Make the Most of
Your Super
Presented by John Frogley, DFP
Manager – Employer Services, Catholic Super
February – June 2010
Disclaimer
The information provided is about the Fund and is not intended as financial advice. It does not
take into account specific needs, so you should consider your personal position, objectives and
requirements before taking any action. The information is also subject to change.
Authorised by the Trustee of Catholic Super, CSF Pty Limited (ABN 50237986957) (AFSL
246664) (RSE L0000307) (RSE R1000597).
Agenda
• Catholic Super Overview & Returns
• Catholic Super Fund Merge
• Superannuation Rules
• Super Salary Sacrifice – How it works
• Transition to Retirement
• Government Super Co-Contribution
• Insurance Options Overview
History
• Established in 1971
• Over 70,000 members* (approx. 2,500 pension members)
• Over $3.7 Billion in assets*
• All profits to members
• Member Services 1300 655 002
Peter Bugden
Chairman
* Approx. 02/2010
Frank Pegan
Chief Executive Officer
About Catholic Super
• Your choice of “Build Your Own” investment options
• Access to CSF Financial Planning Services
• Account based Pensions
• Member Online – access to account online facility
• Education Seminars
• Public Offer (Personal Plan)
• Information including newsletters and brochures
• Member Services 1300 655 002
Summary – Super Rules …
• No Super Lump Sum Benefits Tax from age 60
• No Income Tax on Super Pensions from age 60
Summary – Super Rules …
• Employer contribution limit from $50,000 to $25,000 under age 50
effective 1st July 2009
- Employer contribution limit Age 50+ from $100,000 to $50,000 till
2011/12 then to $25,000 for all ages
• ‘Transition to Retirement’ Strategy
• After tax contribution limit of $150,000 per year**
• 1st July 2009, access to co-contribution via salary sacrifice changed
* Conditions apply ** $450,000 up front or limit can be averaged over 3 years.
Super – How does it work?
You
Contributions
Your
Account
Employer
Admin
Costs
Taxation
Investments
- MIC Options
- Fund Managers
Insurance
Costs
Investment Options
% Defensive investments
% Growth investments
• Cash
• Fixed interest
• Alternative assets
• Property
• Shares
• Alternative assets
Lower
 more stable
 tend to produce lower long-term
returns
Risk Vs Return
Higher
 can be more volatile
 potential for higher growth over
the long term
 required to achieve higher return
in excess of inflation
Investment Choice
FIVE ‘Managed Choice’ options
•
•
•
•
•
Aggressive
Moderately Aggressive
Balanced
Moderately Conservative
Conservative
or
FIVE Asset class specific Choices
•
•
•
•
•
Australian Shares
Overseas Shares
Property
Diversified Fixed Interest
Cash
We have 44 Investment Managers to provide Diversification
Australian Share Managers :
Overseas Share Managers :
Private Equity Managers :
Currency Manager :
Direct Property Managers :
Listed Property Managers :
Fixed Interest Managers :
Cash Manager :
Infrastructure Managers :
Absolute Return Managers :
7 (including 1 large and 1 small cap manager)
9
6
1
9
1
3
1
5
2
Catholic Super Managers grouped by asset class. Source CSF Website @ 09/02/2010; listing current @ 18/05/2009
What are the 15 Major Share Investments within the Fund, both in Australia
and Overseas?
Australian Shares:
BHP Billiton Limited
National Australian Bank Ltd
ANZ Banking Group
Commonwealth Bank of Aust
Westpac Banking Corporation
Rio Tinto Limited
Woolworths Limited
CSL Limited
Telstra Limited
Coca Cola Amatil Limited
Amcor Ltd
QBE Insurance Group
Insurance Australia Group
Asciano Group
Oil Search Limited
Total weighting
%
7.9
5.3
5.1
4.5
4.5
3.2
2.6
2.0
1.6
1.5
1.4
1.3
1.2
1.2
1.2
44.5
Source CSF Website @ 09/02/2010; listing current @ 30/09/2009
Guide Only
Overseas Shares:
Microsoft Corporation
Nestle’ SA
Samsung Electronics Limited
Roche Holdings
Johnson & Johnson
Vodaphone Group
Intel Corporation
SBI Holdings
Heineken
Cisco Systems Inc.
T & D Holdings
Wellpoint Inc
CVS Caremark Corporation
Vivendi S.A
Linde Ag
Total weighting
%
1.1
1.0
0.9
0.7
0.7
0.6
0.6
0.6
0.6
0.6
0.5
0.5
0.5
0.5
0.5
9.9
Catholic Super Returns
Managed Choice
*FYTD %
1 Year %
3 Years (pa)
%
5 Years (pa)
%
Aggressive
19.09
29.86
-0.67
6.85
Moderately Aggressive
16.19
24.00
-0.13
6.52
Balanced
12.51
16.97
0.10
6.34
Moderately Conservative
10.50
14.92
1.28
5.76
Conservative
7.05
8.98
2.92
5.72
Build Your Own
*FYTD %
1 Year %
3 Years (pa)
%
5 Years (pa)
%
Australian Shares
27.59
47.44
1.52
10.08
Overseas Shares
13.91
23.67
-4.34
2.95
Property
9.33
7.27
2.18
6.65
Fixed Interest
3.77
5.50
3.62
4.07
Cash
2.25
3.00
4.76
4.92
*FYTD 31/03/2010 Catholic Super website
Catholic Super Returns - Financial Years
Managed Choice
2008-2009
%
2007-2008
%
2006-2007
%
2006-2005
%
2004-2005
%
2003-2004
%
Aggressive
-12.1
-12.2
25.0
17.7
16.3
16.1
Moderately Aggressive
-10.7
-9.4
22.6
15.9
15.0
13.8
Balanced
-9.9
-6.4
21.0
15.3
14.3
11.8
Moderately Conservative
-6.0
-3.9
16.4
11.3
11.0
10.2
Conservative
-3.3
2.3
12.2
8.8
9.3
5.9
Build Your Own
2008-2009
%
2007-2008
%
2006-2007
%
2006-2005
%
2004-2005
%
2003-2004
%
Australian Shares
-12.2
-13.0
30.7
22.6
26.3
22.0
Overseas Shares
-10.0
-19.1
20.0
12.9
8.3
14.3
Property
-12.1
7.0
16.2
12.4
13.4
10.8
Fixed Interest
6.2
0.3
4.4
3.0
7.7
3.3
Cash
4.9
5.9
5.4
4.7
5.2
5.9
As at 30 June 2009
How do I increase my Super?
Make extra
contributions
• Either regular payments
or lump sum
• Before tax (Salary
Sacrifice) or after
Maximise
your returns
• Member Investment
Choice
• Consolidate super
accounts
• Find your lost super
Income Tax Rates - 2009/10
Taxable Income
Tax Payable
Tax Rate on Excess
$ 6,000
NIL
15%
$ 35,000
$4,350
30%
$ 80,000
$17,850
38%
$ 180,000
$55,850
45%
Medicare Levy is also payable at the rate of 1.5 to 2.5 % of taxable income
Compare super to other investments
Outside Super
Salary
$ 10,000
Less tax
$ 3,150 @ 31.5%
Net to invest @ 4% cash
$ 6,850
After Tax
$ 188 @ 31.5%
Value after Yr 1
$ 7,038
Super (Salary Sacrifice)
Compare super to other investments
Outside Super
Super (Salary Sacrifice)
Salary
$ 10,000
$ 10,000
Less tax
$ 3,150 @ 31.5%
$ 1,500 cont. tax @ 15%
Net to invest @ 4% cash
$ 6,850
$ 8,500 @ 4% cash option
After Tax
$ 188 @ 31.5%
$ 289 earnings tax @15%
Value after Yr 1
$ 7,038
$ 8,789
24.8% +
Transition to Retirement Pension
Examples:
You could finish full-time work but continue part-time & use some
of your super to supplement your income
or
Continue to work full-time & direct more salary into super while
drawing a tax effective super account based Pension* to repay
debt, improve lifestyle or enhance savings
*Also previously known as an Allocated Pension
Account Based Pension Rules
•
You must be minimum of 55* years of age
•
You can continue to work either full time or part time
•
A 10% maximum super income limit per year
•
A 4%* minimum super income limit per year up to age 65
•
Tax free income if over age 60
•
New employer contribution limit of **$50,000 till 2011/12 then $25,000
•
Tax concessions between age 55 – 59 e.g. 15% tax offset
•
*Temporary halving of minimum drawdown percentage extended to 2009/10
* Phase in to age 60.**2009/10
Pensions – Yearly Income Payments
Age
Minimum income as a
%
of account balance
Minimum income as a %
of account balance
(2009-2010 only)
Maximum income as a
%
of account balance
Under 65
4%
2.0%
100%
65 – 74
5%
2.5%
100%
75 – 79
6%
3.0%
100%
80 – 84
7%
3.5%
100%
85 – 89
9%
4.5%
100%
90 – 94
11%
5.5%
100%
95 +
14%
7.0%
100%
Overview – Transition to Retirement; How it Works
Your Super
Account
9% Employer &
Salary Sacrifice
$$$$$$
Account Based
Pension
$$$$$$
Pension Income
Case Study - Brenda
•
Aged 60 will retire at age 65
•
Gross Salary $79,648
•
Currently salary sacrifices $7,965 (10%)
•
Pre tax salary is therefore $71,683
•
Super balance is $200,000
•
Needs $55,000 after tax income
How can the rules help Brenda?
Brenda’s current situation is therefore …
Without pre-retirement
super pension
Salary (ex Sal Sac)
$ 71,683
Pension (tax free)
$
Less tax
-
- $ 16,430
Net to spend
$ 55,253
Net Superannuation
$ 12,863
Overall benefit
$ 68,116
2009/10 tax scales – includes medicare levy, lower income tax offset and mature
age workers tax offset (if applicable).
$79,648 x 90% (10% salary sacrifice) = $71,683
Under the super rules Brenda:
•
Draws a $19,800 tax free pre–retirement super pension
•
Salary sacrifices $38,946 to increase her super
•
Reduces her pre tax salary to $36,816
•
Pays only 15% tax on her super contributions compared
to 31.5%
•
Is not entitled to the $1,000 Government Co - contribution
Post 01/07/2009 Transitional Concessional Cap of $50,000
Brenda must leave a minimum $2,000 in her superannuation account; therefore transfers $198,000 to TTR strategy
What does this mean for Brenda?
Without pre-retirement
super pension
With pre-retirement
super pension
Salary (ex Sal Sac)
$ 71,683
$ 40,702
Pension (tax free)
$
$ 19,800
-
- $ 16,430
- $ 5,249
Net to spend
$ 55,253
$ 55,253
Net Superannuation
$ 12,863
$ 19,397
Overall benefit
$ 68,116
$ 74,650
Less tax
$6,534 extra
SGC (9%) on $79,648 is $7,168 less 15% tax = $6,093
2009/10 tax scales – includes medicare levy, lower income tax offset and mature age workers tax offset (if applicable).
$50,000 Transitional Concessional Cap effective 01/07/09 (Brenda uses $46,114 of this cap)
Government Super Co-Contribution Scheme
•
Encourage super savings for lower income earners
•
Additional contribution up to a maximum of $1,000 per year
•
Must make after-tax contribution
•
Reduces by 3.33 cents for every dollar over $31,920
•
Gross income*
•
Phases out completely at $61,920
•
Part time or casual workers (e.g.. teenage children)
*Temporary Reduction to Scheme
* Plus reportable fringe benefits and salary sacrifice * 10% + income from eligible employment.* Restored in full 2014/15
Government Co-contribution Scheme
Assessable Income
Co-contribution
$ 31,920 or less
$ 1,000
$ 35,000
$
897
$ 45,000
$
564
$ 55,000
$
231
$ 61,920 or more
$
0
Temporary Reduction to Scheme
* Member must be an eligible employee & make a personal after tax contribution. Assumes member contribution of $1,000.
Changes apply for 2009/10 to 2011/12 then increasing back to $1500 by 2014/15
** Plus reportable fringe benefits. Beware salary sacrifice rule change - assessable income 1st July 2009.
Insurance
•
Managing Risk
•
Protect your Assets
•
Protect Yourself and your Family
•
Life Insurance
•
Income Protection Insurance
3 Types of Insurance Cover
•
Death Only
•
Death and Total and Permanent Disablement (TPD)
•
Income Protection
2 Ways to Structure your Insurance Cover
•
Basic Cover – an automatic level of cover for all
employer-sponsored members
•
Build Your Own Cover – allows you to increase your
cover to suit your own needs
Insurance *
•
Automatic Basic Cover is 2 Units of Death Only Insurance
and 2 Units of Total & Permanent Disablement
•
Automatic default is 5 Units of cover for Income
Protection - 60 day wait period & 5 year benefit period
•
Can purchase additional Cover under Build Your Own
Cover options subject to limits and evidence of health
•
Cover is 24 hours 7 days a week for members
* All employer sponsored members
Death & TPD Cover
• Basic cover of 2 units provided upon joining the Fund up to age 65
• Death cover only is provided to age 70; if required
Aged Based Example:
Age Next
Birthday
<35
36 - 40
41- 45
46 - 50
51 - 57
58 – 60
61 - 63
64 - 65
66 - 70
Cover
Amount
(2 units)
$201,000
$172,200
$129,200
$86,200
$57,400
$43,000
$28,800
$14,400
$11,200
Income Protection Insurance *
•
Benefit payable is 85% (includes 10% Superannuation) of
your stated monthly income
•
Optional waiting periods – 60 days or 30 days
•
Optional benefit payment periods – to age 65 or 5 years
•
Each Unit provides a gross monthly benefit of $585*
* Limits apply Indexed to Average Weekly Ordinary Times Earnings
Super - Accumulation Stage Taxation
Accumulation
Fund Balance $$$
15% Max
Tax Rate
on Earnings
Before Retirement
How much Income do I need?
Single person
Couple
Modest
$19,617 per year
$27,454 per year
Comfortable
$37,829 per year
$50,561 per year
Lifestyle
•
Westpac-ASFA Retirement living Standard Research September 2008
•
To be used as a guide only
Victoria Melbourne homeowners.
Modest – better than just surviving on age pension but still only being able to afford fairly basic activities.
Comfortable – broad range of leisure and recreational activities and a good standard of living. Able to
purchase household goods, private health insurance, reasonable car, good clothes, electronic equipment and
domestic & occasional int’l travel.
For a couple, comfortable
lifestyle in retirement
$50,561 per year
How much do I need to Retire?
Years to
provide for you
$25,000
$30,000
$40,000
$50,000
$60,000
10
$201,148
$240,405
$319,540
$398,675
$476,811
15
$268,483
$319,980
$426,636
$534,232
$641,745
20
$321,741
$386,329
$514,445
$641,905
$769,241
25
$364,086
$436,552
$580,719
$725,512
$870,224
30
$397,265
$475,884
$633,881
$791,946
$949,609
Approx 6.31% pa CPI 2.31% pa
CSF Financial Services
•
Wholly owned by Catholic Super
•
Salaried employees - no commissions
•
No fee to discuss your situation
•
Your personal Financial Plan in writing - Fee $1,210*
•
Contact us on 1300 655 002
*$958 Net fee - after fund tax credit if deducted from your Super account
Financial Planning Process
Consultation
Your
Goals
Your
Investment
Attitudes
Your
Current
Situation
Your Personal Plan
Wealth
Accumulation
Wealth
Protection
Income
Generation
Final
Distribution
MemberAccess
• Manage your account in our secure online facility, MemberAccess:





Change your details such as email, address, phone number.
View your balance, transactions, investment options
Switch your investment options. (No fee for switching)
Receive your statements electronically
Link your accounts for a single login (if you have a super and pension
account).
• Register for access online:
 You’ll need your member number, name, postcode and birthday to
register (The same as we have them recorded)
• Call 1300 655 002 if you have any questions
Online Statements
• Helps us reduce our use of natural resources
• Enables you to store your statements electronically and keep track
of past statements
• Available through MemberAccess, our secure online facility
Why Catholic Super?
•
An Industry Fund - all profits returned to members
•
SuperRatings Platinum Rating
•
SuperRatings Fund of the Year Finalist in 2009 & 2010
•
Low fees
•
Investment Performance
•
Seminars and school visits
•
Access to CSF Financial Services
Contact Us
Member Services
1300 655 002
Email
info@csf.com.au
Website
www.csf.com.au
Questions?