Education videos
Hear from our experts on a range of topics to help you make the most of your super, whatever stage of life you’re at. The videos are available to watch on demand for your convenience and run for around 20 minutes each.
FY23 EOFY investment update
On Tuesday 15 August, a panel of AustralianSuper experts discussed the strategies that helped deliver returns for members and what you can expect for your super in the year ahead.
FY23 EOFY investment update

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Good afternoon and welcome. Thanks for joining our end of year Financial Year Investment update.
Today's webinar flows on from the end of financial year performance update presented by our Chief Investment Officer, Mark Delaney, which you may have seen already. If you haven't, there is a link to it, to the video currently on the AustralianSuper Internet landing page.
Today I'm going to be talking about AustralianSuper's investment performance for the financial year just gone by, how we're managing your super in the current market cycle, our outlook for the Australian and global economies, as well as investment markets and importantly, strategies to help you manage and grow your super.
My name is Peter Treseder I'm an Education Manager at AustralianSuper and today I'm going to be your host.
AustralianSuper acknowledges the traditional custodians of the land on which we work and we pay our respects to their elders, past, present and emerging, and we extend that respect to Aboriginal and Torres Strait Islander peoples.
Before we start, please be aware that the information being provided in this webinar today and the answers to any questions will be of a general nature only. We do not know your personal needs or your financial situation or objectives, so please assess your own financial situation before making a decision and please read the product disclosure statement and target market determinations available on our website before you make decisions. We're talking about investments, so please remember that investment returns are not guaranteed and past performance is not a reliable indicator of future returns.
To help me with today's discussion, I have with me two of our experts from our Investment team, Sam Weaner, Manager of our Investment Communications, and Amber Rabinov, head of our Macro Research and Strategy Investments. Thank you for both joining me.
Starting with you, Sam. How do you help members? Hello, I'm Sam Weaner and I've worked in the investment industry for about 20 years now and at AustralianSuper, I assist members with updating information about our investment strategy as well as updating information about our performance of investment options.
And welcome, Amber, same question to you. How do you help members? Hi everyone, I am Amber Rabinov. I lead a team of highly specialised economists and strategists. Together, we work to find investable opportunities in asset markets and the broader portfolio in order to help maximise financial retirement outcomes for all of AustralianSuper’s members.
Thanks, Amber, and thanks, Sam for joining us. Now, Sam in his investment update, Mark Delaney, our Chief Investment Officer pointed to the positive returns for the 2023 financial year. The majority of our members are invested in the fund's default option, the Balanced option. So maybe we could start there. And could you please explain how that Balanced option is invested?
Thank you. Peter. To start off, the primary objective of our investment team is to generate strong long term returns for members, and we seek to do this by actively investing in assets as well as diversifying across asset classes to help manage downside risk. So the strategic asset allocation for the Balanced option represents how we do this.
You can think of each asset class as a building block of the portfolio And the strategic asset allocation provides a mix of different asset classes. These include growth asset classes like Australian shares, international shares and private equity, Mid-risk asset classes that have a mix of growth and defensive characteristics. These asset classes are unlisted property, unlisted infrastructure and credit. As well as defensive asset classes like fixed interest and cash to help manage downside risk. You can think of the strategic asset allocation as a starting point for our investment approach. It's the mix of asset classes that help achieve the investment objective of each option. And for the Balanced option, the objectives are to outperform the consumer price index by 4%, as well as beat the median balance fund over the medium to long term. Effectively, we're looking to outperform inflation as well as outperform competitors in the industry. The key part here is outperforming inflation is very important because you want your investment balance to maintain your cost of living, as inflation increases over time. So this benchmark mix of assets start with the strategic asset allocation, basically has that portfolio that has the growth potential to meet those objectives.
Okay now the investment earnings of super. Now that's super in the accumulation phase, or if I've got a transition to retirement account, the investment earnings are concessionally taxed and if I've got money in an account based pension or the Choice Income account that AustralianSuper has, the earnings are tax free. So there's going to be different return rates we're going to be talking about Sam. Could you take us start by taking us through some of the recent performance of AustralianSuper's main investment options?
Yeah, the end of the financial year gives us a good opportunity to reflect on the returns over the year as well as how we perform for members. So we'll start with the returns of the accumulation option and then look at the returns of the retirement options.
And on this first chart, we have the performance of the PreMixed options with the one year return in orange as well as the ten year annual average return in blue. For this one year we're very pleased that each of the PreMixed options had positive returns for members and we're able to help increase the balances of members invested in each of these options. There's two key themes we'll talk about as we go through the webinar today. One is the performance of listed markets like Australian shares and international shares, as well as how they compare to private market assets like unlisted property, unlisted infrastructure and private equity over the year. One aspect you can highlight and see the difference on this chart is that the performance of the Index Diversified option compared to the Balanced option, which has a similar risk return profile. In Index Diversified the growth portion of that portfolio was invested in listed shares like Australian shares and international shares, whereas the Balanced option is invested in a mix of private markets and listed markets. Over this last year, Australian shares and international shares did very well compared to private markets and that's where you see that higher return for Index Diversified in this period. Now over the long term, the Balanced option actually does very well because of our active approach as well as the investment in these private markets. And that's where you see the Balanced option pull ahead over the ten year period with that 8.60% average annual return compared to 7.22% for the Indexed Diversified option.
So thanks Sam, that's our PreMixed options, like the Balanced option, where AustralianSuper decides what the pie chart investment looks like. You can choose your own options through our DIY, do it yourself options. How did they perform Sam?
So we look at the DIY Mix options. These are the options that focus on specific asset classes and this is where you can see that performance from Australian shares and international shares over the one year period as well as over the ten years per annum. So in Australia over this last year, there was a very strong rebound that came off the concerns of the market had about interest rates and high inflation a year ago. And effectively the returns were also supported by higher company earnings and earnings growth over the year. International shares had a very similar story where the returns really did a strong rebound from a year ago, especially in technology shares, where we saw technology shares really take a leap forward over the last six months. For diversified fixed interests, we still do see an effect where that increase in interest rates over time puts downward pressure on the prices of bonds in the portfolio due to that inverse relationship, higher interest rates lead to a lower price. And that's where we see the negative return over the one year there In Cash options, we have seen the return increase compared to previous years, largely due to those higher interest rates that we see in the market. So that actually has helped the Cash option.
Okay, and as I mentioned before, even though they're invested in the same options, there is a different level of return between let's say Super and Transition to Retirement and our Choice Income account, because the Choice Income account, there's no investment tax paid there. What have the returns been for the Choice Income account? Peter you're right that the Choice Income accounts effectively have the same underlying investments as the Super options, and the main difference is that difference in tax treatment where the Choice Income accounts don't pay Australian income tax. So this is where you see that the PreMixed options had a higher return over one in ten years due to this difference in tax treatment. So you see that the Balanced option over ten years had that 9.48% return over that time period.
On the next chart, you can see how this differential tax treatment affects the DIY Mix options. And this also brings up a frequently asked question we often get about Australian shares and franking credits. Whether you're invested in the Super option or the Choice Income option, you do get the benefit of franking credits through the crediting rate or the return that you receive. The main difference is in the Choice Income option, it doesn't pay Australian income tax, but you still get that benefit of franking credits. So whether you're invested in Australian shares, in the Australian shares option or in one of the PreMixed options that benefit passes through on your return.
Thanks, Sam. Now, turning to you, Amber, Sam's gone through the investment performance, What factors in the economy have played a role in investment markets?
Thanks, Peter. I think it's helpful firstly to explain why we spend so much time thinking about the macro economy and the outlook. Now traditionally we look at the economic cycles, so whether the economy is in recession, recovery, expansion or slow down and what these economic phases imply about factors including economic growth, inflation and the setting of interest rates to help inform the asset allocation process. As what we find is different asset classes can perform quite differently depending upon where the economy is in the cycle. Now, with that in mind, we can see that inflation has peaked around the world. Now, while prices are continuing to rise, they're doing so at a slower pace. We can take the US as an example and see this reflected in the fall in annual headline inflation over 9% last year. It's currently tracking around 3% at the moment. It's a similar situation in Australia. Headline inflation has fallen from around 8% in year on year last year to currently tracking around 6%. As a result, major central banks around the world are coming to the end of their cycle of rising interest rates. Now that said, there are concerns regarding the stickiness of price rises given the continued strength in spending and healthy labor markets. With unemployment rates around the world remaining at multi-decade lows as such, we think global central banks will keep interest rates relatively high, even though the immediate inflation emergency appears to have receded for now. Moreover, we think that monetary policy takes time to work its way through the economy. The full impact of interest rate hikes aren't felt for anywhere between, say, 12 to 24 months after they're implemented. So if you think about it, it's kind of like if you're driving a car and you want to turn a corner, but you won't get around the corner until maybe one or even two years after you've turned the wheel.
Now, as Peter's mentioned, our CIO Mark Delaney spoke in his end of year update. As he mentioned, these economic conditions are expected to generate a much more challenging growth environment over the outlook period. So by challenging, we mean that a further easing in household spending is expected as additional savings built up over the COVID period run out. And also a more challenging environment on the corporate side of the fence, businesses already beginning to suffer from tighter credit conditions as well as lower profits and margins. And ultimately, we expect these factors to feed into a broader slowdown in economic demand. But with this change in market cycle, we think opportunities will also be provided for our investment process. So the concurrent fall in valuations, which we expect with an economic slowdown, will make assets more attractive for us to buy into.
Thanks, Amber. Now, Sam, given the economic conditions that Amber has just outlined, can you provide some more detail on the performance of the underlying asset classes within the portfolio?
Earlier, we started talking about the building blocks of the portfolio in the Balanced option. This chart shows more detail about the returns of these asset classes that we use in each of our PreMixed options and how they've done for the one year ending 30 June 2023. So as Amber pointed out, the returns of each asset class can vary depending on the economic environment and market conditions. So in a diversified portfolio, you can often expect one asset class to do really well, whereas other asset classes might have challenges during that period. And that's the benefit of diversification because you don't always know the timing of when that will occur. So we put it the last year in context let's highlight a few asset classes that have done well as well as a few that haven't done as well over this last year.
So, we'll first start taking a look at listed shares like Australian shares and international shares as well as unlisted property, unlisted infrastructure. So in Australian shares and international shares, these asset classes actually exceeded our expectations for the year. We think the environment that we're facing, that high interest rates, high inflation, we expect expected some more challenges in how these companies would perform over the year. However, there is very high consumer spending over the year on the back of the pandemic and effectively the basically the corporate earnings did very well. We saw this both in Australia as well as internationally. And internationally we saw a strong rebound from the technology sector, with especially over the last six months, and this is where some stocks actually performed by upwards of over 100% in the portfolio. But it was a very concentrated rebound with technology really leading the way of that performance.
And looking at unlisted infrastructure, this is an asset class that actually does well during high inflation, but there's actually some inflation protection in infrastructure assets. Many times the revenue from an infrastructure asset is linked to inflation. Think of toll roads or utilities that are higher, those higher prices actually flow through to benefit these assets. So while it hurts a little bit to have higher toll bills or higher utility bills, you can be slightly comforted by the fact that some of those revenues flow through and benefit your retirement portfolio.
Now, it's also worth looking at a few asset classes that did not perform as well this last year. So we'll take a look at private equity as well as fixed interest and we’ll close on unlisted property.
So with private equity, we have updated the valuations in this asset class and they really reflect the current market cycle for private equity portfolios. And a large part of that is the higher interest rates that has put a damper on the valuations there. Now, we have looked at each of the largest holdings in the private equity portfolio and looked at the fundamentals, and we still believe that this is an asset class that will perform well for the fund in the long term and give a strong performance for members. In fixed interest, this is where that increase in interest rates over the years still put a negative effect on the on the performance of the price of bonds in the portfolio. And that's why we see the negative return in fixed interest.
Now, unlisted property is worth highlighting because that's where we saw some key things on the back end of the pandemic that really affected the returns there. And this is especially in retail properties as well as office properties. So this also highlights the importance of our valuation approach. We update our valuations with a frequency to make sure that there is a fair value in the crediting rate that we provide to members. So we want to make sure those are updated frequently. And this negative 8% return that we see this last year reflects that. So we thought it was important to update the returns of those office properties as well as the retail properties Because an office that's slow return to work that we've seen post the pandemic has affected their valuations. We also see a lot of vacancies in retail properties as well.
Now looking forward, we are looking to reposition the property portfolio and invest in more asset sectors that will do well. Those things are like industrial warehouses as well as logistics centers. As an example, a recent investment we have there is the Amazon Robotics Fulfillment Center located in Victoria, and these are the types of assets we think will do well going forward.
Thanks, Sam. Now, Amber, Sam's had the ability to look to the past and see what's happened. When we look to the future and the economy has done well, there are asset classes that have done well. But when we look to the future, what are we anticipating?
Well, earlier I spoke about why we think about the economic cycle and how that helps us to support our investment process. But increasingly, especially in my team, but across the investment department, we spend just as much time thinking about the thematic and the long run outlook as we do on the cycle and the reasons why are two-fold.
Firstly, because we believe that the global economy is undergoing some fundamental structural changes which mean that the next ten years will likely be quite different to the ten years leading up to the pandemic.
A second reason is our Fund strategy. As we've grown in size with more assets under management. We've increasingly internalised the management of the portfolio and we've also internationalised our asset base. In addition, we have more unlisted assets in the portfolio, and these includes assets such as you can see on your screen that New South Wales Ports Asset or the Amazon Fulfillment Center that Sam spoke of. We tend to hold these unlisted assets for longer periods of time than, say, more liquid assets such as Australian shares or international shares. Now, as such, we've increasingly needed to look through economic trends over the next one, two or three years and really have a good handle on longer term macro influences over the coming five, ten or 20 years to help to inform the kinds of assets we want to hold in the portfolio over the longer term and also the kinds of assets that we don't want to hold in the portfolio.
Now, as I mentioned, we believe that the future will be different from the past and there are four key areas that we've been focusing on which we believe are already making structural changes to the global economy. And therefore these are issues that could impact on AustralianSuper's investment portfolio.
These include, number one, geopolitics. This is all about how different countries interact with each other. Some examples of developments in the geopolitical space include conflicts such as Russia's invasion of Ukraine, what that has meant for the global economy. But also issues such as new trade restrictions and investment restrictions that have been announced by a number of countries recently.
A second major theme is the energy transition. So that shift away from fossil fuels, empowering our societies and towards renewable and zero carbon energy sources such as solar and wind, as well as broader climate considerations. Again, here, there have been key government initiatives in this space which have impacted on the economic outlook. These include the US Inflation Reduction Act, which included significant policy support for energy transition measures.
Third theme that we look deeply into, demographics. So this is all about how population growth is slowing globally and to society's age. This can have a number of big impacts on the economy by the demographic makeup of countries. Here, I mean, the number of workers available, the wages they can demand, for instance, as well as shifts in savings and consumption patterns.
And a final big theme that we've been thinking a lot about of late is technology, particularly in the space of artificial intelligence.
I think a final point that I'd like to make, which is interesting about these four key global themes, is how they interact and are intertwined. And this umbrella theme, if you will, has been a distinct shift away from the importance of pure cost or economic considerations in the setting of official policy and towards national security considerations. We can really see this umbrella theme weaving its way through these four key points that I highlighted for you.
Now, one of the things that tweaked my ears then Amber was AI, artificial intelligence. Now, many people see this as the way of the future Where does AI sit in the world of investing?
Yeah, AI is really, really interesting, Peter. It's an interesting development in the thematic space, not just from a global competitiveness angle, but also from an innovation and also a productivity perspective. Some of the considerations we're thinking about include shorter term issues and firstly, looking through the current hype and some of those movements we've seen in international equities that Sam highlighted, we look through the current hype we can consider the pace of AI adoption across industries, plus the demands upon data and power to drive AI.
Now what we can say is AI is not a new development, but we can see signs of longer term accelerated innovation, particularly in the area of generative AI. Over a longer timeframe what we can say is technological advancements tend to be productivity enhancing and disinflationary. What that means is, they make people more efficient in what they do and the cost of production tends to be lower as a result. And we think AI will be no different. The question is how powerful these forces will be and could they be offset by other structural issues pushing in the opposite direction, for instance, on inflation.
We also need to consider different constraints which present further uncertainty. These include things around regulation, data quality, computing power, as well as the energy that's required to support it, as well as geopolitical considerations and how policies impacting on trade flows. So overall, what we do as a team when we think about issues such as AI, is to ultimately consider their significance, to the outlook for the economy and to our investment portfolio. That is, what does their evolution mean for things including growth, inflation, interest rates, different industries, different countries. And using this research helps us to uncover investment opportunities in order to maximise returns for all our members.
Thanks, Amber. But now Sam Amber has gone through a lot of factors that come into play when we're investing. How is AustralianSuper, you said we're an active manager, how is AustralianSuper positioning the portfolio?
Yeah, the analysis that Amber’s team does really determines how we allocate assets in the portfolio. So we think of the strategic asset allocation as the starting point. This chart shows how this asset allocation positioning has changed in the Balanced option.
From a year ago in orange to 30 June this year in blue. So all the outcome of that economic and market analysis that we've done really leads us to be cautious about how higher interest rates may affect the future of company earnings and the valuation of growth assets. And this is really why we lowered the allocation to Australian shares and international shares and increased the allocation to fixed interest. We effectively move the positioning of the portfolio to assets that we expect to do well during this economic cycle. So when interest rates are peaking or when central banks are close to the end of their tightening cycle, we find that fixed interest may be a favorable place to invest because you receive that higher yield from those investments. So overall our our portfolio position is set to really respond to market conditions that look for investment opportunities that arise through this economic cycle.
Now, Sam, we mentioned before we have benchmarks, one to outperform inflation, the other to outperform competitors. Based on the asset class positioning, how did our performance results compare to those benchmarks?
A key aspect of monitoring investments is to see how they're performing against their objectives. So we are seeking to be a top performing fund over the long term to really help enhance the returns for members.
So this chart shows a comparison of the Balanced option compared to its benchmark over the one, five, ten and 20 years with the option in orange and the benchmark in blue. And the benchmark is the Super Ratings Index for Balanced options, which is a group of our key competitors in the super industry. And looking at the one year return, you do see a result of 8.22%, which is slightly behind the competitive benchmark. And the main reason for this is we we believe were more defensively positioned than the rest of the market. So we do feel that through our economic and market analysis there are some headwinds to the economy and we've positioned our portfolio with a lower allocation to those growth assets. And over this last year, as we saw earlier, Australian shares and international shares beat our expectations and did well. And that's why we we underperformed over this one year period. Now the objective of the option is to beat those benchmarks over the medium and the longer term over that ten and 20 year timeframe. And that's where we've been a pleasingly been able to provide that performance for members over that timeframe. So a major benefit for us is that we're positioning the portfolio to go through this current economic cycle so we can continue to achieve that long term objective in the future.
Thanks, Sam. We must remember super is a long term investment and we've seen this different performances over different time periods. But it's the power of compounding interest, the interest on interest that drives the growth of whether it's Super, the Transition to Retirement account or your Choice Income account. How might the growth of my account with compound interest, What might that look like, say over the last 20 years?
Certainly, another way of looking at the performance is the growth of your portfolio over time. So this is the growth of the Balanced option with $100,000 invested 20 years ago with no additional contributions. And how it is performed through different market cycles. So you think of the time during the global financial crisis back in 2008-2009, as well as the COVID 19 downturn just three years ago, that the Balanced option is really set to to invest through these time periods and provide members with an opportunity to gain some of that performance during those rebounds as well. So when growth returns to the investment markets, a member that investing in the option is able to get that upside swing as well. So we think of investing for a long period of time, there are those ups and downs in the economy as well as investment markets, and you can expect that in your journey of investing.
Yeah, and it is a long term investment and again looking at history, the ups out weigh the downs. So thank you, Sam, for your insights. Thank you Amber, for sharing your expertise.
If you're looking for help and advice, you can visit our website, which has a range of tools and calculators. We have qualified Financial Advisors who can provide members with over the phone advice on simple matters such as investment choice, contributing to super, insurance options available to you. And there is no additional cost for that advice. There is a small fee for people that want to go into the more broad areas of retirement and transition to retirement strategies, and some members might feel they are in a situation where it's complex or they like to prefer to meet with an advisor in person. AustralianSuper offers access to Financial Planners in offices around the country, and that service does come with additional cost. If you'd like to know more about which option is best for you or require further assistance, please visit our Help and Advice page. AustralianSuper.com/helpandadvice
For further education, we have a range of webinars and videos covering a variety of topics and these can be accessed through AustralianSuper.com/webinars
Now that brings us to the end of the formal part of the webinar. but there was one or two questions that did catch my eye, which I'll throw, to you.
One of those themes is about our size and scale and how does that benefit members? I'm happy to take this one, Peter. So in terms of scale and size, I think there are three key factors why this provides benefits for members. I think firstly, it allows us to build out our capability in our international offices and to be able to access the best international investment opportunities to add to our returns. I think a second benefit is our ability to invest in unlisted assets. So those large multi-billion dollar commitments - such as that New South Wales ports asset we have that we saw on screen earlier, the Amazon logistics facility that Sam mentioned, toll roads, airports - investing in these big ticket assets is only possible with scale. And a final benefit, it allows us to have a really strong team of specialists to drive our investment analysis and management. Again, finding those opportunities for the portfolio in order to maximise returns for all of our members.
Look and Sam, just touching on specialists, we have within AustralianSuper. Now I’ve been with the Fund for nearly 25 years, One of the biggest changes I've seen in the investment area has been internalisation. How's that benefiting members? Sure, I’m happy to take that one. So when you think of internalisation first, it's worthwhile defining it. So internalisation means that we're managing the assets in-house. We have a team of over 330 investment experts at AustralianSuper that manage assets on your behalf, and this compares to using external managers. And we do use a mix of both. But right now about 58% of the assets are managed internally. And there's two key advantages to that for members in the portfolio. Number one is it reduces costs for members as well as it helps us manage the efficiencies of reallocating assets. So the first part, internal asset management is actually much less expensive than using an external manager. Oftentimes the fees for external managers can be much higher. So this helps bring down the overall investment fees and costs for members over time. The second benefit is a portfolio efficiency of moving assets around. So we talk a lot about how we move assets through the economic cycle. By using our internal asset management, we can actually more efficiently delegate assets between different parts of the investment team Whereas when you use external managers, that can be often slower to do that. So between lowering costs and adding to portfolio efficiencies, it definitely is a good benefit for members.
Looking and a final one that a number of members are asking, it’s a common theme. And look, I'm going to paraphrase here: I'm approaching retirement. I've got concerns about the market uncertainties, the slowing of the world economy, as you mentioned. How might that impact my super savings?
I can start with that one. One key aspect is, especially when you're approaching retirement, you're getting to the point where you're actually using the money so that the whole goal of investing for retirement is to be able to spend it. So in the short run, you want to make sure you have enough income to meet your current needs, but also you could be retired for many, many years. You might be retired for 20, 30 or more years. So investing in an option that enables you to get growth over time is pretty important as well. But overall, you want to make sure that you're invested in a way that meets your own personal situation. So it is worth looking at different advice options and really asking for help if you have questions about your super.
I might just add to that from my perspective, firstly, recessions are opportunities. We think recessions provide buying opportunities with more attractive entry points to implement our longer term investment strategies. And as I mentioned, this is because valuations or asset prices, they tend to fall as demand in the broader economy slows. And so we can use recessions to position the portfolio for the eventual economic recovery to follow. I think this broadly feeds into the fact that Sam pointed out we actively manage the portfolio as the economy evolves through different cycle points to take advantage of market opportunities. And also, you know, just a final point, just keep in mind the slide that Sam showed earlier on the performance of the Balanced option over 20 years; the importance around staying invested through the cycle. So longer term themes take many years to play out. There might be a few ups and downs, but it's important to stay invested through the cycle to take advantage of those themes.
Thanks Amber, Thanks Sam, now we have reached the end of our time today So once again, thank you, Sam and Amber, for joining us today. And on behalf of AustralianSuper, I'd like to thank the many of you that have joined us today, and I wish you all the best in the future. Thank you.
Super basics – saving for your future
If you’ve ever had questions about super, we’ll break it down in simple terms, so you can feel confident you’re making the most out of yours while you’re still working.
Super basics – saving for your future

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Welcome and thank you for taking the time to join our Super basics – saving for your future presentation.
If you consider that your super maybe come one of the largest assets you'll ever have, paying closer attention to it sooner rather than later could make a real difference down the track. If you've ever had questions about super, we're going to break it down into simple terms so you can feel confident you're across what you need to know.
My name is Jaclyn Livingstone. I'm an Education Manager at AustralianSuper, and part of my job is to help you better understand how super works.
This presentation may include general financial advice, which doesn't take into account your personal objectives, financial situation or needs. Before making a decision, consider if the information is right for you and read the relevant Product Disclosure Statement and Target Market Determination on the AustralianSuper website.
Today, we'll be covering a number of things such as: what is super, when you can access it, how super works, ways to take control of your super, and where to go for help and advice.
Super is money set aside and invested while you’re working, to live off when you retire. If you're eligible, your employer will pay a percentage of your before-tax income into your nominated super account under what's known as the Superannuation Guarantee, or SG for short.
The SG rate is a percentage of your before-tax income. It's scheduled to gradually increase and reach 12% by the 1st of July 2025. If you're employed and over 18, you're generally eligible for SG contributions regardless of whether you're a full time, part time or casual employee, including if you're a temporary resident. If you are under 18, you must work more than 30 hours per week to be entitled to SG contributions.
Separate to SG contributions, you may choose to contribute to super yourself if you're self-employed or want to add to what your employer already puts in.
When you’re putting away money for your future, it’s natural to want to know when you can access it. Generally, you can access your super when you reach your preservation age, which will be between 55 and 60, depending on when you were born, and retire. Check out the table to see what your preservation age is.
If you've reached your preservation age but aren't ready to retire permanently, you may be able to access a portion of your super through something known as a transition to retirement income account. You can access all of your super when you turn 65 too, even if you haven't left the workforce.
There are also certain situations where you may be able to access some or all of your super early. This is strictly limited to special circumstances. Eligible first home buyers may withdraw a certain amount in voluntary super contributions to put toward a deposit under the First Home Super Saver Scheme.
Other instances include when you may be experiencing severe financial hardship, or under compassionate grounds, where you don't have capacity to meet certain expenses. This may include medical expenses, funeral costs, or mortgage repayments if you're at risk of losing your home. If you are diagnosed with a terminal illness or are permanently incapacitated, you may also be able to claim some or all of your super.
Likewise, if you're a temporary resident who earns super who earns super while working and living in Australia, you may apply to have super paid out as a Departing Australia Superannuation Payment, after you leave. For more information regarding rules and eligibility, visit australiansuper.com/AccessSuper
We've looked at what super is and when you can access it. Let's now unpack how it works and some other things you'll want to be across.
Your super is a bit like a bank account in that it’s a way to put money away for your future. Money goes in through employer contributions, if you're eligible. It also goes in through any extra contributions you might decide to add, in addition to investment returns, your super fund may generate for you.
Some money also comes out to cover fees, premiums for any insurance you might have, and tax, and it may drop due to market volatility. It may sound a little complicated, but let's break it down so it makes a bit more sense.
Contributing into super may be a tax-effective way to save for your future, as people typically pay less on super than they do on any employment income they receive.
There are two types of contributions you can make, which include before-tax contributions, also known as concessional contributions. And there are after-tax contributions, also known as non-concessional contributions.
Let's take a look at these in a bit more detail. Before-tax contributions include what employers are required to make under the Superannuation Guarantee. These are probably the most well known.
Salary sacrifice contributions are additional contributions you can get your employer to make directly into your super fund out of your before-tax income, if you choose to. Then there are tax-deductible contributions. These are voluntary contributions you can make, such as when you transfer funds from your bank account into your super, that you can then claim a tax deduction for, when you do your tax return. The maximum amount you can contribute in before-tax contributions is currently $27,500 per year.
Separate to that, there are after-tax contributions, which generally include voluntary contributions you make after tax. The limit on these is $110,000 per year. In certain circumstances, you may be able to contribute more than the annual limits, under what's known as the carry forward rule and the bring forward rule. For more information on these rules, visit our website, or you can register for one of our webinars on contributions.
We've spoken about contributions as a way to increase your super. Now let's look at the investment returns your super fund may generate for you. Super funds typically invest in a range of assets with the goal of growing member balances over time. Compound interest plays a big role in this.
Put simply, compound interest is the investment returns generated on both the money you've saved and the interest you earn. Here's an example of what $20 a week could do to your super balance over the period of a decade when compound interest is involved. As you can see, adding to your super in your twenties could make a big difference to your final super balance later on. The earlier you get the ball rolling, the longer your money will have to accumulate compound returns and grow.
Before adding to your super, weigh up your financial circumstances, contribution caps that may apply, and any potential tax issues.
We've looked at how super works and what factors may help your super balance to grow. Now let's take a look at how AustralianSuper invests members’ money. The money put into your super is invested by your super fund with the aim of generating returns to help your retirement savings grow over time.
As a part of this, choosing the right investment option for you is important as it could affect how much your super savings grow and how long they might last. The investment option you choose will come down to a few things, such as how hands on you want to be, how long you plan to invest for, and how comfortable you are with investment risk.
For instance, some people may choose to take on more risk with the potential for higher returns in their younger years, but then change to more conservative options with lower returns as they get older and closer to retirement. A good place to start in making the right decision for you is to read the AustralianSuper Investment Guide, which is available ataustraliansuper.com/InvestmentGuide
This guide lists your investment options with AustralianSuper in more detail. Alternatively, you can speak toa phone based financial adviser who can look at your situation and provide advice on the most appropriate investment option for you.
When you join AustralianSuper, unless you choose otherwise, your money is invested in the Balanced option, which is our default investment option. The Balanced option invests in a wide range of assets, including shares, private equity, infrastructure, property, fixed interest, credit and cash.
If you are in the default option, you can see here what we invest in each asset class and what ranges we stick to, keeping in mind asset allocation may change from time to time depending on market conditions. It's also important to know if you do want to take a more hands on approach, other investment options are available, which you can check out on our website.
We spoke before about market volatility and how this can impact your super balance. We also spoke about the power of compound interest, and this graph reflects that while markets may go up and down, they typically recover over the long term. A look back over history can be reassuring. It shows that significant share market downturns and recessions aren't uncommon. You can see here that over the last 20 years, the performance of the Balanced option, which is our default investment option, has weathered the storms of the Global Financial Crisis and the COVID 19 downturn to provide strong long-term returns.
In this example, a balance of $100,000 increased to more than $450,000 over two decades, despite market ups and downs, reiterating that super is a long-term investment.
Moving onto fees, super funds generally deduct these from member account balances. We'll unpack how this is done, but a quick pointer is that you shouldn't be charged exit fees for moving all or part of your super to a different fund as these fees were banned in 2019.
There are different types of fees at AustralianSuper. The investment fee helps cover the transaction costs of managing your investments. It’s charged as a percentage of your balance and can vary depending on your choice of investment option. Transaction costs are incurred when buying and selling underlying investments for certain investment options.
The administration fee covers the general costs of managing your account. It covers things like the Contact Centre and maintenance of the mobile app. It's charged as a combination of a fixed fee and a percentage of your account balance up to a certain limit. Additional fees and costs for things like insurance, if you have it, may apply. For a full run down, check out australiansuper.com/fees
Having multiple super accounts, which around a quarter of Australians do, might mean that you're paying more fees than you have to. This could mean less money for you when you reach retirement. For this reason, you may want to consider whether consolidating accounts into one is appropriate for you.
It could create advantages, such as fewer sets of fees and less paperwork. However, it's important to do your research first and make sure you're not at risk of losing any features and benefits, like insurance, which may be attached to the account you're considering closing. You'll also want to make sure you have adequate features and benefits in the account you're thinking about consolidating into.
Paying for insurance out of your super has come up a few times in this presentation. Some people may not realise this, but one of the benefits of having insurance cover inside super is it may be cheaper. At AustralianSuper, we use our size and scale to negotiate lower insurance costs. It is important, however, to look into whether you have the right type and the right amount of cover if it's something you have currently, or are considering getting in the future.
There are three common types of insurance cover included in super. The first is death cover, which can help ease financial stress by paying a lump sum to your beneficiaries if you pass away. The second is Total and Permanent Disablement cover, or TPD for short, which can provide a lump sum payment if you are totally and permanently disabled and can no longer work. The third is Income Protection, which can help if you became ill or injured, at or outside of work, and can't temporarily work.
It can provide monthly payments to help you get by while you're not earning your regular salary. AustralianSuper provides most members with a basic level of insurance cover with their super account, noting some age and eligibility conditions apply. You can access more details on insurance, including when cover starts, by visiting our Insurance through your super page at australiansuper.com/insurance
You can also get an estimate of your insurance needs by using the insurance calculator on our website. This is a great way to estimate how much cover you should potentially have, and how much your cover might cost.
Whether insurance is something you want or not, another important consideration is who your super will go to in the event you pass away. This is important because if you don't nominate a beneficiary, your super fund may decide who receives your super money. This is regardless of what you have done in your will, if you do have one. You’ll have the option to make a binding or a non-binding nomination.
Binding nominations typically expire after three years unless you renew them, while non-binding nominations mean your super fund will consider who you've put down, but ultimately have the final say. If you don't nominate anyone, your super fund will pay your death benefit to your estate or use its discretion to determine which eligible beneficiaries the money should go to.
Eligible super beneficiaries can include: your current spouse or partner - whether you’re in a same-sex or defacto relationship; your child, of any age; someone who's in an interdependent relationship with you; anyone financially dependent on you when you pass away; your estate or legal personal representative. There may be tax implications depending on who you nominate. To find out more visit australiansuper.com/beneficiaries
We also run a regular webinar on Estate planning and your super, which you can register for via our website.
We’ve covered a number of things today to help you understand the basics of super. We’ve looked at what super is, when you can access it, and how it works. It's also important you take action, because our actions, coupled with yours, may be able to improve the life you live in retirement.
Some things you might consider include: contributing a bit more to your super, if you’re in a position to; checking your investment options; reviewing any insurance cover you might have; and nominating your beneficiaries.
You could also get a sense of how your super is tracking by using our super projection calculator. To work out how much super you could have at retirement and how long it could last, visit australiansuper.com/ProjectionCalculator
If you're looking for help and advice, you can visit our website, which has a range of tools and calculators. Qualified financial advisers can also provide members with advice on simple matters at no additional cost, over the phone. This might include advice on making an investment choice, contributing to super, and the insurance options available in your AustralianSuper account. A small fee does apply to advice regarding retirement more broadly, and transition to retirement strategies. For members who may have more complex things to discuss or would prefer to meet with an adviser in person, AustralianSuper also offers access to financial planners in AustralianSuper offices around the country, which does involve a cost.
If you're interested in learning more about super, we offer a range of webinars at different times throughout the year, so you can tune in from the comfort of your own home, or wherever you have internet access. To find out more or to check out other videos, visit australiansuper.com/webinars
Thank you for taking the time to join our Super basics - saving for your future presentation. We wish you all the best on your financial journey.
Understanding contributions and recent legislative changes
If you’re thinking about adding a bit extra to super, find out about the different contribution types, limits and benefits that may be available to you. We’ll also unpack recent legislative changes and where advantages could exist.
Understanding contributions and recent legislative changes

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Welcome and thank you for taking the time to join our Understanding contributions and recent legislative changes presentation.
If you've ever thought about adding a bit extra to your super, you may be interested to know more about the different contribution types, limits, and benefits that may be available to you. A number of changes to super also came into effect on 1 July 2022, which means further advantages could exist depending on your situation.
My name is Yen Du, and I'll be unpacking contributions and recent changes to super today with my colleague Mark Terry. Both of us are Education Managers at AustralianSuper, and part of our job is to help you feel more informed around some of the things you may want to do, and could do, with your super.
This presentation may include general financial advice, which doesn't take into account your personal objectives, financial situation or needs. Before making a decision, consider if the information is right for you and read the relevant Product Disclosure Statement and Target Market Determination on the AustralianSuper website.
Today we are going to cover: why you might consider contributing to super and different contribution types, and where benefits may exist. We'll also provide a summary of recent legislative changes, and give you information on where you can go for help and advice.
Before we cover off some of the types of contributions you could make, you may be wondering, well, why contribute into super on top of what your employer might be already paying you?
Mark, could you tell us what some of the benefits might be?
Thanks Yen. Hi everyone. One of the more well-known reasons is that it’s generally a tax effective way to save for your retirement. That's because the tax you pay on contributions, as well as any earnings on investments within your super, is typically less than what you pay on your employment income.
You're also able to generate returns on top of returns, as super benefits from compound interest. In addition to that, you may be eligible for various tax offsets and possibly co-contributions from the government, which we’ll cover in a bit more detail later. Other advantages include that you may have the ability to invest in large assets, like airports and motorways, which you wouldn't typically have access to as an individual investor.
When you reach retirement, from age 60, normally you're eligible to access your super tax free too, not to mention, super may be a great way to improve your financial outcome at retirement. Of course, there will be things to consider. For instance, the value of your investment in super can go up and down, so you'll want to make sure you're comfortable with any potential risks.
The government also sets general rules around when you can access your super. This typically won't be until you reach your preservation age, which will be between 55 and 60, depending on when you were born, and meet a condition of release. There are also some special circumstances under which you may be able to access your super early.
Let's take a look now at how you can add to your super and what contribution limits apply. To break it down, there are really two different doorways into superannuation. Through one doorway, you can make before-tax contributions, which are also referred to as concessional contributions. Through the other, you can make after-tax contributions, also known as non-concessional contributions.
Yen, can you tell us a bit about doorway number one through which people can make before-tax contributions?
Before-tax contributions include those that employers are required to make under the Super Guarantee, or SG for short, if you’re eligible. On 1 July 2022, the SG rate also increased from 10% to 10.5% of an employee’s before-tax income. The minimum income threshold of $450 per month was removed at the same time. This
means employees who earned less than $450 in a calendar month are now typically eligible for contributions from their employer. However, other eligibility criteria still exists.
Separate to employer contributions are salary sacrifice and tax-deductible contributions, which also count toward the maximum amount that you can make in concessional contributions each year, which is currently $27,500.
If you're wondering what salary sacrifice contributions are, we’ll break it down. This is where you choose to have some of your before-tax income paid into your super account by your employer. This is on top of what they might pay you under the super guarantee.
Making salary sacrifice contributions does involve a reduction in your take-home pay, but it also means you could increase your retirement savings while also potentially reducing what you pay in tax. That's because contributions made via a salary sacrifice arrangement are generally taxed at a lower rate than most people's personal income tax rates.
Let's take a look. As you can see here, tax on salary sacrifice contributions is 15% if you earn under $250,000
and 30% if you earn over $250,000. In the second column, you can see the different personal income tax rates that currently apply, depending on your employment income.
Let's take a look at this example with Simon. Simon is a graphic designer aged 30, who earns $70,000 a year. He receives compulsory employer contributions of 10.5% per annum, and has a super balance of $50,000. How might setting up a salary sacrifice arrangement, where Simon’s making additional before-tax contributions, impact his retirement at age 67?
If Simon salary sacrifices $50 a fortnight, he saves $254 in tax and his super balance at retirement is $70,000 higher. If he salary sacrifices $100 a fortnight, he saves $507 in tax and his super balance at retirement is $140,000 higher. If setting up a salary sacrifice arrangement is something you’re thinking about, consider your circumstances before deciding what's right for you. We recommend you consider seeking financial advice.
Earlier, we talked about tax-deductible contributions as another type of concessional contribution. This is where you could make an after-tax contribution, for instance, you may transfer money from your regular bank account into super, and then claim a tax deduction for it, when you do your tax return.
After-tax contributions you claim a tax deduction for are treated like before-tax contributions, and count towards the concessional cap. They may be of benefit if you receive some extra income that you'd otherwise pay tax on at your personal income tax rate, as this is often higher.
You can also claim tax deductions on these voluntary super contributions whether you you're employed, self- employed, or in some instances even unemployed. You'll generally need to lodge this notice and have it acknowledged by your fund before you file a tax return for the year you made the contributions.
Under the work test, if you’re aged 67 to 74, you must also have worked at least 40 hours over 30 consecutive days in the financial year to make tax-deductible contributions, unless you qualify for an exemption.
Regarding the annual cap that applies to all concessional contributions, there may be certain circumstances where you can contribute over this limit.
That's right, Mark. It's possible to catch up on concessional contributions under what's known more formally as the carry forward rule. This enables you to accrue unused concessional cap amounts for up to five years, which could help if you've taken time off work to study or care for kids. You might have also been prioritizing other financial commitments, like paying off a mortgage.
Let's look at this example with Annette. She's recently gone back to work and she would like to catch up on what she hasn't put in over the last couple of years.
She's made $21,000 in concessional contributions this year, which includes $11,000 from her employer, as well as a tax-deductible contribution of $10,000. This leaves $6,500 remaining on her cap, which means she could carry this forward and contribute $34,000 in concessional contributions next financial year.
If Annette also carried forward unused cap amounts over the following four years, she'll be able to contribute any additional unused amounts on top of that as well. It's important to remember you can only carry forward unused concessional contribution cap amounts from 1 July 2018.
Your total super balance also needs to be less than $500,000 on 30 June of the previous financial year. And, unused cap amounts can only be carried forward for five years until they expire. If you want to know more about eligibility and whether this strategy might be right for you, we recommend you consider seeking financial advice.
Mark, we spoke earlier about the second doorway through which people could make after-tax contributions, also known as non-concessional contributions. Tell us a bit about these.
These generally include voluntary contributions that you make after-tax, which you don't claim a tax deduction for. They can also include spouse contributions, which you might make if you want to top up your partner's retirement savings, which we'll talk a bit more about later.
The limit on non-concessional contributions is $110,000 per year. Again, you might be able to contribute more than this under what's known as the bring forward rule. Different to the carry forward rule, the bring forward rule may allow you to make up to three times annual cap amounts.
This means you may be able to top up your super by $330,000 within the same financial year. This could help if you’ve reached your concessional contributions cap, received an inheritance, or made money on the sale of a large asset.
Individuals up to age 75 can take advantage of the bring forward rule, but your total super balance at the 30th of June of the previous financial year will play a part. To break it down, you could contribute up to $330,000 if your total super balance on the 30th of June of the previous financial year was less than $1.48 million, up to $220,000 if it was above $1.48 million and below $1.59 million, nil if it was $1.59 million or above. For more information check out the ATO website at ato.gov.au
Another tip is if you make an after-tax contribution to your super fund, which you don't claim a tax deduction on, you might be eligible for a co-contribution of up to $500 from the government, depending on your total income.
The co-contribution is tax free, it isn’t taxed when it's deposited into or withdrawn from your super account. If you have a total income below a certain amount this financial year, you could be eligible for the full $500 co-contribution from the government, if you make after-tax contributions of $1,000 or more.
If your total income exceeds that amount, you may still be eligible for a partial co-contribution, but once your income reaches a certain limit, you'll no longer be eligible. If you're wondering how it works, the co-contribution gets paid directly into your super account after you've lodged your tax return for the year, as long as your super fund has your tax file number. Co-contribution income thresholds are indexed each year and may change in future financial years. Find out more at australiansuper.com/cocontribution
Something else we spoke about earlier was spouse contributions. If your partner is not on a big income, working part time, or unemployed, adding to their super could benefit you both. If you make after-tax contributions into your spouse’s super account, apart from increasing what they have in super, you could be eligible for an 18% tax offset on up to $3,000 through your tax return.
To be eligible for the maximum tax offset, which works out to be $540, you need to contribute a minimum of $3,000 and your partner’s annual income needs to be $37,000 or less. If their income is above $37,000, you may still be eligible for a partial offset. But, once their income reaches $40,000, you’ll no longer be eligible for any offset, but you can still make contributions on their behalf.
Spouse contributions you make into your spouse's super account count towards their non-concessional contributions cap.
Mark, people have also heard about contributions splitting. Can you explain how that works?
Yes, it's another way to increase your partner's super, but it allows you to split up to 85% of your before-tax super contributions with them. For example, if your total before-tax contributions for the year were $10,000, you could split up to $8,500 with your spouse. To be eligible, your partner must be under their preservation age, or between their preservation age and 65, and not retired.
Any concessional amounts you split and put into your partner's super will also count towards your concessional contributions cap. There are various reasons why couples may use these strategies. There are various reasons why couples may use these strategies. If it's something you'd like to consider, think about seeking financial advice.
Downsizer contributions are another one to call out. This is where people aged 60 or over, previously 65 or over, may make a voluntary contribution to their super of up to $300,000 using the proceeds from the sale of their home. Now, this generally needs to be done within 90 days of the sale of the property, and it can be done regardless of super caps and restrictions that otherwise apply.
For couples, both people can take advantage of this opportunity, which means up to $600,000 per couple could be contributed towards their super. There are however, rules and other things you’ll want to be across, so check out the ATO website for further information and what eligibility criteria applies.
Now we've covered a lot of detail on different types of contributions and ways that you could potentially benefit. For further information, visit australiansuper.com/grow
Now Mark, another thing we're going to cover off were the super changes that came into effect on 1 July 2022. While we've touched on a number of these throughout the presentation, could you give us a quick overview of what else has happened?
As we mentioned, employer contributions increased and the minimum income threshold of $450 per month was removed. Another important one, which we haven't spoken about, is eligible first home buyers can withdraw more voluntary contributions under the First Home Super Saver Scheme.
If an individual is eligible, the maximum amount of contributions that may be withdrawn under this scheme is $50,000, whereas previously it was only $30,000. These amounts may be withdrawn, plus associated earnings, less tax, from their super fund to help with a deposit on their first home. It might not be enough money for an entire deposit, but it could help if combined with other savings.
For more information or to apply, you should check out the ATO website. That could be welcome news for first home buyers, Mark. What else has changed?
We talked about the work test before. This used to apply to those aged 67 to 74 when making any type of voluntary contribution, but now only applies to this age group if they're claiming a tax deduction on contributions.
More people can also make up to three years’ worth of non-concessional super contributions in the same financial year, as the cut-off age to access bring forward rules increased to under 75.
Similarly, more people are also eligible to make a tax-free downsizer contribution, with the eligibility age decreasing from 65 to 60.
Thanks Mark. It sounds like these changes could provide greater flexibility for a number of people saving for their retirement.
If you are looking for help and advice, you can visit our website, which has a range of tools and calculators. Qualified financial advisers can also provide members with advice on simple matters at no additional cost, over the phone. This might include advice on making an investment choice, contributing to super, and the insurance options available in your AustralianSuper account. A small fee does apply to advice regarding retirement more broadly, and transition to retirement strategies. For members who have more complex things to discuss or would prefer to meet with an adviser in person, AustralianSuper also offers access to financial planners in AustralianSuper offices around the country, which does involve a cost.
If you're interested in learning more about super, we offer a range of webinars at different times throughout the year, so you can tune in from the comfort of your own home or wherever you have internet access. To find out more or to check out other videos, visit australiansuper.com/webinars.
Thank you for taking the time to attend AustralianSuper’s Understanding contributions and legislative changes presentation. We wish you all the best on your financial journey.
Planning for retirement sooner rather than later
While everyone’s idea of retirement may be a little different, living your ideal lifestyle after you finish working will involve careful planning. See what things you could do today to retire with more confidence in the future.
Planning for retirement sooner rather than later

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Welcome and thank you for taking the time to join AustralianSuper’s Planning for retirement sooner rather than later presentation.
If you've thought about retirement, you might have pictured yourself traveling, taking up new hobbies, or spending more time with loved ones. Your financial situation may have also crossed your mind. Can you really afford to retire when you want to? How much will you need? Will you be in a financial position to do the things you want to do? What could you do now to retire with more confidence later?
My name is Kim Heironymus and I am an Education Manager at AustralianSuper. I’m here with Phil Wilkins who is a Financial Planner and authorised representative of Industry Fund Services. Together we’re going to address some of the commonly asked questions that we get from members in the lead up to retirement.
This presentation may include general financial advice, which doesn't take into account your personal objectives, financial situation or needs. Before making a decision, consider if the information is right for you and read the relevant Product Disclosure Statement and Target Market Determination on the AustralianSuper website.
Today some of the things Phil and I will be discussing include where your money may come from, how much you might need, different contribution strategies, other important considerations, and where to go for help and advice.
Phil in the conversations you have with members every day, what advice do you often give them when it comes to retirement?
Thinking about it before it happens is a great first step. You'll want to consider what retirement looks like for you. It might involve holidays, activities with friends and family, volunteering, or maybe even a bit of work on the side. You'll also want a rough idea of what your expenses might be. For instance, do you own or rent your home? What might that cost you in the future? Could downsizing, relocating or renovating be on the cards?
From a lot of the conversations I have, I find people’s living expenses, outside of travel, moving and hobbies, don't tend to change too much in retirement, which is why figuring out what you're spending now could go a long way. If you know when you want to retire and about how much you want to live on, it’s then easier to get an idea of how long your money might last and if what you want to do is actually achievable.
Another key consideration is where your money will come from. Most retirees will receive income from at least a couple of different sources. Aside from what you might have saved in super, this may include the Government Age Pension, if you’re eligible, additional savings, including what you might inherit, and other investments, you potentially have access to.
Phil, if you're planning for retirement and putting money into super at the same time, an obvious question is, when can you access it?
So, Kim, generally you can access your super when you reach your preservation age. This will be between 55 and 60, depending on when you were born, and you meet a condition of release, such as retirement. You can check out the table here to see what your preservation age is. If you've reached your preservation age, but aren't ready to retire permanently, you might also be able to access a portion of your super through something known as a transition to retirement pension, which we at AustralianSuper call a transition to retirement income account. We'll cover that a bit later in the presentation.
You can access all of your super when you turn 65 too, even if you haven't left the workforce. There are some certain circumstances as well, where you may be able to access some or all of your super early. For more information, check out: australiansuper.com/AccessSuper
Regardless of whether you have money in your super or not, you might be eligible for the Government Age Pension as well. It's important to know that the age you can access your super and the age you’ll be eligible for the Age Pension won't necessarily be the same. As you can see from the table, the age you qualify for the Age Pension will be between 65 and 67, depending on your date of birth. Apart from your age, eligibility will come down to your residency, as well as your income and assets.
As mentioned earlier, if you're eligible for the Age Pension, it could provide a second source of income on top of what you’ve saved in super. While everyone's retirement dreams are going to be a little different, The Association of Superannuation Funds of Australia, or ASFA for short, estimates what a single person or couple may require each year to live a comfortable versus a modest lifestyle. This could help to give you a better picture of what you might need.
The comfortable retirement standard allows retirees to maintain a good standard of living in the years after they finish working. It accounts for daily essentials and home repairs, as well as private health insurance, a range of exercise and leisure activities, and the occasional restaurant meal. The estimate also accounts for an annual domestic trip and less frequent international trips.
Let's compare this now to what you might need each year to live a modest lifestyle. A modest retirement lifestyle is considered better than living off the Age Pension alone. It allows retirees to afford basic health insurance, and infrequent exercise, leisure and social activities. You'll notice from the image that there are a number of items that were included in the comfortable retirement lifestyle that are missing from the modest retirement lifestyle. Remember, this is a guide only, and not an actual representation of what you can or can’t achieve in retirement.
It's also worth looking at how the comfortable and modest lifestyle budgets compare to full Government Age Pension rates. You can see from the table that the money needed to fund a modest lifestyle, according to ASFA, is a bit higher than the full Age Pension rates currently available. If you're relying solely on the full Age Pension, it’s important that you’re aware of this gap. And this is where your super, even if you don’t have a lot of it, could make a big difference to your lifestyle in retirement. The Age Pension, if you're eligible, may be able to top up what you've saved in super, which could make a big difference.
To get a better picture of how your super and the Age Pension could work together, Phil, let's run through a case study with a couple who are starting to think about retirement. Jamie and Daniella are both 53 years old. Jamie earns $85,000 per year, and has $180,000 in super, while Daniella earns $75,000 per year and has $120,000 in super. Their current living costs are about $65,000 per year, and they'd like to have the same level of income in retirement, which is something that they’d like to do at age 63. And in the meantime, the only contributions being made into their super are the compulsory contributions that are paid by their employers.
Kim, you can see here Jamie and Daniella’s current retirement outcome, if they were to retire at age 63. The combination of their super accounts, in light and dark orange, provide them with their desired $65,000 per year until they’re eligible for the Age Pension at age 67. From that age, it's a combination of their super and Age Pension, in light and dark blue, that maintains their desired annual income until age 83, which is when their super runs out. From age 84, their income drops to the full Age Pension amount.
So, the question becomes, how can Jamie and Daniella achieve the income they want until life expectancy, and potentially beyond? In short, they’re going to need a higher super balance at retirement. A good place to start is drawing up a budget to see if there’s room for Jamie and Daniella to make additional contributions into their super on top of what their employers already pay.
Let's take a look at the types of contributions available, and then we can see which might work for Jamie and Daniella, if they’re in a position to put in more.
Concessional contributions include those that are paid by your employer. They also include salary sacrifice contributions, which are additional contributions people may get their employers to make into their super fund, out of their before-tax income, if they choose to.
Then there are tax-deductible contributions, which are voluntary contributions people can make, which they can then claim a tax deduction for at tax time. For those aged 67 to 74, you need to meet a work test, in order to make tax-deductible contributions. This requires a person to be employed for at least 40 hours over a 30 day consecutive period during the financial year, unless you qualify for an exemption.
There's also a limit on the amount of concessional contributions a person can make and this is currently $27,500 per year. Regarding the annual cap that applies to all concessional contributions, there may be certain circumstances where you can contribute over this limit. For instance, it is possible to catch up on concessional contributions under what’s known more formally as the carry forward rule. This enables you to accrue unused concessional cap amounts for up to five years, which could help if you've taken time off work to study or care for children. You might have also been focusing on other financial commitments, like paying off a mortgage.
Let's look at this example with Gary. He's recently gone back to work full time and wants to catch up on what he hasn't contributed over the last couple of years due to a reduction in work. He’s made $21,000 in concessional contributions this year, including $11,000 from his employer, as well as a tax-deductible contribution of $10,000. This leaves $6,500 remaining on his cap, which means he could carry this forward and contribute $34,000 in concessional contributions next financial year. If Gary also carried forward unused cap amounts over the following four years, he’d be able to contribute any additional unused amounts on top of that as well.
If you want to know more about eligibility and whether this strategy might be right for you, you should consider getting financial advice.
Separate to concessional contributions, there are also non-concessional contributions. These generally include voluntary contributions that you make after-tax, which you don't claim a tax deduction for. They also include spouse contributions, which you might make if you want to top up a partner's retirement savings. The limit on non-concessional contributions is $110,000 per year. Again, you might be able to contribute more than this under what’s known as the bring forward rule.
Different to the carry forward rule, the bring forward rule allows you to put in three times future annual cap amounts. This means you may be able to top up your super by up to $330,000 within the same financial year.
This could help if you’ve reached your concessional contributions cap, received an inheritance, or made money on the sale of a large asset. Individuals up to age 75 can take advantage of the bring forward rule, but your total super balance as at 30 June of the previous financial year will play a part.
Thanks Phil. That covers some of the different contribution types available. Now, let’s go back to Jamie and Daniella and what they might do in their situation.
For Jamie and Daniella, they’ve completed a budget and determined they do have some spare cash available at the end of their pay cheque each fortnight, which they could contribute. It's recommended they both make additional contributions into their super accounts because the tax rate on concessional contributions, generally 15%, unless you earn over $250,000 a year, is less than the tax they both pay on their employment income.
They do this by setting up a salary sacrifice arrangement with their employer. Jamie salary sacrifices $7,800 each year, so $150 a week, until age 63, and Daniella salary sacrifices $5,200 each year, so $100 per week, also until age 63. Entering those additional contributions, you can see with salary sacrifice contributions, that Jamie and Daniella now have their desired income of $65,000 per year until age 88.
In this scenario, the advice received has resulted in an additional $127,783 in super, which gives Jamie and Daniella an extra six years of the retirement income they want. They also take their desired income beyond their average life expectancy, which means they could retire a little earlier or even spend a little bit more in retirement.
If you want to work out how much super you could have at retirement, how long you super might last, and what difference additional contributions could make to your balance, check out the super projection calculator on our website.
Something else we’re going to look at today is a transition to retirement strategy. Now, this involves transferring some of your super into a transition to retirement income account once you've reached your preservation age. You can then withdraw a portion of your super from this account, whether you’re still working full-time, part-time or casually.
It may create greater flexibility and potential tax benefits when combined with certain types of contributions. Minimum and maximum withdrawal amounts do apply. The minimum is dependent on your age, while the maximum is 10% of your TTR account balance on 1 July in most instances. This strategy won’t be for everyone though, so it is important to seek advice before deciding what's right for you. Phil, could you take us through some of the potential benefits and how TTRs work?
Kim, TTR strategies were initially designed for those who wanted to work less and top up their take-home pay.
However, these days, a lot more people are using this strategy so they can continue working the same hours, while contributing more into super, and reducing what they pay in tax.
This may be possible through making concessional contributions on top of what your employer pays, as your tax on super is generally less than what most people pay on the income they receive from working. If you’re wondering how it works, you need to make a transfer of at least $25,000 from your super to open up a TTR account.
To keep your super account open, you also need to leave at least $6,000 in it. You can then withdraw regular payments from your TTR account to supplement any reduction in your take-home pay due to the additional contributions you’re making.
To get a clearer idea of where the tax benefits may lie in this type of strategy, let's take a look at Fred. Fred just turned 60 and is keen to add to his super balance, which is currently $175,000. He earns $60,000 per year and he wants to retire at 65.
Through implementing a TTR strategy, Fred found that he could salary sacrifice $18,100 into his super over five years without reducing his take-home pay. Apart from increasing his super balance by over $18,000, Fred manages to save $14,000 in tax over five years through salary sacrifice. He's also able to retain the same take-home pay that he would have had without his TTR income account.
Phil, what happens to a TTR income account when someone stops working?
Once someone reaches age 65 or advises that they're retiring permanently, their TTR income account automatically converts to what’s known as an account based pension. At AustralianSuper, we call it a Choice Income account. You can transfer the rest of your super into this pension account up to a certain limit, keeping in mind the income you receive is based on the amount you have in super, so won’t necessarily guarantee an income for life.
You won't be limited to what you can withdraw, but there will be an annual minimum withdrawal amount. It may provide tax advantages and more investment options than withdrawing your super as a lump sum, so when you do get to this point, it's worth looking into. For more information, check out our website.
I want to emphasise here too that it’s never too early or too late to get expert advice. Seeking advice before you retire can make a big difference. Not only might it be your last chance to get money into super, there could be other important things to factor into your retirement planning. For instance, ways to reduce existing debt you might have, and whether any insurance cover you might have is going to meet your changing needs. You'll also want to be across your super investment options and ensure you’ve nominated super beneficiaries, and have a will and estate plan in place. We can also look at possible ways to maximise your current income, potentially pay less in tax, and review the level of risk tied to your investment options.
If you’re looking for help and advice, you can visit our website, which has a range of tools and calculators.
Qualified financial advisers can also provide members with advice on simple matters at no additional cost, over the phone. This might include advice on making an investment choice, contributing to super, and the insurance options available in your AustralianSuper account. A small fee does apply to advice regarding retirement more broadly, and transition to retirement strategies. For members who may have more complex things to discuss, or would prefer to meet with an adviser in person, AustralianSuper also offers access to financial planners in AustralianSuper offices around the country, which does involve a cost.
If you're interested in learning more about super, we offer a range of webinars at different times throughout the year, so you can tune in from the comfort of your own home, or wherever you have internet access. To find out more or to check out other videos, visit australiansuper.com/webinars
Thank you for taking the time to join our Planning for retirement sooner rather than later presentation. We wish you all the best on your financial journey.
Retirement ready - what are your super options?
Choosing how to manage your super when you finish work is an important decision, as different actions may have greater financial benefits. Find out more about your income options and what difference an account based pension could make.
Retirement ready - what are your super options?

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Welcome and thank you for taking the time to join our Retirement ready – what are your super options? presentation.
When you’ve spent much of your working life accumulating super, when the time comes to access it, you might be wondering what your options are.
My name is Michael Kallis, and with me today I have Linda Burns. Both of us are Education Managers at AustralianSuper, and together we're going to discuss different ways you could use your super in retirement and how the Government Age Pension could play a part.
This presentation may include general financial advice, which doesn't take into account your personal objectives, financial situation, or needs. Before making a decision, consider if the information is right for you and read the relevant Product Disclosure Statement and Target Market Determination on the AustralianSuper website.
Today, Linda and I are going to discuss the different options available to manage your super in retirement. We'll also cover how you may be able to top up your super with Government Age Pension payments if you're eligible, as well as what other government assistance may be available, and where you can go for help and advice.
In terms of what you can do with your super when you retire, you can leave it where it is, withdraw it as a lump sum or take it as a regular income. You're also not limited to one option, and you could take your super in a variety of ways, noting there will be different tax implications you will want to consider.
Before we jump into it, it's worth covering off when you can access your super. Generally, you can access your super when you reach your preservation age. This will be between 55 and 60, depending on when you were born, and you meet a condition of release, such as retirement. You can check out the table here to see what your preservation age is.
If you've reached your preservation age but aren't ready to retire permanently, you might also be able to access a portion of your super through something known as a transition to retirement pension, which we at AustralianSuper call a transition to retirement income account. And when you turn 65, you can access all of your super even if you haven't left the workforce.
There are certain circumstances as well where you may be able to access some or all of your super early. For more information, check out: australiansuper.com/AccessSuper
Now, Linda, tell us what people might consider when it comes time to access their super?
Sure, Michael. Well, as you mentioned before, many people may start using their super savings as soon as they retire, but you don't have to. If you have other income sources, for instance you may have savings or other investments to live on, you could leave your super in your super account.
By leaving your super account open, you could also continue to make contributions into it, if you're in a position to. However, there may be tax advantages and disadvantages, depending on your situation, so it may help to seek financial advice.
Another option is taking your super as a lump sum. This could help you to pay off your home loan or other outstanding debts, or maybe even invest your money elsewhere. The important thing here is to make sure you're across any tax implications. If you're over age 60, super money you access will generally be tax free. But if you're under 60, you might have to pay tax on your lump sum.
If you're planning on investing the money, you may also be taxed on the interest you make, or possibly any capital gain. Whether taking your super as a lump sum is tax effective or not will depend on your circumstances.
Something else to think about is personal investing success can depend a lot on market conditions and your appetite for investment risk. It requires a high level of knowledge, and often time, to get it right. For some people, becoming an investor makes for a new focus once they finish up at work, while for others it could add pressure and get in the way of enjoying their retirement, particularly if they're not seeing the investment returns that they're hoping for.
Another thing to think about is what you will live on if you have no super left, as the Age Pension alone might not be enough to enjoy the lifestyle you want in retirement.
So transferring some or all of your super savings into an account based pension is a different alternative. An account based pension allows you to withdraw regular, flexible, and tax-effective payments when you’ve permanently retired. You can also commence an account based pension once you reach age 65, regardless of your work status. This can be a popular choice for people who've gotten used to a regular income over many years in the workforce, keeping in mind that your payments are based on the super you've saved, so it won't guarantee an income for life.
Many super funds offer this type of product as the next phase of superannuation. You have your accumulation account while you're saving super, and then you have your drawdown account when you're taking money out.
So at AustralianSuper, our account based pension is called a Choice Income account. There are a number of potential benefits to an account based pension, aside from receiving a regular income. For instance, there are no withdrawal limits. So in addition to regular income payments, you could also choose to take additional lump sum withdrawals as and when you need to, for instance, if you're planning a holiday. You will however need to withdraw a minimum amount each year, which Michael will cover in a moment.
Other potential benefits may include that your super savings remain invested, and you can generally choose from a range of investment options. Bear in mind, though, that investment returns from account based pensions are tied to movements in investment markets, so they may go up and down. Your money also isn’t exposed to the tax rules that apply to money held outside of super. This means that you won't be taxed on investment earnings. And from age 60, you won't pay tax on payments that you receive. You may be able to top up what you receive from your account based pension with the Government Age Pension too, if you're eligible for it.
So Michael, can you run through the yearly minimum withdrawal amounts that are set by the government?
As you mentioned, Linda, you do need to withdraw a minimum amount every year from an account based pension. The amount will come down to your age at 1 July each year and will be a percentage of your account balance. The minimum withdrawal amounts for this financial year were temporarily reduced to provide flexibility during COVID. You can also see the general yearly minimum withdrawal amounts here in this table.
If you're wondering how it works, to open an account based pension with AustralianSuper, which we call a Choice Income account, you need to roll over at least $50,000 that you already have with AustralianSuper or another super fund. You can then draw regular payments or lump sums from your Choice Income account straight into your bank account.
Under government rules from 1 July 2021, the most you can transfer into an account based pension under what's known as the transfer balance cap is between $1.6 million and $1.7 million, depending on your circumstances. It's important to note, once you’ve transferred the maximum amount into a retirement pension, you typically won't be able to top up your retirement pension a second time, even if your balance reduces over time. If you do transfer more than your relevant transfer balance cap into an account based pension, tax penalties may apply. You can view all your transfer balance cap info via the ATO section of your myGov account.
So as we've mentioned, for many retirees, another source of income will come from the Government Age Pension. You can apply for this even if you have savings in super or you receive a regular income from an account based pension.
The Government Age Pension is a fortnightly Centrelink payment designed to help eligible older Australians pay for basic living expenses, if you're eligible. It can supplement payments from your super and provide an additional source of income once you've stopped working.
The March 2021 figures from the Australian government reveal around 62% of Australians over the age of 65 receive either a part or a full Age Pension. So you can see the maximum fortnightly Age Pension payment rates shown here. The Department of Social Services regularly reviews these rates to reflect changes in the Consumer Price Index. So keep in mind that these figures could change in the future.
So Michael, at what age do people qualify for the Age Pension?
You can qualify between 65 and 67, depending on your date of birth, keeping in mind the age you can access your super and the age you'll be eligible for the Age Pension won't necessarily be the same. Generally, you will be able to access your super first.
Apart from your age, eligibility for the Age Pension will come down to your residency, as well as your income and assets. You must have income and assets under certain limits to be eligible. As you can see here, when it comes to your assets, there will be a range of things that are assessable as well as non-assessable or exempt, such as your home, if it's your main place of residence.
To break it down into dollar amounts, you can see in this table that if your assets are below certain amounts, you could be eligible for the full Age Pension, whereas if your assets exceed certain amounts, you won't be eligible for any Age Pension.
When it comes to the income test, your income needs to be below the amounts shown on the left for you to be eligible for maximum payments, whereas if your income is above the figures shown on the right, you won't be eligible for any Age Pension. Your cutoff point will be higher if you qualify for something known as the Work Bonus, which Linda will cover shortly.
It's also important to note that when you reach Age Pension age, your super will count towards both the assets and income tests. It's included in both because it may be an asset or income, depending on your age and circumstances. Like many financial matters, the Age Pension can be a bit tricky to navigate, so we do suggest you consider seeking financial advice.
Linda, can you tell us about some other forms of assistance which may help at retirement?
Well, something you just mentioned, Michael, was the Work Bonus. So this reduces the amount of employment income, or eligible self-employment income, that the government applies to someone's rate of Age Pension entitlement under the income test.
Another thing to be aware of is you could save on bills and services as you become eligible for age-based discounts. Concession and health cards to look into include the Commonwealth Seniors Health Card, the Low Income Health Card, the Seniors Card and the Pensioner Concession Card.
The Home Equity Access Scheme is something different altogether. It enables those who are eligible to take out a loan against the equity in their property. So this may provide an additional source of income in retirement, which may provide benefits, but it's important to know that you do need to repay the money you receive. So that means that any balance owing will be taken from the value of the property when you sell, or when you and your surviving partner pass away.
Downsizer contributions are another one to call out. So, this is where people aged 60 or over may make a voluntary contribution to their super of up to $300,000 using the proceeds from the sale of their home. This generally needs to be done within 90 days of the property sale, and it can be done regardless of super contribution caps and restrictions that otherwise apply.
For couples, both people can take advantage of this opportunity, which means that up to $600,000 per couple could be contributed towards super. There are, however, rules and other things you’ll want to be across, so check out the ATO website for more information on rules and eligibility.
You should also take into account that downsizer contributions may impact the Age Pension eligibility, and that additional property related costs may also need to be factored in.
Hopefully, this presentation has provided some food for thought. Next, you may want to look further into what super options might suit you best at retirement, whether an account based pension is right for you, if you're eligible for the Age Pension, as well as other government concessions.
If you think you could benefit from professional financial advice, it’s never too early or too late to get it. A financial adviser can speak to you about maximising income, minimising tax, reducing debt, and reviewing investment risk. There may also be avenues to increase your Age Pension payments, if you’re eligible. As we mentioned earlier, your income and assets can impact Age Pension eligibility and payments, so if it’s possible that you may inherit some money in the future, or are considering downsizing your home, this is where advice could help.
If you're looking for help and advice, you can visit our website, which has a range of tools and calculators. Qualified financial advisers can also provide members with advice on simple matters at no additional cost, over the phone. This might include advice on making an investment choice, contributing to super, and the insurance options available in your AustralianSuper account. A small fee does apply to advice regarding retirement more broadly, and transition to retirement strategies. For members who may have more complex things to discuss or would prefer to meet with an adviser in person, AustralianSuper also offers access to financial planners in AustralianSuper offices around the country, which does involve a cost.
So if you're interested in learning more about super, we offer a range of webinars at different times throughout the year, so you can tune in from the comfort of your own home or wherever you have internet access. So to find out more or to check out other videos, visit australiansuper.com/webinars
Thank you joining our Retirement ready – what are your super options? presentation, and we wish you all the best on your retirement journey.
Investing in retirement when markets are volatile
The right investment strategy could help you to manage financial risk in retirement. Our experts share insights to help you understand what your options are, what to keep in mind when markets are volatile, and what the outlook is from here.
Investing in retirement when markets are volatile

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Welcome and thank you for taking the time to join our presentation today.
When market conditions change, particularly after many years of positive returns, it's normal for people to feel a bit unsettled about their investments. You might be wondering, should you change to a more conservative investment option? Should you hold the course in case markets rebound and you're able to recover your losses? How might you lessen some of the investment risk? These are common questions during periods of market downturns, which our panel will talk through today.
My name is Peter Treseder, and I'm an Education Manager at AustralianSuper. Joining me is our Head of Diversified Portfolios, Justine O'Connell, and one of our Financial Planners, Steve Lambou, who is an authorised representative of Industry Fund Services.
This presentation may include general financial advice, which doesn't take into account your personal objectives, financial situation or needs. Before making a decision, consider if the information is right for you and read the relevant Product Disclosure Statement and Target Market Determination on the AustralianSuper website.
During this session, we're going to discuss current market conditions, the investment performance of our account based pension, which we at AustralianSuper call a Choice Income account, and the different investment options available.
If you're not familiar with account based pensions, they allow you to withdraw regular, flexible and tax-effective payments out of your super when you retire, or reach age 65 and are still working. For many people, they're a bit like the next part of the super journey. Phase one, you accumulate super in a super account while you're working. Phase two, you draw down super through an account based pension when you retire.
Some of the potential benefits are that your super savings remain invested, and you can generally choose from a range of investment options. Investment returns on account based pensions are also generally tax free, whereas investment returns on super accounts are generally taxed at 15%.
Keep in mind, your account based pension forms part of the income and assets test, so it may affect your eligibility
for a full or part Age Pension. As the income you receive is based on the amount you have in your super, it also won't necessarily guarantee an income for life.
As investment returns from an account based pension are tied to movements in investment markets, they can go up and down, and this is something we'll discuss in more detail in the presentation today. Justine, before I pass to you, can you tell me a bit about your role?
Thanks Peter. So I'm Head of Diversified Portfolios in the Total Portfolio Management Team, which sits within the AustralianSuper's Investment Department. My team and I are responsible for setting the long-term investment strategy for our pre-mixed investment options. The goal is to ensure all our options are well positioned to meet their return objectives within certain constraints. We work closely with the asset class teams within the investment department to do this.
We offer six pre-mixed options and have two return objectives for each. The first is a relative return objective to outperform our peers, and the second is an absolute return objective to beat inflation, plus a margin over the longer term. Our constraints include cost, the amount we can invest in unlisted assets, and how much risk we can take on.
So Justine, in the last financial year, many super funds experienced their first negative returns since the Global Financial Crisis over a decade ago. Could you please explain the approach AustralianSuper takes when investing members’ money in retirement?
Absolutely, Peter. So when we construct the pre-mixed investment options, we consider a number of things such as how inflation affects people's savings over time, what the best mix of assets is to meet the return objectives, and ensuring the portfolio is diversified across different asset classes to help manage portfolio volatility.
We also consider how to position the mix of assets given the economic and policy outlook; and how to invest as much of the portfolio actively as possible, as we believe an active management approach does deliver greater long-term returns for our members.
Going back to inflation, this can erode the value of your savings over time and your spending power in retirement, which is why our pre-mixed options have an objective of outperforming inflation over the long term. For example, our Balanced option seeks to outperform the consumer price index, a measure of inflation, by 4% per annum over the longer term.
Thanks Justine. For those who might not know, the Balanced option is AustralianSuper's default super and account based pension investment option. The default option applies when someone doesn't make an investment choice when they join a super fund. Justine, you mentioned other investment options.
Yeah, Peter. That's right. There are a range of investment options that people can choose from, depending on how hands on they want to be and how much risk they want to take on, keeping in mind exposure to different assets will vary depending on the option chosen.
The strategic asset allocation that you see here is for the Balanced option and shows the key positions we're targeting over the longer term with the flexibility of the bands in the far-right column.
Investing in growth assets, like Australian shares, international shares and private equity, provides opportunities to grow your savings over time. Mid-risk assets such as property, infrastructure and credit provide a balance of growth potential and downside risk protection to act like a ballast in the portfolio. Defensive assets, such as fixed interest and cash provide portfolio stability and liquidity.
We also actively manage the allocation to various asset classes through the cycle to add more outperformance and also to manage risk. For example, at the moment we have less equities and more bonds and cash in the portfolio, relative to our strategic asset allocation, as there are indications we're heading into a recession.
The financial year ending 30 June 2022 was only the fourth negative return the fund has announced in the past 36 years, Justine. So does AustralianSuper make changes in the way it invests when markets retreat?
In the investment team, we see our role as making money for members and increasing their balances, so we share our members’ disappointment when there are negative returns. As you can see here, we’ve had positive returns for 10 years up until this year, noting we’ve still managed to perform better than the SuperRatings SRP50 Balanced Index median return, during the recent volatility.
You've got to keep in mind, it’s normal for markets to go up and down during certain phases of the economic cycle. We saw this during the Global Financial Crisis in 2008 and the COVID downturn in March 2020. So, yes, while there can be short-term downturns in investment markets, historically the growth in asset values has added to member balances over the long term, as you can see from the graph here. $50,000 invested from the 1st of January 2008 in our account based pension Balanced option would now be worth around $135,000 today.
From our perspective, what we seek to do is position the portfolio to take advantage of growth during expansionary economic conditions and reduce risk in the portfolio when recessions are predicted.
So Steve, as a Financial Planner, how do you help members, particularly those who might spend over 20 years in retirement, but potentially they don't see their retirement savings as the same long-term investment that their super was. Where do you start a conversation with a member about investing for their retirement years?
When we catch up with members, we do a deep dive into their risk profile, which is essentially a questionnaire which allows us to assess how comfortable they are with certain investments, and the associated volatility attached. It might be shares or other growth assets, or more defensive assets, such as fixed interest and cash, as Justine mentioned earlier. We try to align recommended investments to their preferred risk tolerance, so they’re comfortable with where their money is invested in retirement and that it meets the “sleep at night test”.
Now what I mean by the “sleep at night test” is we don't want members up at night worrying about their retirement income, so we take steps to ensure the portfolio we set up for them is the one that they're most comfortable with.
One of the first questions we ask members, do you have a specific timeframe for the funds you want to invest? Many members might say they have a long-term investment timeframe of over 15 years, which is most often the case, but quite a few also say their timeframe is five years or less. This is despite they may only be 60 years of age, and their life expectancy is still more than 25 years, and they'd have no need to withdraw most of their super within the five-year timeframe. Many members are also under the impression that everything needs to be held in cash in retirement, and that their money won't last the long haul.
After we have a chat, they realise they can still invest some, if not all, of their assets in the same investment options they were in before they retired, and that the remaining balance after each regular payment is made is still actively invested. It means their regular income in retirement may actually last a lot longer than what they initially thought, and potentially even beyond their life expectancy, which gives them great peace of mind. At the end of the day, it all depends on the individual member’s financial situation and goals. So if you want to know what's right for you, it's best to get some financial advice.
Justine, you spoke earlier about AustralianSuper's Balanced option, could you tell us a bit more about some of the other options that Steve's talked about, which might suit members who are trying to lower their risk tolerance?
AustralianSuper has a range of pre-mixed options that can suit different return objectives and risk tolerances. The Balanced option is the default option because it provides higher potential to outperform inflation over time. Many of our members in retirement also have full or part access to the Government Age Pension, which means they may potentially have an appetite to take on greater amounts of investment risk with their super.
Aside from the Balanced option, we also offer more conservative pre-mixed options for members who may want to reduce the level of risk in their portfolio. The Conservative Balanced and Stable options, as you can see here, have a higher allocation to lower risk asset classes, such as fixed income and cash to reduce volatility.
So Justine, as you reduce the exposure to growth assets, you also potentially reduce the expected level of investment return. How do the objectives between the options differ?
Yeah, absolutely. So this reduction of growth assets, like equities, private equity, correspond with lower expected returns, which is reflected in a lower investment objective. So the margin we expect to deliver above inflation is 2.5% for the Conservative Balanced option and 1.5% for Stable. And you remember that we said earlier, the Balanced option has an objective of 4% above inflation.
Having lower risk also means that there is a lower probability of negative returns, meaning these options may also be suitable for members with shorter-time horizons. Even though they have lower risk, these options do invest a portion of assets in the same asset classes as the Balanced option, but at different weights, giving them the benefit of our active investment approach and exposure to investments in unlisted assets, such as private equity and property, and infrastructure but at lower weights relative to the Balanced option.
So Justine, how have these investment options performed recently?
The average annual performance has corresponded with the level of risk taken by the options. Looking at performance over most time periods, these options have performed in line with expectations for the amount of risk taken by each of the options. That is, higher returns for accepting higher risk and lower returns for accepting lower levels of risk.
But this doesn’t always hold over shorter-time periods. So over the last year, both listed shares and fixed interest assets have had negative returns. This is unusual. Typically, when listed shares fall, bond prices rise as investors prefer to invest their money in lower risk assets.
In this case, bond prices fell at the same time, largely due to the significant and quick rise in interest rates. And, at the same time, concerns about the impact of higher interest rates caused falls in equity markets. The impact of this is that we saw negative returns across all our pre-mixed options. So, while we absolutely manage the portfolios to reduce downside risk, there are shorter time periods during the economic cycle when even conservative options may have negative returns.
The benefit of diversification across asset classes, however, is what helps to balance out returns. While some asset classes had negative returns, the returns of private equity, unlisted property, unlisted infrastructure and private credit had positive returns during the past financial year.
Steve, you mentioned before that a lot of people's minds go straight to cash when they’re thinking about investing in retirement, even though there are other growth orientated options that Justine has outlined.
That's right, Peter. As I said earlier, many members may feel they should go into cash when investing in retirement. It can be helpful to explain that all investments, however, carry some form of risk. Cash, for example, can potentially create a risk that people might outlive their savings, which we call longevity risk.
This is because retirement income streams invested in cash for long periods of time, aren't likely to generate the returns needed for the investment to last as long as someone’s retirement. In other words, whilst cash can offer very stable returns, it offers little in the way of growth, meaning funds generally run out a lot sooner, as you can see here.
After we speak to members about their planned periods of retirement, and consider this time horizon together with their preferred risk tolerance, we often then look at other pre-mixed options. As Justine said, these options contain a level of exposure to growth assets and have different objectives, which is why it's important to weigh the risks and rewards when deciding what's right for you.
Okay, Steve, so once members have chosen the investment mix that suits them best, what flexibility do they have in regard to receiving payments from their account based pension?
There's quite a lot of flexibility, Peter, around the frequency of payments, which might be fortnightly, monthly, quarterly or even annually. You can also choose which investment options your account based pension payments may be drawn from. For instance, many members like to have their payments taken from their portfolio held in cash, so then they don't have to sell down growth assets to make a payment particularly in volatile times.
So Steve, how do you find members react or behave during periods of investment downturns?
Markets moving up and down is a normal part of investing. While it can be tempting to switch options, it's worth considering the investment time horizon intended to support the investment objectives, which can often be long term. It's important to remember that markets do recover, as we've seen during the GFC and also during the COVID, just recently, and sometimes quicker than expected.
Justine’s chart before showed $50,000 invested in 2008 would be worth nearly $135,000 in 2022, which supports the old adage that it's time in the market, not timing the market, that counts.
Justine, looking forward now, what changes do you expect to see in world economies, and how might that impact the way AustralianSuper invests going forward?
AustralianSuper is a patient investor, focusing on how to build the investment options to outperform over three, five, and 10-plus years. We also invest actively across all asset classes, and also adjust the portfolio’s asset allocation based on the current market environment.
In terms of the economic cycle, we see that central banks are focused on price stability and combating inflation, which is putting upward pressure on interest rates, as you know. This increase in interest rates does dampen revenues and profitability for many companies, which then in turn affects their valuation and share prices. There's also potential for recession in many economies around the world and concerns of the impact of rising energy prices, especially in Europe, which may lower returns for members.
The investment team has been anticipating an economic slowdown for some time, and for that reason we've positioned the portfolio for a lower growth environment. Longer term, we’re continuing to build our allocation to unlisted assets, particularly private equity and unlisted infrastructure, as we think these asset classes will deliver strong returns over the long term. To help us do this well and at low cost, we have established offices in London and New York, where we now have large teams of direct investors identifying and assessing attractive assets offshore.
So Steve, if a member needs help with their investment choices, what is the process when they come to see you?
As financial advisers, when we meet with members, we discuss all of this in quite some detail and do an analysis of their position and a risk profile as well. This allows us to then recommend whether a member should stay in the investment option they’re in, or consider a different one.
Members tell us it's really helpful to go through this process to determine what sort of investment option, or mix of investment options, would suit them best. It makes them feel comfortable - remember the “sleep at night test” I mentioned earlier, Peter. It ensures they’re invested appropriately and gives them a better chance to meet their retirement objectives. Most importantly, they feel reassured to have someone qualified to talk to them about their super, so that they don’t feel they're making really important decisions on their own.
During retirement, you should expect financial markets to deliver a wide variety of returns and at times that return will be disappointing. The good news is, over time, markets generally do recover, keeping in mind that the very strong returns we’ve seen over the last decade have been abnormally high.
If you're looking for help and advice, you can visit our website, which has a range of tools and calculators. Qualified financial advisers can also provide members with advice on simple matters at no additional cost over the phone. This might include advice on making an investment choice, contributing to super, and the insurance options available in your AustralianSuper account.
A small fee does apply to advice regarding retirement more broadly, and transition to retirement strategies. For members who have more complex things to discuss or would prefer to meet with an adviser in person, AustralianSuper also offers access to financial planners in AustralianSuper offices around the country, which does involve a cost.
If you're interested in learning more about super, we offer a range of webinars at different times throughout the year, so you can tune in from the comfort of your home or wherever you have internet access. To find out more or to check out other videos, visit australiansuper.com/webinars.
Thank you Justine. Thank you Steve, for joining us. And thank you for joining our Investing in retirement when markets are volatile presentation. We wish you all the best on your retirement journey.
Setting your super up for success
Making the most of your super starts with knowing the basics of how it works. There are simple things you can do now that can make a big difference to your super in the long run.
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Welcome and thank you for taking the time to join the AustralianSuper's Setting your super up for success presentation. Your super might be something you don't spend much time thinking about, and retirement might seem a long way off. But aside from a house, your super could be the biggest investment you have in your life, and it's all for your future. In today's presentation, we'll cover tips and strategies to help you set up your super for success. My name is Jaclyn and I'm an Education Manager at AustralianSuper. My job is to help you better understand how super works.
Before we start, it is important to understand that the information we are covering today is general financial advice, and doesn't take into account your personal objectives, situation or needs. Before making a decision, consider if the information is right for you and read the relevant PDS by visiting australiansuper.com/pds or by calling 1300 300 273. Also it's important to note that investment returns are not guaranteed and past performance is not a reliable indicator of future returns.
Today, we will be covering a number of concepts to help to set your super up for success including: understanding the basics of super, then we'll take a look at tips and strategies to manage your financial wellbeing, take control of your super, and the simple actions you can take now to set your super up for success. Superannuation is one of those things that can be easy to ignore, especially if we have a lot going on with our finances outside super and life in general. When we're young, retirement can feel like it's forever away. So tinkering around with our retirement savings that we may not be able to access for 20 or 30 years might not feel like a priority, but getting on top of your super at an early age could help you have the lifestyle you want later in life. To better understand super, let's take a closer look at the super basics.
Super is money set aside while you're working, so you'll have money to live off when you retire. Your employer directs a percentage of your salary to your nominated super account. There are some exceptional circumstances in which employers aren't required to pay super, for example, some contractors. This money is invested by your super fund and can earns returns, which could help grow your retirement savings for your future. When we say returns, we're referring to how much money the money you have invested in super has made. There are often some misconceptions about super, but as mentioned before, it could be one of your biggest assets. Your super is here to provide you with an income in retirement once you have stopped working. Without super and other savings, you may be relying on the Age Pension. Super can provide income for you to help you have the lifestyle you would like in retirement. It is also tax-effective with contributions potentially reducing your tax and the investment earnings inside your super, being taxed at 15% per annum in accumulation and 0% in retirement. This could be potentially lower than your taxable income.
But one of the true wonders of super is compound interest. The value of investing over the long term. Compounding is an important part of investing. In fact, it's often referred to as one of the great wonders of investing. In relation to your super, put simply, compounding is the investment returns generated on the returns you've already earned. Picture this: A snowball rolling along. It may start small, but it grows the longer it rolls. That's because it's adding layer after layer. The snowball represents your balance and the layers represent the compounding returns. Compound returns are earned on your entire super balance. Your super fund continues to invest these additional returns. The process repeats, continuing to accumulate returns as long as your super is invested, leading your balance to grow through employer and voluntary contributions while still compounding the returns.
Everything we do at AustralianSuper is designed to help people achieve their best retirement. As one of the biggest funds in the world, our size and scale mean that we have access to some of the world's best investments. Choosing the right investment is important. It can affect how much your savings grow and how long they last. You can decide to either leave your investment in the default investment option, which is the Balanced option, a PreMixed option, or choose and manage your own. You can also make and change investment choices after you become a member. You can choose one or a variety of options. And if you don't make a choice, your super savings will be invested in our Balanced option. PreMixed options are diversified options that invest across different combinations of asset classes, such as shares, property, infrastructure, fixed interest, and cash. There are a number of PreMixed options, which include High Growth, Balanced, Socially Aware, Index Diversified, Conservative Balanced, and Stable. DIY Mix options are single asset class portfolios. You choose how much you want to invest in each mix that can also include one or more PreMixed options. Your DIY Mix choices are Australian Shares, International Shares, Diversified Fixed Interest, and Cash. The Member Direct investment option gives you the greatest control of all options. You can invest your own super in a range of listed securities, including shares in the S&P/ASX 300 Index, Exchange Traded Funds, Listed Investment Companies, or term deposits. A good place to start in making this decision is to read the AustralianSuper Investment Guide which is available at australiansuper.com/investmentguide This guide can help you make your decision. You'll look at your investment needs and then go through your options in more detail. Alternatively, you can speak to a phone-based Financial Adviser who can look at your situation and provide advice on the most appropriate investment option for you.
Before we look at how you can benefit from taking control and making the most of your super, it's important to ensure you have taken control of your financial wellbeing outside super. A great place to start is managing your savings and understanding your spending habits. Setting short-term, mid-term, and long-term financial goals is an important step toward becoming financially secure. If you aren't working toward anything specific, you'll likely spend more than you should. You'll then come up short when you need money for unexpected bills, not to mention when you want to make a big purchase or retire. Vague goals don't necessarily work. Goals should be specific. Your goal is direct, detailed, and meaningful. It should be measurable. Your goal is quantifiable to track progress or success. Attainable, your goal is realistic, and you have the tools and the resources to attain it. Relevant, your goal matters to you. Time-based, your goal has a deadline. You can then break them down into smaller goals to ensure you are chipping away at these, which can help with motivation to continue working towards your goals. But what's next?
Once you've set your goals, it's actually a good time to look at what you were spending and create a budget. For those that already have a budget, how did that go? Did you stick to it? Do you review it regularly? The best way to control your finances is to do a budget. It will show you if you are spending more or less than you can afford. It can highlight where you can save money, or if you have surplus, it allows you to make other plans, such as saving for your goal or make super contributions if appropriate. Once you know your budget, you can set up a savings plan to better manage your finances. This could include implementing a bucket approach. The first step to becoming a budgeting expert is deciding how many buckets you need and what they are. An example might be a bucket for your bills, which covers things like your rent or mortgage repayments, as well as utility bills and repaying any debts. Then you could have a bucket for the everyday, which could cover things like groceries, public transport, and petrol. Then another could be a spend bucket. This could be for anything from catching the latest Marvel movie to eating out on a date night or even those shoes you've been eyeing off. And finally, a savings bucket. This will cover any emergencies and also things you're saving up for. It could be a family trip to Europe, your first house, or a new set of wheels. Once you've put a budget together, tracked your spending and implemented a bucket approach, this is something that you can continue to review regularly and work towards your goals.
So far, we've covered steps to manage your financial wellbeing with setting goals, budgeting, and allocating savings. It is now a great time to take a look at the five steps to take control of your super. In setting up your super for success, it's important you have chosen the best super fund for you. A great place to start is to do a comparison. There are a number of factors to consider when conducting a comparison including performance. How your super performs over the long term will make a big difference to your money for retirement. Fees It's important that you're paying reasonable fees. And insurance, which provides financial support for you and your family if anything happens to you.
If you have more than one super fund, you may want to consider consolidating your accounts if it's appropriate for you. Consolidating into one account might reduce the overall costs of your super accounts, helping you to grow your super. It's important to know before you consolidate to do your research. Use the comparison tool. Ask your super providers about any fees or charges that may apply. Another important consideration is your insurance cover. Before you rollover your accounts, it's important to ensure you have adequate insurance in place in your new account as you will most likely lose any insurance that was in place on the account you rollover.
Adding a little extra to your super can be a great way to boost your super savings for retirement. Paying extra into your super could save you tax and help you retire with more. Contributing small amounts over time is often easier than finding a spare lump sum of money. This way, your super can grow with investment returns. You can add to super in two ways. Before-tax, including employer contributions, salary sacrifice, extra employer, and tax-deductible personal contributions. These are also called concessional contributions. There is a limit to how much you can contribute each year for this type of contribution, which is $27,500 per annum. In certain circumstances, you can contribute more than the annual limit if you've not reached the contribution limits in prior years, which is known as the carry forward rule. The other way you can contribute is after-tax, which includes spouse contributions, after-tax employer, and non-deductible personal contributions. If you make contributions above the annual non-concessional contributions cap, you may be eligible to automatically gain access to future year's caps. This is known as the bring forward rule.
Depending on your total income, if you make after-tax contributions to your super account, the Government also makes a contribution called a co-contribution, up to a maximum of $500. The co-contribution is tax-free and isn't taxed when it's deposited into or withdrawn from your super account. You can find out if you qualify at australiansuper.com/Co-Contribution. As mentioned earlier, adding to your super can help it grow for the long term.
AustralianSuper provides most members with basic insurance cover with their super account with some age and eligibility conditions applied. This cover provides a basic level of protection if you die or become ill or injured. Eligible members receive age-based Death, Total and Permanent Disablement, and Income Protection cover. Age-based cover is designed to provide a minimum amount of cover for changing needs as you get older. Death cover can help ease financial stress by paying a lump sum to your beneficiaries if something happens to you. TPD can pay you a lump sum payment if you become totally and permanently disabled and can no longer work. Income Protection can help you if you become ill or injured at work or outside of work and can't temporarily work. It can provide monthly payments to help you get by while you're not earning your regular salary. You can adjust the level of cover you hold to meet your needs. For Income Protection, you can insure up to 85% of your income with either a 30-day or a 60-day wait and benefit period paid for two years or up to age 65. You can access more detail on insurance by reading the Insurance in your super guide available on the AustralianSuper website. You can also calculate an estimate of your insurance needs by using the Insurance Calculator available on our website. This is a great guide to estimate how much cover you should have and how much your cover should cost.
If you've taken the time to carefully choose the super fund and you're happy with how it's performing, one of the best things you can do is take your fund with you when you change jobs or retire. You can also use the tools available to you to track your super, including an online account and the mobile app.
It's also important to let your fund know what happens to your super in the event of your passing, and there are a few options when deciding what happens to your money. You can nominate a beneficiary in two ways: binding and non-binding. With a binding nomination, you complete a form providing formal written direction to AustralianSuper to tell us who you want your account balance and Death cover paid to so that it's legally binding. A binding nomination comes into effect from the date we accept it and expires three years from the date you signed the form. You can set up or change your binding nomination by completing a valid binding death benefit nomination form, and you will be prompted to update it every three years. With a non-binding beneficiary, you nominate who you'd prefer your account to be paid. However, your nomination is not legally binding. And although the fund will consider who you choose, ultimately, the fund are legally responsible and will need to consider relevant laws when making a decision. You can make a non-binding nomination by completing the Change my details form available at australiansuper.com/factsheets or through your online account at any time, or by calling us.
So who can you nominate as a valid beneficiary? You can nominate your spouse or partner, including same-sex or de facto relationships, your child of any age, interdependants who is someone who lives with you and shares a close personal relationship where one or both of you provide financial and domestic support and personal care of the other. Other financial dependants, such as someone who relies on you financially, or your estate or legal personal representative. So, it's important to check if you have a beneficiary and look into your options to make the right choice for you. We have covered a number of concepts today to help you set your super up for success.
We've looked at understanding the basics of super, including the power of compounding interest, managing your financial wellbeing, and taking control of your super, but it's so important to take the steps now to ensure you set your super up for success. You could start by creating a budget, which will give you a clear picture of your finances today and help you set your goals and ultimately achieve them. You could check that your account details are up to date to ensure that when you want to take any actions on your account, you're able to do so. Another great step is to search for lost super. It could be reassuring to know you have all your super in the one account if you don't find any. Alternatively, if you do find lost super, you can consolidate it into your account to ensure that all your super money is working for you. And finally, download the AustralianSuper app. This is a great tool to track your super, check where you're invested, what insurance you have, and monitor your contributions. You can also make additional contributions to your super from the app when it's appropriate. And a great way to look at the long-term impact of setting up your super for success is to use the Super Projection Calculator. The calculator is available on the AustralianSuper website and is a great tool to look at what your lifestyle might be in retirement. You can see what it is today if you make no changes, and what it could be if you decide to add extra to your super. It could have a significant impact on your future.
AustralianSuper aims to provide help and advice to members as they need it. And we do this in three main ways. Online via our website, which has a range of tools and calculators and information about AustralianSuper and super in general. You can speak with an advice team member over the phone for simple personal advice, covering topics relating to your AustralianSuper account, such as your investment options, making contributions to super, insurance, and retirement income options. This advice is provided at no additional cost to members. Its cost is included in the member fee that we all pay. So I would suggest that to get the best value from your AustralianSuper membership, it makes sense to seek advice as you need it. I will just note that phone advice for retirement or transition to retirement has a small fee. For those members that would prefer to meet with an adviser or maybe have more complex issues, AustralianSuper also offers access to Financial Planners based in our offices around Australia. This advice is usually provided face-to-face or as a virtual meeting. This financial advice service is at the member's own expense. You can also access advice in your local area with a registered Financial Adviser. You can find all the advice options through our Find an Adviser tool.
By attending today's session, you have already taken a step in learning more about making the most of your super. I encourage you to look at what is available to you and determine what is the best course of action for you. We thank you for attending and wish you all the very best with your financial journey.
Estate planning and your super
What happens to your money when you're gone? Nominating super beneficiaries and understanding the tax consequences (so loved ones can potentially avoid unexpected tax bills) are all part of smart estate planning.
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Your super savings may last 20 years or more when you retire. Some of your savings may even outlive you, so it's important to let us know where you want your money to go. The concept of beneficiaries can raise lots of questions. Who should I nominate? What happens to my super when I pass away? And, will it be taxed? Today, in our Estate planning and your super presentation, we're going to unpack this and discuss what happens to your super when you pass, and how you can ensure it passes to those you intend to receive your benefits. My name is Darryl Florance and I'm an Education Manager. Part of the Education Team here at Australian Super. Helping you better understand how super works is important and why we're here today. I've been working in super and financial services for over 35 years.
Today, I'm joined by AustralianSuper Financial Adviser, Daihla McGinty, who is going to help us understand how estate planning and your super work together. So, welcome Daihla. Can you please tell me how you help people, in particular, when it comes to their beneficiaries?
Thanks, Darryl. It's great to be here today. My role as a Financial Adviser is to help people with retirement planning, but it also includes things such as estate planning. This is a really important discussion to have with people to really understand what they'd like to happen, in the event that they passed away, to ensure that things get passed as per their wishes.
Before we start, it's important to understand that the information we're covering today is general financial advice, and it doesn't take into account your personal objectives, situation or needs. Before making a decision, consider if the information is right for you, and read the relevant Product Disclosure Statement by visiting australiansuper.com/pds or by calling our national contact centre on 1300 300 273. It's important to note that investment returns are not guaranteed, and past performance is not a reliable indicator of future returns.
Through our discussion today, we'll look at what's included in an estate plan. We'll look at the rules around nominating beneficiaries, including who can be nominated. Then we'll work through the tax implications of different beneficiaries, and how this could be factored into your decisions. And, finally, the next steps you could take following today's presentation. In our roles, we meet a lot of different people and one of the most common things we hear is, "It's okay, I have a will. I don't need to worry about my beneficiaries." Now this is not necessarily the case. Before you start planning your estate, it's important to understand the way different assets are treated and the options available to you. Making sure your assets go to the right people after you pass is not always as simple as stating your wishes in your will. How your property and assets are distributed may depend on a number of factors. Many people think super forms a part of their estate. This is actually a misconception, and, in fact, your super isn't considered part of your estate and, therefore, not subject to the terms of your will. Therefore, it's important to ensure you have an estate plan plus nominated beneficiaries listed on your super account. We'll unpack this area in today's presentation. Daihla, can you please tell us what estate planning is, and what people should consider as part of their estate plan?
Estate planning involves the transfer of wealth between yourself and your chosen beneficiaries. Having a valid will in place is just one aspect of estate planning, however, having that will in place, can give you comfort and peace of mind to know that your wishes can be followed in the event of your death. A will is a legal document that sets out how you want assets that you own to be distributed when you pass away. You must have both legal and mental capacity to be able to make a valid will. If someone dies without a will, they die intestate. Being intestate means that the laws of the state or territory they live in will decide how their estate is administered. This highlights how important a will is to ensure your wishes are met. Then there are enduring powers of attorney, financial or medical, and enduring powers of guardianship. Again, different states have different rules in regards to these items. A power of attorney or enduring power of attorney can give you the peace of mind knowing that your affairs can continue to be taken care of in the event that you are not in a position to make certain types of decisions yourself. For example, this can include situations when you're overseas or incapacitated. There are a variety of powers of attorney available. The ones that are appropriate for you will depend on your circumstances, and what decisions you think are important in the event that you are unable or unavailable, to make those decisions yourself. A letter of wishes, also known as a statement of wishes, is an informal document that accompanies your will. A letter of wishes help to explain your will and make it easier for your executor to administer your estate, than if they just had your will to go by. It's not legally binding and it's much easier to make changes to than your official will. A health directive is a legal document that enables you to make decisions, now, about the treatment you would want, or not want to receive, if you ever became sick or injured and were incapable of communicating your wishes. In such circumstances, your health directive effectively becomes your voice. Finally, there are beneficiary nominations to ensure your super passes as per your wishes.
It's important to let your super fund know what you want to happen to your super in the event of your passing. And there are a few options when deciding what happens to your money. You can nominate a beneficiary in two ways, binding or non-binding. Once retired you also have another option, to nominate a reversionary beneficiary to continue to receive your regular pension payments. Daihla, can you please explain these types of beneficiary nominations?
For a binding nomination, you provide formal written direction to AustralianSuper to tell us who you want your account balance, including any applicable insurance, paid to, so that it's legally binding. A binding nomination comes into effect from the date we accept it and expires three years from the date you sign the form, as long as the nominees remained valid beneficiaries. You can set up or change your binding nomination by completing a valid Binding death benefit nomination form. A binding nomination instructs AustralianSuper how to pay your death benefit if you die. As long as it's valid, your nomination is legally binding and we must follow it. This is why it's important to consider changing or cancelling your binding nomination, if your circumstances change, so that your benefit will be paid in line with your current wishes.
For a non-binding beneficiary, you nominate who you'd prefer your account to be paid. However, your nomination is not legally binding, and although your super fund consider who you choose, ultimately, they are legally responsible and will need to consider relevant laws when making a decision. You can make a non-binding nomination by completing the Change my details form available at australiansuper.com/factsheets through your online account at any time, or by calling us on 1300 300 273.
Finally, if you have a pension account, you can nominate a reversionary beneficiary. A reversionary beneficiary will receive regular income payments from your account until the account balance reaches zero. You can set up or change your reversionary nomination by completing a valid Reversionary benefit nomination form.
When nominating a beneficiary, it's important to understand who you can nominate. So, who can you nominate? You can nominate your spouse or partner. A spouse includes legally married spouses or de facto spouses. A spouse can be a person you're legally married to but estranged from or separated from. So, if you haven't formally ended a marriage, your husband or wife is still considered your dependent under superannuation law. And while you can't be legally married to two people, it's still possible to have two spouses. A legally married spouse and a de facto spouse. Your child, of any age. A child includes an adopted child or a stepchild, even though a stepchild is included in the definition of a child, if you end the relationship with the natural parent or the natural parent dies, the child is no longer considered your stepchild. However, they may still be considered a financial dependant, or in an interdependency relationship with you, and could, therefore, continue to be a beneficiary of your super. Interdependants which is someone who lives with you and shares a close personal relationship, where one or both of you provide financial and domestic support, and personal care of the other. A financial dependant, generally, a person is financially dependent on you if the level of support you provide them is necessary and relied upon, so that if they don't receive it, they would be severely disadvantaged rather than merely unable to afford a higher standard of living. And, finally, you can nominate your estate or your legal personal representative. This will mean your super benefits could be paid as per the intentions of your will.
When we talk about dependants, they are actually two different dependants. A dependant under super legislation, known as the Superannuation Industry Supervision Act, or SIS Act, meaning who is eligible to be a beneficiary of the super benefits, and a dependant for tax purposes, meaning, who can receive the benefits tax-free. The SIS Act determines who can get your super directly from your super fund without having to go through your estate, these are your SIS dependants. Tax law determines who pays tax on the taxable component of any such payment. Tax dependants receive your super tax-free. A current spouse is considered a SIS dependant, so can receive your super benefits directly, and also receive these benefits tax-free. A former spouse is not considered a SIS dependant, so is unable to receive the super benefits directly from the super fund, but if they did receive the benefits via an estate, they could receive these benefits tax-free. A child under 18 is considered a SIS dependant, so it can receive your super benefits directly, and also receive these benefits tax-free. A child over 18, who is not a financial dependant, is considered a SIS dependant, so can receive your super benefits directly, but they are not considered a tax dependant and, therefore, would be required to pay tax on the taxable components of the super benefits. A financial dependant and an interdependant are considered a SIS dependant, so they can receive your super benefits directly, and also receive these benefits tax-free.
When we talk about tax potentially being payable on the death benefits, it's important to understand what that means. The taxation of death benefits from super varies depending on many factors, including tax components within the account, which are tax-free and taxable, whether the beneficiary is a dependent for tax purposes, which we've just discussed, whether the amount is taken as a lump sum or an income stream, and, in some cases, the age of the deceased and a beneficiary. For reversionary pensions, consideration may also need to be given to the introduction of the transfer balance cap for larger account balances. Daihla, can you please explain in more detail what the tax components are?
The tax-free component of a super account includes the following: after-tax contributions, Government co-contributions, and any tax-free component of a rollover from another super fund. Whilst the taxable component is the total of the following: employer contributions, salary sacrifice contributions, personal contributions where a tax deduction was claimed, and any investment earnings. Whilst the entire tax-free portion of the benefit is received with no tax payable, there can be tax payable on the taxable component of the total benefit. The tax payable is 15% plus the Medicare levy.
Let's take a look at an example of the implications of the tax payable with John and his family. John is 60 and married to Laura, 58. They have a son, Ben, who is 20, currently studying at uni and financially dependent. They have a daughter, Meg, who is 28 and married. Meg has a daughter, Ava, aged 4, who is John's granddaughter. Sadly, John passes away, and has a total super death benefit of $400,000. This is made up of 100% taxable component. Daihla, let's assume that the full $400,000 is paid to just one of John's family members. What are the tax implications if the full amount is paid to each of his family members?
As Laura is his spouse, she is considered a SIS dependant and she can receive the full super death benefits directly, and also receive these benefits tax-free. Ben, a financially dependent child, is also considered a SIS dependant, so he can receive the full super death benefits directly, and also receive these benefits tax-free. On the other hand, Meg, a child over 18, who is not financially dependent, is considered a SIS dependant, so she can receive these benefits directly, but Meg is not considered a tax dependant, and, therefore, would be required to pay tax on the taxable component of the super benefits. This is 15% plus the Medicare levy on the $400,000 benefit. Meaning if she received the full benefit, there would be tax payable of $68,000. Finally, Ava, who's John's granddaughter, is not a financial dependant, so would not be eligible to receive the benefit and is not a tax dependant either, so would have to pay tax on the benefits. However, if Ava was a financial dependant, for example, if she lived with her grandparents, she could be dependent for both super and tax purposes. So, this highlights the importance of planning when deciding on who your beneficiary should be.
Daihla, are there considerations or strategies available to help people plan and reduce the tax implications?
Absolutely, Darryl, there are a number of strategies that we can implement to help minimise or reduce the amount of tax payable. What's important to understand though, is everybody's situation is different. So, I would strongly suggest that you seek some personal financial advice if you wish to explore this area in more detail.
Thanks, Daihla. You've certainly highlighted just how important it is to plan and consider all of the options when nominating beneficiaries. Today, you've made the first step in planning and preparing by attending our presentation. However, there are some other steps that you can take. First, you can nominate or review your super beneficiaries factoring in what we've covered today, including who you can nominate and who qualifies as a tax dependant. You should consider legal advice on your estate planning requirements, including wills, power of attorney, and any other areas that may be applicable to your situation. And you should consider seeking financial advice. Like Daihla mentioned, there are strategies that may be appropriate to you that could potentially reduce the tax implications, but advice may also provide you with a peace of mind when making decisions.
Daihla, AustralianSuper has a range of financial advice options. How can someone determine which option may be best suited to their circumstances?
AustralianSuper aims to provide help and advice to members as they need it, and we do this in three main ways. Online via our website, which has a range of tools and calculators, and information about AustralianSuper and super in general. You can speak with an advice team member over the phone for simple personal advice, covering topics relating to your AustralianSuper account, such as, your investment options, making contributions to super, insurance, and retirement income options. This advice is provided at no additional cost to members. Its cost is included in the member fee we all pay. So, I would suggest that to get the best value from your AustralianSuper membership it makes sense to seek advice as you need it. I will just note that the phone advice for retirement or transition to retirement has a small fee. For those members that prefer to meet with an adviser or maybe have more complex issues, AustralianSuper also offers access to Financial Planners based in our offices around Australia. This advice is usually provided with face-to-face or via virtual meetings. This financial advice service is at members' own expense. You can also access advice in your local area with a registered Financial Adviser. You can find all of the advice options through our Find an Adviser tool on our website.
Thanks again, Daihla, for your insights today, and explaining the finer details of beneficiaries, the tax implications, and how important it is to plan and prepare. By attending today's session, you've already taken a step in understanding how estate planning and your super work together, how you can evaluate the most appropriate beneficiaries, and what the tax implications are, and the next steps you can take today. Thanks for joining us, and we wish you all the very best on your financial journey.
Tips to boost your super
Instead of having your super in a set and forget mode, simple actions like making extra contributions when you can, knowing the different types of contributions you can make, and understanding how much you’ll need for retirement can all help improve your super.
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Welcome, and thank you for taking the time to join AustralianSuper's Tips to boost your super presentation. Now there are many things that we enjoy planning for including holidays, starting a family, buying a home, and we tend to spend a lot of time focusing on these. However, our retirement, which could be 20 to 30 years of our life isn't often given as much time. But your super could one day be the biggest investment that you have in your life. At AustralianSuper, we aim to help members achieve their best possible retirement outcome. And in today's presentation we'll cover the tips and strategies that may be available to you to help boost your super, and to help you have the best possible retirement. My name is Linda and I'm an Education Manager at AustralianSuper, and my job is to help you better understand how super works. Now, I've been working in the super industry for over 20 years. Today I'm joined by one of AustralianSuper's Financial Advisers, Duncan Collie. And Duncan's here to help me unpack the ways in which we can boost our super. Hi Duncan, can you please tell me how you help people boost their super?
Thanks, Linda, in my role as a Financial Adviser, I help members plan for their retirement. In meeting with my clients and getting to know them, I find out what's important to them and what they want to achieve. From here we can work through the strategies that will benefit them and help them to achieve their goals.
So, before we start, it's important to understand that the information that we're covering today is of a general nature, and it doesn't take into account your personal objectives, situation or needs. So before making a decision, consider if the information is right for you, and read the relevant PDS, by visiting australiansuper.com/pds or by calling 1300 300 273 Also it's important to note that investment returns are not guaranteed, and past performance is not a reliable indicator of future returns.
So there are a number of factors that can help you to boost your super, and today we'll be covering understanding how much super you might need, learning the ways that you can boost your super through contributions, understanding how investments form an important part of your super, and learning more about the different investment options that are available to you. When you reach retirement and you're able to access your super, you may also be eligible to access the Government Age Pension. While this sounds like an easy route to a comfortable retirement, many people are unsure of how much super they actually need in retirement. For instance, do you want to spend the same you are now? Do you want to travel? What will your day to day living expenses be? It's worth thinking about what type of lifestyle you'd actually like to have in retirement. The Association of Super Funds of Australia benchmarks the annual budget needed by Australians to fund either a comfortable or a modest standard of living in their retirement. This is a good starting point to determine what type of lifestyle you'd like and how much super you may need. Duncan, can you explain to me what a modest and comfortable lifestyle are?
A modest retirement lifestyle by the ASFA retirement standards, is considered better than the Age Pension, but still only able to afford fairly basic activities. However, a comfortable retirement lifestyle by the ASFA retirement standards, assuming the retiree is healthy, provides the ability to undertake a range of leisure and recreational activities, maintain a reasonable car, afford private health insurance and make purchases like electrical equipment, household goods, and new clothes as well as being able to take an occasional holiday. This is assuming the retiree owns their own home. A budget is a great place to start in determining your own exact needs, as everyone's situation is different. The next step is then how much super do you need to provide that lifestyle?
For a comfortable lifestyle, a single person would need a super balance of approximately $545,000 at retirement. While a couple would need a super balance of approximately $640,000. A great tool to use is our Super Projection Calculator. You can see how much super you could have at retirement, and how long it could last. And the difference additional contributions could make to your super balance. The calculator is available on the AustralianSuper website and is well worth a look.
Whether retirement is on the horizon or right around the corner, it's never too late to add more to your super. There are simple ways to contribute to your super while you're still earning a regular income. So, you'll have more for your best retirement. Extra contributions can make a big difference to your final super balance and your retirement lifestyle. Plus, there are ways that you can save on tax. Duncan, can you please explain the different ways that you can contribute to super?
You can add to super in two ways. Firstly, concessional contributions, also known as before-tax contributions, which include employer contributions, salary sacrifice, tax deductible personal contributions, and reportable super contributions. For example, employer paid insurance premiums. The maximum amount you can contribute is $27,500 per year. However, you may be entitled to contribute more than this, subject to eligibility using the carry forward rule. From the 1st of July 2019, you can carry forward any unused portion of the concessional contributions cap for up to five previous financial years if your total superannuation balance is less than $500,000 on 30th of June of the previous financial year. Unused concessional contribution cap starting from the 2018/19 financial year may be carried forward in this manner.
So, let's now take a look at the carry forward rule in action. So, in this example, we're going to have a look at Sarah, and how she can use the carry forward rule. In the 2019/20 financial year, Sarah has an available contribution cap of $25,000. Now her employer pays in $10,000 as part of her employer contributions, and that leaves her $15,000 remaining cap. This $15,000 can be carried forward into next financial year So in the 2020/21 financial year, Sarah now has a total available contribution cap of $40,000. The $15,000 from last financial year is added to the concessional contribution cap of $25,000. So, her employer pays in $10,000 as part of her employer contributions, which leaves her $30,000 remaining cap. Now this amount can be carried forward into this financial year. So, in the 21/22 financial year, Sarah now has a total available contribution cap of $57,500. The $30,000 from last financial year is added to the concessional contribution cap of $27,500. So, her employer again pays $10,000 as part of her employer contributions. However, this year she makes a personal deductible contribution of $20,000 from her available funds. Now this leaves her with $27,500 remaining cap, which can be carried forward to next year, but she also has a tax deduction for this financial year of $20,000, which is based on the personal deductible contribution that she made. So, to find out how much of your concessional cap that you have available, you can log into the ATO via your myGov account and look under the super section. So, Duncan, earlier you mentioned that there are two ways to contribute, what is the second way of contributing?
The other way you can contribute to super is via a non-concessional contribution, also known as an after-tax contribution, which is made from your after-tax take-home pay. This includes non-deductible personal contributions and after-tax spouse contributions received by you. The non-concessional cap is $110,000 per annum. This is subject to eligibility, including your total super balance and bring forward arrangements. The bring forward rule allows you to bring forward up to three years’ worth of non-concessional contributions, depending on your super balance and age. For example, if you contribute $330,000 in this financial year, you wouldn't be able to make a non-concessional contribution in the next two financial years.
If you’re interested in learning more about the different types of contributions you could make, contribution limits that apply and where potential benefits may exist for you, you can register for AustralianSuper’s live Tips to boost your super webinar at: australiansuper.com/webinars
Attendees also have the opportunity to participate in a live Q&A session with our AustralianSuper education managers at the end of the presentation. Now, back to you Linda for some more helpful hints.
You could be eligible for a Government co-contribution if you make an after-tax contribution to your super. Under the scheme, the Government matches 50 cents for every dollar that you contribute to your super from your after-tax pay, up to a maximum of $500 per annum. This co-contribution gets paid directly into your super account after you've lodged your tax return for that year, as long as your super fund has your tax file number.
So, we've covered a lot of detail on the different types of contributions and the ways that you can add to super. For more information, visit australiansuper.com/grow Another component to your super is how your super is invested. There are many different ways to invest your money. How you decide to invest can depend on your age, your financial situation, and your personality. So, Duncan, what are some of the considerations in understanding what type of investor you are?
One of the first steps to understanding what type of investments you should have your super invested in, is understanding what type of investor you are. This means knowing yourself, the types, and levels of investment risk you're prepared to take, as well as understanding how long you're investing for. The timeframe is a very important consideration, when determining your investment choice. Your investment timeframe is how long you plan to invest your super savings before you retire, as well as how long you want your savings to last once you do retire. Take a look at the table to see how long you might need to keep your savings invested in super, based on how old you are now, and your current life expectancy. Keep in mind, the timeframes shown are averages. So, you may well live beyond these ages. So, for a 40-year-old male today, he will have another 42 years until his life expectancy. And this is how long he would like his super to last.
One of the biggest considerations is that superannuation is a long-term investment. While it can be concerning to see returns go down during periods of volatility, it's important to remember ups and downs are a normal part of the investment cycle. A look back over history can be reassuring. It shows that significant share market downturns and recessions are not uncommon, and indeed should be anticipated over a lifetime of investing. Before 2020, the last major share market downturn was the GFC in 2008. At the time, it was a very challenging period, and there were large daily swings in super balances. But the important thing to remember is that markets did eventually recover, and we experienced strong investment returns over an extended period. So as an example, if you invested $50,000 into the AustralianSuper Balanced option on 1 July 2006, 15 years ago, and left it in the Balanced option for the entire period despite the GFC and various other market corrections, your investment would have grown to $147,859 as at 30 June 2021.
Choosing the right investment option is important. It can affect how much your savings grow and how long they last. So, you can choose one or more investment options for your super account. If you prefer not to make a choice, then your super will be invested in the default investment option, which is AustralianSuper's Balanced option. So, the PreMixed options means that AustralianSuper has determined the assets and the asset allocation for each of these options. As you look down the list from High Growth to Stable, the amount of growth assets, such as shares, reduces. As the allocation to growth assets reduces, so too does the investment risk and the expected rate of return. If none of the PreMixed options appeal to you, you can make your own investment mix by using the individual asset classes listed in the DIY options. If you want to be a bit more hands-on with your investment options, then you have the Member Direct option available as well. The Member Direct option allows you to pick and choose any shares included in the ASX 300 list, a limited range of exchange traded funds, and even some term deposits. Our investment options are quite flexible, so you could have all of your account invested in just one option or spread across multiple options.
A good place to start in making this decision is to read the AustralianSuper Investment guide, which is available australiansuper.com/investmentguide. This guide can help you make your decision. So, you'll look at your investment needs and then go through your options in more detail. Alternatively, you can speak to a phone-based Financial Adviser, who can look at your situation and provide advice on the most appropriate investment option for you.
So far, we focused on helping you to work out what type of investor you are, how comfortable you are with investment risks, and what amount of control you want. Here are a few other things to consider when making your investment choice, as well as some ways to help manage your investment strategy and minimise your risk. Focus on your long-term needs. And remember, that it's normal for markets to change both up and down. If you're not comfortable with your investments, review them, and seek some professional financial advice, and make your investment decisions based on informed factual research. As mentioned, a great place to start in understanding your investment options is with the AustralianSuper Investment Guide. You can download a copy at australiansuper.com/investmentguide or you can speak to an AustralianSuper phone-based Financial Adviser in order to receive the advice on the best option for you. So, we've covered a number of tips and strategies about boosting your super in today's presentation. Now it's important to us that you have the tools and the help and advice available to make the appropriate decisions for you.
So, we've discussed a number of helpful resources today. To estimate your super retirement, please check out our Super Projection Calculator at australiansuper.com/super-projection-calculator For more information on contributing to your super, please visit australiansuper.com/grow And finally, to learn about your investment options, download a copy of our Investment Guide at australiansuper.com/investmentguide Now, these are just some of the tools and resources that are available to you to assist you to boost your retirement savings and to achieve your best retirement outcome. So, Duncan, you spoke earlier about your role as a Financial Adviser. Can you give us an overview of the role that financial advice can play in boosting super?
It's never too early or too late to get financial advice. Seeking advice can help you get a plan in place and on the way to achieving your retirement goals, we'll consider things such as maximising your current income, reducing tax, increasing contributions, to super, focusing on any non-deductible debt and reviewing your risk profile. We can then start visualising what retirement might look like for you.
Now AustralianSuper has a range of different financial advice options, so how can someone determine which option may be best suited to circumstances.
AustralianSuper aims to provide help and advice to members as they need it. And we do this in three main ways. Online via our website, which has a range of tools and calculators, and information about AustralianSuper and super in general. You can speak with an advice team member over the phone for simple personal advice, covering topics relating to your AustralianSuper account, such as your investment options, making contributions to super, insurance, and retirement income options. This advice is provided at no additional cost to members. Its cost is included in the membership fee that we all pay. So, I would suggest that to get the best value from your AustralianSuper membership, it makes sense to seek advice as you need it. I'll just note that phone advice for retirement or transition to retirement has a small fee. For those members who would prefer to meet with an adviser, or maybe have more complex issues, AustralianSuper also offers access to Financial Planners based in our offices around Australia. This advice is usually provided with face-to-face or virtual meetings. The financial advice service is at the member’s own expense. You can also access advice in your local area with a registered Financial Adviser. You can find all the advice options through our Find an Adviser tool.
By attending today's session, you've already taken a step in learning more about making the most of your super. I encourage you to look at what is available to you and determine what is the best course of action for you. We thank you for attending and wish you all the very best with your financial journey.
The Government Age Pension – are you eligible?
Many Australians in retirement receive either a part or full Government Age Pension. And the good news is you don't have to use all of your super before you can access it. Learn how the Government Age Pension works, the eligibility criteria, and what income and assets impact it.
Learn moreThe Government Age Pension – are you eligible?

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When you think about your retirement and how you're going to fund it, you may only consider your super balance. But around 62% of Australians over the age of 65 receive a part or full Government Age Pension payments, and the two can work together to support you in retirement. These extra payments can support your super and help you manage your retirement budget. The balance between super and the Age Pension is different for everyone, but understanding both can help you feel more confident about your retirement.
My name is Claire and I'm an Education Manager at AustralianSuper. My job is to help you better understand how super works and I have been working in financial services for over 14 years. I'm joined today by AustralianSuper Financial Planner Kevin Moore to help us understand how your super and the Government Age Pension can work together. Welcome Kevin, can you please tell me how you help people, in particular, when it comes to their retirement and the Age Pension?
Thanks, Claire. My job as an AustralianSuper Financial Planner is to assist AustralianSuper members and would be members to get their best possible financial outcome, and for most people, that's their best possible retirement outcome. It's a fact of life that most Australian retirees will get a part or full Centrelink pension, so it's an integral part of any planning that we do to make sure that any of our AustralianSuper members who are looking at retirement to see whether they're eligible for any benefits, and for us to assist them to maximise those benefits, if possible.
Before we start, it is important to understand that the information we are covering today is general financial advice, and doesn't take into account your personal objectives, situation or needs. Before making a decision, consider if the information is right for you and read the relevant Product Disclosure Statement by visiting australiansuper.com/pds or by calling 1300 300 273. Also, it's important to note that investment returns are not guaranteed, and past performance is not a reliable indicator of future returns.
Most people attending today may have some understanding of the Age Pension and how it works. It is a regular fortnightly income payment from the Australian Government to provide financial support to retirees, and it is subject to a range of eligibility criteria, including your age, your assets, and your income levels. But most importantly, it can work together with your super to top up your retirement income. A common question we often hear is, do I have to wait until my super runs out entirely before I can apply for the Age Pension? And the answer to this is usually no, you can still have a super balance and other assets and income and apply for the Age Pension, as long as it's within the income and assets test limits, which we will cover today.
As I've mentioned, your level of income and the value of your assets affect the payment rate of your pension. There are different Age Pension rates for singles, couples, and homeowners. If you're in a couple, whether you're married, separated, or living with a de facto partner, can also affect your payment rate. Generally, Services Australia will consider you to be in a couple if you're married, in a registered relationship, or in a de facto relationship. When looking to apply for the Age Pension, the first factor when it comes to eligibility is your age and residential status. When it comes to super, retirement and the Age Pension, there are two important numbers you need to be aware of, your preservation age for super and your Age Pension qualifying age. Kevin, can you please step us through these two important considerations?
Super could form a major part of your retirement income, so it's important to understand when you can access it. Your preservation age is the minimum age you must reach before you can access your super, and it varies depending on the year you were born. In addition to reaching your preservation age, to access your super, you need to have permanently retired, or want to transition to retirement while you're working, or have changed jobs on or after turning 60, or have turned 65, even if you're still working. You will see from the table that if you were born before the 1st of July 1960, your preservation age was 55. That gradually increases up to age 60 for those who were born after the 1st of July 1964. We find that preservation age is often confused with the Age Pension qualifying age, which, in fact, is quite different. If you're eligible for the Age Pension, you will be able to apply for it when you reach your qualifying age. As you can see, your qualifying age is higher than your preservation age. That means that even if you've reached the age you can access your super, you may be a number of years away from being eligible to receive the Age Pension. The Age Pension qualifying age increases in line with your age. For example, if you were born before the 30th of June 1952, you would have qualified for the Age Pension from age 65. If you were born on or after the 1st of January 1957, your eligibility for the Age Pension will occur when you turn 67. Between these dates, the Age Pension qualifying age increases incrementally. You can work out from the table when you will be eligible for an Age Pension.
In most cases, being eligible for the Age Pension means being an Australian resident who has lived in Australia for at least 10 years. You must have lived in Australia for at least five years consecutively. You also need to be in Australia on the day you apply for the Age Pension. If you're not an Australian resident, there are some circumstances in which you could be eligible for the Age Pension. For example, those who have lived or worked in a country that has a social security agreement with Australia, and refugees. If you meet the age and residential requirements, your eligibility depends on two tests: an asset test and an income test.
As we've discussed, the value of your assets determines your eligibility for the Age Pension, as well as the payment rate you receive. To have the value of your assets determined, they're subject to what's called an assets test. Kevin, can you please explain what assets are assessable and which are exempt?
The asset test takes into account the value of the assets you own. This includes investments such as shares, cash, term deposits, bonds, includes super and retirement income accounts, yours and your partners, household contents, a car, property, although generally it doesn't include your principal home and up to two hectares of the land it's on. It's important to note that assets such as your household contents are the fire sale value, not the insured value. So, if you had a garage sale today and put everything you own on the front lawn, how much would you have in your hand at the end of the day? That is the value of your assets as considered by Centrelink. The test also considers assets that may not seem obvious. These include any deposits you may have paid on a granny flat or retirement village for the rest of your life and includes any gifts or assets you might have given to family members or friends. There are also assets that are exempt from the test, including your primary place of residence and surrounding land, up to two hectares on the same title. Some properties larger than two hectares on the same title, in some circumstances. It includes super accounts if under Age Pension age. So, for example, if your spouse or partner is under the Age Pension age, their super would not be assessed by Centrelink. And it also includes funeral bonds and cemetery plots. It's also important to understand the rules around gifting. The first thing regarding gifting is if you want to give money away or help out a loved one, you can. It's your money, you can do what you want with it. However, if you are receiving the Age Pension, it can impact on how much you may receive. It is considered gifting when someone gives away an asset or assets, or transfers, or sells an asset for a value that is less than market value. There are some allowable limits where you can gift without it adversely impacting your Age Pension payment. This is $10,000 per year, but not more than $30,000 over a five-year period. If you're a couple, that $10,000 and $30,000 is for both of you, not as individuals. After five years, the gifted amount is no longer assessable. The asset test has different thresholds for singles and couples, and whether you're a homeowner or a non-homeowner. If assets are below the lower threshold, you're eligible for the full Age Pension under the assets test. As the value of your assets increase, the amount of pension decreases. If your assets are over the upper threshold, you will not be eligible for the Age Pension.
For many Australians, measuring income isn't as simple as just looking at a payslip. Income can come from a variety of sources, such as investments and interest on savings. When it comes to the Age Pension, your combined income has to be under a certain limit for you to be eligible for payments, similar to the assets test. To assess your Age Pension eligibility in relation to the income test, the Government looks at your total earnings across all your income streams. This total income value along with your total asset value will determine if you're eligible for the pension, and how much your pension payments will be. Just like the asset test, the income test has different thresholds for singles and couples. If your income is below the lower threshold, you are eligible for the full Age Pension. As your income increases, the amount of pension decreases. If your income is over the upper threshold, you become ineligible for the Age Pension. The income test looks at all income sources. This includes employment income, wages you might earn from working, or money you might receive from businesses you own. It also looks at investment income. This include your super and income created from financial assets, such as savings accounts, managed investments, and shares. Income sources exempt from the test include rental assistance payments, child support, emergency relief payments, and regular payments from a close relative.
To assess the income from your investments, the Age Pension income test uses a set of rules known as deeming. Deeming works by assuming your financial investments are earning a certain amount of income, rather than considering what they're actually earning. The rate your investments are deemed to be earning is set by the Government and is known as the deeming rate. For example, for a single person, the first $56,400 in investment assets have a deeming rate of 0.25% applied, and any asset value above that amount, they have a deeming rate of 2.25% applied. When you compare this to your potential super returns, you could actually be earning more on your super or account based pension than the deeming rate that is applied.
There are a couple of other considerations and strategies that come into play if you are receiving or hoping to receive the Age Pension or are retired. Kevin, can you briefly explain what some of these are?
One of those considerations is the Work Bonus. I find many people get asked to come back and help out at work on a casual basis after they retire, or even find that they miss the social aspect that work brings. The Work Bonus refers to an exempt allowable amount of earned income from work, which includes self-employment for Age Pensioners. The first $300 per fortnight is exempt from the income assessment and can accrue for up to 12 months. This can be really helpful if you get asked to go back to work for a couple of weeks, as you can potentially do this with no impact to your Age Pension payment.
For those members that are not eligible for the Age Pension, there is the consideration of the Commonwealth Seniors Health Care card. This entitles the holders to concessions and discounts on everyday items to reduce the living expenses of retirees, and therefore reducing the need to draw on their retirement funds. This is income-tested, but not assets-tested. The majority of people I see that aren't eligible for the Age Pension are mostly able to qualify for this card, due to the current low deeming rates. Furthermore, those who have not yet reached their qualifying age may be eligible to claim the Low Income Health Care card. Checking eligibility for these types of concession cards are part of the advice process.
Although not an Age Pension or Government benefit, the downsizer contribution is a very useful strategy for retired or older Australians. If you're 55 or over and sell a property that has been your main residence for 10 or more years, you could be eligible to contribute to super via a downsizer contribution. This may be suitable if you want to sell your home and use any surplus funds to boost your retirement savings. You can add up to $300,000 per person into super, regardless of your work status, super balance, or what you've already contributed under the ordinary concessional and non-concessional contribution caps. However, one area to be aware of is that moving funds from a non-assessable asset for the Age Pension into an assessable asset may have implications for your Age Pension payment. It's also important to note that the contribution needs to be made within 90 days of settlement, so it might be worthwhile to seek advice prior to ensure that this is appropriate and has been planned before settlement.
If you're eligible for the Age Pension and approaching retirement age, you don't have to spend all your super before you're eligible for pension payments. You can draw payments from your super to top up any Government pension payments you're entitled to. You can do this by setting up an account based pension from your super. AustralianSuper's account based pension is called a Choice Income account.
You can learn more about the Age Pension and the rules that are applied at servicesaustralia.gov.au/agepension To understand more about how your super savings and the Age Pension can work together, please visit australiansuper.com/agepension And finally, to see what your retirement outcome could be, please visit the AustralianSuper Super Projection Calculator. Kevin, you spoke about your role earlier as a Financial Planner, can you give us an overview of the role financial advice can play in the journey to retirement?
It's never too early or too late to get financial advice. We help people when they reach Age Pension age, when there may be some opportunities to maximise Age Pension payments. Maybe you've received estate proceeds or considering downsizing your home. We will consider all of these strategies and any concessions or benefits you may be entitled to.
AustralianSuper has a range of financial advice options. How can someone determine which option may be best suited to their circumstances?
AustralianSuper aims to provide help and advice to members as they need it, and we do this in three main ways. Online via our website, which has a range of tools and calculators, and information about AustralianSuper and super in general. You can speak with an advice team member over the phone for simple personal advice, covering topics related to your AustralianSuper account, such as your investment options, making contributions to super, insurance and retirement income options. This advice is provided at no additional cost to members. Its cost is included in the member fee that we all pay. So, I would suggest that to get the best value from your AustralianSuper membership, it makes sense to seek advice as you need it. I will just note that the phone advice for retirement or transition to retirement has a small fee. For those members that would prefer to meet with an adviser or maybe have more complex issues, AustralianSuper also offers access to Financial Planners based in our offices around Australia. This advice is usually provided with face-to-face or virtual meetings. This financial advice service is at members' own expense. You can also access advice in your local area with a registered Financial Adviser. You can find all the advice options through our Find an Advisor tool.
Thank you for taking the time to attend today's presentation to look at how the Age Pension can work with your super, the eligibility criteria, and some of the other strategies and considerations that may be available to you as you navigate your retirement. Thank you, and we wish you all the best on your financial journey.
Annual Member Meeting
AustralianSuper held its 2022 Annual Member Meeting on 29 November 2022. The purpose of the meeting is for the Chair, Chief Executive and senior Executives to update you on the performance of the Fund and provide an outlook for the year ahead. It’s also an opportunity for members to ask questions about the governance and operation of the Fund.
Find out more