Let`s talk super (45+) - May 2013

Superannuation | Pensions | Insurance | Financial Advice
Let’s talk super
Super newsletter - May 2013 (45+)
Nev & Carole
Platinum rated Fund
for 5th year running
Couple saves $’000s of dollars with
financial planning advice
Fund members Carole (age 49) and her
husband Nev (age 60) had saved hard during
their careers and were living quite comfortably.
In addition to their home mortgage they had a mortgage on
an investment property, and were becoming concerned about
their likely level of income in retirement, and whether they had
in fact saved enough.
The Fund is proud to announce we have
received our fifth consecutive platinum
performance rating from independent
ratings agency, SuperRatings. Only the
best performing and ‘value for money’
funds receive the platinum rating and
this places us in the top 15% of funds.
They had heard about the financial planning services
available through Australian Catholic Superannuation and
made an appointment to meet with a financial planner.
(continued page 5)
1
CEO update
I am pleased to announce SuperRatings
have presented us with our 5th
consecutive platinum rating, placing us
in the top 15% of Funds in Australia. Our
insurance product has also been rated
in the top 3 by Money Magazine’s Best
of the Best 2013, a great result for our
members and their beneficiaries.
We have ensured you receive a detailed
summary of the announcements from the
Federal Budget on Tuesday 14 May 2013
and the upcoming legislative changes for
Stronger Super which start from 1 July
2013. It is our aim to update you on what
MySuper and Superstream are and what
they mean for you.
There are a number of articles to assist
you with managing your account and
some helpful case studies to read.
Importantly there has been a recovery
in investment markets since September
2012, as outlined in the table of
investment performance.
Due to the positive feedback received,
we have again formatted the newsletters
in such a way that articles should relate
to your ‘stage of life’ and segmented the
newsletters based on members’ age.
I would also like to remind members
that binding nominations for your
account lapse every 3 years and it is
your responsibility to complete a new
nomination should you wish to renew
your nomination. The Trustee assists you
in this regard by sending you a letter and
form with a reply paid envelope prior to
the 3 year period lapsing.
Thank you for your continued support of
Australian Catholic Superannuation.
Greg Cantor
Chief Executive Officer
You could receive up to $500 from the Government ...
... just by transferring bank savings to your Australian Catholic Superannuation account.
Did you know that by adding after-tax
money to your super account you could
have a contribution of up to $500
from the Federal Government added
to your account, depending on your
assessable income?
Since savings in a bank account are not
eligible for the co-contribution, it may be
worth considering transferring some
savings from your bank account into your
super account.
To qualify for the Government Co-contribution the money you
transfer into your super account must be received by us by
Friday 28 June. The simplest way to do this is by BPay from
your bank account. Please allow up to 3 working days for bank
transfer and processing time so that your funds are received by
this deadline.
2
Your additional contribution (as part of
your future contributions) can be placed
into any of 11 different investment options,
including the Cash option, which invests
primarily in term deposits held with
Australian banks.
This Cash option gives
you comfort if you are
concerned about volatile
investment markets.
Conditions do apply. The maximum benefit applies to members
with an assessable income of up to $31,920, and is phased out
completely once your total income reaches $46,920. Full details
are available at www.catholicsuper.com.au/cocontributions
Investing time to understand
Transition to Retirement – access some of your super from age 55
Government regulations allow you to access some of your
superannuation funds from age 55 years if those
funds are converted into a transition to retirement pension
account, which is part of the superannuation system.
After completing some paperwork, a transition to retirement
pension account is normally started by transferring a large
proportion of your superannuation (minimum $25,000) into your
new pension account. Your super account remains open to
receive future contributions.
Government regulations allow you to withdraw up to 10% of the
balance in your pension account each year. This can be done
by automatic transfer to your bank account monthly, quarterly
or less frequently – to suit your needs.
The pension account operates in conjunction with your super
as shown in the diagram at left.
When you have a transition to retirement pension account
several tax advantages are available on the funds in your
account, including:
• No tax on investment earnings*
• No tax on capital gains
*Note: on 5 April 2013 the Treasurer of the Federal Government
announced the intention to change taxation arrangements.
This has not yet been legislated
• From age 60 years, no income tax is payable on the pension
paid to you.
To learn more about whether a transition to retirement pension
account may be suitable for you just call us on 1300 658 776.
Tax-free investment earnings – from age 55
Are you planning for the day when you can pay
0% tax on the earnings from your retirement
savings or other investments, and pay no capital
gains tax on your investment? If this possibility
appeals to you, read on.
At Australian Catholic Superannuation our financial planners
often see members of the Fund who have established a variety
of investments outside of the superannuation system, typically
in Australian shares or an investment property, and typically
in their own name – so they potentially pay income tax on
investment returns and capital gains tax on eventual sale.
It could have been so different had
those members been aware that more
tax-efficient options may be available.
Much of the impact of taxation depends on the name in which
the investments are made – i.e. whether the investment is in your
own or joint name of individuals, or as an allocated pension.
As shown in the diagram at left there are many different types of
investments, as well as several different “name”, or investment
vehicle, options. If those investments are made in your name as
an individual the marginal tax rate can be as high as 46.5%, or
as low as nil.
On the other hand, if those investments are made though
an allocated pension, (which is part of the superannuation
system), from age 55 years tax on investment earnings and
capital gains tax is zero.
Some types of investment
SHARES
PROPERTY
MANAGED
FUNDS
FIXED
INTEREST
CASH
The investment is held in the name of:
ALLOCATED
PENSION
ACCOUNT
SUPER
ACCOUNT
COMPANY
INDIVIDUAL
The tax on investment earnings would be
0%*
10 – 15%
30%
0 – 46.5%
This raises an important question – if you are contemplating
making possibly large investments a discussion with a qualified
financial planner at Australian Catholic Superannuation can
help make you fully aware of all the taxation and investment
return considerations. This could set you up on the right path
so that you maximise returns from your investments.
To make an appointment, just call us on 1300 685 776.
*Note: on 5 April 2013 the Treasurer of the Federal Government
announced the intention to change taxation arrangements.
This has not yet been legislated
3
New developments
Significant event notice: Abolition of member protection
Currently members with account balances of less than $1,000
cannot have their account balances reduced by administration
fees that are greater than the earnings credited to their accounts.
This is called member protection and it was implemented at a
time when contribution levels were low in order to help small
account balances to grow.
Under the government’s MySuper reforms, all members in a
MySuper product must be charged the same fees and costs. It
will no longer be possible for protected members to be charged
administration fees that are lower than those paid by other
members.
Member protection will be abolished from 1 July 2013, provided
that the relevant legislation is passed. As all members will pay
the same administration fee ($1.50 per week), many protected
members will experience an increase in fees.
The cessation of member protection applies to all super funds,
and not just to Australian Catholic Superannuation. If you have
a number of small accounts in other funds, you can reduce
the impact by rolling your inactive accounts in other funds into
your Australian Catholic Superannuation account and therefore
paying only one administration fee.
For more information on how we can assist you to consolidate
other accounts visit: www.catholicsuper.com.au/Consolidate
What is MySuper?
MySuper forms part of the Government’s broader
Stronger Super reforms which are aimed at making
the Australian superannuation system stronger, more
efficient and at helping to maximise retirement income
for members.
MySuper is a new, simple and cost-effective superannuation
product which replaces existing “default” products for
employees who have not chosen a super fund or made an
investment choice within their super fund.
All super funds which offer MySuper products will need to offer
a simple set of standard features. This will enable members,
employers and market analysts to compare funds more easily
based on a few key differences. It will also ensure that you, as
a member, don’t pay for any unnecessary “bells and whistles”
you don’t need or use.
Superannuation funds must hold a licence issued by the
Australian Prudential Regulation Authority (APRA) in order to
offer MySuper products.
Introducing Australian Catholic Superannuation’s
“MySuper Balanced” option
MySuper is a simple and cost-effective superannuation
product for members who do not want to make choices about
their retirement savings.
We were one of the first ten funds in
Australia to be authorised by APRA
to offer a MySuper product.
Our MySuper product will commence on 1 July 2013.
In practice, very little will change for Fund members. Our
MySuper product will simply be the existing Balanced option
with a new name – MySuper Balanced. The investment strategy
remains the same and there will be no increase in fees or costs
as a result of the “transfer”. A small number of members will be
offered insurance for the first time.
Impact on contributions
Impact on allocated pensions
From 1 January 2014, if employees have not chosen their own fund, employers must
pay contributions to a fund that offers a MySuper option. We will offer a MySuper
option from 1 July 2013, so there will be no impact on Fund employers.
There will be no impact on allocated
pensions. The MySuper changes apply
only to the funds in the superannuation
or “accumulation” phase.
All contributions must be paid to a MySuper option unless the member has made a
different investment choice. This means that from 1 July 2013, MySuper Balanced will
become our default investment option.
Because we are simply re-naming the Balanced option, from 1 July 2013 all
contributions that would have been paid to the Balanced option will be paid to
MySuper Balanced.
Impact on account balances
On 1 July 2013, all money in the Balanced option will be automatically “transferred” to
MySuper Balanced.
A small number of members with money in other options will also have their account
balances transferred to MySuper Balanced. Those members affected have already
been provided with details of the change. The transfers will be carried out at no cost
to members i.e. the normal buy-sell spreads will not apply.
4
Opting out
If you do not want your contributions or
your account balance paid to MySuper
Balanced, you can change your
investment choice at any time, either
online or by completing a change of
investment form.
For more information
More information about MySuper is
available from the MySuper section of
our website at
www.catholicsuper.com.au/MySuper
Socially Responsible Investing
You never have to leave us –
no matter where you work
Should you change jobs in the future
it’s easy to keep all your Australian
Catholic Superannuation insurance
and superannuation benefits, no matter
where you work, or in which industry. All
you need to do is ask your new employer
to pay your Superannuation Guarantee
contributions into your existing Australian
Catholic Superannuation account, rather
than into a new account at another fund
they may suggest.
If there is any difficulty in achieving this,
you can simply transfer the majority of the
balance of your new account into your
existing Australian Catholic Superannuation
account every 6 months or so.
Australian Catholic Superannuation offers a specially constructed investment option,
the Socially Responsible Balanced option, for members who wish to take advantage
of responsible investing strategies across Australian shares, international shares,
property and other investment classes.
What is Responsible Investing?
Responsible investing is the integration of environmental, social and corporate
governance (ESG) factors into investment management processes and ownership
practices in the belief that these factors can have a material impact on financial
performance. It involves research, selection and monitoring of an investment security
or portfolio.
What is ESG?
ENVIRONMENT - Climate change, unsustainable consumption of natural resources
SOCIAL - Human rights, labour standards, health & safety
GOVERNANCE - Corporate governance & ethics
By managing ESG impacts and opportunities, the Fund is likely
to be more financially sustainable in the long term and could
deliver better long term financial performance.
To find out more about Australian Catholic
Superannuation’s Socially Responsible Investing go to
www.catholicsuper.com.au/responsibleinvesting
Nev and Carol - Continued from cover
After meeting with the financial planner and having a long
discussion about their financial concerns, health, and lifestyle
wishes in retirement their planner developed a comprehensive
plan which was presented to Nev and Carole at a second
meeting. After discussing the proposed plan they agreed to
implement it, which involved:
• Selling the investment property, and using the funds to clear
the investment mortgage
A summary of their financial position is below:
Nev
Carole
Annual gross income
$105,000
$70,000
Superannuation balance
$383,000 (in two funds)
$130,000 (in two funds)
Insurance
Paying in two funds
Paying in two funds
Savings
$20,000
Investment property
$500,000
Total liabilities
$482,000
• Nev commencing a transition to retirement pension, using all
the funds from one super account and much from the second
• Carole changing her income protection insurance from
a “2 year” to a “to age 65” version, for added protection
• Both Nev and Carole to increase their salary sacrificing
contributions, and to also commence additional
contributions on an after-tax basis
• For Nev to commence spouse-splitting of contributions,
to build Carole’s account balance more rapidly.
Nev and Carole felt the financial
planning advice provided them with
substantial benefits ...
including: saving $8,400 in income tax in the first year; an
increase of $8,060 in salary sacrifice contributions; and
an increase in after-tax contributions of $52,000 a year –
all in addition to significant peace of mind.
Further details about Nev and Carole’s circumstances, plus
other examples of financial planning recommendations,
can be seen at www.catholicsuper.com.au/financialplans
To make an appointment to meet with a financial planner
to discuss your circumstances and objectives please
call us on 1300 658 776.
5
Market Commentary
Over the financial year favourable returns
on shares in developed markets were
driven primarily by perceived recovery in
the US. The US unemployment rate has
begun to decrease, the housing market
has shown signs of recovery, retail sales
increased and consumer confidence
rose. The Japanese share market also
responded well to the Bank of Japan’s
stimulus measures which have been
showing signs that the monetary easing
is having the desired effect of boosting
the Japanese economy. However, there
were still some clouds over the period
with concerns regarding the Cyprus
banking system and what measures
would need to be adopted in order to
attract a bailout by the European Central
Bank and the International Monetary Fund.
The Italian elections also caused some
nervousness. Although the Australian
share market performed above the
international market it was not immune to
global nervousness as can be seen in
the chart below. Our market was also
affected by Chinese growth figures with
our market strength stalling when Chinese
growth was lower than expected.
In regard to cash rates, these have
been kept at historically low levels in
the developed world to help stimulate
economies. In Australia, there have been
three official interest rate cuts of 0.25%
over the current financial year to-date,
with the cash rate now at 2.75%. Recent
surveys show that the low interest rates
may be having some impact of attracting
buyers into our residential market resulting
Market returns to 31 March 2013
Year (%)
Developed markets and Emerging markets share returns
financial year to 31 March 2013 (see line chart to right)
Australian Shares
Return To-date (%)
International Shares
(hedged)
Return To-Date (%)
Jun-12
1.0
1.0
1.0
Jul-12
4.2
1.4
-0.9
Aug-12
6.4
3.7
1.0
Sep-12
8.8
6.3
6.4
6.0
FYTD (%)
Month
Top 10 Aussie Shares earn $45 million Dividends
and $13.5 million Franking Credits for members
Super and pension members with Australian Shares in their
investment option (comprising 27.5% of the Balanced Option,
and 100% of the Australian Shares Option) have shared
in significant dividend income and franking credits for the
financial year to date 30 March 2013. Over this period the
Fund’s top 10 share holdings, shown at right, have generated
gross dividends of approximately $45 million and franking
credits of approximately $13.5 million. These dividends and
franking credits are distributed to members in proportion to
their account balance in the various investment option(s).
These figures are just from the top 10 shares – the figures from
all the stocks in the portfolio would be considerably higher.
Franking credits obtained from these dividends reduce the tax
the Fund pays on income from the Australian Shares, effectively
boosting returns to members.
Further details of the various investment options available to
members are shown in the Product Disclosure Statement,
available at www.catholicsuper.com.au
6
in increased house prices in major cities.
Australian inflation figures released late
April 2013 show that inflation, at 2.5%, is in
the middle of Reserve Bank of Australia’s
(RBA’s) stated preferred range and is
unlikely to be a problem in the near future.
Therefore Consumer Price Index issues
are not expected to have a large impact
on RBA’s near term interest rate decisions.
The RBA may, however, take into account
Australia’s increase in unemployment,
decrease in mining activity, some lowering
of confidence in the manufacturing sector
and recent signs that emerging drought
conditions are affecting our farmers.
All these factors may lead to the RBA
leaving interest rates on hold or even
announcing a further slight decrease in
the near future.
Emerging Markets
Return To Date (%)
Oct-12
11.9
6.0
Nov-12
12.4
7.8
6.8
Dec-12
16.1
10.0
12.5
Jan-13
21.9
16.2
13.7
Feb-13
28.3
18.0
14.7
Mar-13
25.4
21.6
11.0
ASX
code
Australian Company
Value ($m)
% of total*
BHP
BHP BILLITON LIMITED
112.80
7.3%
ANZ
ANZ BANKING GROUP
108.00
7.0%
NAB
NATIONAL AUST. BANK LTD
101.30
6.6%
6.4%
CBA
COMMONWEALTH BANK
99.70
WBC
WESTPAC BANKING CORP.
83.70
5.4%
TLS
TELSTRA CORP LIMITED
56.70
3.7%
WES
WESFARMERS
49.10
3.2%
NWS
NEWS CORP CL B
38.90
2.5%
WPL
WOODSIDE PETROLEUM
37.40
2.4%
RIO
RIO TINTO LIMITED
36.00
Total
723.6
2.3%
46.8%
*Australian Share holdings
Members are able to change their investment options, online,
at the Members Online link. Advice about the most appropriate
investment option, or combination of options, is also available.
If you wish to make an appointment with a financial planner
at Australian Catholic Superannuation to discuss your
circumstances just call us on 1300 658 776.
Outlook
Investment returns to 30 April 2013
Very strong share markets
such as those that have been
experienced recently
eventually lead to corrections
but, at the same time, large
missed opportunities may
be experienced if markets
are exited before they truly
run out of steam. Currently
the Australian Catholic
Superannuation’s Balanced
option’s exposure to Australian
and international shares are
at benchmark levels, fixed
interest and cash are below
benchmark and alternative
assets, such as private equity,
infrastructure and hedge
funds are above benchmark.
The international shares
portfolio currently has a bias
to the US market in order to
benefit from signs of recovery
in the US economy. Australian
Catholic Superannuation’s
Investment Committee is
closely monitoring the Fund’s
asset allocation with a view
to increasing diversification
through its asset allocation
to other investment classes if
there are increased signs of
share market weakness.
Super
Pension
Diversified Shares
Super
Pension
Australian Shares
FYTD %
21.4
24.5
FYTD %
27.6
30.3
1 Year %
15.3
17.2
1 Year %
18.5
20.1
3 year %pa
4.5
5.8
3 year %pa
6.3
8.3
5 Year %pa
1.1
1.3
5 Year %pa
3.7
4.3
Growth
International Shares
FYTD %
16.5
19.2
FYTD %
15.9
18.4
1 Year %
12.4
14.2
1 Year %
12.4
14.1
3 year %pa
5.2
6.5
3 year %pa
2.9
3.3
5 Year %pa
2.0
2.2
5 Year %pa
-0.4
-0.8
FYTD %
13.4
15.5
FYTD %
10.4
11.8
1 Year %
10.9
12.4
1 Year %
11.9
13.3
3 year %pa
5.4
6.6
3 year %pa
9.9
11.6
5 Year %pa
2.5
2.7
5 Year %pa
2.4
2.5
Balanced (Default)
Diversified Property
Socially Responsible Balanced
Diversified Fixed Interest
FYTD %
16.9
19.6
FYTD %
5.4
1 Year %
14.4
16.4
1 Year %
6.6
7.9
3 year %pa
6.3
7.6
3 year %pa
5.6
6.6
5 Year %pa
3.5
3.9
5 Year %pa
5.7
6.5
3.8
Conservative Balanced
6.3
Cash
FYTD %
11.0
12.6
FYTD %
3.3
1 Year %
9.6
10.9
1 Year %
4.1
4.7
3 year %pa
5.9
6.8
3 year %pa
4.5
5.3
5 Year %pa
n/a*
n/a*
5 Year %pa
4.4
5.1
Conservative
* Commenced 1 July 2009
FYTD %
8.3
9.8
1 Year %
7.9
9.2
3 year %pa
5.6
6.7
5 Year %pa
4.6
5.1
Differences in returns for the same
investment option in Super and
Pension is due to taxation treatment
FYTD = Financial year to date
Please go to www.catholicsuper.com.au/sreturns for
more details
International shares (hedged) Return to date (%)
Australian shares return to date (%)
Emerging markets Return to date (%)
Cash investment option
Term Deposit and Cash Maturity Profile
Peace of Mind with Term Deposits
% of total Cash Option
Depending on your circumstances members may appreciate
the peace of mind that comes from knowing that some or all of
your super (or pension) account can be invested in a pool of
Australian bank term deposits through our Cash option.
One of the 11 different investment options available to Australian
Catholic Superannuation members for their super or pension
account, the Cash option invests primarily in Australian bank
term deposits.
As at 31 March 2013 the pool of bank term deposits in the Cash
option was valued at over $450 million.
As at that date the pool comprised 46 individual term deposits,
the largest for $30 million and the smallest for $1.7 million.
These term deposits represented almost 97% of funds in the
Cash option.
Term (days)
This pool of term deposits generated an average return of
5.15%, before deduction of fees and taxes, for the 12 months
to 31 March 2013.
7
SEMINAR: TAx-REducEd RETIREMENT
Australian Catholic Superannuation is conducting a number of
With past seminars of this type, members and friends, retired or
comprehensive retirement planning seminar sessions in May to July.
Running morning, afternoon or early evening sessions, with light
refreshments included, attendees will be provided with a variety of
presentations from a number of guest speakers on many aspects of
retirement, not only the financial.
contemplating retirement within the next 5-10 years, have expressed their
delight in attending what is virtually a “one stop shop” for information on
the necessary housekeeping and mindsets for a contented retirement.
This one-stop planning event will have a session on Tips and Traps in
Estate Planning by an independent expert and a Centrelink Financial
Information session on pension, concession and retirement issues.
Lifestyle speakers will also outline purposeful endeavours to keep the
mind and body in great shape and of course our own financial sessions
will either confirm or set you on the road to a comfortable and rewarding
retirement.
View a seminar feedback video on our bookings page.
Members will receive more information about the venues and times in the
coming weeks. Best of all attendance comes at no cost or obligation so
you are welcome to bring your family and friends. As seating varies by
location and to allow for catering, early registration is requested - simply
logon to www.catholicsuper.com.au/seminars and reserve your seats.
If you are aged 45 or over
this seminar may benefit you.
Book your FREE retirement planning
seminar and learn how to optimise your
savings for retirement and potentially
savE tax with an allocated pension.*
In 90 minutes you can learn about:
• Retirement strategies
• Tax-saving potential
• Optimising your super contributions
• Managing market risk
• What’s new in the budget
ERS
PARTIN
ENDS
& FR COME
WEL
*members aged 55+ years and still working
BOOK NOW – www.catholicsuper.com.au/seminars | 1300 658 776
Our regional offices:
Zilla Lyons | Townsville | 270 Stanley Street, Townsville, QLD
Rita Svensson | Port Macquarie | Suite 3/106 Horton St, Port Macquarie, NSW
Paul Lynch | Brisbane | Ground Floor, 229 Elizabeth St, Brisbane, QLD
Justin Colley | Sydney | 33 Burwood Road, Burwood, NSW
Katrina Sephton | Perth | 33 Williamstown Road, Doubleview, WA
Peter Murphy | Canberra | 51 Cooyong Street, Braddon, ACT
Australian Catholic Superannuation – offices in Sydney, Brisbane, Port Macquarie, Canberra, Townsville, Perth
t 1300 658 776
e [email protected]
PO Box 656 Burwood, NSW 1805
f (02) 9715 0090
w www.catholicsuper.com.au
@AusCathSuper
SCS Super Pty Limited, ABN 74 064 712 607, AFSL 230544, RSE L0002264 Trustee of Australian Catholic Superannuation & Retirement Fund, ABN 24 680 629 023, RSE R1055436
Important information This newsletter has been produced by SCS Super Pty Limited (ACN 064 712 607, AFSL 230544, RSE L0002264), the Trustee of the Australian Catholic Superannuation
& Retirement Fund. It does not take into account your own objectives, financial situation or needs. As a result, before acting on any information in this newsletter, you should consider its
appropriateness, having regard to your own objectives, financial situation and needs. This newsletter is not intended to be financial advice, therefore, you should consider obtaining independent
financial advice before making any decisions about your benefits in the Fund. For further information refer to the Product Disclosure Statements available at www.catholicsuper.com.au