that respect to all Aboriginal and Torres Strait Islander people at AustralianSuper. Our head office is located on the land of the Wurundjeri People of the Kulin Nation.

Before I get into today's presentation I do want to let you know that today's session is general in nature and what that means is that I am not taking into consideration your personal needs goals or objectives to help you make a decision about your own circumstances. You can refer to our website product disclosure statements and target market determination to help you make a decision.

I'll also provide some information at the end of the session around where you can get access to some helpful tools resources and advice from AustralianSuper. So in today's session I'm going to be covering off on what estate planning is, nominating beneficiaries and some of the things to be aware of when you are thinking about how to structure your beneficiary nominations, understanding the tax implications depending on who you decide to nominate and then some final steps and thoughts, where to go to from here and this is where I'd like to start and this is a really important point.

Generally your super isn't considered part of your estate planning so a common thing we hear from members are things like it's okay I have a will I don't need to worry about where my super will end up. So, it's really important to understand this and understand that your super and your estate are treated separately and making sure 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 wills typically only cover assets that you own personally. So things like houses, cars other investments, where as your superannuation is held in trust for you, by the trustee of the superannuation fund. Many people do think that their super automatically forms part of their estate but this isn't necessarily the case. Unless, you elect for your superannuation to form part of your estate, which is something I'll cover off in a little a little bit more detail as we go through today's session.

So before we talk a little bit more about superannuation and nominating beneficiaries I want to touch on some estate planning considerations and some of the things to think about when we're thinking about what we want to happen to our super and other assets or ourselves in the event of our death.

And the first of those of course is drawing up a will which we know is a legal document that sets out how you want your assets distributed.

In the event of your death you must have both legal and mental capacity to be able to put a will in place and to make sure that it is valid. There are also testamentary trusts and this is a quite a complex structure that can be set up in the event of your death which can provide some additional asset protection and taxation benefits. In the event of your passing so if this is something that you think you'd like to consider we do suggest seeking some profession legal advice in that area.

Then there are of course powers of attorneys, which can come in many different forms. We've got enduring powers of attorney which authorise someone to make legal and financial decisions on your behalf. If you are not able to, perhaps if you are overseas or incapacitated then we've got our medical power of attorney, which allows someone to make decisions for you, on your behalf if you're unable to from a medical standpoint. There is of course also a letter of wishes which is also sometimes known as a statement of wishes, this is an informal document that accompanies a will.

And the idea of this document is to help explain your will and make it easier for your executive to administer your estate in the event of your passing, this is not a legally binding document, it can be easier to change than an official will, but is usually designed to accompany a will. Then we've got our nomination of beneficiaries which instructs our superannuation fund on how we'd like our superannuation assets and potentially some insurance is attached distributed in the event of our passing. There are also health directives and health directives are legal documents that enable you to make decisions about how you'd want to be treated in certain conditions.

So, just a few things to start thinking about if you are considering your estate planning needs.

Now, let's talk a little bit about nominating beneficiaries. It is important to provide instructions to your super fund around what you want to happen to your super in the event of your passing, and there are a few options when it comes to how you can do this, and deciding what happens to your money in the event of your death and we're going to cover these off. In quite a little bit of detail firstly, we've got binding nomination options, so for a binding nomination this is an instruction given to your superannuation fund, in writing around what you'd want to happen to your superannuation in the event of your death.

As the name suggests this nomination is legally binding, so it is airtight and secure, as long as it is valid and I'll talk about validity in a moment. There are now two options at AustralianSuper when it comes to a binding nomination. This can either be a lapsing nomination and a lapsing nomination means that in 3 years from signing the form, that nomination will expire and the fund will let you know that that nomination is going to expire and give you the opportunity to renew.

That nomination, we also now have the option of a non-lapsing nomination, this option does not have an expiration date and it will continue to remain in place until such time that you decide to change it.

So, that's a legally binding nomination it can be lapsing or non-lapsing and this secures the nomination, gives you the peace of mind that in the event of your death the money inside of your superannuation will be distributed according to your binding nomination. Now, there are also non-binding nominations, so a non-binding nomination is otherwise sometimes referred to as a preference, because it's you telling your superannuation fund who you'd prefer your superannuation be paid to in the event of your death. This is not a legally binding domination and your super fund will ultimately decide who that superannuation money will be left to in the event of your death and they'll consider the relevant laws when they're making that final decision. Having a non-binding nomination also means that that nomination is open to be challenged in the event of your death.

Which can mean that the nomination takes all the money, rather takes longer to get to your nominated beneficiary when you don't have that legally binding nomination in place. There is a third and final option when it comes to nominating a beneficiary, with regard to superannuation and this is a reversionary nomination and this only applies to members with a retirement income account.

So, for those that are drawing a regular income from their superannuation in retirement and what this option allows for is for you to nominate a financial dependent or beneficiary to receive your superannuation in the event of your death, in regular payments so that income account that you are receiving in the event of your death, would just revert to your beneficiary's name and start paying them that regular income in the event of your death.

As mentioned this does only apply to those that are in the retirement income phase of superannuation and already drawing a regular income from super. Now, who can you nominate to receive your superannuation? You can nominate a current spouse or partner a child of any age can be nominated as beneficiary of your super and interdependent.

So, this could be someone that you share dependency with, so it could perhaps be a relative that you're living with perhaps, sharing a mortgage and other expenses so, you would be reliant or dependent on each other, financially. Any other Financial dependence that you might have can be nominated as beneficiary of your super and the last option there is your legal personal representative.

Now, a legal personal representative is usually the executive of your will and by nominating your legal personal representative, you're making your superannuation part of your estate. So, it is then the responsibility of your executor to make sure that your super is distributed according to what's written in your will. So for those that are, wanting their super distributed according to what's written in a will, this might be an option to consider, even for those that might not have a spouse, partner, child or any other financial dependent. We often get asked, well who do I leave my superannuation to, if I don't have a dependent.

So, seeking some legal advice in that area can be a great option, and looking at what might be appropriate for you and your situation. It is also important to mention that the validity of your beneficiary nomination is tested at the time of your death. So, at the time of your passing, is when the superannuation fund will confirm the validity and confirm if your beneficiaries are valid beneficiaries and do fall under the criteria on the screen here. So, there are some considerations in relation to who you can nominate. We've discussed some of these already. Let's talk about who is classified as a dependent and what the potential tax implications are.

So, a dependent under the super legislation means, someone who's eligible to be a beneficiary of the super benefit, which is what we've just spoken about. While a dependent for tax purposes means, someone who can receive the benefits tax-free, and these can be different, and we can see an example of that here on the screen. So the super industry or the CIS act determines who can get your super directly from your super fund without having to go through your estate and these are referred to as SIS dependents. Tax law on on the other hand determine who pays tax on the taxable component of any such payment and I'll talk about those tax components in a moment.

So, a current spouse or partner is considered a SIS dependent, so they can receive your super benefits directly and also receive these benefits tax-free, a former spouse however is not considered a SIS dependent, so isn't able to receive the super benefits directly from the super fund. But, if they did receive the benefit via an estate they could receive these benefits tax-free. A child under 18 is considered a SIS dependent so can receive your super benefits directly and also receive these benefits tax-free.

A child over 18 however, who is not a financial dependent, is considered a SIS dependent, so can be nominated to receive those benefits from your superannuation account but is not considered a tax dependent. So, there could be tax payable, when superannuation is left to a child over 18, who is not financially dependent on you. A financial dependent and interdependent are considered SIS dependent, so can receive the super benefits directly and also receive these tax-free.

So, some important considerations there when it comes to Estate Planning and thinking about who you are leaving your superannuation money to. The taxation of a super benefit varies, depending on many factors. We've discussed some of these already, but some things that can impact the taxability of a death benefit, are the tax components and I'll discuss those shortly. It can also depend on whether the beneficiary is a dependent for tax purposes, whether the amount is taken as a lump sum, or as an income stream, can make an impact. The age of the deceased and the age of the beneficiary and lastly the transfer balance cap consideration. So, having a look at what that transfer balance cap is and what that might mean for the beneficiaries of that super death benefit. Let's now talk about some of the tax implications.

So when we talk about tax potentially being payable on death benefits. It's important to understand what that means and this is going to look very different for everyone depending on the underlying tax components of your superannuation at the time of your passing. Each superannuation account has these underlying tax components and once you have retired and met a super condition of release, the super money that you draw out yourself, for your benefit in retirement is tax-free to you but when this tax can be payable on these underlying components happens at the time of your death. depending on who the superannuation money is left to.

So there are broadly two underlying components in our superannuation accounts. There is a tax-free component of our superannuation and a taxable component of our superannuation. So the tax-free component of our superannuation is made up of any monies that have gone into our superannuation accounts after tax, so if we've made after tax contributions or non-concessional contributions to super, these would form part of our tax-free component. Any government co-contribution that we've received and any tax-free component of a rollover from another super fund will make up your tax-free component.

The taxable component of our superannuation accounts is made up of everything else. So, the employer contributions, or super guarantee that we receive while we're working, makes up our taxable component. Any salary sacrifice contributions that we make into super while we are working, any personal contributions that we've claimed as a tax deduction, as well as, investment earnings. So for many people, the higher portion of their super is made up of these taxable component, because that's for most people, how the majority of money has entered the superannuation environment and when death benefits are paid out to beneficiaries in the event of your death, it's this taxable component that can be taxed when paid to a non-tax dependent.

And that taxes at a rate of 15% plus the Medicare levy. So to put some of this all together, we're going to run through a bit of an example. So here we've got John and his family John is 60 and he is married to Laura, she's 58, they have a son Ben, who is 20. Ben is studying and he's at University and he's still financially dependent on his parents.

They also have a daughter Meg, who is 28 and she is married and Meg has a daughter of her own. So John's granddaughter, her name is Ava and she is 4 years old. So John passes away and has a total death benefit of $400,000 and for the purpose of this example we're going to assume that, that's 100% taxable component, which would mean that during John's working life, he's contributed money to super, only through means of super guarantee, salary sacrifice, or perhaps tax deductible contributions.

So let's have a little bit of a look at the tax implications. If the full amount of John's super death benefit is paid to each of his family members. So firstly we'll look at Laura. So Laura is his spouse and is considered a SIS dependent, she can receive the full super death benefit directly and also receives this benefit tax-free. If John had a pension account, so if he was receiving a regular income from his super in the pension phase, Laura would also be eligible to receive this as a regular income, if John had listed her as a reversionary nomination.

Now let's have a bit of a look at Ben. So Ben is John's son, he is a student and is financially dependent on John. So he is therefore considered a SIS dependent, so can receive the full super death benefit directly and tax-free, and he is also eligible for an income stream as long as he remains financially dependent, this does however cease at the age of 20.

Now, let's have a little bit of a look at Meg. So, Meg we know is a child who is over 18 she is not financially dependent. She is considered a SIS dependent, so she can receive the super death benefit directly from the super account, but Meg is not considered a tax dependent and is therefore required to pay tax on the taxable component of the super death benefit.

So for Meg, if she were left that balance of John's super and it was a 100% taxable component, that would be a tax of $68,000, on that taxable component in Meg's situation. Ava is John's granddaughter and she's not a financial dependent so would not be eligible to receive the benefit from the super account and she's not a tax dependent either so she would have to pay tax on the benefits.

However, if Ava was a financial dependent for example, if she lived with her grandparents, she could be a dependent for both super and tax purposes. So this is just designed to highlight the importance of planning when deciding who your beneficiaries should be, and thinking about some of the tax implications, depending on whom you leave your superannuation to.

So, today we've discussed how important it is to plan and consider all the options when nominating beneficiaries. You've made the first step in planning and preparing, by attending our presentation today, however there are some other steps that you could take and first and foremost, nominating or reviewing your superannuation beneficiaries.

This could be something you do yourself, or seeking expert legal advice to make sure that you're making a decision that is aligned with your objectives and goals. Consider your broader estate planning requirements.

So, we really did focus today on beneficiary nominations and tax planning but thinking about your broader estate planning needs. So, if you haven't established a will, perhap

So, thinking about some of those broader estate planning requirements, communicate your wishes to all relevant parties, so not only is putting these estate planning arrangements in place important but it's also important to discuss this with those that are important to you. Letting your exec to know that you have nominated them as an executive of your will is important to do.

Previously when I was a financial planner, I used to talk to my clients about Estate planning and one of the things I would mention to them is not only the importance of having a will in place, but also making sure you've let your loved ones or executive know where that will is or where it's kept because people can often be left scrambling not knowing if you've got that will and not knowing how to find that will as well.

And lastly, as I've touched on already during the session, consider seeking financial advice or specialist legal advice or tax advice when you are considering your own estate planning needs if you are thinking of retirement you can take some steps by visiting our elements of retirement guide there are some really useful resources in here uh some around estate planning as well so you can refer to this uh interactive tool on our website or visit Australian elements of retirement

Australian super provides you with access to a number of advice options depending on your needs and you can speak with an advice team member over the phone for simple personal advice covering topics relating to your Australian super account such as your investment options making contributions super uh insurance and retirement income options we have a number of tools and calculators on our website that you can refer to and our education team at Australian super run a number of different uh webinars we're glad that you've watched one here today but there are others on our website that may interest you as well.

We do also have comprehensive financial advice that for those that have advice needs, that are more broad and outside of superannuation, for those that enjoy listening to a podcast, we have a podcast series called the Moments that count and this is where Our Head of Member Products Guidance and Advice speaks to members like you about how they plan for retirement and the steps that they took when planning for their future we also speak to Super experts from around the country so you can check this out on iTunes or Spotify or by visiting the QR code on your screen.

Thank you for joining us for our Who inherits your super webinar today, we hope that you've had something beneficial to take away from today's session and we hope to see you along at another one of our sessions soon.

Keep your super safe online

Superannuation is likely to be one of your largest assets. Understand how to keep it safe from scams and fraud events.

Keep your super safe online

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Thank you for joining us. My name is Peter Treseder, I'm an education manager at AustralianSuper and I've been helping members understand their super better and hopefully engaging with their super more to put themselves in a better financial position when retirement eventually comes. The topic today about keeping your super safe online, I have with me Cat Burke. Cat is one of our member-facing fraud specialists. Now fraud specialist sounds a bit sinister Cat, but you need to know what's going on to stop what's going on. So welcome Cat.

Thanks for having me. AustralianSuper does acknowledge the traditional custodians of the land of 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 talking to you from the lands of the Taungurung people and the Bunurong people.

What Cat and I are talking about today is general information. We don't know your personal circumstances, wants, needs, desires, etcetera. So what we're providing is general information. If you got to make a decision about AustralianSuper, please read our target mark determination and our product disclosure statement.

So looking at the topic, what are we going to be looking at today when it comes to keeping your super safe online? I'm going to look at what data breaches are, the various scams that are around, how to identify them, looking at how AustralianSuper protects members and also providing you with a number of different tips to help you keep your super safe.

So we hear Cat all the time in the news about data breaches and there's been quite a few, well, a number over recent years, some affecting well-known company household names. Yeah, absolutely. You can't sort of look at a news website these days without seeing a more recent data breach. Obviously, we've had a few sort of where people where companies have been held to account and threatened with their customers' data to be leaked on the black web and that sort of thing, or the dark web. But a data breach is, yeah, something that I think that everybody's encountered these days in the news.

So we see them in the news and there's reports of a data breach. But if we dig a little bit further, how would you describe a data breach? Yeah. So data breach is the equivalent of somebody coming into your house, getting your passport, they might find your birth certificate, they might get copies of your bills and that sort of thing. And then having access to all of that personal information. The difference with the data breach rather than somebody breaking down your front door is they often get that information online. So it's usually facilitated through electronic devices, the Internet, and usually the threat is to your own personal security or your financial health. So a lot of it comes down to privacy issues, but it can really result in a lot of time lost for yourself, but a lot of money as well. So there's, yeah, huge consequences for it.

So the breach can happen for your own personal devices, but it can also happen through a service provider that you use, government agencies, or even your employer's payroll systems we've seen be targeted as well. The big call out for a data breach is that if you are a victim of a data breach, then you're so much more likely to be a victim of a scam. OK. And these data breaches. Thanks for that. And so before I meet go any further, if you do have questions, please type them in the Q&A box. I have some colleagues behind the scenes that are ready, willing, and able to answer your questions, and they'll also be putting some links in the chat that relate to what Cat and I are talking about.

So this data breach is the virtual break-in where someone's usually breaking. People sneak in and pinch something, this way they're sneaking in electronically. So what are some of the scams or the types of scams we've seen recently? Yeah, so there's obviously a lot of different scam types. We see one thing with scam is, is they're always continuing to evolve. So a scam is a crime of opportunity where the person is usually tricked into believing the personal organisation that they're dealing with is genuine. We see a lot of our members be victims of scams at AustralianSuper, but a great resource which I refer to regularly is the Scam Watch website, which is where sort of these sort of little data points have been taken from.

But we do see a lot of different scams, predominantly at the moment we're seeing online dating scams. So that's where a scammer builds a personal relationship with you to gain your trust and your money. And then they make you believe that the relationship is real. They manipulate you into giving them your money over time, which, Yeah, is usually sort of quite heartbreaking because you genuinely believe that the person you're dealing with has your best interests at heart. But realistically, it's quite the opposite. We see investment scams as well, so that's where our members might be looking to make money through investing. They'll go and do a little bit of research online and then the scammer will convince you that they're going to be able to make you more money than you could ever make by yourself or with more traditional platforms such as your superannuation.

And then the last one that we see quite a bit is impersonation scams. So that's scammers impersonating trusted businesses, friends or family, and they'll convince you to transfer money to them all, obviously in an effort to steal that money from you once they have it. But more valuable, and well, sometimes more valuable is your actual personal information. Not just the money that can be lost through this, but the time it takes you afterwards to protect yourself is something that some people don't think about. Yeah. And I think we've all had those. We've seen those impersonations. I think most of us have probably got that email from the Nigerian Prince promising to give us multi millions of dollars. And look, I, I had one, oh, maybe two years ago where I got a text message allegedly from my son that something had happened to his phone. And Gee, it was, it was very convincing. It wasn't until I took a bit of time to stop and think about it, that I realised this, this doesn't weigh up.

And so they're the types of scams. How are the scammers trying to reach out to us? Yeah. So you can see on this slide that there's numerous ways, but I want to focus on the top three reported ways, which is text messages, phone and email. So quite often you'll receive text messages from government organisations, businesses that you deal with or even your own family or friend trying to catch you out. So good example being the message that you received. Just recently I received a message from Amazon trying to tell me that there was a seven and a half $1000 transaction on my account and was this legitimate? Do I actually need to buy a, a spa bath and to please click on this link to dispute it, which obviously any text message that has a text link in it, you always have to be a little bit questionable of.

Phone scams is a big one as well. So that's cold callers. That's somebody giving you a call to try and convince you that they are who they say they are? This is another one that I get quite regularly, which is the ATO calls asking me to log in and lodge my tax return. Otherwise, they're going to send out police because there's a warrant for my arrest. And I promise you I've done my tax return at least for the last few years. So that's another one that sort of seems to come out quite a lot is those cold calls trying to convince you. If it's not from an organisation, it'll be from Microsoft or your bank trying to convince you to log in while they're on the phone. That's usually a good sign.

And then the last one that we see quite a lot is email scams. So to your Nigerian inheritance, it's definitely one that we see quite a lot and it's either going to be a completely out of the blue dead relative or it will be something along the lines of a bank impersonation where it looks like it might have come from the genuine bank, but there's always sort of slight differences. The wording could be incorrect. You'll see the sender is a little bit not genuine, or they're asking you to click on this link and log in. And don't worry about calling them to verify it just definitely trusts that they are who they say they are. Yeah. And often you'll see, as you're saying in those emails, the grammar's not right, The salutation of hello, Peter Mann or something like that. But just sort of throws you off straight away. I think I've probably got the same one from you about Amazon that was new straight away because I don't even have an Amazon account.

So they're trying all different ways. But then it costs, it costs Australians lots of money in a number of various ways over the, if we look over the recent years Cat. Yeah, absolutely. So $2.74 billion in losses in 2023 alone as reported to the ACCC. 1.3 billion of that 2.74 was investment scams. But something to keep in mind is this'll only be the scams that have been reported to the ACCC. So there's a lot of the time when somebody has been a victim of a scam, they're embarrassed that they fell for it. Scammers are really sophisticated. They're very well practised in what they do and they target people who they consider vulnerable. So scam is a crime of opportunity. It's where they will send a text message out to, you know, 100,000 people and if they get just one person, that's a good day for them. The problem is, and we see it all the time as well, where our members might fall victim to scams and they're embarrassed to tell us. They might be embarrassed to call the police. They might be embarrassed to tell their families and friends, which you should never be embarrassed. It's, it's happened and there's people around you and there's organisations and there's people like myself who are here to help you. You should never be embarrassed if you fall victim to something like this.

Yes, as you said, this is what's been reported. There's probably a lot more that hasn't been. So if we bring it a bit closer now into superannuation world and the scams and frauds, how are these scammers targeting super? Yeah, so for a very long time, superannuation wasn't targeted. For a very long time, it was all about banks. But in the last sort of 10, 15 years, we've seen superannuation really be targeted. One of the big ways is staging accounts. So back to the data breach that we were discussing earlier, a staging account is where a fake member account is created for people who aren't aware that their identity is being stolen. We next see these accounts used as an unauthorised rollover. So an unauthorised roller is where the scammer has taken that information, created the staging account and then they rolled someone's genuine retirement savings into that fake destination account. By either creating that fake account or we see a lot of mygov portal accesses where someone has been able to get your mygov password or get into the ATO portal and sort of access your personal information. We have seen a huge uplift in the protections that the ATO and the advancements that the ATO has made though. So we have seen those drop off quite significantly, which has been great.

We also see it AustralianSuper, a lot of member impersonations. So this is where someone will call, write or message a contact centre pretending to be the genuine member to change their contact information, reset their password to access their online account and then request a benefit, so a withdrawal from their super account. And then finally, we see a lot of early release, So illegal early release, which is sometimes where we see the actual genuine member slowly deplete their retirement savings by claiming financial hardship and then rolling it over to another super fund and doing the same thing within a 12 month period, which is against the legislation around financial hardship. But we also see early release in terms of departing Australia, super payments and compassionate ground payment applications being received when the member wasn't eligible. These payments are managed by the ATO, which again does make it really difficult for super funds to identify.

OK, so this is where it's important that if something's happening with your account, take note of it because I know not like me and not everyone's as excited about super as I am or engage with super. So it's important that if something does come through, not to ignore it because it could be someone being shifty around your account. And if you're not taking note that they may take some actions. And I think often when we talk about these things, it's best to put it into context by what has actually happened with a member. And you recently had a situation with a member through fraud called I think it was Connie. Yeah, absolutely. So. Connie had been a member with AustralianSuper for about 50 years. I mean 15 years. Goodness. And Connie's 60, so she's right at that age where she's starting to consider retirement, but she's considering what her investments will look like for the next few years. So yeah, Connie was a lovely member who I had the opportunity to sort of work with. But so essentially, Connie was searching for an online way to improve her retirement benefits and increase her investment returns. She found a website that promised to do this in a crypto fund investment, which she signed up for. So she's entered all of her contact information. She's uploaded a copy of her driver's licence and her passport. Because quite often when you deal with genuine investment funds, they'll ask you to provide all of that when you onboard or when you sort of first engage with them.

So after all that had been uploaded, the scammers contacted Connie and convinced her to transfer a small amount of her AustralianSuper balance into her bank account and then told her to move it again into the scammer's bank account. And then they moved it into this crypto platform, which they said was amazing. So she was then shown a website detailing her balance, showing how much it had increased in a short amount of time. And then she was sold. So she then tried to move the remainder of the funds to a new bank account. So our flags then alerted to us and it was flagged by the member protection team. The second withdrawal was a significantly large amount of Connie's balance. So we gave her a call and that we asked a few more questions and it was through asking those questions, asking her to share us the website that she was investing in. We were really fortunate with Connie that she was willing to have those conversations with us. Sometimes we might have that conversation and it just gets people's backs up a little bit. They don't want to have that conversation with us. But we identified that the website wasn't genuine and that Connie's first transaction wasn't actually invested as she thought she was, so the remainder of Connie's Super balance wasn't transferred out. Thanks to that call and Connie's willingness to have that conversation with us, we were able to protect the funds with AustralianSuper and help Connie as well. So she felt really silly. But through my conversations with her, the most important thing was protecting herself, resetting all of her online passwords and just doing what she needed to do to make sure that these people couldn't get anything more from her, but also the information that she'd shared with them wasn't going to be able to use further.

Yeah. And I think that's the important part, that Connie's experience. The website looked legit. The numbers looked legit. Everything was there. But like you were saying before, often it's that temptation of more than possibly could be imagined and if it's too good to be true, maybe it is. So the member protection team got involved there when that second transaction was being made. How is that member protection team working and protecting members' information? Yeah, absolutely. So we take a multi-pronged approach. Obviously with scammers, they're very sophisticated. So we need to do everything that we can to address the threat before it happens and do what we can when it is identified. So at AustralianSuper we invest in financial crime and information security teams. I'm obviously one of those people and we're every single day committed to protecting members from harm. We have a security programme which delivers enhancements as part of that strategic road map in response to constantly changing environments. We do education and awareness. So thanks to all of our members who are joining us today. One of the best things that you can do after this is take the tips and share them with as many people as you can. You don't even have to tell them that it was Cat Burke and Peter who told you to do it.

We do data governance as well, so continuously refining data retention, archiving and destruction standards to reduce the risk of data loss. We're proactively responding to new threats and we protect members associated with recent data breaches, being that from employers or companies that we're aware of, we actively protect those members and finally through collaboration. So one of the most important things that we do is we work with law enforcement, regulators and industry partners to combat the increasing threat of cybercrime and fraud. Yeah. And it's that collaboration part that really helped Connie because she was open to say, well, this is what I had. This is what I've seen. So if you're aware that something doesn't look right, we're certainly going to help you. And the more you get involved, as Cat said, the more you tell others, the more you're probably going to help the next person.

So if we bring it down now to a personal level, what are some of the ways that I can protect myself from scams? Kat. Yeah. So information security is about keeping your personal and financial information safe from cyber criminals and scammers. So just like you would use a lock to protect your house or your car, think of your information security as a virtual lock. So you want to think about protecting your own personal and sensitive information online. Just be aware of what you're sharing. Preventing our devices from being accessed without our consent. So that's a big one that we see a lot of is, you know, be aware of what Wi-Fi you're connecting to, that sort of thing and preventing cyber criminals from stealing our valuable information or causing us harm. So just being aware of, you know, where did you leave your wallet? Was it in your car, in your front yard overnight? And it's been broken into. It's not just about online cyber criminals, but it's also your personal information as well in that hard form.

And that's keeping and making, I suppose passwords better than just password or ABC1234. So what would be some of your tips to help people protect their privacy and identity? Yeah. So the best thing that you can do is with your financial institutions, and obviously AustralianSuper being one of them, is keep your account information up to date. Do we have your correct phone number? Do we have your correct email address? If anything happens, we're going to try and contact you or you're going to contact us. And that's going to be one of the first things that we ask you is, is the information that we have up to date creating a passphrase, rather than just using your dog's name +1234 as your passwords for every single website, use a passphrase. So for example, something that someone wouldn't be able to guess like so purple monkey dishwasher, plus something else in addition to it. That seems random, but it makes sense to you. Beware of host emails. Don't click anything as we sort of said earlier. And again to the unsolicited calls and text messages. Sure, here is the text sectioned into appropriate paragraphs:

If ever you're not sure about something being genuine, find the website for that company that is contacting you and call their contact centre. They'll be able to verify to you straight away.

And then finally to cybersecurity, the Wi-Fi and device browsing when you're online. I recently had a member who was a victim of online attack and it was through his local library. He'd connected to the Wi-Fi from his car outside and he thought he was connecting to the genuine Wi-Fi of his library, but it was actually someone else in the area making it appear like it was the library's Internet that he was connecting to. But it was this additional service that was not genuine. So yeah, it's really important.

Yeah. And I think you're right with passphrases coming into play, I'm sure. Was it purple monkey dishwasher? I would have probably gone with Blue Gorilla microwave or something like that. But it is that making it tougher for people to get in.

So if the worst does happens, like with Connie, what should you do if you think you've been been scammed? Yeah, absolutely. So the first thing to do is act fast and report it. Report it to the financial institution that you think has been impacted. So if it was something going out of your AustralianSuper account, call us first. If it was something coming out of your bank, call them first. But ultimately it's about reporting it first and the quicker you do, the easier it is going to be for the financial institutions, me to actually try and protect your account but also recover anything if there has been any funds that have gone out of your account.

As part of that reporting as well is reporting it to police to Scam Watch and the Australian Cybersecurity Centre as well. And then that way the authorities can act as quickly as possible as well. And as I said, we work closely with the authorities as well as much as we can. So yeah, the more information they have and we have, the easier it's going to be for us to help you.

The secondary is change your passwords. So your financial institutions, your bank, your mygov account is another good one to make sure that you're protected on. And obviously you're AustralianSuper online account as well. And then finally, contact ID Care. So ID Care isn't an organisation that a lot of people have heard of, but it's Australian and New Zealand's national identity and cyber support service. They help hold your hand and help instruct you on what to do next and what steps you can take to protect yourself moving forward.

So it's just that common sense approach, like if I lose my house keys, I'm going to change the lock. If someone's got my password, I need to change the password to stop the next one. Now we've talked about the way scammers try and get in touch with us through SMS and email. AustralianSuper, we communicate with members with SMS and email. How can members be comfortable with what they're receiving from us that it is actually from us? Yeah, absolutely. So SMS is will never ask you to click on a link to update your personal information or link through to your account login page. They'll always be something like an update on your account or something that you're either expecting or something that you're not expecting. So if it's something that you're not expecting, that's where it will ask to call us.

The secondary is if you do receive a call from AustralianSuper, even if it's unexpected, our representatives will always clarify who they are, the reason for their call and ensure that you're comfortable to continue before they continue that conversation. And then if you're ever suspicious that a call isn't from AustralianSuper, hang up and call our contact centre. Use the phone number that you find on our website, not the one that you just received in an email or text message, because that's going to be the most secure obviously as well. I can verify that the phone number that you can see on the screen as well is AustralianSuper's phone number. Just for a little bit more Peace of Mind.

OK. And I suppose where we go to from there, and we've covered some of these things is learn more about the various scams, Cat's given us some some insights, but AustralianSuper has a couple of locations on the website shown on the screen here. But the ACCC also has their little black book of scams. Now, what's in their little black book Cat? Yeah, obviously the ACCC is one of the authorities on recent scam trends. So this little black book is essentially a web page that has all of the most recent trends that are being seen. So for every person that reports a scam, the ACCC collates that information and updates their website, which helps keep our members up to date and the general public on what scam trends are being seen. But it's also a great resource for people in my profession as well. So it's, yeah, really valuable to have in your back pocket if you're ever curious as to sort of what's going on in the scam world, other than, of course, our actual website itself.

OK. So again, that that sharing of information, building a bigger database for the authorities to make sure that no one falls victim to the scams because they can recognise them and shut them down. Well, that brings us to the end of the formal part of the presentation. We'll now go to some questions. My colleagues have been answering questions that have been going through and putting some links up in the chat. One question that's come up that's fairly topical, Cat, is about multi, what's it called? Multifunction identification. Now there's been a lot of interest in around that. How is AustralianSuper looking at that? Yeah, good question. Multi factor authentication is what it's called, but I think it's called factor or function depending on which school of thought you belong to. So at AustralianSuper, we take protection of personal information seriously and we have robust security measures in place to safeguard members, accounts and data. These measures do include aspects of multi factor authentication or MFA. It's also sometimes referred to AS2FA. So 2 factor authentification which is where you.

Yeah, one of the more recent enhancements that we've rolled out is in AustralianSuper's mobile app. So we now have the functionality to be used as a authenticator for online portal login, which is using PIN, Touch ID or Face ID. That obviously depends on which how advanced your mobile device is. But then in addition to that we also send real time notifications and we have a stringent security identity check as well process in place. So I definitely encourage if you are concerned about MFA and two FA is use our mobile web app as it does provide that additional security features, which allows you to sort of access your account regularly as well. And that's one of the best things that I can recommend if you are worried about being a scam victim or you're worried about somebody accessing your data, be it on the dark web or if you have recently been a victim of a data breach. Is actively staying on top of your account balances your transactions, whether it's with your AustralianSuper account or your banks or even your mygov account. By actively engaging with those institutions and understanding what your balance is and having a good idea of where you expect it to be, it means that you're more in touch with it. Ultimately, you're the best protection you have against being a victim of scam or if you have had your information leaked on the line.

OK, now one of the questions come up, Cat, is you talked about romance scams. How do they work? How are they? Are they picking on the vulnerable here? Yeah, absolutely. So romance scams, we quite often see members become victims of romance scans because they either receive an email, which was unexpected, but it's sort of, hey, I'm, I saw your profile on social media and I'd like to become friends. And then they slowly win over your trust. So usually it's either via email or it's through social media. So we see it via Instagram and Facebook where, you know, you get a friend request from somebody who you weren't expecting. And then slowly they build trust so they stop showing interest in your life. And then they get you to be interested in their life. And then slowly things start to go wrong with them. We see people who all of a sudden they might not be able to pay their phone bills. So it starts something small and it's usually something that would stop them from talking to you. So it's, oh, I need $50.00 for my phone bill or I can't contact you anymore. And by this stage, you're already sort of engaged with who the other person is, the scammer is. And so you continue to have those conversations. It's like, Oh well, $50, I can give you $50. So we can continue to be friends. And then it's snowballs. So often it'll be some sort of family tragedy. It'll be something to do with, oh, well, I'll come and visit you, but I need $10,000 for the flights and that sort of thing. And these romance scams are quite often the ones that people are the most embarrassed about. We had a member who unfortunately was a victim of a romance scam and lost a significant amount of money. And when they told us, when they let us know, when I was speaking to them, they didn't want to tell me what it was for. They just said, oh, I transferred the money, but you know, I'd like to get it back and how can I help? And it was through the police report. So we work obviously closely with police. And it was through the police that they actually told me the circumstances and how embarrassed they were. And our poor member didn't want to tell his family and friends and that sort of thing because he felt silly. But ultimately it they're very, very sophisticated. They know what they're doing and they know what triggers and leavers to pull for people because they do this every day. It's, yeah, really heartbreaking. But yeah, the more we talk about it, the more people are aware of it, and then hopefully the more people come forward when they have been victims.

Yeah, great. Thanks for that, Cat. Now we've gone through all the questions, so we might just wrap it up there. So thanks Cat for your time and your expertise as a fraud specialist, having the knowledge to help protect our members. Thank you to those that have joined us. I hope and trust that you've received some information that you can put into practise. And finally, thanks to the team behind the scenes being answering questions and popping those links in chat. AustralianSuper does have a number of other webinars you may want to join and you can find that by going to australiansuper.com. So I might see you in the future. Thanks again, Cat, and all the best for the rest of the day, wherever you may be. Thanks a lot.

FY24 End of financial year investment update

Watch a recorded webinar with an update from AustralianSuper experts on our EOFY investment performance to 30 June 2024, and our outlook for future investment markets.

FY24 End of financial year investment update

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Good afternoon and welcome. Thank you for joining us at today's end of financial year investment update webinar. This afternoon we'll be discussing a number of things. We're going to be looking at AustralianSuper's investment performance to 30 June 2024, how we're managing your super in the current market climate, our outlook for Australia and Global economies, as well as investment markets and key things for you to consider when managing your investment choices.

My name is Peter Treseder, I'm an Education Manager and for 25 years I've been helping AustralianSuper members better understand their super so that they can get a better retirement outcome, and I will be your host for this afternoon.

In the spirit of reconciliation AustralianSuper does recognise the traditional custodians of the land of 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 I'm talking to you from the land of the Boonwurrung people which is down the south-east area of Melbourne stretching all the way down to South East Gippsland.

What we're talking about today is general information, I do not know your personal circumstances and situations so what we're talking about will be of a general nature. Before making a decision, please consider the information that you need to make a right choice for yourself by reading the Product Disclosure Statement and Target Market Determination.

We will be talking about investment returns so please remember investment returns are not guaranteed, and past performance is not a reliable indicator of future performance.

Now I'm not the only host today I have some experts with me to get down into the nitty-gritty of super. I'm joined by Sam Weaner our Manager of Investment Communications. Amber Rabinov, Head of Macro Research and Strategy and Nicholas Keats one of our Financial Planners. They're all going to help us today. Just a brief intro from each of you. I'll start with you Sam what you do and how do you help members?

Thank you, Peter. I'm Sam Weaner and in my role at AustralianSuper I provide updates to members on our investment strategy as well as the performance of our investment options.

And Amber same question to you.

Hi everyone, I'm Amber Rabinov, I lead a team of highly specialised economists and strategists and together we work to find investable opportunities in asset markets and the broader portfolio in order to help maximise financial outcomes for all of AustralianSuper members in retirement.

And last but not least Nick as a Financial Planner what do you do to help members with their super?

Hello Peter, and hello everyone on the webinar today my name's Nicholas Keats, I'm a salaried employee of AustralianSuper. I'm licensed through a group called Industry Fund Services as an authorised representative providing comprehensive financial planning advice to AustralianSuper members. I've been a Planner for about 20 odd years, and I've been with this group since 2006. I guess planning as a concept is working one-on-one or one-on-two with clients to try and help improve the sense of control and comfort you experience day to-day over your financial affairs and reducing uncertainty into the longer-term future.

Thanks for joining us, now some of you today may have already watched the end of financial performance update presented by Alistair Barker, our Head of Asset Allocation. If you haven't watched it I do suggest you have a look at it to get a broader view of the financial year just gone by. Alistair talked about the positive returns that have been delivered to members over the past 12 months. Now all super funds have a default investment option, that is how your super is invested if you don't make your own investment choice. At AustralianSuper the default investment option is called the balanced option. So, Sam can you take us through the balanced option numbers because the majority of our members are in the balanced option, and we must remember you're going to be presenting two sets of numbers. One for our people in accumulation phase, that's building up their super and what we call super accounts, and one for those in our account-based pension product called Choice Income. Now the performance numbers between these two accounts differ due to the way they’ve been taxed, but Sam how did we get to the numbers we produced this year?

Thank you Peter, so the end of the financial year gives us a great chance to reflect on recent performance and also gain an understanding of what's contributing to member returns. So, over the last year we have seen positive performance from each of AustralianSuper’s investment options. This includes the PreMixed options as well as the DIY mixed options. We'll focus on the balanced option today as well as what's contributed to the balanced options returns. So, for the returns to 30 June 2024 the balanced option for super accounts returned 8.46% for one year with an average annual return of just over 8% over 10 years, and 9.26% per annum since inception back in August 1985. When looking at different time periods it is important to really compare those returns of what those different time periods mean, because each starting point does make a difference. So for example if you look at the 20-year number it looks a little bit lower than some of the others because the 20-year number includes the period of the global financial crisis, which is when listed share markets sold off in 2008 and 2009. Which is a little bit lower than that of the 15-year number. The 15-year number started in the middle of 2009 and this was during some of when the market sold off the most during the global financial crisis. So effectively had a lower base to start which gave it higher performance over that time period. So, it's often beneficial to look behind the numbers to see what's contributing to returns. Now if we turn to the Choice Income option, so this is the balanced option for Choice Income accounts, this is the account-based pension product for those that are in retirement. This option returned 9.25% over one year and 8.83% per annum over 10 years to 30 June 2024. Now the returns for Choice Income often have a higher performance than super options and this is because Australian taxes do not apply to investment earnings, which gives them a benefit. Similar to the super option, the 15-year figure is from the middle of the global financial crisis and then since inception number was from January 2008, which was before the global financial crisis started and includes that downturn during the 2008 and 2009 time period.

Thanks Sam, it's good to see long-term returns continue to be strong. What are some of the factors that contributed to this year's returns?

The biggest contributor to returns over this last financial year has been the performance of listed share markets and this chart shows the daily performance of market indexes over the last financial year and includes Australian shares and international shares. So, the broad market for Australian shares gained over 12% for the whole year, while international shares by rose by just over 19%. The chart also shows how volatile markets can be from a day-to-day basis. So, if you look back a year ago there was a lot of uncertainty around inflation and the level of interest rates, and this led markets to go sideways and even negative during the first part of the financial year. As investors gained more confidence over the year there was a lot of strong corporate earnings that fed higher share prices as the year progressed. So, in the domestic market as an example, banking shares had the most impact with their return making up about half of the 12% return. In international shares the big story was the technology boom this continued to drive markets with significant returns from stocks like NVIDIA, Meta, Alphabet, Amazon and Microsoft. So, when we have seen periods like this before, where technology advances have really led to significant growth and even investment opportunities, in some ways you can liken artificial intelligence as similar to the inventions of the mobile phone and the internet. Each of these inventions led to an increase in productivity gains and even led to higher economic growth over time.

Sam, many members are aware of listed investment sectors such as shares, property, fixed interest and cash. What about unlisted assets, what are they and what impact did they have on our numbers this year?

Yeah, well while the last few years has been an exciting time for listed shares, returns have been a little bit more modest for other asset classes in the portfolio. Over the last year, listed assets were affected by the higher sustained level of interest rates that we've seen in the market and this puts some downward pressure in their valuations. This has meant lower returns for asset classes like infrastructure, property and private equity. Compared to listed markets like Australian shares and international shares over the last year. Now there were some assets in the portfolio that did continue to do well in the current environment, and this included seaports, airports and toll roads. On screen there are just a few examples of some of the investments that are in the portfolio. So, New South Wales ports, Sydney Airport and Transurban Chesapeake are examples of essential public services that we invest in to help grow your super.

Okay Sam, now you've given us the balanced numbers for the default option. How do those numbers compare to our peers?

When investing it's definitely important to compare your performance to a benchmark and for the balanced option its objective is to out outperform the median fund in its peer group over the medium to longer term. This graph shows the balanced option in orange compared to the median return in blue. Over the long term over 10, 15 and 20 years the balance d option has achieved this objective and we've been able to achieve this outperformance largely due to our active management approach to help enhance returns over time.

Now Sam, as someone who speaks to members every day and responds to members questions, one of the questions we're having, and you may be aware of that some members are asking why our performance has lagged behind our peers over recent times. Can you shed some light on this?

Yeah, there's definitely a few factors to consider there. On this chart you'll see that the one and the three-year number, we are slightly below the peer group during that time. At AustralianSuper the reason behind this is we do seek to adjust the asset allocation or the mix of asset classes in the portfolio based on our economic outlook and the valuation of investment markets. So if you look back a year to two years ago, we believed that the chances of an economic slowdown were heightened. There was a lot of news at the time of a potential recession in the US, a potential recession in Australia and in line with that thinking at the time we thought that was going to impact share market performance. So, we positioned many of the PreMixed options including the balanced option more defensively. This meant we had lower exposure to listed shares like international shares and more exposure to defensive assets like fixed interest in the portfolio compared to our peers. So, now what we see is over the last two years, that due to the post-pandemic consumer spending and the technology boom, listed share markets, especially international shares, continue to do really well. So, our lower exposure to those markets compared to our peers ultimately led to a short-term impact to our relative performance. Now currently we do see a reduced likelihood of a significant economic slowdown in the near term. So, since January of this year we have increased our exposure to international shares, which is helping to improve our relative performance compared to peers in recent months.

Thanks Sam. Now as we know and as you have shown each year goes by and produces another number but it's those numbers adding on top of each other through the wonders of compounding interest. Something that Einstein once said was the eighth wonder of the world, and that compounding interest is the key to growth of superannuation accounts. Can you give us an example or show us how these compound returns build our members balance?

Sure, the benefit of investing over time is that your portfolio has the potential to earn income on top of the returns you've already returned in your balance. So much like a snowball picking up momentum as it's rolling down a hill, getting bigger and bigger. So, for example if you invested $100,000 in the balance option 20 years ago and made no additional contributions, over the first nine years you would have actually doubled your money from $100,000 to $200,000 and that's even while navigating the global financial crisis. If you fast forward in another five years you would add another $100,000 and over the course of the full 20 years your balance would have grown to over $450,000. So, while it's never guaranteed, investing over time does provide those opportunities to help build your balance.

Now just quickly to you Nick, as someone else who deals with members every day and they see these ups and downs and they get worried when volatility occurs. What is one of the first things that all members should think about when it comes to their super investments?

Thanks Peter. Look one of the things that I'd say is first to consider is the conflict between what I'd call the now, that is how we internalise short-term returns, particularly the bad ones and the long-term nature of superannuation. So that is your super is likely to be yours into the late 80s or 90s and possibly even longer. We tend to find that the white noise of investment markets in the short term can distract from good decision making over that sort of a time frame. You can see in the slide here for the balanced option at AustralianSuper going back historically. There's been a couple of significant drops including things like the GFC, 15 or 16 years back, COVID-19 of more recent. History does tend to show that markets do bounce back and as a result consistency is certainly our friend. As a current example the market turbulence this last week just gone shows how fast things can change. It does mean that if making a dash for cash, in a flash-crash, is the main driver, then we may well have lost sight of quality well-structured decision-making. Given we sadly can't foresee market returns, it's important to make sure that you invest consistently and for the long-term, to ensure that you don't miss the rising tide when it comes.

Thanks Nick. Now, turning to you Amber. Sam has spoken about improving economic conditions, can you elaborate on this for us and comment on how changing economic conditions here and overseas, may impact investment markets and ultimately member balances?

Sure, well the macro picture which we discussed earlier in the year at our mid financial year update has evolved broadly in line with our expectations. So, if we look at the global picture to start with, inflation has broadly continued to ease in developed markets back towards Central Bank targets of around 2% and you can see this in the left-hand chart on the screen. In broad terms, economic growth has been tracking it around a trend pace. Labor markets have also become more balanced after experiencing tight conditions for the past few years, so that is strong employment growth and record low unemployment rates. Now this picture has evolved in 2024 with a slowing in jobs growth from the very strong pace seen in 2022 through to 2023 and also a gradual nudge higher in unemployment rates as strong population growth has added to the labour supply. Now what this has meant is that it's given many advanced economy central banks including the Bank of Canada, the Swiss National Bank, Sweden's Ricks Bank the ECB and most recently the bank of England, it's given them sufficient confidence to start reducing policy interest rates and you can see this occurring in the right-hand chart on the screen. Now as we forewarned in our February update, this last mile of the normalisation of inflation has been a little bit harder in some economies and this has meant that some central banks have yet to move interest rates lower. In international markets most notable in this category is the US Federal Reserve. Now having said that, following the Fed's most recent meeting in late July, the central bank has started to shift its tone from being highly attentive to inflation risks, to being attentive to both sides of the dual mandate. That is paying equal focus on both sustainable prices growth as well as full employment and Chair Pal has acknowledged that the downside risks to the employment mandate are real. Given that, and following the weaker than expected July jobs report and softening growth and employment outlook, markets are now looking for the Fed to start cutting the funds rate from its September meeting.

Thanks Amber, so you're looking beyond our shores how about a bit closer to home what's the outlook for Australia?

Thanks Peter, so in Australia inflation has lagged trends relative to other developed markets, in part because of the Australian economy's relatively later return to more normal activity after extensive COVID lockdowns. In Q2, headline inflation came in at 3.8% in year-on-year terms and the RBA is not expecting its preferred measure of core inflation to move sustainably back inside its 2-3% target band until late 2025 and into 2026. Moreover, it remains alert to the upside risks to this inflation outlook that is inflation taking even longer to return to target and that's because overall demand in the Australian economy remains stronger than supply. And that concern is likely to persist for a little time longer, particularly given the boost to disposable income coming through via the extraordinary fiscal largesse from both the federal as well as the state governments at the moment. To give some context around this together with the long-heralded stage three tax cuts, the recent cost of living measures across both levels of government adds up to around 1.5% of GDP. We've also seen the resilience of the Australian labour market also continuing, and like in international markets we've seen the unemployment rate slowly rising due to strong population growth. It's now up to a little bit above 4% up from those multi-decade lows in the mid 3.5% range which persisted through mid-22 and into 2023. So, when we put these inflation and labour market stories together, that slow progress on inflation, only moderate easing in labour market indicators, and also that uncertainty around the potential boost to demand from fiscal stimulus, when we put all this together, we continue to expect to have to wait a little bit longer for the RBA to start cutting rates relative to its developed market peers. Now bringing this back to investment markets, the trend for lower policy interest rates will work to lower borrowing costs and support the continuation of growth and the current economic cycle. Interest rate cutting cycles have traditionally been positive for growth-oriented asset classes particularly listed equities and because Australian markets tend to trade in sympathy with global markets, we may see the positive influence of lower global policy rates on our market. Even if the RBA keeps the cash rate here unchanged for now.

Thanks Amber, now going back to our update in February, you mentioned that 2024 was going to be a big year for elections around the world. We've seen some elections come and go, we've seen surprise elections, how are they progressing and what's to come?

Great memory Peter, we did talk about this earlier in the year, around how elections would provide a lot of uncertainty this year, that's certainly been the case as you've mentioned. There was a surprise election for instance in France, a very early election in the UK and even the outcome in India's election was unexpected. So, whilst Prime Minister Modi secured a third term as leader, he governs now from a weakened position without a parliamentary majority. Now, of course all market focus is on the upcoming US presidential election that is set for the 5th of November. This focus has only grown after a series of unpredictable events, including an assassination attempt of former president and current Republican party nominee Donald Trump. Whilst the current Democratic party President Joe Biden he stepped aside as his party's candidate in a very unusual move for his vice president Kamala Harris.

Now our research teams have been spending a lot of time thinking about the macro and the investment market implications of the potential outcome of the US election and it's not only about who gains the presidency, which is important, so to, is the balance of power in Congress. That is in the House and in the Senate, and this is because whilst the President has powers to pass certain rulings such as on tariffs and on foreign policy, when it comes to fiscal policy, so taxation decisions, spending decisions, these need to be legislated or agreed upon by a majority vote in both the House and the Senate. While both a Trump and a Harris presidency are expected to be fiscally expansionary given their respective slates of policy proposals, their macro implications, so what this means for growth, what it means for inflation, what it means for monetary policy, and therefore what it means for investment markets, this is really, really, uncertain. Of course, a Trump presidency would also have significant economic implications for other countries including here at home in Australia, in the event that his tariff proposals are implemented. So, the one certainty that we can take away from this is that at least up until the election result is known, hopefully on the 6th of November, market uncertainty and volatility is going to remain higher than normal.

Thanks Amber, and thanks for running us through what we think may lay ahead. Now to Nick, as a Financial Planner, like me, you talk to members. What are some of the feedback that you're hearing from members around investments and investment choices?

Sure, so look from a Planners perspective Peter, we certainly do deal with clients day-to-day regarding a range of considerations. One of which is indeed investment approach and that sort of flows on more so into discussions around performance and managing risk. As we've seen in this webinar and from returns last financial year, AustralianSuper did finish strongly positive. More broadly much of the feedback in my experience from clients on the ground has been positive given greater than return, greater than expected returns in many areas. We have some clients however that do note, that there appear to be differences in returns from one fund to another. Particularly on the upside last financial year and rightly raised this sort of item for discussion. However, as recently as last week, the discussion changed significantly, again to one of managing volatility and negative runs. Look for mine, I suppose any discussion around performance, up or down is a good thing. It's an opportunity to refocus on why at the client level, we set an investment approach, that's designed to consider things like volatility, set some broad range expectation and identify the time frame for the investor.

Yeah and I suppose it's that objective and expectations that sometimes don't marry up. When you're talking to members, what are the pointers, or the start points for them to consider when choosing their investment options?

Look, there a range of items at the individual level for us to consider, we've listed a few here first of all when we come to compare returns, fund to fund, it's important to ensure we're comparing investment options that are similar in their growth exposure. That is, returns from one fund's default investment option to another can vary considerably based on the level of growth assets held. Now, growth assets are things like shares here, overseas property, infrastructure and so on and these are a big driver of long-term performance. So, small differences in growth allocation can mean a big difference in performance outcomes. Single year returns can also be a distraction, considering that you invest wealth for such a long time. Whilst I'd love big returns every year with no risk, this simply isn't an option, it's a unicorn. A consistency of approach will help manage longer term performance as its time in the market, not timing the market or trying to pick winners, that generally matters most. Sadly, no one tells us what the returns for the financial year will be at the start of the year. Third, understanding investing and performance as an extension is an emotive process that can swing from elation in good time, to panic and bad this has been proven in the week just gone. The emotional ride is a natural response but that needs to be managed by setting and understanding expectations. So, setting a risk theme or an investment approach and sticking to it over time helps to manage emotional swings and does tend to return focus back to the longer-term perspective. And fourth, AustralianSuper as with many funds has a wide range of investment options available for you to pick and choose as desired. You have choice over how you manage your super, be that cautious, aggressive or somewhere in between, so being engaged matters. These options vary in the diversified arena from stable, which is about 35% growth assets, to high growth which is a little over 80% growth assets, to things like sector funds such as Australian or international shares and even to direct stock. It's important to realise that they all have different return objectives and risk levels.

Suppose Nick, it's knowing if I'm the member what my attitude towards risk. In our chat we do have a link to a risk profile calculator that might help you determine, what type of investor you are. Now as a Financial Planner, you provide financial advice, now it's not something that many Australians do. Many Australians take the approach of she'll be right when thinking about their retirement but if members do want advice. How can they get it from AustralianSuper?

To look or to learn more about the options Peter, you can visit the website and initially and probably have a bit of a look through the investment guide, the materials are a terrific place to start. If you need help to work out which option is perhaps best for you, which investment option is best for you, AustralianSuper offer a range of service points to assist. Now, having a look on screen here we can see that the top two cover what I'd say is general and educational material initially. There's a very wide array of information available on the website to help improve both general knowledge and conceptual understanding. On the bottom left we can see the phone-based advice team, this is a team that can help decide the right investment option for you, this type of advice through the phone team comes at no additional cost to you as a member. The bottom right is comprehensive Financial Planners, those are people such as myself and there's 15 or so of me scattered around the country. We deal with investment selection as part of a broader sweat of advice needs and charge for the advice depending on scope, complexity and so on. Now if you're unsure, feel free to contact the fund and seek support and how we can triage your needs and move you to the right person or area to help.

Thanks Nick and if you are interested in learning more about your super there are a range of webinars at different times throughout the year, so you can tune in for them from the comfort of your home or wherever you may be, and you can find more out about those if you go to Australiansuper.com/webinars.

Now, in the chat we have put a link to a survey, which would love you to complete as it helps us tailor these webinars to what you want to know. It also gives you the opportunity to request financial follow up if need be.

That brings us to the end of the presentation part. Questions have been coming in thick and fast, and my colleagues behind the scenes have been answering those feverishly. There’s a couple there that I've been keeping an eye on, that’s a bit of a trend. So, I'll go with those first.

And the first one is to you Nick. I see this a lot. Should I change investment options if I'm moving into retirement? Good question and one that’s raised reasonably frequently. The answer for mine is probably a bit of yes and no. I’d initially want to start by making sure we know what sort of investment option you're in now and what that actually looks and feels like. What's the growth allocation and what sort of risk can we expect from that type of approach.

You often find that changing to a more conservative approach in retirement is considered by many the next logical step. But, we do still need to consider that retirement is a long-term gain. As I mentioned it, possibly 80s or 90s. So, that sort of time frame will impact decision-making, as you still need to weight towards growth assets in some manner to manage wealth productively over that time. On the ground, at a planning level. I tend to find clients normally maintain a fairly consistent or similar approach over time, into retirement in particular. Once we’ve established what sort of approach may suit them.

Thanks, Nick. One for you Amber. You spoke about elections all around the world. How about closer to home and an election in Australia, which I think has got to happen in the next 12 months or so?

Yes, that's right. There’s likely to be a federal election here in Australia by May next year. On this, I can make a couple of broad points. Firstly, Australia's political structure and rules, and this includes compulsory voting and proportional representation, these have a tendency to draw parties to the centre. So what happens here is that we don’t typically see some of the more radical policies that are being proposed elsewhere in the world.

And to this point, thus far there’s little in the way of controversial potential fiscal policies likely to be proposed, such as what we’ve seen for instance in large advanced economies around tariffs or taxes that we’ve seen proposed in France or the US for instance. Another factor to consider is that our markets are also significantly influenced by events on global markets. And so, as we’ve spoken about today markets don’t like uncertainty. And in our mind, It’s hard to see the opportunities for a large policy surprise. So even a large positive policy surprise. Say a kin to the significant deregulatory reforms of the 1980s for instance. It’s hard to see something like this being part of the upcoming election campaigning here.

Thanks, Amber. Now, Sam, I won’t leave you out of the questions here. A question has come in about, you mentioned before AustralianSuper’s balanced option is an active manager. What about indexed investments. What can you tell us about indexed investments? How do they perform short-term, long-term?

A good place to start for that would be basically defining the terms of what they mean. So, with indexing. Indexing is a passive way to invest, where you seek to match a benchmark. So you are seeking to match say the return of the ASX 200 or perhaps the MSCI World Index globally. So, often times passive investing or index investing could come at a lower cost because effectively the cost of setting up indexing is to build out systems to match that benchmark performance. So it’s seeking to match that index.

Where as active investing, you’re basically doing research or hiring investment managers that are picking securities to potentially outperform an index. So it really comes down to, in your own portfolio, determining which approach works for you. And it’s not a one or the other, you can actually have a mix of both types of styles in your portfolio. In AustralianSuper, we do believe in active investing and we have done very well over the long term. Some examples would be our Australian shares option, when you compare the returns of our Australian shares and our security selection approach there and its performance versus the benchmark, we have done very well. It’s also a key part of how our balanced option has performed. If you look over 10, 15, 20 years a large part of our outperformance is due to our active approach.

Thanks, Sam. And look, you touched on one thing there, that you don’t have to have all your eggs in the one basket. When it comes to the investment options available, we have about a dozen different options. You don’t have to be in just one, you can be spread across all of the dozen if you wish.

So, similar question back to you Nick. What are a planner’s thoughts on indexed or active?

Yeah, that’s a good one. Sam has already spoken to the DNA of each. But for a planner's mind I’d be best starting with the question of what level of risk the individual is prepared to accept. Indexed diversified has a strong performance history depending on what sort of time frame you’re referencing. But the nature of that option is to replicate the index. Which means it can be limited somewhat in terms diversification and active management. As it doesn’t necessarily manage the downs or volatility, it tries to replicate a relevant market in some fashion. It’s similar in growth allocation to balanced. There is limited allocation however beyond shares, fixed interest and cash, So in good periods for those assets, particularly around shares, Australian and and international stock, it’ll do very well. If both of those are struggling the downside tends to extend beyond a probably better diversified approach that’s holding some additional sort of active management and diversification. The balanced option does have the benefit of investing in things like unlisted assets, private equity, and infrastructure, which tend to have helped enhance performance overtime. But with that being said we're all different and each different options or combination there of may have its appeal depending on the individual and their needs.

Yeah, you’re right Nick, everyone is different, and we don’t have a one-size-fits-all. This is where that advantage of getting that personal advice can tailor something not only your comfortable with but he's also going to achieve the objective you're asking for.

Back to you Amber, I’m sorry I’ve got to stay on politics. This has come up a few times. What may a Trump presidency mean for returns? I know it’s fairly broad.

And very topical though Peter.

To be clear, we don’t place bets on the outcomes of elections. What we do try and do is research a lot to try and understand what might happen under different outcomes in order to help us manage risk. So, for example Donald Trump has a few key policy proposals that if there enacted would have really big economic impacts. And for example, I spoke previously about his policy proposals on tariffs. So these are a generalised 10% tariff rate on all goods imports into the US. And a 60% import tariff from China. So in insolation, if enacted these tariffs would work to lower economic growth and increase inflation in the US, which isn’t great for equity markets. However, Trump has also promised to cut the corporate tax rate, which would work to improve profitability for businesses, And therefore boost equities. Ultimately, what we should expect if Trump gains office is more volatility in asset markets as Trump works to implement his policy agenda. And noting here that it’s a very different one from the existing Biden policy agenda, and also what Harris is currently campaigning on.

Another couple of questions have come through that I think I can handle at this stage. Is it ever too late to get advice? No it's not. Is it ever too late to get involved in your super? No it isn't. The more you engage in your super the more options you will have. And getting that financial advice is key and also understanding what investment options are available and which of those options are going to best suit you.

I’m going to wrap it up here. We have come to the end of our allotted time. We’ve had many thousands of people join, we’ve had it seems like thousands of questions asked. So, my thanks goes to the team behind the scenes answering those questions as we’ve been going through the webinar. Thanks to you, Sam, Amber, and Nick for giving us your expertise.

Over what we find, or most members find, is the biggest driver of satisfaction with a super fund is how a fund is performing. And thank you for the explanations of what the numbers were, how we got to those numbers, where those numbers may be leading in the future. And certainly, from Nick’s point, how can you get all those numbers to line up to give you the best result.

Apologies if we didn’t get to your question. As I've said we've had thousands of questions coming through we can’t get to all of them.

There’s a lot more information available on the AustralianSuper website, at australiansuper.com across the top of the landing page there are various sections you can select depending on whether your questions continuing on investments, whether it’s on super, whether you’re looking at retirement. We have fact sheets. We have education sessions to help you understand your super a little bit more. So we can give you and this is what we strive to do at AustralianSuper, we want to put you in a better financial place when you do get to retirement whenever that would be. So thank you for giving up your time today. We've enjoyed presenting this to you, hopefully we will see you again next year. And as we've said hindsight is a wonderful thing when it comes to investing. It’s easy to make decisions after something's happened. But it's easier to make better decisions by getting help and advice along the way.

Thank you and have a great afternoon.

End transcript

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