g Simon, Teacher, DECD Trevor points out: They re independent and not necessarily peddling a product.

Transcription

1 super insight g Simon, Teacher, DECD Triple S Scheme August 2013 don t play catch-up! In This Issue Try and get in early to avoid playing catch-up! That s the key message from Triple S member Trevor. Like many others, it was the realisation that his super wasn t going to be enough in retirement that gave Trevor the wake-up call he needed. Before that, Trevor, a Triple S member had taken a more casual approach to his super. I put in 4.5% after-tax so I d get more than the minimum 9% from the employer. I cruised along a while with that and then the penny dropped about ten years ago that it was not going to be anywhere near enough to retire on. At that point Trevor was considering salary sacrifice and decided he needed to learn more about it. Attending a Super SA Planning for Retirement seminar helped reinforce that Trevor was on the right track. But it was a visit to IFS that really hit home the truth. I went to one of the IFS advisers and he said, It s great to salary sacrifice but it s nowhere near enough. And so he ramped it right up and said well there s no point in paying extra tax, it might as well be in your super. Meeting with a financial planner was worthwhile because it helped Trevor gain some sound financial advice. He also got a financial plan done, outlining saving strategies tailored to him. Trevor points out: They re independent and not necessarily peddling a product. The fee was deducted from Trevor s Triple S account. It was a bonus that the financial planning service didn t attract commission. Put in whatever you can afford over a longer period of time. That way it s painless. Asked if he had any good tips to pass on to others regarding their super, Trevor had this to say: Get in early! I ve had to play catch-up and playing catch-up at my stage of life is hard. Put in whatever you can afford over a longer period of time. That way it s painless. Trevor tries to reiterate this point to his children by urging them to start thinking about their financial future sooner rather than later. Although retirement is still some way off, Trevor is keeping his retirement goals in order by reviewing his financial plan every two years and watching his super grow at a steady pace. > > Don t play catch-up! > > Changes in super > > Super update > > Super smart strategy > > Early access to super (EATS) > > Top Ratings for Super SA products > > Going on extended leave? > > Super SA member tools > > Market update This newsletter is printed on paper that is farmed from sustainable resources. g Trevor, Secondary Teacher, DECD TS_apret

2 Triple S > August 2013 Super INSIGHT Changes In Super SG increase The Superannuation Guarantee (SG) rate increased to 9.25% on 1 July 2013 and will eventually rise to 12%. The SG age limit of 70 has also been removed from 1 July Government Co-contribution The Commonwealth Government s Co-contribution scheme has reduced entitlements ($500 down from $1000) and the higher threshold ($46,920 down from $61,920) for personal contributions made from 1 July Reduced higher tax concessions The Government has made a minor amendment to reduce the amount of concession for those with higher incomes above $300,000. Further information about the impact of this change will be published on our website as soon as it becomes available. New Product Super SA Select established Our new fund, Super SA Select, has been up and running since 1 January For those who earn $37,000 or less per year this may be a good option as it may attract a Low Income Super Contribution (LISC) of up to $500 per year. For more information visit Super Update Is your investment option appropriate to your financial needs and objectives at this time in your life? One of the issues that has been concerning me recently is whether members have a clear idea about the sort of lifestyle they want in retirement and whether they re on track to achieve their financial goals. Stephen Rowe, General Manager, Super SA Recently Super SA has directed considerable effort to working with Funds SA and global professional services company, Towers Watson, to better understand our members investment risk tolerance and the importance of choosing the right investment option. Most super is affected by the normal volatility or ups and downs of investment markets. However, research shows that as you get closer to retirement, you have less ability to recover from the effects of major market events like the Global Financial Crisis. Achieving your desired retirement income after events like this can depend on your age and investment option. A lower risk, lower return strategy may be suitable if you re planning to retire soon. If your funds are invested in the Moderate to High Growth options, the chances of recovery decreases from around age 50. As long as you don t need to access your super for at least another 20 years, you may want to take on some investment risk to build your retirement balance. You will still have a good chance of withstanding the impacts of any negative returns over the longer term. So it s important to review your selected investment option, ensuring it s appropriate given your age, the amount of risk you are prepared to take when investing, your desired retirement income and other investments you may have outside of Super SA. This will help you achieve your financial goals in retirement. Investment options You have a choice of eight investment options ranging from Cash to High Growth, each with a different level of risk and expected return. A lower risk, lower return strategy may be suitable if you re planning to retire soon. And you can have your super in two options to diversify your investment risk. To make sure you re on track with your super you ll need to work out what sort of retirement lifestyle you want and from that, what size retirement benefit you ll need. A good place to start is the ASFA Retirement Standard on More information is available on the Super SA website: Then you can use the Super SA Benefit Projector to check whether you re on track. Use the What kind of investor am I? calculator. Read the Investment Fact Sheet for more detailed information about investment options. Calculate what your final entitlement could be using the Benefit Projector. 2 Super Insight August 2013

3 super smart strategy Think strategically about salary sacrifice say financial planners Paul Cameron and Andrew Hiscock. And they should know, after all as financial planners with Industry Fund Services (IFS) they have over twenty-five years of experience between them. Salary sacrifice means contributing to your super from your before-tax, or gross salary. This can reduce your taxable income, so you pay less tax and more money goes into your super. Projecting where a client s super will be in five and 10 years is how Andrew demonstrates the impact of salary sacrifice. People make the mistake of focusing on the short-term conditions of the market and don t see tax savings as a return. Once we explain that and then do some projections, the numbers speak for themselves. No annual concessional caps in Triple S also means that members can put more into their super than is the case with other super funds. In Paul s view this is an enormous advantage as it allows members to compensate for those years when the mortgage and children take priority over super. A look at the salary sacrifice behaviour of Triple S members supports this. While the average amount members aged between salary sacrifice into their super is 8.7%, for members aged it is 13.7%. For members aged over 55 something remarkable happens it more than doubles to 32.1%. Andrew believes that the increase after age 55 is probably accounted for by members who have come to recognise the benefit of incorporating salary sacrifice into their overall financial strategy. This could involve members opting to do salary sacrifice through either Early Access to Super (EATS) or by off-setting salary sacrifice with savings. IFS offers single issue and comprehensive commission-free advice, but Paul has some completely free advice for people who think that preparing for retirement is a post-60 proposition. Doing something is always better than doing nothing because all the people we see at retirement say, Gee, it went quick, I wish I d done something sooner. The earlier you start the more time your super has to grow... Name Age Salary Starting super balance 2 IFS facts: 55Commission-free service is available in the city. 55Triple S members can have the cost deducted from their Triple S account. 55To make an appointment call Extra amount contributed per year Super balance age 65 3 without extra contributions An extra 5% = an extra $30,000 super Situation: Jo is 53 2 and earns $50,000 pa Scenario 3 : how much super will Jo have at 65 if she salary sacrifices 5%, 10% or 15%? Salary sacrifice facts: 55Fill in a Salary Sacrifice Contributions through Employer form. 55Return the completed form to your agency s payroll office/delegate. 55A payroll fee of $44 is deducted from your pay. Super balance age 65 3 with extra contributions Tran 50 $50,000 $77,000 17% ($8,500) $240,532 $403,195 Teresa 55 $50,000 $103,000 33% ($16,500) $211,488 $401,932 Tom 60 $50,000 $145,000 55% ($27,500) $233,466 $400,720 1 Westpac ASFA Retirement Standard benchmarks (March Quarter 2013). 2 Starting balance average Triple S account balance for the quoted age at 30/6/12. 3 Projection: In today s dollars, $1.35 per week administration fee, $1.50 per week Death and TPD insurance premium, 0.2% of salary IP insurance premium, 7% investment rate, 3% inflation, 3% salary growth, 9.25% SG for after-tax contributions that are less than 4.5% and 10% employer contribution for members contributing after-tax equal to or greater than 4.5%. SG increases incrementally by 0.5% pa from 9.5% to 12% between July 2014 and July Super Insight August 2013 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 0% 5% 10% 15% Summary: each extra 5% in salary sacrifice gives Jo an extra $30,000 when she retires!

4 TSFS07 Triple S > August 2013 Super INSIGHT EArly access to Super (EATS) Want to grow your super? Or ease into retirement? EATS might be a solution. Once you reach your preservation age (currently age 55) you can begin accessing your super via regular income payments from an income stream while you re still working. This lets you build your retirement wealth or reduce your work hours through Early Access to Super. Wealth creation A way to build your super is to salary sacrifice into your Triple S account and supplement your reduced income through an income stream. Why? You ll reduce the tax you ll pay so you can put what you save into your super to build it more quickly. Easing into retirement Or, if you d like to reduce your working hours, say to three days per week you d only get three-fifths of your salary, but you could top this up with an income stream. Starting up an income stream You ll need at least $30,000 from a superannuation source such as Triple S to roll into an income stream, like the Super SA Income Stream. While you re still working your Triple S account remains open and continues to receive contributions. So even though you re drawing down your super you re still growing it! Tax benefits If you re over 60 your regular income payments from an income stream are tax free. If you re under 60 your payments are added to your assessable income but you ll get a 15% super rebate and a portion of your payments may be tax free. Going on Extended leave? Leave without pay is a way to extend your leave. Whether it s an overseas holiday, Carer s leave, or just to extend your recreation leave, it s comforting to know that leave without pay (LWOP) is an option if you need it. If you re considering LWOP, here s what you should know: Insurance You re not covered for Income Protection while on LWOP. Your Death and Total and Permanent Disablement (TPD) insurance cover will continue during your LWOP. 1 You can suspend your Death and TPD insurance cover while on LWOP. If you choose to suspend your cover, no Death and TPD will be paid within one year of your arranging to reinstate your insurance cover unless your death or disablement is caused by an accident. Contributions Want to know more? Download the Early Access to Super fact sheet from the Super SA website, or attend the Early Access to Super seminar. You can choose to make after-tax member contributions into your super during LWOP. Your employer is not required to make contributions into your super during this time. top ratings for Super SA products Super SA Income Stream, Flexible Rollover Product, Triple S and Super SA Select have been awarded Platinum ratings by independent researcher Super Ratings. Triple S has been Platinum rated for five years. In addition, the Triple S Scheme and Income Stream have received the 5 Apples rating from Chant West. These ratings are the highest possible ratings from two of the industry s leading independent researchers. Here s how we rate in 2013: Triple S Scheme 5 years Platinum and 5 Apples Super SA Income Stream Platinum and 5 Apples Flexible Rollover Product Platinum Super SA Select Platinum Fact Sheet > Triple S LEAVE WITHOUT PAY The information in this document forms part of the Triple S Product Disclosure Statement dated June 2013 IN THIS FACT SHEET > Facts about LWOP > What to do when you take LWOP > Paying for member contributions while on LWOP If you are taking LWOP you need to contact Super SA to discuss your options. Last updated February 2013 You must let Super SA know that you are taking Leave Without Pay regardless of whether or not you choose to maintain member contributions during your period of LWOP. There are a number of reasons that SA public sector employees take Leave Without Pay (LWOP). These may include: parenting leave extended study leave overseas holidays secondment to another employer overseas aid programs. If you are taking LWOP you need to contact Super SA to discuss your options. Facts about LWOP You are able to make after-tax member Visit the Super SA website and download the Leave contributions into your super for the period of Without Pay form or contact Super SA to have one LWOP granted by your employer. During a period posted to you. This form should be completed and of LWOP you are not entitled to any employer returned to Super SA before you commence your contributions. leave. If you have Income Protection Insurance you will Paying for member contributions while on have immediate cover for Income Protection LWOP Insurance when you return to work. However, if you are on LWOP for 12 months or more, you will If you have elected to maintain your personal not be covered for any pre-existing medical contributions during your LWOP you can pay by: condition that was known to you on the day you returned to work for a period of two years from making a lump sum payment following that date. You cannot claim for Income Protection notification of the amount from Super SA, or Insurance while on LWOP even if you continue to direct debit. contribute. If you choose direct debit as your payment method Your Triple S Death and Total and Permanent you need to complete the Member Direct Debit Disablement (TPD) insurance cover will continue Request (DDR) form included with the Leave during your LWOP. The cost of your insurance will Without Pay form. be deducted from your Employer Account. If there are insufficient funds in your Employer Please note that if you choose to make a lump sum Account, your insurance will be suspended. payment, in the interests of the security of our To find out more call or visit You can choose to suspend your Death and TPD insurance cover while on LWOP. If you do this, you will not be covered by insurance and you will not be charged a fee. You should contact Super SA to suspend your insurance cover. > 1 No Death and TPD insurance will be paid within one year of your arranging to reinstate your insurance cover unless your death or disablement is caused by an accident. What to do when you take LWOP You must let Super SA know that you are taking LWOP regardless of whether or not you choose to maintain member contributions during your period of LWOP. Get more info! Download the Leave Without Pay fact sheet from the Super SA website Contact us at supersa@sa.gov.au Call If you re on LWOP for 12 months or more, you will not be covered for any pre-existing medical condition that was known to you on the day you returned to work for a period of two years from that date. 4 Super Insight August 2013

5 Triple S > August 2013 Super INSIGHT Super SA Member Tools Centrelink seminars, online calculators, worksite visits, free guides...it s easy to keep your super on track! Super SA WEbsite Super SA Calculators Worksite Visits Financial advice info Secure Member Area How much super will I have? How will salary sacrifice affect my pay? Take the guesswork out of super with our calculators. They re fast, fun, and factor in your circumstances so you can really put your choices to the test. Seminars Balance E-news sign up Super updates SUPER SA MY RETIREMENT BOOKLET Seven simple steps to your dream retirement Super the smart way Use your smartphone to transform your super! SUPER SA member guide: PRODUCT DISCLOSURE STATEMENT Date of issue: June 2012 Income Strea m Date of issue: 1 September 2011 Barossa Valley, South Australia It s all about time... Get Super SAvvy with seminars, guides and worksite visits Seminar, guide, or both? A financial planner presents at the My Retirement and Early Access to Super (EATS) seminars. There s also Sort-Grow-Know the seminar, Grow Your Super the guide and My Retirement the guide simply go online to download a guide or to book into a regional or city-based seminar. Head online to Book a seminar forms to your inbox Calculate your balance Lost super info Get your details No cost, no app! Access the site on any mobile device using our web address. Worksite visits Why not have a super workshop at your workplace? Our Member Education Officers are more than happy to come to you! superbookings@sa.gov.au to register your interest. 5 Super Insight August 2013

6 Market Update Performance was strong across the Triple S investment options Last financial year performance was strong across all of the Triple S options with the Balanced option (the default for members) returning 14.7%. The strength in the Australian and international share markets benefited the Triple S investment returns, particularly those investment options with high exposures Triple S performance for financial year ending 30 June % 15% 10% 9.7% 12.3% to shares such as Balanced, Growth, High Growth and Socially Responsible. More modest returns were recorded for Cash, Capital Defensive and Conservative as returns for cash and bonds were not as strong. Actual annual asset class returns Australian shares 23.0% International shares 30.2% Property 12.0% Australian bonds 3.1% Australian cash 3.4% 14.7% 19.0% 16.5% 19.7% Investment strategy remains appropriate for a low growth environment Although share markets performed strongly over the last 12 months, significant risks remain relating to the sustainability of global growth and the gradual removal of supportive monetary policy across the world. Changes in government policy settings could have a detrimental impact on share markets especially given that fundamental valuations are not particularly cheap. Accordingly, Super SA s investment options are positioned for an environment of subdued economic growth but with shorter and possibly more volatile cycles. Balanced option asset mix: 5% 3.4% 5.7% Diversified Strategies Growth, 8% Cash, 3% Fixed interest, 10% 0% Cash Capital Conservative Moderate Defensive Balanced Socially Responsible Growth High Growth International shares, 20% Inflation linked securities, 12% Market conditions favoured investments in shares for the past financial year For most of the year market conditions gave investors increased confidence to invest in shares: global growth was modest at around 3% with inflation contained governments restrained their spending central banks continued their supportive monetary policy the risk of European governments defaulting on their debt diminished. 1 Monies in the Triple S scheme are invested by Funds SA. However, the last few months of the financial year were volatile due to concerns of a potential change to the US central bank s policy as well as the expectation that China will target lower levels of growth. These conditions particularly impacted bond and currency markets. Ten year bond yields rose from 1.6% to 2.5% in the US and from 3.0% to 3.8% in Australia over the last two months of the year. This resulted in low returns for bond Australian shares, 20% Property, 12% Diversified Strategies Income, 15% investments for the year. The fall in the value of the Australian dollar against the US dollar, from an intra-year high of 1.06 to 0.92 at year end helped the return of international shares as close to 60% of this asset class is unhedged and therefore affected by movements in the currency. WE re HERE TO HELP If you require further information please contact Super SA: Website supersa@sa.gov.au Member Service Centre Ground Floor 151 Pirie St (enter from Pulteney Street) Adelaide SA 5000 Postal address GPO Box 48, Adelaide SA 5001 Telephone (08) (for calls within the State Government network), or Facsimile (08) Triple S is an exempt public sector superannuation scheme and is not regulated by the Australian Securities and Investments Commission (ASIC) or the Australian Prudential Regulation Authority (APRA). Super SA is not required to hold an Australian Financial Services Licence to provide general advice about Triple S. The information in this document is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Super SA recommends that before making any decisions about Triple S, you consider the appropriateness of this information in the context of your own objectives, financial situation and needs, read the Product Disclosure Statement (PDS) and seek financial advice from a licensed financial adviser in relation to your financial position and requirements. Super SA and the State Government disclaim all liability for all claims, losses, damages, costs or expenses whatsoever (including consequential or incidental loss or damage), which arise as a result of or in connection with any use of, or reliance upon, any information in this document. The Chant West ratings logo is a trademark of Chant West Pty Limited and used under licence.