Q&A with estate planning lawyer
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Show Transcript
Welcome. Thank you for joining us.
We're going to explore some of the practical questions that members often have about estate planning.
From planning for incapacity to avoiding common mistakes and making things simpler for the people that you leave behind. And there is no better person to help us explore this than Ann Janssen founder and divisional head of estate First lawyers. Welcome Ann.
Thank you Kim for having me.
Really glad that you joined.
Ann has over 20 years of experience in estate planning law and she is noted for delivering innovative solutions to blended families and strategies to prevent inheritances going L shaped. That is, to stop inheritances from ending up in the hands of unintended
So Ann many people believe that having a will means that their estate planning is all done. Why is this often a misconception?
Well, it wasn't a misconception perhaps 30 years ago. It is now. And the reason for that is that our lives are a lot more complex now. We have a lot more assets than our parents and grandparents did, and also our relationships have become more complex. And so 30 years ago, you might have had a house with your partner.
Probably didn't call them partner, then you called them the husband or wife. Now it's a partner and your affairs were fairly simple. Your house wasn't worth that much and you had maybe four or five kids to share it amongst. Now we have far more assets. Superannuation came in in about 1991 and all of a sudden our wealth is become more complex. We might be on my second or third relationship with stepchildren and children from previous relationships and now we've got a lot of money and more complexity and will just cannot handle all of those different things. Particularly as the wealth that we hold our assets in, it's not all covered in our wills.
So Ann what key assets or decisions are commonly not covered by a will, particularly for superfund members? So most of us have superannuation and some of us have as much superannuation as we do our the value of our home. So superannuation is not governed automatically by your will. And that comes as a bit of a surprise for a lot of AustralianSuper
members, or any super fund members. Superannuation is governed by its own legislation and by its own testamentary documents, and the main testamentary document that governs where your super will go if you pass away is the binding death benefit nomination.
OK, so. What are some of the most common estate planning mistakes you might see that causes stress, delays, or perhaps even disputes for families?
There are basically three bad mistakes that lead to a lot of problems in estates The first is the will itself has been poorly drafted. This is causing a lot of construction cases, construction of the wording cases going to court and any court estate matter is very expensive. The second big one is that the estate plan which covers more than a will, it covers your superannuation. If you have trusts, you need separate documents for that. Same for insurance.
And also jointly held assets do not pass under the Will Act in the first instance. They go to Joint Survivor. So if you are not looking at all of those elements and aligning all of those elements together, you have what I call a poorly planned estate plan. And if you have not covered all of the beneficiaries that you need to.
You are highly likely to have big problems later on. So for example, I was looking at an estate only this morning and the lady left the residual of her estate to four charities. She had an estate worth $3,000,000 and because of all of the problems in the drafting and the problems in the planning, we've actually got to the point where I act for one of the residuary beneficiaries. The charities are getting nothing. The legal costs are over $600,000 to the lawyers who are fighting it out, not us. But I'm now looking at it and I'm going.
That is huge and it's just such a shame. And that one is, I've only just finished doing so it's it's sort of top of mind. Wow. The third thing is, and this is a real crying shame, is there are tax opportunities and concessions that are available to people who get the right advice when they're doing their will and their estate plan, and unfortunately a lot of people are not getting that advice and the tax concessions and exemptions are significant for those death benefits.
OK. So how often should people be reviewing their estate planning documents and if there are certain, you know, other certain life events that perhaps should trigger an immediate review?
So this certainly are key life events where if you did, if you just ignored them and you didn't make changes to your estate plans, it would not go well for you. So, and these are the classic ones like the death of a significant beneficiary or your executor or someone loses capacity in those positions.
Other things include a relationship breakdown. You separate from a partner, you marry your partner. You divorce from a partner. All of those are what we call trigger events that need you to review your estate plan. You should nevertheless review your plan at least every five years.
Or earlier if a major trigger event occurs.
OK. So you mentioned earlier around super, you know, not flowing through a will. What role does the superfund trustee play?
So if you don't have a a binding nomination or a reversionary pension nomination, if you are in income phase i.e. you have retired, then the discretion as to who to pay your super death benefit to belongs to the trustees.
So for instance, the Board of Trustees of AustralianSuper would then have the discretion as to who to pay your super to. Now they are limited to certain dependants under the superannuation legislation, or they can choose to pay it into your will, but it's at their discretion and it's out of your control and out of your hands as to who they decide to give it to. And what often happens is the squeaky wheel gets the oil, but that might not be the person you wanted it to go to.
So we've got a couple of different types of nominations. What's the practical difference between a binding and a non binding death benefit nomination?
There's a big difference, and as the name suggests, if you have a binding death benefit nomination in place, it binds the trustees to abide by your decision as long as you filled out the forms correctly and you have nominated a superannuation eligible death dependent. So assuming that.
Your trustees are bound to follow your wishes, but if you've just got a preferred nomination, then it is just a wish and a hope. It is not actually binding on the trustees, and the trustees can make a different decision and they are legally entitled to disregard your preferred nomination and go with who they think should get the money based on a number of indice that they follow.
So binding nomination is important. What are the most common reasons that a binding nomination might end up being invalid or outdated?
A trigger event, so you nominate your spouse, but you're divorced from that spouse, or you've separated but the spouse is still nominated. You might not have filled out the form correctly with the two independent witnesses if that's what was required. It's quite strict and technical how you complete those nominations and the requirements can change depending on which superfund you're with and if you have a self managed super fund more so. So those are the key things. Also some super funds have lapsing binding nominations that only last for three years and so you might have let your binding nomination lapse.
And if you then lose capacity, you can't actually renew it and so that can be a problem for you.
OK. So Ann you mentioned a little earlier a reversionary pension. When might a reversionary pension be more appropriate than perhaps a binding nomination?
So that's a good question, Kim. And reversionary pension nominations work so that if you are in pension phase because you have retired for example, you have usually have the choice of either doing a binding nominations for instance, let's say to your spouse.
Or you might decide to actually do a reversionary pension nomination so your pension reverts to your spouse on your death. Now that keeps that reversionary pension will keep your super in 'super land' and your spouse will receive your pension and usually pensions in pension phase are tax free, so there's some really good tax benefits in doing that.
If it's a binding nomination, you may your spouse who survives you, for example in that example will have to cash it out and it might not be as tax effective then in his or her hands as it would have been if it stayed in 'super land'. But if you have, if you are relying on that super death benefit to pay specific gifts to, for example your children or children of a previous relationship. Then you have to be most careful about doing a reversionary pension nomination, for example to your spouse, because then the gift in the will, will not be able to be affected.
Okay Ann why are adult children often surprised by tax outcomes on super death benefits?
Nobody wants to pay tax.
I think it is surprising because in Australia we don't have death duties and so we don't understand, you know, a lot of clients don't understand well why all of a sudden my being slugged with the death tax on mum or dad's super? for example. And so it doesn't apply to all people, but certainly with adult children.
Because they are not financially dependent on their parents unless they were, for example, they were disabled. They will be taxed at a rate of 15% or 17% depending on whether the super goes direct to them well through the estate, and it will be taxed on the taxable component of the deceased persons death benefit and usually most of a person's super is the taxable element and so you can get quite big hefty tax bills if you decide to leave your superannuation to your independent adult children. And so this is why I was talking about the planning and the tax planning in estates. You can actually avoid significant tax bills by driving the Super to people who don't pay the tax on it and driving other assets to adult children in that example where they won't pay tax on on say, for instance the transfer of a property or shares.
There's a lot of considerations here Ann. Why is planning for incapacity just as important as planning for our death?
So 30 years ago, if I harken back to then, we were not living as long as we do now and enduring powers of attorney, the legislation for that only came in around 30 years ago, which is remarkable. And so I guess now that we're living well into our 80s and 90s, some of us will be living with incapacity and so if you don't have the right documents in place to give decisions that you would have made, but now you cannot make to the right people and with the right conditions on those powers, then you have no control whatsoever of what happens to your estate in any period when you have lost capacity that could easily impact on your will.
But more so, it impacts on the quality of life that you would like to have even if you don't have capacity.
Very important.
Absolutely.
So Ann from your experience what are some simple steps that we can take to make an executives job alot easier because it is one of those jobs that you know there's a lot involved in being an executor. What can what simple steps can we take?
So I always say to clients that if you want an elegant and simple solution, there's complexity to get to it, but once you've got it, the plan becomes elegant and simple. So to me it is a very clear recipe for people who want to minimise the risk of expense in estate matters a nice simple streamlined process for your executors and optimization of all the things you can avail yourself here in Australia in terms of tax concessions and that is essentially to have a really professionally drafted will.
This is not an area that can any longer be dabbled in. You know, we used to dabble in different areas of law years and years ago. We all had a little go at conveyancing, a little bit of family law, little bit of drink drive, bit of wills and estates.
Our world is become so much more complex now and the inheritances we have to give us so much larger that everything has become specialised and so I would encourage viewers to always see an estate planning lawyer, someone who does not dabble in this.
But who has it is one of their main focus is if not their only focus of what they do, Because then you're going to get a well constructed will, you're going to get a well constructed estate plan thinking about all the pieces are the moving parts in that and they're going to know all the advice to give you to make sure your estate is maximised, expenses are minimised, tax is minimised.
OK, so we've we've learned a lot today in this session. If members only take say three actions after today, what should they be?
OK, three things.
Take your estate plan seriously. A simple will is not going to cut it, and you are increasing the risk of your inheritance going off in ways you never conceived of, like the example I gave you that I just did this morning. So take it seriously because it has become complex.
If you don't have anything in place for you, just have a simple will. I would encourage you to get it reviewed and get it reviewed by an estate planning lawyer.
Wherever that is, whichever whoever you're comfortable with, if you have your estate planning in place but you're concerned that maybe the lawyer you used or you did a DIY will or something like that, it doesn't hurt to get it reviewed. There might be things that you missed you.
You might think you've got everything in place. I've always said I'm not worried about the people who haven't got anything in place because they know they're naughty.
But the people who've got something in place might be oblivious to the fact that what they've got in place is inadequate. So get it reviewed.
OK, thank you so much Ann. that's all we have time for in this session. Thank you so much for joining us and we hope that you took away something useful from this session. Again, big thank you to Ann for joining us and for lending ask your expertise on estate planning.
Thank you. Thank you, Kim. Thanks.
Government benefits & support
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Show transcript
Once people move into retirement, the questions we hear from members often change their focus. Many are no longer asking about when they can retire, but are instead asking things like am I getting the right amount of age pension?
What happens if my circumstances changed and what other support is available to me now?
We're now going to focus on those common questions we hear from members living in retirement, particularly around the government age pension. To help unpack these questions, I'm joined by Kris Tiberi, Financial Planner who works closely with members everyday. Kris supports members through all stages of retirement planning from pre-retirement strategy and income planning to understanding how superannuation fits into life after work. He is known for translating complex financial concepts into clear, straightforward advice that empowers clients to make confident decisions.
Now, just a reminder that the information we're covering in this section is general information only, and before making any decisions, we recommend seeking personal financial advice.
AustralianSuper has engaged Industry Fund Services Limited IFS to facilitate the provision of financial advice to members of AustralianSuper. This advice is provided by financial advisors who are authorised representatives of IFS.
Kris. Thanks for joining us now what got you into being a financial planner? As a kid, I always enjoyed the concept of investing and money and all that sort of stuff. And financial planning was this up and coming thing back when I went to university and I started a unit in it and I saw the impact that it was sort of having on people. At the time my grandmother was retiring, when I was at university and she sort of went and spoke to a financial planner, and it is quite instrumental in sort of setting her up for retirement and allowing her to retire early in it. I sort of thought to myself, this would be something I really enjoy doing is talking to people about money and retiring and structuring their assets and these types of things. So that's, that's what got me into it.
Yeah. When I was a kid, I wasn’t investing. I was just spending, if I had any money at the time.
So, in your experience, Kris, what is the most common question that members have about the government age pension from members? It's more in around work. I think it's the first question they come to us with. A lot of members may be looking to transition to retirement but don't want to.
Give up work fully and there's not a great level of understanding between the relationship between working and getting an age pension. I think members still see it as an all or nothing, wherein I guess it's our role as the financial planner to educate them to say that age pension or being eligible for an age pension doesn't mean you have to stop work.
So I think that's the big one that members really want to engage on is well, I want to continue to work maybe in a reduced capacity, can I still get some eligibility to that age pension. So that may be the first thing. The second thing they then want to ask is the relationship between their financial position and the ability to get an age pension, so.
I think the second thing we like to do then is maybe explain the asset and the income test in a in some language that the members can understand. So it's, typically those two questions that we sort of start with that then rolls off into I guess some more specific questions, the other ones gifting as well. Members sort of heard a little bit around, you know, this punishment perse of giving away assets once their age pension mode. So they want a little bit of understanding around there because again, members are looking to support either at all children or their grandchildren throughout their retirement as well.
So it's getting knowledge about something they don't really know about. Well they've heard about and qualifying age for the age pension yeah, so 67 so.
The government lifted the qualifying age to for everybody to now 67. So that's male and female. And just to I guess for a bit of information for members out there, you can make an application up to three months before your 67th birthday. So maybe something to watch out for their don't maybe wait until you've had your 67th birthday, start making preparations leading up to your birthday, Yeah. And they've got to be proactive Centrelink don't come to the correct you don't get the birthday card saying happy birthday, you're over. Age pension, age. Come over. Chat to us. You know you've got to go any good to start that process yourself with the age pension. Many members I speak to find that it's just sitting. Forget that's going to be the same. Not true. No, not true.
Centrelink want to know changes to your personal circumstances. So I guess fleshing that out a little bit more, what they're really looking for is material changes to your asset position in particularly. So that's either your income position or the value of your assets. They really want that communicated to them. So if you have a windfall, you inherit.
The money, it's incumbent on you as the recipient of your age pension to let Centrelink know that 'cause they're not going to know that you know, great Aunt Effie passed away and left you $5,000. So you've got to let them know any changes to your acid and income position. The other one where people are quite knowledgeable on is travel.
So we're seeing more and more of our members now travelling, particularly travel overseas are Centrelink want to know if you're heading overseas for more than six weeks. It shouldn't impact on your entitlements and less if you're leaving Australia permanently, but they do want to know when you're leaving, how long you going for and when you plan to come back. So that's just.
Ensure that you've got some continuity payment and more importantly, Centrelink knows what your plans are around travel. I guess the other one is people restructure their affair. So they might change a super provider, they might make some big changes to their financial position. Again, Centrelink and not going to be aware of that. You've got to tell them when you make those types of big changes to your circumstance. Now you mentioned their, their assets income changing, but the government also has thresholds that change as well as they index them in line with CPI. Yeah, exactly. So again, got a lot of members who in retirement maybe renovate the family home, don't want to big trip overseas these types of things.
Again, I'll be encouraging you if you if you're doing those things and you have this type of spending to, to let Centrelink know because a lot of members we do see they are part age pensioners and those types of material changes in asset position can really have quite a favourable. I guess how come for members. So I'd encourage members to speak to Centrelink when they've got those asset changes because it could result in an uplifting in age pension entitlements and I suppose with those changes my position thresholds I may not have been eligible for the pension in the past. Now I am, it's up to me to find out. Absolutely. So I think again that can be a little bit confusing for members is I've gone through the process before I wasn't eligible, Centrelink wouldn't let me know when I become eligible. That's not the case. I guess it's a, it's a separate assessment process every time you go through Centrelink. So really it's very common for members to spend their assets in retirement and we encourage that, that members are out there enjoying their best retirement from their assets.
So just keeping that in the back of the mind that you know, I may have been ineligible for an age pension initially under that asset test. But as I spend my assets on my retirement and maybe my best interest to go back to Centrelink just to double check that I might be eligible because as you pointed out, they do index a lot of these thresholds in March and September of every year as well. So even if you maintain the same assets, but that there is a likelihood here that at some point you become eligible for an expansion. Yeah. So it's definitely not set and forget, definitely not setting forget.
Kris, Another common question I get from members is if I start drawing down on my super, I'm going to lose my pension. Yeah, I think it's a common misconception.
And there's not a lot of understanding really income tests the government since 2015 and tried to simplify this for all older Australians in the sense that what you draw from your superannuation is not what is encountered as I guess income for Centrelink purposes. So certainly give something called a deeming rate. So I might use an example, might be a bit easier. So we've got $100,000 in income stream account and AustralianSuper. Whether I draw $5,000 a year from that income stream or I draw $20,000 a year from that income stream, Centrelink assess the income the same and ignore that drawdown amount. So they use something called the deeming rate to say that $100,000 of assets is deemed to earn income of X. So they're more interested in the value of the asset that you hold, not how much you're drawing from it. And also they don't then worry about how much that asset went up or went down. Whether they went from $100,000 to $120,000 or down to $80,000, it's that deeming on the income that determines where you fit on that income test.
Absolutely correct. So again, using the same example, it goes from $100,000 to $110,000. The deemed rate would be the same if went from $100,000 to $105,000. So it's it they're not looking at how much you earn on your money or draw from your money, they just looking at the value of that asset. Yeah, 'cause many members are worried and I'm taking $30,000, $40,000. It doesn't count. It's that deeming rate. They need to be aware of.
Absolutely. Now you mentioned before gifting because sometimes retirees find themselves in the position where they can give some money away to support family, for example.
There are some rules around how the government assessors what you give away. There is. So there's a couple of tests here. So there's really two types of spending. There's normal spending and then there's gifting. So I think taking a step back, gifting is not renovating your home or gifting is not going and buying yourself a car or going on a holiday with you and your partner if you're a couple for Centrelink purposes, that's normal spending the same as buying the groceries. Gifting really is where you're giving an asset to someone else and you're receiving no material benefit for that.
So think of, you want to go to Bali and it's you and your wife and you want to take your two adult children with you. If you pay for their flight to Bali, there is no material benefit to you in doing that. That would be a gift for Centrelink purposes. So it's that I guess giving of assets to someone else or an experience to somebody else they're trying to capture here, so they do limit that. So they say $10,000 in a single financial year is the amount that you can do from a gifting perspective, but they do limit it to $30,000 over 5 financial years. And timing then becomes really, really important because if you gift in April and then in May you could inherently go over the gifting threshold in that single financial year. So just be mindful that it's that July to June type time frame and when looking to make gifts.
So the government is not limiting what I can give away. They're just saying giveaway X will only count.
The difference between X and $10,000 is still counted as an asset. Yeah. So it's a deprived asset. So you're exactly right. Centrelink don't limit the amount that you can gift. They just limit the amount that they will waive from your asset and income assessment. So if you want to give $15,000 in a single year, that's OK. If that's what you want to do it Centrelink will allow you to I guess reduce your asset position by that $10,000 and that $5,000 of excess gifting in that financial year becomes something called a deprived asset, which essentially just means is that is that remains your asset paper for five years.
So for members joining us today, what we have practical example of giving away money and Centrelink are going to use this gifting rule. So we're in May now. So $100,000 in the bank. I've given away $15,000 to my adult son. My bank balance as of today is now $85,000, but in the eyes of Centrelink I have $90,000. So the way that it works is $100,000 less $10,000 is the allowable gifting amount. So Centrelink it's $90,000, but my actual bank balance shows $85,000. And that difference of $5,000 is the deprived asset. It's the gifting amount in excess of the $15,000 that financial year. So under the income and asset test assessment for Centrelink, I'll be assessed at $90,000 in the bank as opposed to the $85,000 that I actually have. How long do Centrelink continue saying I've got that $5,000 I gave away? Yeah, so we are in May now. So five years from May will be the time frame that they assess me is having that extra $5,000 in my bank account.
So again, you mentioned before timing is essential with the tests that Centrelink apply. Yeah, absolutely because it's done by financial year. So this way good planning can make sure that the impact of this gifting on members can be minimised.
Now Kris was spoke about the age pension and it comes with an age pension concession card.
But members ask about other cards available, whatever some of those other cards that people can get and are there different eligibility rules? Yeah. So the pension concession card is the card that comes with age pension, but there are other cards that are available and I think the two most common cards that we see some members are entitled to first and foremost is the low income health card. So the pension concession card requires you to be age pension age, so 67 for male and female. The low income health card doesn't have an age limit on it. So people of any age can get a low income health care card. We're talking adults here, not children.
But in essence, what the low income health card was brought into address is those people who maybe retire before 67 and become low income earners within I guess their retirement years. So it's a, it's a bridge between their retirement date, which might be 60 and age 60 when there.
Or 67 when they be going to become age pension eligible. So it's very similar to the pension concession card. It's really designed to reduce the cost of medication primarily through the Pharmaceutical Benefits scheme, but it does afford some other benefits in the form of some cheaper rates, cheaper rego, those types of things.
Another card which is more for people of age pension age, but maybe a self funded retirees and not eligible for an age pension because of either the income or the asset test is the Commonwealth seniors health card. So the Commonwealth seniors health card like the low income health card is income tested, but the income test is a lot higher.
That threshold is quite high and again, that was bought in by the government to sort of reward those people that maybe had self under their own retirement, not eligible for an age pension, but still wanted to give them I guess some benefits to primarily the Pharmaceutical Benefits scheme again, but there's also some other ancillary benefits that that card can provide.
So I think it's looking at your own individual circumstances first and foremost. How old am I? If I'm 60 plus maybe retired, am I eligible for that low income health card? If I'm 67 and getting an age pension, well, I've got my pension concession card. And if I'm over 67 but not eligible for an age pension.
I'm looking at something like a Commonwealth seniors healthcare and lock the age pension. I've got to apply for it. I've got to go to send link, fill out the form sold out online to get those cards. Absolutely Ann again. They will ask you what cards are applying for because the application process for all three cards is different. So it's just something to keep in the back of mine. Sounds like a lot of work applying for these cards.
But is it going to be worth it in the end for me to spend my time apply? I think it comes back to the individual member, but a lot of the members we see there is a lot of value in these cards. Medication is really expensive, so getting access to the Pharmaceutical Benefits scheme in a lot of members instances is really beneficial.
Financially for them and then the discounts in particular from the low income health card and the pensioner concession card can be quite significant in the form of a said that we're talking discounted registration that's a that's a big expense and discounted rates electricity these types of things as well. So again we see when we budget with members that these are the big ticket expense items that sit in their budget.
So any form of I guess lifestyle relief in what is a pretty expensive time in Australia at the moment, I think is absolutely worthwhile. And it's not like Akashi anything to apply other than time. So it's there, there's no application fee or anything like that. So I would absolutely encourage members to go in and make an application for those cards. So maybe a bit of pain for again, yeah, long term gain and especially Commonwealth seniors health care that one is really quite simple to retain compared to the low income health care card. There is a renewal process that Centrelink will put you through to make sure that you remain eligible for that card. But again, if you're eligible at the time and you don't have significant changes to your circumstances overtime at the renewal process is quite straightforward it’s all online now.
So government pension concession cards, Federal level, but there are also potentially state cards available depending on where you're living. Absolutely. So this is where I think people get a little bit confused. That's already got one of those and they pull out the state card and I say.
Well, now that's, just a state card. What we're talking about here is that is the federal card. So yeah, I'd encourage members to do a bit of research on these cards because, you know, if you enjoy discounted counter meal at your local hotel or something like that, those cards again can provide really meaningful benefit over the long term. Yeah. And it's reducing costs. Costs it's all about reducing cost yeah we unless you love paying Vic Roads the full rate for rego and that brings you excitement I'd really encourage it to explore these cards because it can carve a significant amount out of peoples budget, which leaves more for them to go and enjoy some of the more exciting components of their retirement spending.
Now Kris we’ve spoken about reducing costs. What about the stuff I've already got? I've got lots of assets. I've got a big family home. Alot of members go through that process of downsizing, Sea change, tree change, retirement village. How does that all impact potentially on Centrelink?
Yeah. So this is a really important consideration for members. As you broadly point out, the asset of the family home sometimes is their biggest asset in conjunction with sort of superannuation. So decisions around that asset can have some material outcomes to retirement funding. I think the first thing we should maybe call out is that the government, I mean, a lot of instances provides an asset test exemption to the family home when it comes to Centrelink. And that's, I guess it is understood, but maybe not in the context of, well then if I sell that, what then happened? So let's take a step back.
So essentially I live in $1,000,000 home. It's on a standard suburban block in Australia. When I go into Centrelink and I record my assets and income for Centrelink purposes, whilst they asked me about that home, they don't count that against me from an asset and income perspective. If I was to then sell that $1,000,000 home and I move into a $700,000 home, I now have $300,000 of assets which Centrelink are going to want to know about. So if that's sitting in a bank account, if that's in a super fund, with an investment manager, whatever I do with that money provided I don't put it into the new home Centrelink are going to assess that as an asset for Centrelink purposes and deem that asset to earn income.
So it could have an impact on the amount I get from Centrelink so that that decision to downsize can impact on my cash flow position. So again, maybe understanding that before that decision is made, I'm thinking about doing this, what impact will have on my individual circumstances is prudent. And then that would come out in the discussions you have with a member about future plans for the 5-10 years down the track. How's it going to affect me then?
Absolutely and then the other thing to be wary of is there are different rules and treatment around retirement villages. How much money is being put down to go into these types of villages can get a little bit complicated. So again, I'll just encourage members to maybe discuss their individual circumstances with either Centrelink or a financial planner just to get, I guess, a real clear lay of the land.
Tips to what will happen come, I guess that downsizing type of end because the last thing we want to see here is, you know, full age pension recipient, you know, tracking really, really well from a cash flow perspective, maybe just need a little bit more capital out and then you go and make a decision and it really compromises that at age pension payment and an put you off in a worse off position from a cash flow perspective. Kris we spoke about people who make a decision to do something. What about when decisions are forced upon someone? They got to move into aged care and suddenly throwing a whole new world of Centrelink forms and rules. How do you help people through that? Yeah, I think the best starting point.
Is there's a lot of emotion in those situations and in a number of instances actually not the member that's having to make these decisions. It might be the children of the member under sort of a power of attorney type arrangement. So there are there is support out there, there's age care specialist offices that do offer the opportunity for members and their children to meet with somebody face to face to really talk through those decisions. So I think taking a step back, selling the family home, it's a significant life event. So I would just encourage members to reach out for support, whether that's an age care specialist, one of these specialists through I guess the age care system or financial planner.
I think discussing or walking through the options I think is absolutely prudent. So it’s that preparation again of this is the action. What are the implications? Yeah, because again a lot of people towards the end of their retirement years that they may be that full age pensioner and unlocking any amount of capital from that family home through that, that lifestyle type event, it is likely that it could have an impact on, on that age pension position. So I think just knowing that first and then there's age within age care, there's a whole host of rules and regulations and that sort of stuff. So I think getting your head around that, just say that you're informed around the decisions you make.
And reaching out for support from those organisations, yeah.
Finally, Kris, we've spoken about a lot of things. A lot of people might be feeling a bit overwhelmed. What would be your top five tips for this process. So I guess start with getting a reference number for Centrelink. A lot of people don't have one. So what does that involve? That involves going to Centrelink, taking your identification documents and saying ‘I’m Peter and I'm here to claim my age pension’, so Centrelink will issue you with that customer reference number.
And once you've got that reference number, that's really the first step. I think that the second step is to apply early. So get ready early. So I'm turning 67 in August or September, 3 months up to my 67th birthday. I can make that application for an age pension. So start nice and early because Centrelink won't back date you if you wait till you're 70 to make an application. So I think that's really, really important.
Further as to that, don't make the assessment yourself. I think we've given a lot of, I guess, general information today, but ultimately it sent Lee to make the decision. So if you don't ask, you can't receive. So I'd really encourage members to ask the question around.
Am I eligible for an age pension? Do the assessment? The worst they can say is no, it's not a black mark against you forever. It can be revisited overtime, which I think is the next thing I'd really encourage members to do, especially those have already made an application and maybe been declined, is to revisit, I guess, that application process.
The indexation across March and September, because inflation is been a lot higher than maybe previous years. Those indexation amounts of have gone up quite a bit. So maybe revisit whether I've become eligible again. And the other one is I've been on a pension for 20 years and I've never been back to Centrelink. I'd really encourage those members.
To go back in and have a chat to Centrelink, especially if their asset position has reduced overtime, it's likely that they're being underpaid from an age pension perspective. So just making sure you're on the right amount of payment is really important as well.
Thanks, Kris.
As we've heard from the expert's retirement doesn't mean that everything has to be locked in forever. It's about knowing that life will change. But there are places to turn to for support when this happens. Whether it's questions about Centrelink, concession cards, housing, aged care or support options, you don't have to navigate it alone.
We hope today's conversations help you feel more informed, more reassured, and more confident about the choices that you have now or those that lie ahead.
How to live well in retirement
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Show transcript
Today, we're going to move beyond the numbers to the emotional transition and explore how to live well in retirement.
When people think about it, they often focus on the numbers. Have I saved enough? Can I afford it? But what many people are surprised by is that retirement isn't just a financial change, it's an
emotional one too. For years, work gives us structure, routine, social connection and a sense of identity.
So when that chapter ends, it's completely normal to feel a mix of excitement and uncertainty, even a sense of loss alongside the relief of finishing work.
If you've ever thought 'I should be feeling happier about this', or 'why does this feel harder than I expected', you're not alone. Nothing is wrong with you. This is a
common part of the transition. Today is about acknowledging that reality. Retirement isn't about stepping away from purpose, it's about redefining it.
On your own terms and with the right support.
I'm joined by Mia Northrop from our Strategy and Insights team. She is a seasoned insights and research leader with over 20 years of experience in market, voice of customer, and design research.
Welcome Mia, thanks for joining us today. Thanks Peter. Now, Mia, In your role, what do you do to help our members? I have the privilege of talking to members about their experience.
Tell us how they're thinking about their personal finances and super and helping drive product innovation and customer experience is here at the fund. Alot of people see retirement is this permanent holiday. What may be a healthier way to to look at retirement? So the key thing to think about retirement is that it's a stage, it's not an event.
And if you recognise that it's a stage that could last 10 or 20 or 30 years, hopefully longer, you can't be on holiday all that time. It gets pretty expensive and pretty unfulfilling. So a healthy way to think about it is a transition as a period, another life event milestone that we can think about that similar is getting married. So some people focus on the wedding.
The event the big day.
We know that probably pays to focus on the marriage itself and the fact that life as newlyweds is very different to 10, 20 or 30 years. You have a happy, successful marriage. It takes effort for a marriage to flourish. It matures, it changes over time and retirement is similar. You have the event of that, the glorious day of the last day at work where you might have resigned or you're stepping away from your business.
But then you have 10, 20, 30 years ahead of you in your retirement. So you can reflect on what does retirement look like in your 60s or 70s or 80s? How might your needs change? How does your lifestyle change? What kinds of preferences or interests are you gonna have at those different stages? And get intentional about those phases so you can think about
those different phases. Who will you live with? Well, you live? what were your day look like? What will your social life look like? And be intentional about it. So yeah, healthier way to think about it is is a period, it has phases and to be intentional about each of those phases. So how important is it for a mindset?
To shape that retirement you're looking for. Yeah. Well, like most things in life, mindset is everything. And there are two mindsets are particularly useful for retirement. Our audience probably has heard of both of them. The first one is a growth mindset as opposed to a fixed mindset. And growth mindset says that you believe that
as a person, you can learn, you can improve your capabilities through commitment and hard work. A fixed mindset suggests that you're born with certain traits and smarts, and that's it. So you know, you could imagine that there's a lot to learn about going into retirement. We've talked about so many things today, a growth mindset where you are
into lifelong learning and you're curious about things sets you up for success because there's lots to learn about retirement. There's the new financial products, there's getting your head around account based pensions, the government age pension, the age care landscape and thinking about your life in a new way. So that growth mindset really comes in handy.
The second mindset is an abundance mindset as opposed to a scarcity mindset. An abundance mindset is a set of beliefs where you recognise the opportunities and the resources that you have available to you, as opposed to a scarcity mindset which might keep you in that fear of running out hoarding savings mode.
Where you feel like there's never enough time, there's never enough money, there's never enough opportunities. So an abundance mindset isn't sort of thinking I'm going to spontaneously manifest money. It's still important to recognise the financial realities of where you are, but it recognises that you have choices, you have options, you have resources that she can tap into weather.
Its financial resource is cognitive, emotional, social and that there's lots of opportunities an contributions you can still make. So those two mindsets together help you see yourself in a new identity as you move into retirement and tap into the opportunities and choices that you have before you in a positive way. What advice would you give to a member who's feeling?
Anxious around certain about what we're time it might look like for them. Yeah. So everyones anxious about some aspect of retirement, whether it's will I have enough money, what am I going to do all day? Is my partner gonna drive me up the wall if we're home together all the time? You know how I feel when I don't have a job title or a role in a business. So that's as you mentioned
before very common but sometimes unexpected feelings. The antidote to this kind of anxiety is action. So everybody in the audience should congratulate themselves for tuning into the webinar because they're taking action to get certainty about what retirement might look like for them and we encourage people to keep doing that. Listen to
podcasts, read books, get your questions answered. Anything you can do to reduce that level of unclarity is going to be useful. And there are two insights from our retirement confidence research, that are reassuring here. The first is that when we talk to members who are in their 50s in that sort of planning stage, we ask them how confident
do you feel that you will live well in retirement? And about 52% feel like they're going to be confident. It's a little less for women. And then we ask them again once they've actually retired. So they've gone through the transition, have made all the big decisions. And that jumps up to 72% feeling like they're going to be confident in the rest of their retirement. So just going through.
The process? Your anxiety actually plummets once you've made the decision and taken that step.
The second insight is that there are two most important drivers of retirement confidence beyond just your super account balance. The first is just having a goal, a target number that you're trying to hit and a plan to get there. And the second is knowing enough to manage your money.
Again, taking action so that you have a goal, you've worked out how to get to that goal and you feel like you've learned enough to manage your money comfortably or confidently is going to reduce that uncertainty by giving you clarity. So that was what we encourage people to do make a goal, workout how you gonna get there improve your knowledge so that you're
confident in managing your everyday money and you'll have a much more enjoyable retirement 'cause you're going to reduce those anxiety levels. So again, comes back to planning. Yes. that's an insight I hadn't thought about Mia, and I'm sure other people wouldn't have thought about that sort of thing as well. Now me, I mentioned before identity shift, how can people plan better
at that stage of their their life? Yeah, it's really interesting thing that we see with our members and it comes down to everyone's relationship with work. So everybody has a different relationship with work and they fall into roughly four different styles of curious where you think you are with the styles and I'd like to audience to think about as I go through them. Which one
resonates with me. And what does that mean for how I might navigate retirement? So the first style is where work is just pays the bills. It's a paycheck. It's important to have rewarding work, but your identity is tied up with your family or your faith or your community or your hobbies. It's outside of work.
So for those people, retirement is a relief. They love the freedom, but it doesn't bring up their sort of existential crisis of, you know, who am I now? It's very much more about the practical stuff. So that's, that's the style one. Style two is where work is really a vocation or calling. So a lot of people in helping professions feel this way about work.
It's where they feel like they make a contribution, they feel needed. It's tied to a sense of responsibility and productivity.
And so for these people, that transition can be a little disorientating because they feel unneeded. They feel like that their talents might be wasted and they're worried about sort of being productive. So for those people in retirement, you need a way to channel those kinds of thoughts and energies into mentoring or volunteering or something where you can contribute
in a in a similar kind of way. The third style is for people who see work as providing structure and routine, which she mentioned before, and that social connection. So it gives shape to their day, gives shape to their week there year. It's where they get a sense of accomplishment that gives them a sense of respect as well.
And again is that sense of purpose and meaning in the routine it gives their lives. So for those people there can be a sense of loss when works goes away. This can be unsettling about what is my day look like now and and why am I? Why am I getting up in the morning? You need to find new reasons.
The fourth and this style is probably the one that experiences sort of the greatest shift in identity is when work is really a big part of your identity, is core to your identity. So work is where you get a sense of belonging. It's where you see your purpose, your status. It's where you set goals. You get a sense of mastery out of work.
A lot of people have their own business, sort of have this kind of relationship with work as well. So for those people, they need to think about how they're going to
have these opportunities to contribute or build their self worth it another way when paid work is at the centre of it. I think I'm probably the first one with a bit of the second one somewhere in there I think. I think it also changes over your career like you might have started out feeling like 'Oh yeah, I'm this is my calling' and as you get
you know, decades down the path, your relationship might change.
A lot of people plan financially, less so emotionally. What is one thing that surprises people when they retire? Yeah. So the people who are deeply connected with their work.
A whole raft of feelings can come up, but then not expecting, but very common. They can feel grief, they can feel lost they can feel lonely, they can feel depressed and anxious. They might feel guilty and they might feel bored. I've interviewed people where they like time is bit more boring than I thought. So some people feel that you might feel none of those things.
You might feel just utter elation and freedom and you're living your best life and you're in love with your lifestyle and you might feel some of these emotions at different stages of retirement. So some people might feel flat and unsure about how they going to inject some purpose into their life. We also see with people who have more senior roles or run their own
business, you are used to being consulted on things and deferred to and being at the centre of things. Sometimes these people feel a little invisible they're sort of at the edges of things. So if their work gives him a huge sense of self worth, they also need to find other avenues for creating that feeling.
So yeah, all of these feelings are common. You might feel different ones at different stages, but there are things you can do at each of those phases to to work through those feelings or prepare beforehand so they don't hit you so hard. Now Mia we've spoken a couple of times about identity shift. How can people manage that identity shift in a in a healthy way? So a good way to think about it
is thinking about how you showed up at work in terms of your skills and your attitudes and behaviours? And can you use those skills and attitudes and behaviours in how you show up in new parts of your life? So if you were used to managing people or leading people or organising projects, you might turn to working in a non profit,
or in the community, you might volunteer, you might mentor people, you might jump on a board and you get to use these same skills just in a different way. So that can be helpful if that's the way your wired. We also see people who think, OK, well I was primarily useful through paid work. Now I'm going to lean into this idea that I'm primarily useful through my relationships.
So they might be caring for a partner or a relative, a parent, they might provide more support to grandchildren or their adult children with some healthy boundaries in there. But they can sort of lean into their family and take on more of those matriarch, patriarch roles where there interested in a sense of legacy for their family and that can be very rewarding and
very profound for people. So depending on how you're wired, you can start to set some of these things up and re balance your life in this way before you actually leave paid work. So it's not such a binary switch on, switch off. You kind of taper into it. Some interesting concepts there, but again, most people may not have thought about. Did your research show there's a difference
between those that plan their retirement rather than those that just go straight into it? Yes, we certainly see patterns in different groups here. The research here is pretty clear. So we find that there's people who plan their retirement, whether it's at a certain age or a certain number of years, feel more in control
of their retirement. They have been proactive and so that financial transition and the emotional transition is usually a little smoother. For people who don't retire on their own terms. And that can be because there's health issues or they have to care for a partner or they've be made redundant and can't find suitable work. Those people when we talked to
them they sort of talk about retirement happening to them instead of choosing it. So that sort of loss of agency, that loss of choice, can make them feel quite anxious and they can have a harder time shifting into retirement. So,
it's interesting that retirement confidence isn't just about having that sum in the in the balance, it's also about that readiness and that choice and how much control you have about retirement. So we've talked about the transition to retirement product. We see lots of people who taper down, go part time, start playing around with a new lifestyle.
And feeling not just the new pace of their day and their week, but also how they manage their money in a different way. And they often have sort of a smoother retirement because they're emotionally ready as well as financially ready. Now Mia give us some great insights, but what is one thing that people could do to help prepare for this
transition? Yeah, great question. I'm gonna say something that I think some people will find unexpected. They're probably thinking, I'm gonna say get some financial advice, which obviously we encourage. It is a great step to take. But what I suggest people do is a little experiment, which is to take some time away from work.
Might be a week, might be a few days. And don't actually go on holiday and plan holiday activities in a holiday budget. Just live at home as if you were retired.
And plan your days as you would if you were thinking, this is what I want my retirement to look like. What does it feel like when you're at home and you've planned certain activities? Maybe you thought you're going to lean into hobbies. What does actually feel like to live this way? And you'll be surprised what you learn because you'll notice parts of the day
where you are having a great time, you might notice parts of the day where there was some friction or some boredom and it just gives you a little sense, you know, a reality check in a bit of a sense check about what retired life might actually look like and feel like Especially if you're retiring at a different time to your partner, if you have a partner. What does it feel like when one of you
is at home and the other is still working? How does the pace of the week feel? How does the rhythm of the week feel? It'll give you some clues about what you might need to dial up or dial down or think about differently when you actually retire. So it's a little lived experiment just for a few days or a week to see how that life actually feels and it will give you some clues as to
what you might need to plan for the future. So if you have a partner, it's what you do together, what you do apart. That's right. Thanks, Mia, for your time. Unfortunately, we've run out of time. What is one thing that you could leave with people to make the most out of their retirement? Yeah. I suggest that people reflect on whether they have a retirement role model.
Or a retirement buddy. So one thing we noticed in the research is that a lot of people, they might have had people in their lives that have retired, but they haven't sort of looked closely at how they did that. And a retirement role model can be a really powerful north star to start thinking that they've retired. I love the way they're living their life. How did they do that?
And having a chat with them or having a buddy that you can talk through your planning together. So someone that you can bounce ideas off, talk about what they've researched, the products they've discovered, the questions they have so that you don't have to go through this alone. So who is going to be your sort of wing man as you go through retirement or start planning for retirement? And that does a couple of things.
One, it gives you a sense of agency because you like, if they can do it, then I can do it. And it also you have someone to share ideas with and learn from and step into retire together. If you're going through this at the same stage. It could be a colleague, it could be a friend, it could be a family member, it could be someone you've met at the dog park.
It doesn't matter as long as you can have those sort of transparent conversations about what you're doing with your money and how you're going to set up your retirement so that you actually really enjoy it. Thanks, Mia, and really appreciate your your time in the insights you've given to us today.
We hope this has got you thinking about how you can prepare not just for the financial transition to retirement, but the emotional too.
Investment fundamentals
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Show transcript
Hello everyone, welcome and thank you for joining us this afternoon for AustralianSuper’s Investment Fundamentals presentation. At AustralianSuper, we're focused on delivering strong long-term investment performance to members to help you all achieve your best possible position in retirement.
So whether you might have just opened your first super account or perhaps investment is a topic that's interested you for some time, today we'll unpack some of the investment concepts and strategies that will help you make sense of the choices that you have.
My name is Andrew Hambling and I'm an Education Manager at AustralianSuper. My job is to help members better understand how super works so everyone can make the most of it. In the background today, I'm also joined by my colleague Michelle, who will be placing some useful information for you in the chat button. She is also available to answer any questions you might have, which you can type into the Q&A button as we go through the presentation today, or if you do have any questions in relation to investments at AustralianSuper.
AustralianSuper acknowledges the Traditional Custodians of Country throughout Australia and their connections to land, sea, and community. Today, I'm speaking on the land of the Kaurna people.
It's also important, before we do get into the content today, that you understand this presentation may include general financial advice, but we haven't taken into account your personal objectives, financial situation, or needs. So it is important, before making any decisions, that you consider whether or not this information is right for you. You can read the relevant Product Disclosure Statements and Target Market Determinations available at australiansuper.com.
It's also important, because we are looking at investments today, that you understand that investment returns are not guaranteed and past performance is not a reliable indicator of future returns.
Now, we know that investing in our future selves involves looking after our physical and mental wellness, but it's also important to consider our financial wellness. Learning more about your super, which is likely to grow to be one of the largest assets you may ever own, can be a great first step to improving your financial well-being.
Today, we're going to help you understand how investment works, the way you can invest your super, which can make a big difference to how much you have in retirement. So, whilst retirement may seem far away for some members who have joined us today, decisions now can help you shape your future.
We're going to have a look at investing with AustralianSuper and the investment options available at AustralianSuper. We're going to run through three powerful tips for investing and provide some help with choosing the right investment option. Finally, I'm going to outline some next steps and places that we can all go for help, advice, and guidance from AustralianSuper.
To start with, many Australians, when they hear of their superannuation fund — which we can say AustralianSuper in this instance — believe that that is one particular investment option. This can be a common misperception in the community in Australia. However, AustralianSuper is the trustee that looks after members’ money and members’ assets. But within the AustralianSuper fund, there are actually lots of different investment options available for members to choose from.
At AustralianSuper, our default investment option is the Balanced MySuper fund, which you can see on the screen is part of the category we call our premixed options at AustralianSuper. But there is a broad range of different investment options that members can choose to put some or all of their super into specific investment options.
Now, at AustralianSuper, we broadly categorise our investment options into three categories. The first one is our premixed options. These are designed for members to be able to indicate how much investment risk they're prepared to take with their investments, and the AustralianSuper investment team does all the work on managing those investments. So you can see at the top we have High Growth and Balanced, and at the bottom of that list we have Conservative Balanced and Stable.
In the middle, we have our DIY or Do-It-Yourself mix options. Once again, these options are invested and managed by the AustralianSuper team, but this is where members can choose to put a percentage or all of their super into a specific asset class. You'll see we've got Australian Shares, International Shares, Diversified Fixed Interest, and Cash.
Finally, we have an option called the Member Direct option. This is a very hands-on investment option where members can actually choose to buy and sell specific investments across a wide investment menu. We do have a Member Direct investment menu available at AustralianSuper which outlines all the different investment options members can buy and sell within their Member Direct option.
It's also important to note that if members are interested in what the Member Direct option entails and what might be included, all members are actually able to access the Member Direct option by clicking on ‘Investments’ either in the mobile app or in their online portal, and clicking on ‘Member Direct’ to have a look at how that feels. Members can actually have a look inside the Member Direct platform and view some of the news articles and the research is available, but as long as they don't transfer any money into the Member Direct account, then they won't have started that option. So everyone can actually have a look at the Member Direct option and see what that looks like.
Now, how are these different investment options made up? Generally speaking, there are two main types of investment options: growth investments and defensive investments.
Growth investments can actually make more money over the long term, and this is because they are bought and sold. You can see there in the middle we have real assets, and sometimes people think about real estate. Houses are bought and sold in a marketplace, and the price is determined based on what people are prepared to buy that asset for on any given day. That's very similar to all the other growth assets. But as a result, their value can actually go up and down a lot in the short term, and the account balance in the super account with more growth assets can change more frequently.
On the other side, we have defensive assets. Defensive assets are slightly different and they don't tend to fluctuate as much in the short term as the growth investments. So, they're definitely less risky in the short term. They often generate returns from an interest or a coupon return rather than from the increase in value of the asset. But over the long run, they usually offer lower returns compared to growth investments because those growth investments can rise in value. Cash is a defensive asset, whereas listed shares, for example, are an example of a growth asset.
Now at AustralianSuper, we do invest in real assets, and some of the real assets that members hold in the premixed investment options include Perth Airport. Recently, Perth Airport has undergone a multi-billion dollar expansion, and AustralianSuper members were able to support Perth Airport with that expansion. So if you have travelled through Perth Airport recently, you would have noticed the expansion at that airport, and that is an example of an AustralianSuper investment on behalf of members.
Another investment that AustralianSuper has made in recent years is actually investing with a group called Assemble. Members would be aware that there is clearly a housing shortage in Australia, and the Assemble project is an opportunity for AustralianSuper to help address the housing shortage. Through Assemble, AustralianSuper has invested in several projects to add additional housing outside of Melbourne and help address this housing shortage in Australia.
But AustralianSuper is a global investor. Some of the global real assets that AustralianSuper has invested in include King's Cross in London. King's Cross has been a significant urban transformation in London. AustralianSuper has invested in this asset since 2015, and King's Cross is a development of retail, offices, and residential spaces. So if you're ever travelling through London in the United Kingdom, it may be worth going past King's Cross to see an example of where AustralianSuper has invested internationally.
In more recent times, AustralianSuper has also invested in Vantage Data Centers. We see the expansion of digitisation and a demand for data as a theme that shapes investment opportunities for AustralianSuper members. So we are investing in assets like tower networks and data centres to capitalise on this theme.
Now, there are broadly two main ways in which investment managers can invest: active management and passive management. Active management is the process of actually making investment decisions about what investments should be included in an investment portfolio and which investments potentially should be avoided. Passive management, sometimes also called index management or index-managed funds, generally tracks the market but does not make specific investment decisions along the way.
An example at AustralianSuper of our actively managed investment options are our Balanced option, our High Growth option, Socially Aware, Conservative Balanced, and Stable. But we do have a passive option available called our Index Diversified premixed option.
At AustralianSuper, we do actively invest, and as I mentioned, we are a global investor. What you can see on the screen is an illustration of where AustralianSuper invests, not only in Australia but also all around the world. AustralianSuper is Australia's largest superannuation fund, and we use our size to benefit all our members. We have in-house investment expertise, we're active managers, and we do this internationally for our members.
So let's now have a look at some powerful tips to consider when investing. We're going to look at the power of compounding returns, why time is an important factor for investment, and the concept of diversification.
Compounding is a really important part of your super. Put simply, compounding is the investment returns generated on the returns you've already received. When members nominate to invest their money at AustralianSuper, AustralianSuper takes that money and invests it on their behalf. Members then get a return on that investment. In the next year, the members' money is invested along with any returns they've already made. This process continues to repeat like a snowball rolling, gathering layer upon layer as it grows. That's how super accounts grow to become very large assets over working people's lives.
Time is also an important consideration. A consistency of the investment approach will help manage longer-term outcomes. Many people might have heard the saying, "It's the time in the market, not timing the market," or trying to pick winners that matters. Sadly, at the start of the financial year, no one has a crystal ball and knows what the returns will be that year, or if there are periods of market volatility, how long it will actually take for those investments to recover.
A fundamental part of the superannuation system is that generally, superannuation is preserved until Australians reach their legislated preservation ages. This helps all Australians benefit from a very long-term investment horizon, and those reinvested returns can continue to grow over everyone's working life.
AustralianSuper has a lot of experience over decades investing in different market conditions, and we have produced a strong long-term return for members over that time.
Diversification is also an important consideration when thinking about investment. There's the old adage, "Don't put all your eggs in one basket," which simply means if you go out to the chickens, collect all the eggs in one basket, and walk back to the house and fall over, you potentially break all your eggs. The same applies with investing — not necessarily investing all in one investment. Spreading those investments across different companies, different industries, different assets, and also different areas geographically around the world. Diversification helps prevent instances where one asset may not perform as expected in the short term, and the other areas may actually compensate and produce that return for members.
Let's have a look at Jane. Jane is 25 years old. She earns $70,000 a year and her super balance is $20,000. Let's have a look at the outcome for Jane of the power of compounding, time, and diversification in action.
Starting with Jane's current super balance of $20,000, if Jane puts these different principles in action at different levels of investment return, we can see the compounding effects of those different returns over her working life by the time she reaches her retirement age. It's really important to consider those different principles of time, compounding returns, and diversification.
Now that we've looked at some of the principles of investing, it's really important that we all consider how we actually choose to invest our super to reach our financial goals. There are three main things to consider when making a choice: your investment time frame, your hands-on level, and your risk appetite.
It's important to note we do have an investment guide available at AustralianSuper, and Michelle will have put that in the chat for you all today. This is the first place to go to review all those different investment options that I outlined, but also to help with understanding the investment time frames, hands-on level, and risk appetite of each different investment option.
When it comes to investment time frame, often, as I mentioned, people consider how much their super will grow by the time they reach their retirement age. But many people discount the average life expectancy in Australia. So if someone was 65 years old today and a male, their average life expectancy is still 20 years from that day. And for females, who live on average longer than males, it's another 23 years. So it is important to consider how long you need those investment returns to work for you.
We have different time frames which are associated with all the different investment options. Your investment time frame is essentially how long you plan on investing that super savings before you retire and how long you want them to last you in your retirement. But some investments we are unable to invest in if we do have a short-term investment time frame. The reason for that is if we experience a period of market volatility, we might not have time to allow those investments to recover because we actually need access to that money in a shorter time frame. So some investments require a longer investment time frame to make sure that we have better chances of those investments outperforming inflation and producing positive investment returns.
Another consideration is our hands-on level – how much time and energy do we want to spend in making active investment decisions? At AustralianSuper, across our three categories that I outlined earlier, there are different levels of hands-on approach to each different investment option.
Our premixed investment option, such as our Balanced investment option, means that members do not need to take a lot of active investment decisions. They broadly need to consider their risk profile and tolerance, and the investment team at AustralianSuper can do the investment work in managing and keeping those investments in line with members' expectations.
In the middle, we have our DIY mixed options, where members can invest in specific asset classes. However, more time and energy is required because members are deciding to put all or some of their money into specific asset classes. So they do need to monitor how those asset classes are performing over time and any changes that might be occurring.
Finally, our Member Direct option is a high hands-on level. Members do need to consider which specific investment options they want to choose as part of their portfolio and actually monitor how those investments perform over time. So it is definitely not a set-and-forget option – members do need to spend the time and energy to make sure they stay on top of their investment decisions.
Often, as an Education Manager, when we're speaking with members – and especially when our financial advisers are speaking with members – they talk about something called the "sleep well test". That is, whichever investment options members choose, if they are not sleeping well at night and they're staying up because of the level of risk that they feel they have made with the investment options in their super, perhaps they are not invested in the right investment option for their personal tolerance. Everyone has a different level of emotional comfort with the decisions we make about investments. So it is important that everyone considers how they feel about the investment options and the level of risk that they're willing to take.
Another way to look at this relationship between risk and return is to plot risk and return on a graph with our different investment options showing. As you can see at the bottom left-hand side of the graph, we have Cash. Cash is generally considered a low-risk investment, but as a result, the interest rate or the return that's generated on Cash also tends to provide a low rate of return.
In the middle of this graph, we can see our Balanced option at AustralianSuper. The Balanced option is a risk-adjusted option. The AustralianSuper investment team are managing how much risk is taken with the managed investments in the Balanced fund, as opposed to the potential returns achieved from those investments.
As you can see, if we continue to go further down the graph, we also have High Growth. High Growth has slightly more expected risk than the Balanced fund. So it has more of those growth assets that we discussed earlier, but over time, potentially a higher level of return can be achieved.
All members have different ways in which they can get help making a choice. For example, we've got Jane, who's 25. We actually have a risk profile calculator available on our website. As a result of completing a risk profile calculator, Jane may have found that because of the amount of time she has until she retires and her personal preference to try and grow her super, she might be appropriate for the High Growth option.
Angie, who's 35, may take advantage of calling the AustralianSuper team on 1300 300 273, as all AustralianSuper members can, to get some help in relation to which investment option is right for her. This is included for members as part of being a member at AustralianSuper. Angie may have called trying to get ahead with her superannuation account and discovered that the Balanced fund matches her desires between the amount of risk she wants to take with her investments and the amount of return.
However, Greg is looking to retire soon and conducting his own research about which investments he'd like to have as part of his AustralianSuper account. He might have decided that he has the time and energy to spend choosing the investments in his super and wants to continue to track that into his retirement years. So the Member Direct option might be an option that suits Greg's needs.
As I mentioned, the investment guide is a great place to start to get a better understanding of all these different investment options. What we can all do when thinking about which investment option is right for us in our AustralianSuper account is use the risk profile calculator available at AustralianSuper. We can all think about how long we are actually investing for and define that time horizon, and also remember the power that we looked at for Jane – those compound returns over time – because those compound returns are what make our super grow to become a large asset during our working lives.
There are a range of ways that members can get help, advice, and guidance from AustralianSuper in regards to their investment options. As I mentioned, we have our investment risk profile calculator, but there's also a super projection calculator for members that would like to visualise, such as the example of Jane today, how their super is likely to grow with different levels of investment return over time. These are available at australiansuper.com/calcs.
As I mentioned, our team are available on 1300 300 273, where all AustralianSuper members are able to ring up and get help and advice around which investment option will be right for them, and that is included as part of being a member. So there is no additional cost for that service.
We also provide webinars, such as the webinar you've attended today from the AustralianSuper Education team, to help Australians better understand all these different components of super.
Finally, we have comprehensive advisers in our offices around Australia, where members can actually book a complimentary meeting with those financial advisers to discuss their personal circumstances. However, before providing any financial advice, the financial advisers will outline what the costs are involved in their service, because they are a fee-for-service.
And that does bring me to the end of the presentation today.
Keep your super safe online
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Show transcript
Hello everyone, welcome and thank you for taking the time today to join AustralianSuper's keeping your super safe online presentation. AustralianSuper are delivering this topic in conjunction with Cyber Security Month.
When we think about security, many of us are good at securing our physical assets. When we leave our home or our car, we lock them so they're safe. We also need to think about how we lock our security in the digital or the cyber world, and sometimes it's not as straightforward as doors and locks. And that's what we'll be discussing today. My name is Andrew Hambling and I'm an Education Manager at AustralianSuper and my job is to help members better understand how super works so that everyone can make the most out of it.
AustralianSuper acknowledges the Traditional Custodians of the lands on which we work. Today, I'm working and meeting with you all from the land of the Kaurna people. It's also important before we get into the presentation today that you understand this presentation may include general financial advice.
But we haven't taken into account your personal objectives, your financial situation or needs when preparing this material. So please, before making any decisions, consider whether or not this information is right for you. You can read out Product Disclosure Statements and Target Market Determinations available at australiansuper.com
Today we're gonna cover the latest scams, red flags - what they are and how to spot them, how we at AustralianSuper protect your information and how we can all protect ourselves.
So to start with, what's the cost to Australians from recent scams? Unfortunately, it has been high with a number of different scams of different types that have occurred. So this data you can see on the screen is based on data over the year of 2024, based on the reports that have been provided to the Australian Competition and Consumer Commission. They actually outlined that $2.03 billion of losses occurred over 2024, with the top five different type of scams listed on screen.
Now something to keep in mind is this will only be the scams that have actually been reported to the ACCC. A lot of the time when someone has been the victim of a scam, many people can actually become embarrassed that they fell or became victim of a scam. It's important that we all remind ourselves that scammers are sophisticated.
They're very well practised at what they do and they target people and situations where they consider vulnerabilities may exist.
It's also important to note that whilst these are the financial losses that scams have caused, the harms actually go well beyond the monetary losses, leaving lasting psychological and societal effects. And this is exactly why we all need to think about our cyber security.
So how do these scams take place? Well, they do in lots of different ways and scammers are very good at pretending to be legitimate sources. There's online dating scams where scammers try and build personal relationships with you to gain your trust and your money. They try and make people believe that there is a real relationship. And then manipulate them into trying to release their money.
There's investment scams for people looking to make investments. Scammers create fake opportunities to try and excite people and ultimately take their money.
There's impersonations scams, scammers impersonate trusted businesses, friends or family to steal money or personal information. One of my colleagues in the Education team has told us of a scam where someone pretended to be his son who had lost his phone and actually was asking for some emergency money in the instance he'd lost his phone.
It was only in the instance when my colleague actually realised how much money was being asked for that this became a red flag. So scammers don't always impersonate just businesses or organisations. Sometimes they pretend to be our friends and family as well. There's products and services scams, where scammers will try to impersonate businesses or individuals and try and get in between transactions, between buying and selling goods. There's threats and extortion scams, job employment scams and this also a type of scam called unexpected money.
So scammers will use any means possible to try and steal your identity, your information or your money. Now recently I was actually at my mother's house and while I was there she actually received a call on her home telephone number and someone had called her house to tell her she'd over paid a bill by $900.
Now this was a situation where the scammers on the other end of the phone call were trying to get her to make a decision on the spot.
Luckily, my mother actually potentially picked up that this might not be a legitimate phone call and asked for more information about the bill that she'd overpaid without releasing any of her personal information to the person on the call. Quite quickly, the phone conversation changed when my mom said she would actually pursue that with her bank. The person on the other end of the phone quickly tried to tell her that she potentially could not trust the people in the physical bank branch or on the official bank telephone number. So this became another red flag for my mum. That she was potentially not talking with a legitimate person. So it is important to note that scammers will try various different means to try and catch us off guard, to get access to our information, our data, or potentially our money.
So how do these scammers reach you? There are actually numerous ways, but I do want to focus on the top three reported ways, which are text messages, phone calls and emails. So scam text messages or messages, potentially look like they're from a Government, a business that you might deal with or even your own family and friends to try and catch you out.
Now they generally try and sound urgent. They potentially have a link in them which will take you to another website. And any information entered into these websites is how the scammers actually start to steal that personal information and then potentially commit fraud in your name.
To make these messages look real, the scammers can even change the phone number or the sender ID of these messages. So sometimes they will even appear in a chain or a link of messages that you have actually received potentially from a business or from family and friends, which makes them quite hard to spot.
There's phones scams, so one and three reported scams actually happen via the telephone. Scammers call pretending to be from well known organisations. This might include Government organisations, maybe law enforcement, investment, lawyer firms, banks or telecommunication providers. Once again the phone calls generally have a sense of urgency. They're trying to get people to act quickly in the moment without thinking about the decisions they're making.
They might try and convince people to give up their bank details or remote access to your computer. Sometimes these callers already have some information about us that help them try to sound legitimate when they call us. My father in law tells me currently he is receiving.
So phone calls around informing him that his home computer has been infected or is compromised and the callers are trying to get him to give them remote access to his computer.
Thre's email scams which once again often look like the real thing, but watch out for any links or attachments, especially anything to do with your financial circumstances, your money or your bank account details. So once again, these emails often sound urgent. They're trying to get people to act in the moment, without thinking about the decisions that they're making. Now, they may use a similar logo or email address, and sometimes scammers can actually change the email address so that it does look like it is from a real organisation.
Unfortunately, it's not just text messages, phone calls and emails. Scammers may try and reach us through other sources as well. So there's social media where people might try and connect with us unexpectedly. Scammers once again try and use these platforms to get information from us or potentially money from us. There's websites and potentially in person scams that take place as well.
So how do we go about spotting scams? We're looking for red flags. What is a red flag? A red flag is simply something that just doesn't look right. We might get an email from 'Australian Superannuation's Funds' and think that's not right, it's AustralianSuper. Or we might get a letter saying hello Mr Andrew and think that's not right. It should be Mr Hambling. So we notice something, even a small thing that's not quite right or as it should be.
Some of the warning signs that things that might be too good to be true. Someone you haven't met before has reached out to you and wants your help and your money. Watch out for links and attachments to emails and messages.
Once again, one of the big things that all of these scams tend to have in common is they try and get us to act quickly so that we're not stopping an actually looking out for these red flags. So any pressure of urgency is a reminder for ourselves to just stop and have a think about what we're actually engaging with.
Also, scammers sometimes ask to be paid in unusual ways, so if you are being asked to set up a specific pay account in order to pay someone or to send money, this is once again potentially a red flag. Also, scammers often ask for our sensitive information.
Our passwords, our passphrases, any one time codes or multi factor authentication codes or our pin numbers and we shouldn't release this information to anybody because it's our sensitive information and it's for our purposes only.
So AustralianSuper takes the issue of account security and privacy of our members very seriously. Protecting our members interests is of key importance with cyber security risk management being a focus area at AustralianSuper. We've deployed robust security measures and processes that are designed to keep members data safe and consistent with relevant legislation and regulations. AustralianSuper have the Australian Prudential Regulation Authority or APRA, Australian Securities and Investment Commission or ASIC, and other Australian and international regulatory bodies that provide direction and oversight of how AustralianSuper operate.
Some of the security measures we have in place at AustralianSuper are, we require further authentication for member critical actions, such as registering for an account online or resetting a password within the member portal or the mobile app.
For any members online rollovers or withdrawals of money, we actually notify members via text message and an email and this gives members the chance to react if it wasn't them that initiated that transaction.
AustralianSuper also has a comprehensive monitoring program, including a dedicated team that analyses any suspicious behaviour.
We've enhanced call security and staff training to make sure we have strong mitigation controls and monitoring to combat these increasingly sophisticated cyberattacks and data breaches. And we work with Government agencies, regulators and law enforcement agencies.
To ensure unhindered flow of regulatory advice and direction and also it allows us to act timely and intervene in the case of criminal activity.
You may have heard of Multi Factor Authentication or MFA. What exactly is it? It's just an extra layer of security added to your account, making it harder for unauthorised individuals to gain access to your account. Now in a phased approach from May 21st this year, 2025, AustralianSuper has started to roll out multi factor authentication for the login process for AustralianSuper accounts.
So the next time you log into your account, if you haven't recently, we'll send a six digit verification code to your registered mobile number. So you simply enter this code on the login screen to verify your identity. Now the code does time out after 5 minutes, so if you weren't ready for that code, you will have to do it again.
AustralianSuper also rolling out something called the trusted device feature alongside this multi factor authentication for both the member portal and the member app. So a trusted device is a simple device that you use regularly like your mobile phone or your home computer.
So after you've actually entered that six digit multifactor code, you'll be given the option to 'trust this device'.
Now, if you do choose to trust this device during the log in you won't need to enter that multifactor code every time you log in from that device. This option is just as secure, but it does help streamline the login experience for members.
You will receive a confirmation email regardless of whether you choose 'trust this device' or not after you're logged in.
Members can actually register up to three trusted devices, but there is a limit. And the limit does help maintain strong security, but also allows flexibility for users who might travel to multiple locations or use multiple devices to log into their super account.
However, it is important to note sometimes even if you have set a trusted device, you may need to do it again. There are changes on your computer like software updates, changes to your browsers such as the history and the cookies, or moving between different time zones, if members have a VPN, or a virtual private network or user browser in incognito mode. All of these different things may mean that that trusted device is not recognised and that multi factor code once again will be requested.
So what can we as members do to protect ourselves from super scams?
The first part is to remember that scammers aren't always after just the financial money. Sometimes thereafter our data, our information or potentially our sensitive information such as our passwords or codes. And identity theft occurs when that personal information
is used by the scammers to carry out fraudulent activity. Things like logging into your AustralianSuper online account and attempting to make a withdrawal or rollover. So AustralianSuper have security measures in place to help ensure your super is safe. However, there are additional things that we can do to reduce the risk of identity theft on our accounts.
The number of steps we can consider are keeping up to date with our account, creating that multi factor authentication, creating a secure password and also changing it regularly. We can be aware of email scams, be aware of any unsolicited calls or text messages that we receive and protect our devices while browsing online. So if you ever have any doubts about any of these things, you can always ring the customer service at AustralianSuper. Make sure you ring the phone number that you know is AustralianSuper. Because many of these scams actually provide a phone number.
But that is not the correct number. It might be a fake call centre. So make sure you always call the right phone number. So let's have a look at these steps in more detail. The best way to stay on top of your super account and detect any unusual activity is set up your online access to your account. Within that account you can track your balance, update your details, review your insurance, download your statements and check those employer contributions being paid into your super account.
When going through the process of setting up the account you can also put that multi factor authentication in place, which as I mentioned is another layer of security added to your online account.
It's important to set up a secure password on your AustralianSuper account. Make sure you set up a strong password or passphrase because the password you choose actually matters. So what does not make a good password? Using your name, your date of birth, identifiable information, short passwords with not many characters, no numbers, no special characters.
So what does make a good password? One that's not easy to guess. Long passphrases are harder to crack than shorter passwords based on a phrase that only you know, and is made up of a variety of letters, numbers and symbols. Maybe it's a line from your favourite movie, poem or book.
It may be 'may the force be with you' or 'there is no place like home'. Something that's easy to remember but difficult for someone else to guess. Make sure that password is unique to your AustralianSuper account alone. Don't reuse your password from your AustralianSuper account for other websites or apps. So avoid using the same password for things like social media, your banking accounts. Have strong unique passwords for your accounts.
And make sure the password or passphrase is only known to you and not shared with your family and friends. It's also important to remember to update this password regularly, so it might be every 12 months when you change the batteries in your smoke alarm.
So it's important to make sure that we do update our passwords periodically so that we don't stay with the same password ongoing.
And finally, when using your account online, when you are finished, log out of that account so it doesn't remain open on the device.
We can also be aware of any emails we receive, when we receive emails and when we're looking at our emails, it's important to stop.
Actually check the information in the emails and protect ourselves. So fraudsters may send you fake emails that contain harmful links or malicious attachments and this is known as phishing with a 'ph'. So phishing and you can identify a phishing email by once again looking for those red flags. So it might be misspelling, might be images and graphics that don't look quite right. We may recognise that the sender address of the email has come from a location or has a name that we are unfamiliar with.
There may be links that take you from that email directly to your online account, or links or requests in the email asking for your personal information. AustralianSuper will never send you an email asking for your personal information.
It's also important for us to consider any calls or text messages that we receive, especially the ones that come out of the blue, so when we haven't requested a call or they're not in relation to any action that we're currently undertaking.
The callers may try and pretend to be from a provider, but they may not be who they actually say they are.
Any calls that you receive, you can always hang up and call back. They might be a pre recorded message call asking you to call back. It may be text messages that are unfamiliar and we're not sure who that sender was or why that information has come through to us.
If you receive a text message you're not sure about, you can call us at AustralianSuper on our phone number which is 1300 300 273 so you can see it on the screen there. At AustralianSuper we have around 3.6 million members and we only have one phone number for a very good reason. So members know how to speak with us directly.
People can also consider implementing a safe word with their family and friends. That way, if they have a family member who regularly assists with home administration, it's easy to verify who's on the other end of the line, that might be asking for some sensitive information, in order to help. So in the instance of my colleague who received a message from his son, allegedly, a safeword is a very good strategy where people can verify that you are in fact talking with the right person.
Some other ways we can stay safe when online is protecting our devices when we're online. It's important when we are online that we remember sharing any of our personal information in public forums on social media or social networks potentially allows others to gain that information.
We can regularly manage our cookies on our computer and delete our browsing history. Also, when we are providing information to websites online, we can go to the address bar at the top, there is often a padlock or a button there where we can check that we are actually dealing with a secure website and we can review the privacy settings both within our browsers and our mobile devices to review how we're keeping our information private and how much information we are sharing when we're online. In regards to our mobile devices. We can set up an auto lock on our mobile device so that if we put it down and we leave, and someone else picks that device up, they can't automatically open it and get access to the information on that device. We can set a passcode on our lock screen on our mobile device.
It's also important when dealing with apps on our telephones that we use the official App Store. So if we have a Google device, we can download the apps through the Google Play Store or Apple devices through the Apple App Store. Avoid downloading or installing apps that may be received via emails, social media or websites. Especially if there are any red flags. And we can manage the permissions for each app. So each app we download may want to collect our personal information, our data like our contacts or our location, and we have the ability to change those settings.
We can also check the name of the publisher of an app before we download it.
It's also important with all of our devices to make sure that we continue to install security updates on our devices because the providers of those devices actually continually create security updates to make sure that the devices stay secure for those that are online.
If anyone thinks they have fallen victim to a scam or may be compromised, it's important to act fast and report it. At AustralianSuper the fastest way to do that is simply to log into your device and contact us via the chat within your online account. Members can always call us on the 1300 300 273 number as well.
It's important if people think they may have been compromised to log into their account and change their password.
Members can also delete any of the trusted devices in their account. And also there is ID Care available, which is Australia and New Zealand's national identity and cyber support service. So when contacting ID Care it's important to have the evidence of what has occured so that ID Care can help create a tailored response to what might have occured. What can you expect from AustralianSuper? We will never send a text message or an email to you asking for you to click on a link to update your personal information or linking you through directly to a login page.
If you do receive a call from AustralianSuper, our representatives will always clearly identify themselves, which department they work in and the reason they call. If you are suspicious in any way that the caller wasn't from AustralianSuper you can always hang up and call our contact centre on our number.
If you're looking for more information and tips around security, there are a number of resources for you today which you can see on the screen. The ACCC also has a little book of scams available.
And the great thing about the ACCC resource is there is multiple language. So there's actually a downloadable resource in multiple different languages so that this message can get out there in the community, especially to people whose English may not be their primary language to help keep the wider community safe.
As I mentioned, AustralianSuper aims to provide our members with the help, advice and guidance they need when they need it. And AustralianSuper does this in a number of ways, so we do have those online resources for you today, but we also have a range of calculators to help members see what making a little change to their super account, could mean for their retirement. We have our team available on our one phone number 1300 300 273 and the team via the 1300 number can also provide simple advice. So we do have a simple advice service to help members if they're thinking about changing their investments.
Making a contribution to their account or potentially changing the insurance in their super account. This advice is actually provided as part of being a member at no additional cost to members via that phone number. We do have a fee based comprehensive advice service which is available as well and also we have the Education team.
And we deliver a wide range of different topics around superannuation and how it works so that members can make the most out of it. So we do look forward to seeing you at one of our future education topics. And the webinars can be found at australiansuper.com/webinars
So that does bring me to an end of the presentation today. We do hope you found this of value and you've thought about some of the things that we should all be thinking about to keep ourselves safe when we're in the cyber or digital world. So thank you very much for attending today.
Strategic investment: maximising your super
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Show transcript
Good evening and welcome to our webinar Strategic Investment Maximising Your Super. This session offers a behind the scenes look at how AustralianSuper's investment strategies have delivered long term value through active management, scale and innovation. So whether you're planning for retirement or optimising your current strategy, this webinar can help provide the clarity and confidence you need to stay ahead.
My name is Michelle Kelada and I'm an Education Manager at AustralianSuper and it's my role to help you understand how your super works. I'll also shortly be joined by Sam Weaner who is my co-host this evening and he's the Manager of Investment Communications.
Before we do get started, AustralianSuper does acknowledge the Traditional Custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to Elders past present and extend that respect to all Aboriginal and Torres Strait Islander people.
Our presentation today may include general financial advice which doesn't take into account your personal objectives, financial situation or needs. So before making a decision, do consider if the information is right for you and read the relevant product disclosure Statement and target market determination that is available on the AustralianSuper website.
So in this session, we'll talk a little bit about investing with AustralianSuper with some insights from Sam. We'll also talk a little bit about what to consider when investing and exploring some of the options that are available to you through AustralianSuper. And then finally, we'll tie it all together by looking at some of the ways you can access help and advice from AustralianSuper. I'm now going to introduce Sam, who, as I mentioned, is the Investment Communications Manager.
Sam, can you tell us a little bit about your role and how you help members at AustralianSuper? Thank you, Michelle. Well, I've worked in the investment industry for over 25 years and tonight I'm pleased to be able to share some of those insights with you. A key part of my role at AustralianSuper is to provide updates to members on the strategies and the performance of our investment options. And I'm pleased to be able to share some of that knowledge with you this evening.
Thanks, Sam. So can you tell us a little bit more about what you do at AustralianSuper and the goal of the investment team?
Sure. The, when we look at it, the, the number one goal for the investment team is to choose investments that can put you in the best financial position in retirement. And we do this in, two main areas. And the things we'll talk about a little bit are how we expand the investment team to look for an additional investment opportunities as well as how we invest in Australia and global markets around the world. So the first part is how we expand our team globally. So this slide shows how the investment team is divided up into different portfolio groups. So you'll see that we have growth assets in the portfolio, mid risk assets, which are kind of in the middle of growth and defensive and defensive assets on the right hand side there. So each part of the team will invest in that dedicated asset class, whether it's be Australian shares, real assets like property and infrastructure or even fixed interest investments. And the team is made up of staff from around the world. So we have offices in Australia, Asia, Europe as well as North America and we have 400 people investing on your behalf. And this includes 70 investment staff in our London office as well as 40 investment staff in our New York office. And effectively the benefit of having staff in all these locations around the world is that we get access to local knowledge and investment opportunities that we wouldn't get from just sitting here in Australia.
So some recent examples is we've also been able to access the global talent pool in London and New York to basically expand the portfolio management capabilities that we have. So we've made some senior appointments in our London office to manage our international shares portfolio. And we've also added additional staff in our London and New York offices to invest in assets that's like private equity property infrastructure as well as credit. So, these appointments enable AustralianSuper to invest in new opportunities around the world. The second part of this is investing in both Australia and global markets. And this map shows how much we have invested in the whole portfolio in Australia as well as different regions around the world. So currently we have about 45% of the portfolio or over $170 billion in assets in Australia. And this benefits from the growth of the Austrian economy, supports local industries as well as infrastructure investments. So we want to be able to support the Australian economy, which is very closely related to their own jobs that we have here. But we also look internationally. So we look around regions around the world to help add diversity to the portfolio as well as widen the opportunity set of potential investments. So this can help with both return generation as well as risk reduction in the portfolio. So overall, the team is focused on getting access to assets that can add diversity to your accounts as well as benefit members returns.
Thanks Sam. So you've mentioned the number one goal for the investment team is to help members by choosing investments to improve their retirement. Can you explain how this applies to the different investment options that are available for members to invest in at AustralianSuper?
Sure. And this is a great graphic which shows all the different investment options that you have access to at AustralianSuper. And this includes the DIY mixed options like cash, diversified, fixed interest, Australian shares and international shares, as well as the different premixed options, diversified options, which you see in the middle of the chart here. And this maps out the risk reward characteristics of the different options that you can invest in. So effectively, cash is considered a lower risk option, but also has the lower potential reward. And then you move up to more, aggressive options like Australian shares, international shares. And in the middle, you have those diversified options which balance out the risks. They provide growth potential, but they also help minimise the downside risk, especially during market downturns. So it's that benefit of a mix of diversification as well as getting some growth opportunities. The next part of this, we'll talk a little bit about the building blocks of what makes up these portfolios and how we invest as well. Thanks, Sam. So we've had a bit of a look at where these options fit on the potential return and expected risk scale. Can you provide more detail on how these options are made up, all these building blocks that you've spoken about?
Definitely. So when you look at this, you look at especially the diversified options, the premixed options, these are the different asset classes that make up many of those options. And we often think of those as the building blocks or the different asset classes. And you can break them down between growth and defensive characteristics much like we saw earlier in those different parts of the portfolio. So cash being the most conservative or, or listed shares and private equity being more growth oriented. So effectively we look at you want growth oriented securities in your portfolio if you want to gain value over the long term or increase your returns over the long term. But they also tend to have some more risk as well. So there's risk in the short term that you could have a market downturn or that you could lose money in the short term. But over the long term, you expect some of those risks to weigh out.
Whereas the defensive assets, they don't fluctuate as much in value, but they also have less opportunities to grow your super over time. The credit and real assets in the middle, they have that mix of both growth and defensive characteristics. So we often think of these as unlisted assets and unlisted assets have some unique characteristics where they have the potential to outperform things like listed shares over time. So effectively there's a big benefit to each of these asset classes.
To dig a little bit deeper, let's look at something like listed shares. So in our Australian shares portfolio, we invest over $100 billion on your behalf in the Australian market. And this is invested in Australian companies. So our portfolio managers in the Australian equity team, they'll do fundamental research that looks for well managed companies that have competitive advantages. And we also want to see companies that have quality management because we believe that gives them the opportunity to outperform the broader market over time. And this is something that's been very successful in our Australian share strategy over the last 10 years.
To give you a bit more detail about some of the assets we have in the portfolio, these are some examples of unlisted assets that we have in the domestic market. I also show some examples that we have in the international market as well. So we've talked a little bit about unlisted assets, how they have some unique characteristics, but they tend to be less liquid and more complex than investing in listed shares. And that's where we use our internal expertise to be able to select these investments on your behalf. These characteristics also give the potential that these asset classes or these assets will do well over the long term.
So one example is the Perth Airport. So this is an asset we've had in a portfolio for over 10 years and it's done very well for members from a return perspective. A recent example as well is that in late 2024, we increased our stake in Perth Airport. The Perth Airport announced a multi billion dollar expansion programme and we were able to support this. So as a part of owning an asset is that we work with management to support them when they need capital to expand. So we saw this as a great asset for the portfolio. So, we basically want to work with, with the management to support their expansion goals as well as assist growth in the portfolio itself.
Another example of an asset we have in the portfolio is Morebank Logistics Park. And this is just West of Sydney and it's an emerging inland port that we've invested in, which is the 243 hectare industrial property and it's one of Australia's largest intermodal logistics precincts. So what we, the reason we wanted to invest in this is this is a major hub and a connection point for the railroad and logistical services and it connects Port Botany to the Interstate rail network. So it has capacity to build up to 850,000 square feet of office warehouse space and it's basically a great opportunity for the portfolio to help with that transportation and logistics services in Australia.
On the next slide, we'll see some examples of some international assets and these two are King's Cross as well as Vantage Data Centres. So King's Cross is an is an example of a significant urban transformation in London. And this is an asset that we've had in the portfolio since 2015 and it includes a development in retail, office as well as residential spaces. So it's definitely worth a trip when you when you visit London to go see how this has been redeveloped in this area. Another example is Vantage Data Centres. And this is where we see the expansion of digitization and the demand for data as a theme that brings investment opportunities for members.
So some assets we've invested in the portfolio are tower networks as well as data centres and Vantage data centre, which is pictured here. It's a fast growing data platform that supports the need for cloud computing, big data and AI. And it delivers data storage space for cooling and power at scale for some of the leading businesses around the world. And this includes Microsoft, Amazon and Google. So these data centres store cloud workloads and how's the computing power needed for businesses. And, and these are just a few examples of the unlisted assets that we hold in the portfolio.
Thanks, Sam for those insights. Could you give us some bit of insight into the investment team's approach to research and areas that they're focusing on?
So, another interesting part of the investment portfolio is we have those different building blocks and we have teams that manage the building blocks, but we also have an asset allocation team that has economists that research market events as well as the outlook for different markets. So they're focused on looking at the valuation of securities as well as the outlook for the economy as well as different asset classes. So a key part of this is understanding how economic market cycles work. So you'll see that a trend of market cycles that go through recovery, expansion, slow down and even recession. And a big part of this is different asset classes perform differently in each of these market cycles. So part of it is determining what market cycle are we in now as well as what are the prospects in the next three to five years.
So one example is during economic recoveries, asset classes like listed shares may do really well, whereas during recessions, asset classes like cash or fixed interest may do comparatively well. So that is a challenging part that it's very difficult to time these movements accurately. So we seek to build portfolios that weather the ups and downs of the economy and investment markets. Another part is we do have an active management approach. So we want to adjust the amount that we have invested in each asset class and this can change throughout the year. So we look at a number of different factors including the economic cycle, we look at valuation signals, we look at investment themes, we look at inflation as well as interest rates and how they affect the different asset classes.
To dig a little deeper, this slide shows the different themes that our investment team looks at and we research these themes that can affect the value of the assets over the long term. These are themes that can affect the global growth, the employment as well as consumer behaviour, and it leads into the profitability and cash flows for different assets. We also look at the interconnectivity of these themes as well.
For example, if we link together digital and decarbonization. So we think of the strong demand that we have for digital assets like data centres and tower networks. This also creates demand for more energy. So it links together with the decarbonization theme because investments like data centres will need energy generation and then we'll and basically combining those two to think of how we're going to power them is pretty important for the portfolio. Overall, we expect more economic volatility. This could mean a higher equilibrium for inflation and interest rates as well as increased fiscal and trade policy uncertainty. And this leads into the output of our asset allocation approach on our next slide.
Sam, you've spoken about the asset classes being the building blocks of the portfolio. How does the fund choose which of these building blocks to use and in what quantities?
So this is, this is a pretty interesting chart. It looks at the Balanced option. We often start with the Balanced option because that's where a large amount of our members are invested. And this is looking at the asset classes over time. So the best way to look at this chart is, if you see that the very top part of it, it has the growth assets like listed shares as well as private equity. And at the bottom of the chart has fixed interest and cash. If we feel that the global growth is going to slow down like we did back in 2018 and 2019 as well as even in the 2022 and 2023, that's where you'll see the green bit or the fixed interest amount increase over time. And we took a little bit of growth off the table. We see the amount of listed assets shrink basically to prepare for a potential economic slowdown.
Whereas if we think more optimistically about the markets, that's where we'll add a little bit more growth back into the portfolio by expanding the amount that we have in listed shares like Australian shares and international shares. Currently we're in a we're in a pro-growth position. We actually believe that global growth will continue to thrive even though there are some factors that are slowing down overall growth. So right now in the portfolio, we are more optimistic that GDP growth will continue to expand over time even if it is at a slower rate.
Thanks, Sam. Appreciate the insights you provided on how active management and strategic asset allocation have driven long term performance and resilience. So the common question that we often get is where is my super invested or how can I find out where my super is invested?
So to dive a little bit deeper, members can see examples of what we invest in in the portfolio. You can do this on our website under investments, what we invest in, where we provide details of what is in the portfolio. This can give you a comprehensive look at where your super is invested, and you can even do searches for individual investments if you are curious of how much is invested in a specific holding.
From talking to members, I know that many raise concerns about investment risks, such as being worried their money might run out or how the recent market volatility has been impacting their super balance. Can I ask you, Sam, to explain some of the risks that members should consider when they're thinking about investing?
Definitely. So there's three main ones that we can think about is inflation risk or the rising cost of goods and services over time, market volatility, which is that changing the value of your investments as well as longevity risk or the concern that your savings could run out.
And to start to do a deeper dive on this, we'll start off with inflation risk. And I still remember back when I went to a party with relatives when I was 30 years old and one of the relatives I met retired the year I was born. So for 30 years they would have been in retirement. And I actually started to think about when I was growing up, how much a movie ticket cost or what was the cost of food when I was growing up compared to what it was when I was 30 years old. So, to think that somebody could be retired for 30 years was pretty amazing at the time. Even thinking of even in Australia, the cost of a movie ticket was about half the half the cost 20 years ago as it is today. So, inflation is often in the forefront of our minds, especially after the last few years when we've seen the increasing prices of our grocery bills, especially since COVID. So during retirement, it's one thing to think about is to invest in a way that your investment account keeps up with the rising cost of inflation. So you think if you look at this chart effectively over 30 years, even at 2.5% inflation, the cost of a cup of coffee could be double that of what it is today. So it's a pretty important part to invest in assets that have that potential to, to keep up with inflation.
The one, this is one reason why when we look at those different investments, we saw cash as a relatively low risk investment, but investing in cash might mean that you don't keep up with the rising costs of inflation over time, especially if the cash rate doesn't outpace inflation.
On the next slide, we'll take a look at market volatility and how that could affect your account. So oftentimes we think of volatility as that basically that chance of losing money. And what I've put together here is a chart that shows the returns of the balanced option and the returns of the Australian shares option over different time periods. So on the left hand side, we see the balanced option, which is over a one year. What was the best and the worst return since 2007 in a in a one year. Then over a five year. If you look at rolling five year periods, what was the best and worst return over five years and then the same thing over 10 years. And what we saw in the balanced option is that in in a given year, it could have made 20% or it could have lost 20%. So those big extremes were actually during the global financial crisis when there was a big market sell off. So even though it's a diversified option, there is the risk that it could lose money, but there's also the potential to increase your value over time as well.
The same thing can happen in Australian shares. So Australian shares you're investing in one asset class in a certain part of the market. And that's where we saw an extreme where during the global financial crisis, you could, you could actually have lost 40% of your money in that account or when it recovered from the global financial crisis, there was an upswing of 40%. You do see those that risk play out over time that if you stay invested, the chances of losing money over longer periods of time diminish. However, there is still a risk of investing. So, the one aspect we look at it in a premixed option like the balanced option is to invest in a diversified set of assets that gives you that growth opportunity while also smoothing your journey as well. So, when you think of market volatility and risk, there's upsides to it as well as the downside.
And, looking at the last risk, there is a, common concern when you retire of basically running out of money. So, this is effectively what's called longevity risk. And if, if the longer you live, the more susceptible you are to longevity risk. And that's the one aspect is you might retire at, at 60, 65, but you'll, you'll need your assets for a relatively long period of time after you retire. The other part of longevity risk too is that the aspect that of underspending your money, you may have a reasonable size in your super amount saved away as well as using the using the pension. You want to be able to use these, you've spent your life saving that money, you want to be able to use that money effectively as well. So you should be able to enjoy the assets and make sure plan for it during retirement. So overall, it's what you can do to address this is to consider your situation as well as what investment options you should invest in.
So we have a range of options available to members from diversified portfolios through to member direct. However, I get many questions from members on how to decide what option is right for them. There are three main things to consider when making a choice on what investment might be right for you. That is your investment time frame, how hands on you want to be with your investments, as well as your risk appetite. Sam, can you explain why it's important to know your investment time frame? You've spoken a little bit about this already.
This goes hand in hand with that longevity risk that you look at that, concept that you, retired 65 or 70, you may live for many more decades and be able to use your assets over that time period. So retirement isn't a single destination. It's not 60 or 65, it's an expended extended period of time. So, the main part is that the concept of planning for it and making sure that your investments will keep up with inflation as well as support your needs throughout your life. As well as your investment time frame. You may also want to consider how hands on you want to be. Choosing the right investment can impact how much your savings grow and then how long they might last. So before making your choice, you need to know how much direct control you want to have over your investments.
At AustralianSuper you have a variety of options to choose from, so let's have a little bit of a look at what's available. We have our premixed options. Sam spoken a little bit about the balanced option, which is just one of our premixed options at AustralianSuper and this is considered to have a low hands on level.
The reason for this is that our investment team work hard to build these portfolios for you on your behalf so that you can select one that is appropriate for your risk tolerance.
Then we've got our DIY mix options. These are considered to have a medium hands on level and this is where you get to become a little bit more hands on with how your super is invested by choosing which asset classes build up your pool of investments inside of your super. You may also decide to exclude certain asset classes from your pool of investments.
Then we've got our member direct option. This is for those members that want to have a high hands on level with how their super is invested and it puts you in the driver's seat when it comes to stock selection and building your pool of investment.
Importantly, you can have both part of your super in the premixed or DIY options as well as a portion invested in Member Direct if you choose to.
So let's have a closer look at Member Direct. Member Direct offers you more control and choice over the investments of your super or retirement income. Through the Member Direct Investment option, you can invest in shares, exchange traded funds or ETFs and listed investment companies, as well as term deposits and cash. Through an easy to use online platform, you also get access to things like real time trading, market information, independent research and investment tools to help you make informed decisions around your investments and help you to manage your portfolio.
Member Direct investment options suits members who want to be actively involved in managing the investments inside of their superannuation. There are a number of different features and some of those are listed on the screen here. You do get access to custom a customised home page with market information that's relevant to you, the ability to participate in available dividend reinvestment plans and independent company research from third party specialists and a number of other features that we've highlighted.
Within the online platform there are three key sections. There are Cover Stories, which is a news feed where front page news and research are kept. The news feed contains articles that you're able to customise from AustralianSuper, UBS Research and Morningstar Australasia. Then you've got the Invest section. So this is where you can select where you want to invest and initiate cash transfers. We've also got Explore and in this section you can discover and read content related to investments and create your own customised information. There are also a number of reports that you can generate within the online platform, including capital gains reporting, cash transaction reports, fees and expense reports and a number of others there as well.
Final question, Sam, on risk, what should members consider when deciding how much risk they are comfortable with?
You know, we often hear about the, the concept of what you're, what are you comfortable with or what keeps you up at night? And we look at this in a couple different ways of emotional comfort, financial comfort leading to your, your total risk comfort. So emotional comfort is definitely how confident do you feel during times of market volatility? Do you feel anxious when there's a market sell off or are you content that there's the markets could potentially recover? Financial comfort is more about your financial position that like, do you have enough assets that create a, a nice comfortable buffer for you, that you, you're not too concerned about meeting your daily cash flow needs effectively. When you pull this all together to your total risk comfort, it's, it's investing in different options and setting forward a financial plan that help meet your emotional and financial comfort levels. So, and there's a variety of different tools that you can use to help address your comfort levels.
Thanks, Sam. So some next steps that you might want to consider taking on a back of attending this evening session are assessing your own risk tolerance. We have a great tool on our website, the Risk Profiler tool, where you can answer a series of questions which can give you an idea of what your risk tolerance might be and what type of investor you are suited to. You may also want to consider starting to define your investment horizon, that is aligning your investments with your timeline for needing those funds.
So as Sam spoke about starting to think about how long the funds inside your super are or could be invested for into the future. You may also want to consider seeking some advice. So starting to learn about the options available to seek some more personalised advice, which I'll talk about a little bit more in a moment.
So AustralianSuper provides you with access to a number of advice options depending on your needs, and you can speak with an advice team member over the phone for simple personal advice. This covers topics relating to your AustralianSuper account, such as your investment options. So on the back of this session, if you are unsure about what option might be available to you, you can book an appointment over the phone and get that advice with a financial planner as it pertains to your situation. You can also receive advice on making contributions as well as insurance and retirement income options for your AustralianSuper account.
For those that have more comprehensive advice needs, we do also have financial planners that you can meet with at AustralianSuper that have where you have the initial appointment. There is no fee for that initial appointment and no obligation and after that appointment the financial planner will let you know what the fee would be if you did decide to proceed with getting that comprehensive advice in writing.
There are also a number of other tools available on our website and calculators where you can project what your super balance might be at a particular point in the future.
And myself and the rest of the education team run a number a series of webinars that you can find on our website covering a number of different topics.
We are running close to the end of time and we have seen a number of questions coming through in the Q&A as we've been going through this evening's session.
Sam, there have been a number of questions and a few that I might pose to you while we're in the final moments of tonight's session. I've got a question here. ‘If I'm retiring in about 12 months, what is the best and safest way to protect my money? The market looks overvalued and politically unstable.’
It's definitely an interesting aspect that we do often look at the day to day or the current market conditions as, as it applies to our accounts. And that flows into a little bit of that short term risk that we talked about earlier that you can have some variability in your account balance in the near term. And the biggest aspect is to invest in a way that you're comfortable with that there are some out of your assets that might be considered long term that you need to let grow for 10 or 20 years or maybe even 30 years. But there's also that aspect of money that you need in the next 6 months, year or even 2 years and making sure that's protected in case there are some short term downturns. And that goes back to the advice options that you offer that if you're uncertain about how to position your portfolio using some of those services can help make you feel more comfortable.
Thanks, Sam. Another question we've got here, which may be relevant to those that might perhaps be thinking of or moving into the pension phase of super is a question around why do returns in super accounts or accumulation accounts vary to those in an account based pension. And this is something you'll definitely see. So under our performance page or even online, you'll see different parts where you see different performance numbers for the Balanced options. So we have a Balanced option for super accounts and we have a balanced option for choice income accounts. And the main difference is that in superannuation during the accumulation phase, tax on earnings is taxed at 15% or 10% for some capital gains. Whereas in a pension there's a lot of those aspects are tax free. So, you should see a higher return during upward markets in the pension accounts because they have lower tax than the superannuation accounts. So depending on your situation, as you're getting close to retirement or in retirement, it could be advantageous for you to transfer to a pension account, which would give you higher returns because of the tax free status.
Thanks, Sam. There's a number of questions about some of the decisions AustralianSuper is making around how they invest members money. And one of those here is whether AustralianSuper invests in cryptocurrency.
It's definitely a frequent question. We see here that one a lot. And the interesting thing about how we analyse different assets as we look at what's the potential of their value and what's the potential for the return over time. And the one challenge with cryptocurrency is that there's no income off of it and there's no way to value what that asset will be worth a year from now. So from a direct investment perspective, we don't invest directly in the cryptocurrency. However, what we do see some advantages is the blockchain technology. So we look at blockchain and how different companies are using it. There are some advantages that the companies use. So we do look at supporting the technology field and how companies are using blockchain technology, but not a direct investment in the cryptocurrency.
And another one on the same theme, Sam, do we invest in gold? Gold is actually very similar as a commodity that gold itself doesn't have an income and sometimes actually has a carrying cost for, for investing in it. So within the portfolio, we have very, very low direct exposure to individual commodities. However in the portfolio there are companies that are gold miners, There's also critical minerals companies that we invest in, but no direct holdings in gold itself.
Thanks, Sam. And we might just pick one more in the interest of time. How risky are US bonds and is AustralianSuper investing in the US bond market?
It's actually, it's an interesting question because there when you do look at the bonds around the world, there are credit ratings for each of the bonds. So in our fixed interest portfolio, we do have a mix of Australian bonds as well as international bonds and it's in general the portfolio has a mix of about 50% Australian bonds and then 50% of bonds around the world. So it is a very diversified aspect and you do see some volatility in in bonds based on interest rate cycles as well as inflation. So overall we look at bonds itself as a very defensive asset class, which is relatively stable over time. However, we do manage those risks in terms of making sure that the portfolio is diversified and mixed and having a mix of bonds around the world. But that is the one aspect that the fixed interest team does look closely at is those whether it's political risks or even policy risks when it comes to fiscal policy or monetary policy. That is an aspect that goes into our analysis and structure of the bond portfolio.
Thank you, Sam, some really great insights. As always. Thank you for sharing your expertise with our members this evening. We might leave it there for now.
Thank you to everyone who's been submitting your questions into the Q&A during tonight's session. And we hope that you join us again for another webinar soon. Bye for now.