2026 Virtual Retirement Event

Hello, everyone. Welcome and thank you for joining our Who Inherits Your Super session. Now, the concept of beneficiaries can often raise lots of questions. Who should I nominate? What happens to my super when I pass away? And will my super be taxed?

So today we are going to unpack these questions and also explain how you can ensure your super ends up in the right hands. My name is Yen Du, I'm an Education Manager at AustralianSuper, and I'll be taking you through today's session.

Now, please do keep in mind this session is general information only and not personal advice. So it is important before you make a decision to consider your own circumstances.

Now, before we kick off, I do also want to let you know if you have any questions along the way, please feel free to type it into the Q&A box. We have the education team in the background answering questions today. Now, a common thing we often hear members say is that, well.

I have a will, so do I need to worry about where my super is going to end up?

Now, making sure your assets goes to the right people after you pass away isn't as simply as stating your wishes in your will. Because a will generally covers assets that you personally own. So assets such as your home, your car.

Money that you have in the bank and also investments. Now, these are included in your estate, and it's distributed according to your will.

Your superannuation, on the other hand, it's actually held in a trust by your trust, the trustee of the super fund. So many people actually think that super informs part of their estate, but that's not always the case. As super isn't necessarily.

Always covered by your will. So that's why it's important to have an estate plan and also to nominate beneficiaries for your superannuation away. Now, there are a few options available when it comes to deciding what happens to your super benefits. So as you can see here, there are three options.

A binding nomination. A non-binding nomination, and also a reversionary. So we're going to talk about each one.

With a binding nomination, it is a legally binding document, so the trustee, they must follow your written instructions about how your benefits should be distributed to your chosen beneficiaries, as long as it's valid.

Now, to make a binding nomination, you do need to print the binding nomination form, fill it out, and also sign it in front of two independent witnesses.

and then return it to the super fund. Now, as you can see here, there are 2 types of binding nominations. The first one is lapsing. Now, this means that every 3 years your binding nomination, it will expire, so you will need to make a new nomination.

You can't simply update your existing nomination. You do need to make a new one. Now, before it expires, AustralianSuper will write to members to let them know the three years it's nearly up, so that you can make a new nomination.

Now, if you don't, um, if you don't update or make a new nomination, it doesn't just disappear. It just reverts to what's called a non-binding nomination, which we're going to talk about next.

Now, AustralianSuper also offers a non-lapsing option. So this means there is no expiry date, so your nomination will not expire. So unless you send in a new nomination or cancel your existing one, it will remain in place.

So members can choose between lapsing and non-lapsing nomination. The different types, but it is on the same form. So when you visit our website and download the form, there is a box to tick whether you want it to lapse, so every three years, or in the main non-lapsing.

Now, because a binding nomination, it's legally binding, it's very important to update your if your circumstances change, is remember it's important to update it. So, for example, if you get married, if you separate or have children.

Now, let's talk about the second type of nomination. This is one I often see more often.

So a non-binding nomination, it usually happens when you log into your online account, you navigate to the beneficiary section, and then nominate someone to receive your super benefits.

Now, with a non-binding nomination, it's essentially a preference. So while the trustee that will take into account your nominated beneficiaries, they are required to follow the law to check if there are any other eligible beneficiaries.

And because of this, your super may not always be paid to the person that you nominated, because this nomination, it's not legally binding. So, in contrast, the one we looked at earlier, the binding nomination, that is legally enforceable.

Now, with a non-binding nomination, this is more of a guideline for trustee.

So it may not always result in your super being paid to your nominated beneficiaries, though the trustee will consider your preferences.

Now, it's all… it's what's important to consider is that, you know, what is your situation? Understand what type of nominations do you currently have if you've nominated?

If you would like to make a non-binding nomination, um, it doesn't need to be on the paper form. You can actually log into your account and nominate your beneficiaries that way. You can even update, uh, if your circumstances change as well. So it is easy to do.

But, um, it's important to consider what's best for your personal situation.

Alright, let's have a look at the third type of nomination. So this is a reversionary. Now, not many people are familiar with this type of nomination, because this option is only available to members who have an account-based pension, such as a Choice Income account.

or a transition to retirement account with AustralianSuper. Now, you can only make a reversionary nomination if you're already receiving income from that account. So meaning your account, it's moving to that, uh, the drawdown phase.

Now, with a reversionary nomination. It allows your nominated beneficiary, usually a partner.

To have the account transferred into their name if you pass away. So that way your nominated beneficiary that will continue to receive those pension payments that you will receiving.

That benefits it continues to be paid until that account reaches zero balance. The beneficiary can also access lump sum withdrawals if needed.

Now, with a reversionary nomination, your money, it does remain in the superannuation system. It's simply transferred into your beneficiary's name, and they continue to receive that regular pension.

Now, the next thing we're going to have a look at, who can you nominate as beneficiaries? Because.

Now, this is important because many people aren't aware that superannuation law sets out who is eligible to be nominated. So let's have a look.

You can nominate your current spouse or partner includes legally married spouses, de facto partners. It covers relationship both of the same sex as well as opposite.

Now, a spouse, I want to explain that a spouse can be a person you're legally married to, even if you are estranged or separated. So if you haven't formally ended the marriage, your partner is still considered a dependent under superannuation law. You can also nominate a child. They can be of any age. It also includes adopted children as well as stepchildren. Now, one thing when it comes to stepchildren, they are included. However, if your relationship with the natural parent comes to an end, or that natural parent passes away.

That child is no longer considered or legally considered a stepchild.

They may become ineligible. However, they may still qualify if they are a financial dependent or if they live with you and rely on you.

Now, let's have a look… let me explain interdependence. An interdependent is someone that you, um, live with, you share close personal relationship, where one or both of you provide financial and also domestic support or care for the other person.

Now, when it comes to financial dependence, it's someone that relies on you for necessary support, and also that support, it must be significant enough that without it, the person would experience genuine hardship.

So to be considered financially dependent, the support you provide, it must be essential and also relied upon for their wellbeing.

And then the final eligible nominee is your legal personal representative, which links your superannuation to your estate. So by nominating your legal personal representative, your super follows the instructions in your will.

Allowing you to nominate anyone you choose as a beneficiary. So if you don't have, for example, a valid beneficiary under these rules, you may consider nominating your legal personal representative, and through your will, you can then nominate anyone you wish.

Now, when we talk about dependents, there are actually two definitions or two meanings. Now, I've just talked about a dependent under superannuation law, super legislation. This one comes from the superannuation Industry Act.

It's often referred to as the SIS Act. Now, these are people who are allowed to receive your super if you pass away.

Now, the second definition are these are dependents under tax purposes. So these rules, it determine who can receive your super death benefit tax-free.

Now, the important thing to understand is that these two definitions that don't always line up. So someone, they might be a dependent under super law, but they might not be a dependent for tax purposes, or they might be or you might be the other way around.

And also, on top of that, not all dependents under super law can receive that benefit as an income stream. Now, to make this a little bit clearer, let me walk through some examples.

So with when it comes to current spouse, whether it's legally married or de facto.

They are dependent under both super and also tax rules. So it means that they can receive your super directly.

And it's paid to them tax-free. They are also eligible to receive that as an income stream. So if you have a retirement income account.

Now, when it comes to a former spouse, they are not considered a dependent under super legislation, so they can't receive your super directly from the fund.

However, if they receive your super through your estate, so under your will.

Through under the taxation legislation, they could receive the benefit tax-free.

Now, a former spouse is not eligible to receive any income streams from your super.

Let's have a look at children. Now, children under 18 are considered dependents under super legislation and also tax rules, and they are also eligible for an income stream. So they can receive your super directly, it's tax-free.

Um, they can receive the benefit as an income stream, a regular payment. Now, when it comes to children over 18.

If they are no longer a financial dependent on you.

They can still be nominated as a beneficiary. However, under tax rules, they're not considered dependents. So it means they must pay tax on that benefit.

Now, children over 18 are not eligible to receive a regular income stream unless they are either permanently disabled or they are younger than 25 and financially dependent on you immediately before your death.

Now, when it comes to financial dependent and also people you are in an interdependent relationship with.

They are considered dependents under both super and also tax legislation. So it means that they can receive your super benefits directly tax free. They are also eligible for an income stream.

Now, we're going to have a look at a case study very shortly, just to show you how the rules apply in different situations. But before we do that, when we're talking about when tax is paid on super benefits, it does depend on several factors. So let's have a look here.

Now, it depends on the tax component within your account. So we're going to have a look at this one next. It also depends on whether your beneficiary is a dependent for taxation purposes, which we've just had a look at. Another factor is how is that benefit paid?

So is it paid as a lump sum or as an income stream? Sometimes the age of the deceased and beneficiary plays a role. There's also transfer balance cap considerations.

Now, your superannuation account, it's made up of two components. So there is a tax-free component and also a taxable component. You may not be aware of this, but your super is actually divided into these two components.

So, one is your tax-free, the other is taxable. We're going to look at what makes up each one. We're going to start with a tax-free component first. So these contains any after-tax contributions that you've made to your super account.

So this includes… contribution and any contributions made by your spouse.

So these type of contributions, they are usually paid from your bank account, and they're not taxed when they enter the super system, because you've already paid tax on that money. And since tax has already applied, these amounts goes into the tax-free component.

I can see here it also includes government co-contributions as well as any tax-free component of a from a of a rollover from another super fund.

Now, let's have a look at the other main component, the taxable. So most people have funds in this category. So it's made up of the usual types of contributions. So employer contributions, salary sacrifice contributions from work.

Now, because these are generally taxed at a concessional rate, usually at 15% when it goes into super, these makes up the taxable component. It also includes any personal contributions where you can't claim a tax deduction.

Along with any investment earnings. So, what's important to know is that how contributions are classified, because this can affect the tax that may be paid on your super benefits, depending who you nominate as a beneficiary. Now, the tax-free component.

It's always paid out tax-free, no matter who receives it. However, if money from that taxable component is paid to.

Beneficiaries who aren't considered dependent under tax law, tax will apply, and that tax that's payable is 15% plus the Medicare levy.

Now we're going to have a look at a case study just to show you how this might play out. So let's meet John and his family. So John is 60. He's married to Laura, who is 58. Together they have a son. So Ben. Ben is currently studying in uni. He's living at home, and he's also financially dependent on John and Laura.

They also have a daughter, Meg. She is 28. She has her own family, so she's married, she's living independently, she's not financially dependent on John and Laura.

She also has, um, a daughter, Ava. So Ava is 4 years old, and so that's John's granddaughter.

Now, sadly, John passes away, and at the time of death, his total super death benefit is around $400,000. Now, to keep things simple, we're going to assume that his entire balance is made up of these.

taxable component. And we're going to have a look at what are the tax implications if the full amount is paid to each of John's family members.

So, starting with Laura, Laura is John's spouse. So she's considered a dependent under super legislation. It means that she could receive the benefit directly.

And, um, she's also eligible for an income stream, and that payment is tax-free.

Now, Ben, he's financially dependent on John. He's starting in uni, living at home, so he's treated the same way. He can receive the benefits directly, tax-free, and he's also eligible for an income stream.

Now, Meg, on the other hand, so John's, um, other adult child, she is considered a dependent under superannuation law.

Now, but she's not a dependent on the tax law.

So it means that she can receive the benefit directly, but because she's not a dependent on the tax law, she would… that amount that she received, it is taxable because 100% is that taxable component. So that tax payable, it works out to be based on 15.

Percent plus Medicare levy, it's $68,000. Now, Ava, so that's John's granddaughter. She's not classified as a dependent under super legislation, so it means that she cannot receive the benefit directly or as an income stream.

If Ava received the benefit through John's will, that amount is taxable as she's not a dependent under tax purposes.

However, things could be different if Ava, say, was financially dependent on John and Laura. She could be an interdependent or she, um… It's a financial dependent than things it could change, she could, um, receive the benefit directly, and even, um, receive the benefit tax-free. But at the… as the current situation is, um, because Ava, she lives separately, she lives with Meg, um, she's not a financial dependent, so she isn't eligible.

So hopefully you can see there why it's important to plan ahead through that case study. Now, here are a few actions you can consider after today's session. To nominate or review your super beneficiaries. So consider the type of nominations available. We talked about binding, non-binding.

And also the additional reversionary. So take the time to reflect. The best option, um, based on your circumstances, and also regularly check your beneficiary nomination. It's up to date as well. It reflects your current circumstances, because life events like marriage, divorce, having children.

It can change who you want your super to go to. Also, think about your estate planning needs. So you may want to consider seeking legal advice or expert advice to make sure you're.

needs are set up correctly and properly documented. Also, take the time to communicate your wishes to relevant parties, so having those open and also honest conversation with family members or anyone that's going to be affected by your by your decision.

Now, AustralianSuper offers access to a range of advice options, depending on your needs. So it is worth exploring the support that's available to help you make informed decision for your future.

Now, that concludes our Who Inherits your super session. Thank you for joining us. You are now welcome to navigate back to the lobby when you are ready.

Welcome! Thank you for joining this session. We hope you've been enjoying the event so far. In this breakout session, 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've joined us today, Ann. Ann has a Bachelor of Laws with honours and a Bachelor of Arts in Economics from the University of Queensland. She also graduated with a Master of Business Administration in 2004.

Taking out the Graduate School of Management Prize for the best MBA of the year. 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 recipients.

And also deals with the estate planning matters within the firm, which involve complex advice regarding how various structures pass on the death of key participants, including self-managed super funds, companies and family trusts.

And she's a keen advocate of testamentary trusts as a tax-effective tool in inheritance planning.

Now, just a reminder that the views expressed by our guest speaker Ann throughout this session are those of Ann. Based on her experience and expertise, and not of AustralianSuper. And a final reminder that if you have any questions throughout this session.

Please pop them into the chat function and our team will do our best to answer them for you as we go.

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, um, a house with your partner.

probably didn't call him partner then, you called him the husband or a wife. Now it's a partner, and your… your affairs were fairly simple. Your house wasn't worth that much, and you had maybe 4 or 5 kids to share it amongst. Now, we have far more assets, superannuation came in in about 1991.

And all of a sudden, our wealth has become more complex, we might be on a second or third relationship with stepchildren and children from previous relationships, and now we've got a lot of money and more complexity, and a 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, um, 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 Superfund 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.

Okay, 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 3. bad mistakes that lead to a lot of problems in estates. The first is the, uh, 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, um… 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 residue of her estate.

to four charities. She had an estate worth $3 million, 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 were 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 sort of top of mind.

Wow. The third thing, um, is, uh, 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.

Okay, so how often should people be reviewing their estate planning documents, and is there a certain, um, you know, are there certain life events that perhaps should trigger an immediate review?

So there certainly are Kim life events where if you did, if you just ignored them and you didn't make changes to your estate plan, 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. Um, other things include a relationship breakdown. You separate from a partner, you marry a partner, you divorce from a partner, all of those are what we call trigger events.

Um, that need you to review your estate plan. You should nevertheless, review your plan at least every 5 years, or earlier if a major trigger event occurs.

Okay, so you mentioned earlier around super, uh, you know, not flowing through a will. What role does the Superfund trustee play?

So, if you don't have 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 dependents 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.

Uh, 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, say, 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've 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 indicia that they follow.

So a 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.

uh, how you complete those nominations, and the requirements can change depending on which super fund you're with, and if you have a self-managed super fund, more so. Um, so… so those are the key things. Also, um, some, uh, super funds have.

lapsing binding nominations that only last for 3 years, and so you might have let your binding nomination lapse, uh, and if you then lose capacity, you can't actually renew it. Uh, and so that, that can be a problem for you.

Okay, 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 reversary 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 nomination.

For instance, let's say to your spouse, um, 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 superland, 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 survived you, for example, in that example.

We'll have to cash it out, uh, and it might not be as tax-effective then in his or her hands, as it would have been if it stayed in superland. 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 gifts and the will.

will not, um, be able to be affected. Okay, and 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 am I being slugged with a death tax on mum or dad's super, for example?

Um, and so it doesn't apply to all people, but certainly with adult children, because they are not financially dependent on their parent, unless they were, for example, if they were disabled, they will be taxed at a rate of 15% or 17%, depending on whether the super goes direct to them or through the estate.

And it will be taxed on the taxable component of the deceased person's 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, 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, and from your experience, what are some simple steps that we can take to make an executor's job a lot 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 minimize the risk of expense in estate matters, a nice simple streamlined process for your executives, and an 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 dry, bit of wills and Estates.

Our world has become so much more complex now, um, and… and the inheritances we have to give are so much larger.

that everything has become specialized, and so I would encourage viewers to always see an estate planning lawyer, someone who does not dabble in this, but who has it as one of their main focuses, 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, the moving parts in that, and they're going to know all the advice to give you to make sure your estate is maximized.

Expenses are minimised, tax is minimised. Okay, so we've learned a lot today in this session. If members only take, say, three actions after today, what should they be?

Okay, briefings. Um, take your sleep 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, um, 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, or 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, um, the lawyer you use, or you did a DIY will, or something like that, it's… it doesn't hurt to get it reviewed.

There might be things that you've missed, 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. Okay, 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 you, Ann, for joining us and for lending.

ask your expertise on estate planning. So please make your way back to the event lobby to join the next session, which is a panel Q&A with our investment expert and a financial planner. Thank you. Thank you, Kim. Thanks.

Welcome back. I hope you enjoyed the estate planning session with either Yen or Ann.

In this segment, we're talking about something we hear all the time from retirees. The fear of spending in retirement.

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 to facilitate the provision of financial advice to members of AustralianSuper.

This device is provided by financial advisors who are authorised representatives of IFS.

Now, many members I meet say to me, I've worked my whole life saving this money, what if I spend it too fast? Or what if I run out?

Now, these questions are incredibly common, even for people who are actually in a strong financial position.

In this session, we'll talk through the most common concerns. Why they're normal, and how people can approach spending with more confidence. To help guide us through this, I'm joined by Sam Weaner from our investment team and Kris Tiberi, our financial planner.

Sam and Kris, for those joining us, what are your roles? What do you do?

I'm investment communications manager. I provide updates to members on our performance as well as our investment strategies. And I've been in the investment industry for over 25 years, so I enjoy being able to share my experience with members. And Kris, I'm a financial planner here at AustralianSuper, so I'm fortunate enough to meet with members every day to hear their concerns around retirement and really support and guide them through their retirement journey. How common is this fear of spending in retirement?

It's a real common fear bead. It's probably one of the major fears we see from members. It's very difficult for them to, I guess, adjust from a savings mindset to a spending mindset. So, I guess members are taught through literature and education to really save, save, save for retirement.

But they don't really get shown or told how to then spend their money for retirement. Um, so yeah, it's very common.

Sam? So, that's what I find amazing, is that you spend a lifetime accumulating. You think even in our careers, we focus on getting a promotion, getting a higher salary, we fill our homes with a lot of items, we also like to see our savings grow.

So that shift from accumulating to spending is definitely a change of pace, and it's something we have to get used to, that in retirement, we may see our account balances move sideways or even be reduced over time.

Now, Kris, one of the biggest, or one of the most common fears we see from retirees is, what if my money runs out?

Yeah, I think that's a real fear for our members, and I sort of take a step back and I say, well, why are they fearful of that? And I think there's a real lack of understanding for some of our members around retirement funding. Unfortunately, or fortunately, people don't know.

How long they're going to live. So, this fear of running out of money within your lifetime is a real fear. Um, so I take a step back and I say, well.

How can we, I guess, alleviate that fear? Because if we don't, I guess the default position that members will take is they'll just underspend. Um, and that's what our statistics show, that people commencing income streams are primarily taking the minimum.

from those income streams, and I'd be staggered if that's, you know, truly aligned to what would constitute the best retirement for that member. So, in order to stop them from doing that, what are the options we have available for them? And I guess it's getting a greater understanding of.

um, why they're underspending. And I think, um, there's three phases to that. So if we can educate members around, well, how much they need at an individual level to sustain their retirement, where they're going to get that money from, um, is that an income stream, is that some Age Pension, is it some investment income that they may have?

I think once we know those two parts, we're pretty confident that we can then educate the member on how long that money will last. And once that member's got that information, they're far more informed than to make a decision around their spending, which can then, you know, stop this underspending that we see from members.

So it's a greater… emphasis on education and understanding of where they're at, what they can do. Yeah, taking the unknown and making it more of a known quantity for them. Because I think until they know how long their money is going to last, they're not going to spend it. So if we could tell them how long it's going to last.

Within reason, and then provide flexibility around the solution for them. I think we can begin to, I guess, address this fear of running out of money.

Sam, we know at the moment, with everything that's happening globally, investment markets are up and down.

Members are concerned about how short-term performance is going to affect their long-term retirement plans.

That's another part of uncertainty with investing, and especially during retirement, when you really are focused on how much money you have, that the first thing a lot of people do is they look at their account balance, and you might look at it monthly or weekly. And when there are volatile times where markets are down a bit, you get concerned. You think, have I made a mistake? Should I change something?

Should I stop spending? And effectively, life doesn't stop whenever markets are volatile. Your bills are still coming through, you still want to enjoy that vacation, you still want to enjoy time with family and friends, so you don't want to stop spending just because markets are volatile.

We've all seen those performance charts where they have jagged lines that go up and down, and what we see there is that the market can sell off or have some downturns from time to time over the course of a year. So it's pretty common for that.

So what can we do about it is the best thing we can do is to mentally prepare, to know that these things occur and to be ready for them.

Secondly is to have a portfolio that's balanced in a way that you're comfortable with the income you're getting from it, as well as the growth you might need for the length of your retirement. And lastly, it's having a little bit of money set aside, perhaps a 3 to 6 months or even longer of income set aside.

in a safe place so that when there are volatile market conditions, you don't have to worry about your income needs. So, like Kris was saying, it's that education piece about understanding what the options are, what your goals are, and making sure the two align.

Definitely. So it's not about ignoring markets, but it's not letting markets drive your decisions with… through fear? Definitely. So you work closely with our investment team, uh, investment markets, always in motion.

How does AustralianSuper manage investment markets when there are ups and downs? Because it is a concern to members in retirement. So it's… it's a large part of what we're looking at in investment markets is the uncertainty that you can see, and our investment team wants to invest through those market conditions to make sure that.

Members have the confidence that they need to retire well. So the key things that we do in the portfolio are ensure that we have diversification, and diversification means that we invest in Australian and international markets, as well as across asset classes.

So fixed income behaves differently than private markets, behaves differently than shares during different news cycles. So we want to make sure that we invest in a broad variety of investments for the portfolio. We also looked at the different timeframes of a retiree.

that retirees have current income needs, as well as needs to grow their capital over time, because as you're retired for 10, 20, or 30 years, you'll want your portfolio to keep up with inflation. And lastly is looking at noisy markets that we've seen over the last couple years.

is that we invest through those conditions because we're looking at the value that an asset can add over the next 5 to 10 years, not just its current reaction to the current market cycle or current news cycle.

So we want to build that value for members over time.

Overall, we want to make sure that members have the security they need to invest through a lifetime of investing so that they have the confidence that they need in retirement. And that'll mean, back to Kris, picking the right investment option for that person.

from the range of options that AustralianSuper provides.

Now, Kris, Sam's spoken about markets, unknowns, ups and downs. What about unexpected costs? I can always remember my father telling me I need to have enough money in the bank to get a new hot water system. I don't know why, that was Dad's thing. But, in retirees, there's that worry about.

extra costs, the unexpected costs, increasing healthcare, aged care, and just something that comes out of the blue. Yeah, so that's a real fear, because unexpected costs are exactly that. They're unexpected. You can't plan for them. Um, so I think the best we can do.

As retirees, um, to manage that anxiety and that fear, because it is a real fear, is, um, is to really, I guess, identify what is expected and what is unexpected. So the expected stuff we can plan for. We can set aside money, we can make long-term investment decisions, we can try to account for inflation, we can try to grow our wealth over time.

with a view of meeting the expected costs in our retirement, which is the day-to-day stuff that's the electricity, it's your food, it's all that sort of stuff. So having a pool of funds there for the expected, and then having a separate pool of funds for the unexpected. So, hot water.

Blows up, as Dad's greatest fear is having some money set aside for that unexpected cost. Uh, so I think that goes a long way, um, I guess, to, I guess, allaying those fears for members that I'm going to have to interrupt, you know, my long-term investment strategy to account for.

for, you know, these short-term unexpected costs. Um, and I guess it allows them to ignore the noise and to really invest for the long term through those market cycles, knowing that there's money set aside for those emergency purposes. So it's coming back to that confidence bit of, I know I don't need to worry about this because I've got.

something set aside for this, even though I didn't know it was going to happen. Yeah, absolutely. Just having, I guess, a greater understanding of what is the purpose of money. Is it to meet the expected or the unexpected? Also showing members, I guess, the value of their capital over time can really help them manage this stuff.

The small-term unexpected stuff, we can really quarantine money and we can account for that. The larger, more unexpected stuff, like residential aged care, we get a lot. Um, I guess it's about showing members how their capital may be drawn down over time from the expected.

costs that they expect to incur year-on-year. So not just showing them, this is how much you've got today, and this is how much you're going to have it at, say, age 88. But showing them, this is how much you'll have at 7, if you do need to move to residential aged care. This is how much you may have at age 80 if you need to move to residential aged care, or you need to downsize to another property more suitable for your needs. So, I think information's the key.

Inflammation removes anxiety, so the more information we can give to members in a language that they understand, um, really helps them say, well, I've got money there if something unexpected comes up. Which leads back to that confidence thing. Yeah, absolutely. Something I hear a lot from members regarding.

Uh, an account-based pension, an income stream is, if I take too much, I'm going to reduce my income, because the government pension's going to drop. Yeah, that's a really common concern, and I think it's really, um, sort of, there's not a lot of education out there around it, Peter.

I think what is really important for members to know is the amount that we draw from our investments, whether that's money from a bank account, whether that's an income stream account, whether that's an investment account, is not what influences or is not what is treated for the income test.

Um, the government uses a metric, it's called deeming, to determine how much your investments count towards that income test. And it's a static, I guess, statutory formula that they use.

Um, so the government's not looking at individual members' situations and going, well, Peter's taking $10,000 from his account-based pension, so we treat him one way, and Sam's taking $20,000 from his account-based pension, so we're going to treat him a different way. If both Peter and Sam have $100,000.

In an account-based pension, their income test assessment is exactly the same. So, I guess I would encourage members to talk to Centrelink around, you know, how much they have in their income stream accounts, how much they're thinking of drawing from their income stream accounts, and if they're looking to.

to change that income stream payment. Again, having that conversation with them, because in a lot of instances, we find that it will have no impact to the Age Pension they actually receive from Centrelink. So what I'm drawing out doesn't count, it's what they say it earned.

And depending on where I am, if we're a home-owning couple, it doesn't completely cut out until about $2,500 a fortnight, so it can be quite generous. Correct, and again, even if you took $2,500 a fortnight from your account-based pension, they don't treat it as $2,500 a fortnight.

They look at the account value, and they say, we deem it to earn X. That $100,000 is deemed to earn X amount of income, even if you take $2,500 a fortnight. So they're not really interested in how much you're drawing from, they're only really interested in the value of.

that account. And it's the same for performance as well. Um, Peter, this is another misconception is, you know, I've earned $10,000 of interest on my income stream account, and now the government's going to take some Centrelink off me as well. Again, they're not really concerned about how much interest that account is earning.

They will deem it to earn X amount of interest. If you earn 5 times the amount of the deemed rate, they don't care. They let you have that excess return without it impacting on your Age Pension Entitlements from an income test perspective. So this, as you said before.

Centrelink's a vital part of this journey to retirement to find out how all these things rule, because many people haven't been to Centrelink, or don't want to go to Centrelink. Yeah, which I find really unusual. It's a key component of funding retirement sustainably, is that.

Age Pension building block. Um, far too often we see members that… who are eligible for an Age Pension, not in receipt of an Age Pension. And similarly, we've seen a lot of self-funded retirees who've done the right thing and funded their retirement initially, um, and become eligible for an Age Pension in the future, and haven't gone back to have a chat to Centrelink. So, I would really encourage the members to.

go to Centrelink, um, accurately record their income and asset positions, because you might be surprised. You might be being underpaid from a Centrelink perspective. What about the situation where someone's contemplating returning to work, but they're worried the income they're going to earn.

is going to adversely affect their ability to receive the government age pension. That's not strictly true, is it? No, so the income test, um, it operates on a spectrum. So, it's not on or off, it is full amount to.

A limit, then it's a partial reduction before fully cutting off, and I think it's important for members to know that that cutoff about close to $2,500 a fortnight, Peter. So that's a lot of income that you can earn, um, before the government will take your aged pension off you. I think something that's also not well understood is there are incentives in place from.

The government to work in retirement. Uh, there's something out there called the Work Bonus, um, that essentially allows you to earn up to $300 a fortnight without any of that income being counted, um, from an income test perspective. There's a couple of caveats out there, and I'd encourage members to go and.

Research and read up on those, but I guess the government has heard the fears of retirees around work, um, and are essentially giving them permission to do a little bit of work, up to $300 a fortnight, without it impacting on their payment. So, um, I guess… I would encourage members to think about what is the ideal retirement for them. Um, is it working a little bit? And for a lot of our members, it is. Whether that's crossing supervisor or, you know, doing a day a week in the bakery, um, people work for a lot of reasons, not just financial. Um, it's for emotional connection, it's for.

that social sort of element that work brings us. So, before you go and give up your work, again, to the prior, I'd encourage members to have a chat to Centrelink around what they're planning on doing with work, so that before they give it away, they actually understand.

what the implications are, because far too often, we see members giving up that one-day-a-week job and getting no additional Age Pension as a result, because it was having no impact on what it is that they're actually receiving. So it's all coming back to not where the money's coming from.

How much have I got to spend? And trying to maximize that through super, pension, other sources of income? Yeah, we talk about it as building blocks, um, to fund a retirement, and for a lot of people, work is a very, very, very powerful building block.

to fund a retirement in part. And it comes back to some of the earlier themes we're talking about around running out of money. One of the strongest things that a member can do to make their money last longer is work longer. And $300 a fortnight, that's $7,800 a year.

That type of money would go a long way to really stretching how long a member's capital can last them throughout retirement. Yeah, so that might fund the holiday that Sam was talking about earlier? Yeah, absolutely.

Now, Sam, you've spoken about how we invest, different investment options, markets going up, going down, being aware that that's going to happen. Kris has spoken about the needs to plan all that.

What do you think is that key mindset shift when it comes to retirement? What I find amazing is when I think of retirement, back when I was 20 years old, retirement was that destination. It was a point in time in the future. But as you get closer, you start to realize it's a phase.

It could happen for decades, and you want to be able to enjoy your retirement and really planning ahead will help you have that assurance that you need to be able to live well in retirement.

So it's that piece we were talking about, the education, understanding, confidence from a financial point of view, Kris? Yeah, so confidence, I'd say, comes from clarity.

flexibility and review, and not focusing on perfect. I guess the overarching theme here is, is that there's expected and unexpected that comes up, so being flexible, being adaptive, and reviewing your financial situation as it changes, I think, is the key.

Now, Kris, a few questions have come in. Sorry, Sam, they're all for Kris. The first one is, how often should I be reviewing my spending plan in retirement? Yeah, that's a great member question. I don't think there's a right or wrong. I think starting that retirement journey.

Um, a lot of members pick a number, um, and that number is their number. Um, I think we should be encouraging members to review that number whenever it no longer seems relevant for them. Um, sort of using some experience, um, maybe through the earlier parts of, you know, the 2010-type era, we had very, very low inflation.

So members would pick a number, um, and they'd be pretty happy on that number for quite a period, you know, 3, 5, 7 years, because we didn't have, I guess, an inflationary crisis within Australia. I think what we're tending to find now is members that even set their retirement number 12 or 18 months ago are actually having to revisit that number, and I think.

Without going into too much detail, the cost of living increase in Australia has been pretty widely reported. Um, so I'd really encourage members to revisit that number whenever they feel that it's no longer meeting their objectives. And a really easy way to do this, Peter, which I encourage members to do, is.

Um, start with a number in your bank account, and have it as a known number to you. It might be 20,000, might be 30,000, $40,000, $50,000, every member is going to be different, okay? Um, the way in which you can clearly identify whether or not you're drawing enough.

from your income streams to meet your expenses is by looking at that number. Clearly, if that number's going down every month, you're not drawing enough to replace, I guess, that capital. And if it's building up too quickly, well, maybe you're drawing too heavily, and you're accumulating more.

Um, in cash reserves than you need. So I think that's a great indicator as to maybe when you need to revisit that spending number. A second question is, I'm getting the Age Pension, I'm over 67, I'm getting the Age Pension, but I'm going back to work.

Can I still have a super account? I've got to, really, don't I? Absolutely. You have to have one. Um, the employer has to pay you your minimum 12% superannuation guarantee. So, no, absolutely, you could keep your superannuation account and still get an Age Pension. Um, I think, um, again.

An asset is an asset in the eyes of Centrelink, whether it's a super account, whether it's a bank account, whether it's a share portfolio, it's all assets to Centrelink. So again, they're not going to get upset with you if you want to keep your account in superannuation accumulation, because that's what you consider to be in your best interest.

absolutely can keep a super account and still claim an Age Pension. And another question, I think inspired from what you said before, uh, the unexpected costs, how much should I put aside? Again, that's based on individual preferences. We have members that need very, very little.

for the unexpected, and we have members that need a lot for the unexpected. So I think, again, challenging yourself. So, a good test for that is, in order to go to sleep at night and rest that head on that pillow, and not wake up through the night going, I don't have enough money, maybe that's… the number that, um, you know, that may resonate for those individual members out there. You know, what are you… what can you comfortably sleep at night knowing you've got set aside for those emergencies? And would you have any rough figure or percentage that might give people somewhere to start? Yeah, so ASFA, which is a body that does a lot around retirement funding and.

and educating of retirees, so that's A-S-F-A. Um, they do provide some guidance out there for members around, well, how much should I be keeping as sort of a safety net of assets? So I'd encourage members to go and do their own research. They've got a website that will, you know.

discuss that item in more detail, but typically, they sort of educate members on from, sort of, three months of your annual income needs is a good starting point, but there's no perfect fit for all members. Ultimately, it's what can you sleep comfortably at night, knowing you've got set aside for that emergency?

Yeah, so everything we've spoken about, one size does not fit all. Learn what your needs are, know what the options are, that confidence comes from there. Unfortunately, that is the case. And I know we've spoken about it a lot today, but, you know.

get some advice. Go and see somebody, whether that's Centrelink, for some Centrelink-based advice, whether that's your solicitor for some estate planning advice, or whether that's a financial planner to talk through, well, what are you going to do from a retirement perspective? There's lots of people out there, happy to help you, so I'd encourage members to go and get.

Some advice? Thank you, Sam and Kris, and for sharing your insights.

We hope this session has helped normalise some of the concerns you may have, and given you greater confidence to enjoy your money, knowing you can spend, adapt, and review your plans over time.

So that almost brings us to the end of the event. We really hope you found the session valuable, and picked up some practical ideas to support you in retirement.

We know we've covered a lot today, and you don't need to remember everything at once.

The aim of today's event was to help you feel clearer and more confident about your retirement choices, and to remind you that support is available whenever you need it.

Before we finish, I'll briefly recap the key themes we explored today.

Jacki Ellis, our Head of Retirement, took us through how the retirement landscape has changed. People are living longer, working with more flexibility, moving between working and saving.

part-time work, even in and out of retirement. While the adjustment into retirement can be daunting, what matters is feeling supported as your needs change over time.

Knowing your income options, and understanding how things like super and the Age Pension can work together.

For those who attended the Q&A with Ann Janssen, she noted that a state law has become more complex over the past few decades.

And that it is important to have an estate plan in place, and that this is reviewed every five or so years.

Because your estate plan is the concluding chapter of all the wealth and relationships that you have grown and nurtured over your lifetime.

Use a lawyer that specialises or practices primarily in estate law.

For those that joined the Who Inherits Your Super session with Yen Du,

She took us through the specifics of who you can nominate as a beneficiary, or the person designated to receive your super should you pass away.

And what the tax implications are for each beneficiary type.

Our investment and financial experts answered a number of questions on investment strategies, unexpected costs, navigating market falls and timings, and how the super and government-aged pension systems work together.

If you missed any of these sessions, details and session recordings will be made available after the event.

If you feel that getting personal advice would help you take that next step, AustralianSuper offers access to a range of advice options.

In our follow-up survey, you'll have the opportunity to request a call from the AustralianSuper Team.

who can help you understand which option may be right for you.

If you request a callback, the AustralianSuper team will send you a text message before calling.

The team are based in Sydney, so the call will appear with a 02 area code.

This process can take up to a couple of weeks.

We wish you all the best on your retirement journey, wherever you may be on it.

And thank you again for joining us.