|Insight Sep 2016||Insight June 2016|
|Insight March 2016||Insight Dec 2015|
On 2 December 2016, the APSS made two adjustments to the investment strategy of the portfolio where Market Return Member Savings are invested. Refer the Significant Event Notice for details.
The Federal Coalition government announced a number of major changes to super in its May 2016 budget. Here’s an update.
The government’s proposed changes were put on hold until after the Federal election in July. When the re-elected government returned to implementing them, some of the original budgeted proposals were revised. The government plans to have the new laws passed in the coming months, reshaping the super landscape as the changes take effect from 1 July 2017. Keep in mind that these changes are still proposed and not yet legislated at the time of writing. Also, while most APSS members are unlikely to be all that affected by them, it’s still important to be informed and understand what’s happening in the wider super environment.
The list of proposed changes to super and their subsequent revisions are extensive and can be quite mind boggling! So this article aims to summarise the main changes and what they may mean in terms of what might be better, what might be worse for some, and what’s not all that different. Most of the changes that have been announced don’t relate directly to defined benefits but we highlight where some of the changes may affect the APSS Defined Benefit (DB).
Proposed changes are likely to benefit members contributing to super for a spouse and those who may now qualify to claim a tax deduction up to $25,000 per annum (indexed) when making personal super contributions. A recent government reversal on the idea of a lifetime limit on certain super contributions is also good news for members who have already made significant after-tax contributions since 2007. The key changes for the better include:
Generally affecting higher income earners, the thresholds that trigger higher super tax payments are being lowered, which means more tax will be payable.
Furthermore, members transitioning to retirement with an APSS Pre-Retirement Pension account currently pay no tax on their investment earnings but the proposed changes will mean that they start paying 15% tax on these earnings from 1 July 2017 until they retire.
People earning less than $37,000 a year currently receive what’s called a ’Low Income Super Contribution’ of up to $500 to offset the 15% super contributions tax. This $500 maximum will remain, only it will be called a ’Low Income Super Tax Offset’ and will be subject to some new eligibility requirements.Changes to the Age Pension
Members receiving a Government pension may be aware that last year the Government announced changes to the assets test to apply from 1 January 2017. The limits on how much income you can earn to qualify for the Government’s Age Pension haven’t changed. You can find out more about your Age Pension eligibility or make an appointment to speak to a Financial Information Services Officer about your Centrelink benefits at
We’ll bring you updates on the website’s Latest News section. If you are concerned about how any of the proposed changes might affect you, please contact SuperPhone on 1300 360 373.
While a Will is a great first step in managing your estate, the Trustee of a super fund is not actually bound to follow instructions within your Will about who receives your super.
The rules governing super mean that we are only able to pay your APSS benefit to one or more of your dependants or your legal personal representative (i.e. the executor of your estate). For more information on who can be a dependant.
So, the best way to ensure that your benefit from super goes to whom you prefer, is to let us know which of these eligible people you would like to receive your benefit, in the event of your death.
When it comes to nominating a beneficiary for your death benefit, the APSS offers you two choices. You can make either a binding or non-binding (preferred) nomination. Knowing that your family is being looked after in the event of your death, may help to provide you with peace of mind.
When it comes to nominating a beneficiary for your death benefit, the APSS offers you two choices. You can make either a binding or non-binding (preferred) nomination. Knowing that your family is being looked after in the event of your death, may help to provide you with peace of mind.
When you make a valid binding nomination, the Trustee is legally obliged to pay your benefit in accordance with your stated wishes. Binding nominations have a fixed term of three years, and can provide you with greater certainty about payment of your benefits. It is therefore important that you update your binding nomination if your personal circumstances change, such as having a child, remarrying or divorcing. This will ensure that your nomination continues to reflect your wishes. Your binding death benefit nomination will generally remain valid despite a change in your circumstances, (such as separating from your spouse, but not filing for divorce) therefore if you do not update your nomination, it may no longer reflect your wishes when you die.
Be sure to complete the Binding Nomination form correctly.
When making a binding nomination, please make sure that you complete all sections of the Binding beneficiary nomination form correctly. The APSS can only pay in accordance with your binding nomination if:
Alternatively, you can make a non-binding nomination, which has no expiry date and is used as a guide by the Trustee. This means that, if you die, the Trustee is obliged by law to conduct its own investigations into your personal circumstances before deciding who should receive your benefit payment. The Trustee can take your non-binding nomination into account, but must act in the best interests of your dependants when making a decision.
When deciding who should receive your death benefit, remember that current superannuation law only allows it to be paid to your dependants (see below) or your legal personal representative (i.e. your estate).
As always, if you hold a Pension Account, you also have the option to make a reversionary beneficiary nomination. Please see the Choosing your beneficiaries fact sheet for more information about this.
Non-binding nomination - Login to your account or call SuperPhone and make your changes over the phone. You can also download the Nominate your beneficiaries form from the website, or call to have one sent to you.
Binding nomination - Download the Binding beneficiary nomination form or call to have one sent to you.
The Federal Government has announced some changes to super in this year's budget. The proposed changes will impact some retirees and some people that are still working to save for their future in different ways. To learn about how the proposed changes affect you read on...
From 1 July 2017, the most you can contribute to super from your before-tax salary at the 15% tax rate (or 30% for high income earners) will be $25,000 a year. This will be the same for everyone under age 75. However if you have less than $500,000 in super, you can make catch-up contributions if you haven't reached your $25,000 a year limit during a rolling five year period.
Currently, if you're 50 or over the most you can contribute to super from your before-tax salary at the 15% tax rate (or 30% for high income earners) is $35,000 a year. If you're under 50, the most you can contribute in this way is $30,000 a year.
There will be a lifetime limit of $500,000 (indexed) on how much you can contribute to super from your after-tax salary (currently this is $180,000 per person, per year).
This change is proposed to be effective from 3 May 2016, and to apply to after-tax contributions you've made from 1 July 2007. If you've already gone over this amount, you can keep this money in your super but you won't be able to make any more after-tax contributions without paying a penalty tax.
From 1 July 2017, anyone under age 75 can claim a tax deduction for personal contributions they make to super regardless of their employee status. The amount of the annual deduction will be up to $25,000 less employer contributions for that year (including notional contributions and salary sacrifice contributions).
From 1 July 2017, you can make contributions to your spouse's super if they earn up to $37,000 a year and are under 75 years old, and receive a low income spouse offset of up to $540 a year.
Currently, you are only eligible for the maximum tax offset of $540 if your spouse's income is less than $10,800.
If you earn less than $37,000 a year, you currently receive a Low Income Super Contribution from the Government to your super account of up to $500 to offset the 15% tax payable on your super contributions. From 1 July 2017, this will become the Low Income Super Tax Offset and will stay at a maximum of $500 a year.
From 1 July 2017, the Government is proposing to apply a 30% tax rate to concessional (before-tax) contributions if your income plus deductible and before-tax contributions reach $250,000 (currently this is $300,000).
A lifetime pension transfer cap of $1.6m is also proposed (see below).
From 1 July 2017, a cap of $1.6 million will apply to the total amount of super you can transfer into a retirement income account like the APSS Pension over your lifetime. If you've gone over this cap, you'll need to reduce the amount of money in your retirement income account by 1 July 2017. Investment earnings on assets in excess of the cap which are converted to or remain in an accumulation account will be taxed at 15%.
The income and earnings on your retirement income account will continue to be tax free when you retire.
From 1 July 2017, if you're aged between 65 and 74, you no longer need to meet the work test to make before-tax or after-tax contributions to super. Under current requirements, if you are aged between 65 and 74, you must have worked for a set period of time in the financial year to be able to make personal contributions to your super.
From 1 July 2017, investment earnings on assets in your APSS PREP account will be taxed at 15% until you retire. Investment earnings on transition to retirement strategies like the APSS PREP account are currently tax free.
Last year the Government announced changes to the assets test for the Age Pension, which will be introduced on 1 January 2017. The limits to how much income you can earn and qualify for the Government's Age Pension haven't changed.
You can find out more about your Age Pension eligibility or make an appointment to speak to a Financial Information Services Officer about your Centrelink benefits at humanservices.gov.au/Centrelink
Superannuation is designed to be a tax-effective way to help you save and invest for your retirement. Taking an interest in understanding the basics now, may help you to achieve the retirement lifestyle you want.
What is super and what's it for
Superannuation (or super) is a long term investment specifically designed to help you save money while you are working so that you and your family have money for when you retire. For most Australians, super represents their largest single investment after buying their own home. The Government's Age Pension provides an amount that is less than most people want to live on in retirement. Super helps us to take control of our retirement and, if there's enough of it, provide a standard of living that we would like. There are two main types of super. Click here to learn more.
When you can access your super
In general, to access your super you must have reached a specified age (between age 55 and 60) - exactly when you can access your super depends on when you were born. MoneySmart's super and pension age calculator at moneysmart.gov.au tells you when you can access your super (keep in mind that there may be tax payable on your super if you are under the age of 60). For more information, go to accessing your super.
If you are eligible to access your super and you have retired, you will need to decide if you want to take it as a lump sum or as an income stream (like your regular pay). Alternatively, if you are eligible to access your super but have not yet retired, leaving your super in the APSS with a Pre-retirement Pension (PREP) will allow you to access some of your benefit as an income stream while still working and earning a wage - find out more by reading the Getting ready for retirement fact sheet.
How you can contribute to your super As an APSS Employee, Spouse or Rollover Account member, you have the option to supplement your super in a number of ways.
Making personal contributions either before-tax (concessional contributions) or after-tax (non-concessional contributions) into an APSS Member Savings account is one of the most effective ways to boost your super savings. To learn more about these types of contributions and how easy it is to start making a difference to your super, read the Boost your super savings fact sheet.
If you're under 40, then your super is probably not your biggest priority. But you'll congratulate yourself in years to come if you give your super some attention now. And the good news is that there's more than one thing you can do to give your super a tune up that won't cost you a cent.
1. Get all your accounts under one roof
If you've got super in more than one account, then you're probably paying more fees than you need to. Combining your accounts can save on fees. To combine your accounts, just complete a Transfer other super into the APSS form
Before rolling your accounts over though, it's important to consider any exit fees, changes to your insurance cover or loss of benefits that may result from closing your other super accounts.
2. Find out if you have 'lost super'
It's not uncommon for people to have lost track of the super accounts that were set up for them by past employers. 'Lost super' is transferred to the Australian Tax Office (ATO). You can find out if you have 'lost super' by using the ATO's online Super Seeker.
3. Invest for growth
Although you don't need to think about investment options for your Defined Benefit, it's important for any other super you may have. If you're under 40, then you've got 30+ years to invest your money. This means you need your super in an investment option that's designed for long term growth. Although performance may vary more from year to year, these types of options are more likely to provide higher returns over long periods of time compared to investment options that have more stable returns.
So consider your investment choices carefully. For our investment options we state the return we aim to achieve and we estimate the number of times that option may have a negative return over 20 years. Go to Your Member Savings at a glance PDS for more details.
4. Add extra when you can
With lots of demands on your income it can be hard to prioritise putting extra into your super. But by contributing more into your super, it could save you tax and mean you have more in retirement than only relying on the super provided by your employer. And the earlier you start, the better off you'll be.
Although markets go up and down, the value of each dollar you invest is expected to grow in the long-term. So, contributing extra amounts early in your career and allowing time for investment returns to compound in value can be more effective than trying to play catch up with large contributions later on. And if you think you may need to take time out from work in the future, then contributing early on is even more important. You can see the difference that extra contributions can make by logging into your account and using the calculator.
If you can top up your super, you can contribute from your before or after tax salary.Which one is right for you will depend on your own circumstances:
5. Keep your beneficiaries up to date
Leaving clear instructions about what happens to your super if you die can make it easier for your loved ones, and it's easy to do. If someone else depends on your income, or you have large financial commitments such as a mortgage, school fees or other loans, it is also a good idea to check how much your dependants will get from your super if you die and decide whether that will be enough. If not, you may want to consider purchasing additional life insurance. And if your family situation changes, then don't forget to update your nominations.
For more information, read our fact sheet Who gets your super when you die?
The APSS Trustee is not licensed to provide financial product advice. Before making a decision about investment options, please read the relevant PDS to find out more. You should also seek the advice of a licensed professional financial and tax adviser.
A quick search of the internet will provide a wealth of articles about preparing financially for retirement, but what about once you've actually retired? Here are a few tips for managing money in retirement.
Know what you're spending
Spending patterns often change once we retire and as we get older - for example, when you retire you won't have work related clothing or commuting costs, but the amount you spend on entertainment will probably increase. Then as you get older, health costs usually increase.
Because your spending patterns will be changing, it's essential to keep track of where your money is going. A budget is a good starting point. Having a method to track your spending is also important. There are some good budget planners and apps online that can help you track your spending. Try Money Smart's Budget Planner at moneysmart.gov.au. It will remind you of expenses you might forget about. You can also download the TrackMySPEND app and use it to record your expenses on the go. You can also nominate a spending limit, separate the things you need versus those you want, and view a history of your spending.
Invest according to when you need your money
If you invest your savings in an APSS Pension account, you will be withdrawing income in the short-term, but you'll have the rest of your account invested for up to 20 or 30 years. The way you invest your savings over the long-term may be different to how you invest money that you will be spending within the next couple of years.
You may wish to consider investing the money you'll need to withdraw in a few years in an option that is recommended for a short timeframe and which is not as likely to have a negative return, so you can be more confident that your short term income needs are protected (i.e. Cash Return investment option). The returns on this part of your savings will generally be low.
For savings that are going to be invested for many years, you may want to think about investing this money in an option that has a higher return objective and is more likely to stay ahead of inflation (i.e. Market Return investment option).
Each of our investment options has a suggested minimum number of years that you should invest in that option. We also estimate the number of times an option may have a negative annual return over a 20-year period. Read your APSS Pension PDS for more details.
Review your investment strategy regularly to make sure that it continues to be right for you as you get older. For more information about investing, read our Investment basics fact sheet
Maximise government support you may be entitled to
As your finances and family situation changes, so too may the government support that you may be eligible for. For example, if you start caring for another person, then you may be eligible for assistance. This can include both payments and services.
To check out other government support you may be entitled to, use the Payment Finder and Service Finder at humanservices.gov.au.
And even if you're not eligible for government support, make sure you get your Seniors Card. It's free and provides transport concessions and discounts at participating businesses. To be eligible you must be 60 or over. There is also a limit on the number of hours of paid work you can do.
Explore options for extra income
If you think you have an income shortfall, then you could explore options for extra income:
Do some estate planning
Estate planning includes working out who you want your money and other assets to go to after you die. Leaving clear instructions can make it easier for your loved ones. While a Will is important, it's not the only thing you can do.
If you haven't already, make sure you nominate your beneficiaries for your Pension account. And if your family situation changes, then don't forget to update your instructions. Read our fact sheet What happens to your Pension when you die? to find out more.
Get expert advice
An expert can help you manage your income in retirement. You can get advice on topics such as your investment strategy, home equity release and planning your estate. Visit the Financial Planning Association's website at fpa.asn.au for information about finding a financial planner.
The APSS Trustee is not licensed to provide financial product advice. Before making a decision about investment options, please read the relevant PDS to find out more. You should also seek the advice of a licensed professional financial and tax adviser.
The third in a series of articles to highlight important considerations about super at different ages.
If you're still working in your 60s, retirement isn't a distant idea anymore, it's just around the corner. And, along with thinking about how you're going to spend your retirement, you need to plan how you'll fund it.
Many people will be eligible for at least some of the Age Pension, but your super is going to provide extra income when you are no longer working. So it's worth investing some time now thinking about how you can maximise your income in retirement. Here are a few ideas to start you off.
Do some planning
A person in their 60s now can expect to live well into their 80s and many will live into their 90s. So planning your income during retirement is an important first step. Get started with two questions:
There's an easy to use Budget Planner at moneysmart.gov.au that can help you work out your expenses in retirement.To work out your income, permanent employees can login to their account at apss.com.au and use our Retirement Simulator. It will show you an estimate of the yearly income you'll get from your super plus income from the Age Pension (if you're eligible). It will also show you how long your super is expected to last depending on how much you withdraw each year.
To check out other Government support you may be entitled to, use the Payment Finder at humanservices.gov.au
Also think about how you'll manage your savings. One option is to convert your super into an income account like the APSS Pension. It's an easy way to manage your savings - regular payments from your super are made directly to your bank account, just like wages.
Build up your super
It may be worthwhile to consider adding to your super before retiring - it's a tax effective way to save compared to many other investments. And if you convert your super to an APSS Pension when you retire, everything is tax free - including income payments and investment earnings.
So, what's the best way to add to your super?
Contributing from your before tax pay means that you only pay 15% contributions tax. If you're in your 60s, you can contribute up to $35,000 each year. For Defined Benefit members, this limit includes your notional taxed contributions. Those who earn above $300,000 will also pay a higher tax rate on contributions. Read our Superannuation taxes fact sheet at apss.com.au for details.
If you want to contribute from your after tax pay or transfer other money into your super, you can add up to $180,000 a year. If you're under 65, you can bring forward an additional two years of contributions, up to $540,000 over three years.
You may be eligible for a Government Co-contribution. If you earn up to $35,454 a year, for every $1 you contribute from your after tax pay, the Government will contribute 50 cents. The maximum you can get is $500. As your income increases the co-contribution decreases (and cuts out for people earning above $50,454).
Transition to retirement
Before you retire, you can set up an APSS PREP Account and get income from your super. This is known as a transition to retirement strategy, and may suit you if you want to reduce your working hours and maintain your income. You can also use this strategy to boost your retirement savings before you retire by contributing more of your salary to your super account using salary sacrifice. This option might suit you if the marginal tax rate on your income is higher than the tax you pay on your super contributions. You can find out more about this option by reading the Getting ready for retirement fact sheet at apss.com.au or you may wish to speak with a financial adviser.
If you work part time after 65, you may also be eligible for the Government Work Bonus. If eligible, it lets you earn up to $250 a fortnight before your Age Pension is reduced. For more information, visit humanservices.gov.au
Don't retire your super too early
Just because you may be thinking about retiring, that doesn't mean your super can. Your savings need to keep working hard for you right through your retirement to keep ahead of inflation. A low risk option, like the APSS Cash Return option, may provide more protection against short-term market ups and downs, but in the long-term returns are generally low. If you are planning to live off your super over many years, the return from low risk options may mean that your savings don't last as long as you want. Options that include asset classes like shares and property usually are expected to provide higher returns over longer timeframes and may be better suited if you plan to keep your pension invested for a longer period of time.
So consider your investment choices carefully. You can choose a combination of Market Return or Cash Return investment options for your savings so that you have some that's safe for the short-term and some that's invested for long-term growth. For both investment options we state the return we aim to achieve and we estimate the number of times that option may have a negative return over 20 years. Go to your Member Savings PDS for more details.
Get expert advice to maximise your income in retirement
Even if retirement is a few years away it's good to prepare early. With the right advice, you can maximise the income you'll get from your super and the government support you may be entitled to in retirement. You can also get advice about your investment strategy, a transition to retirement strategy or adding to your super. Visit the Financial Planning Association's website at fpa.asn.au for information about finding a financial planner.
If you're in your 60s and retired, we haven't forgotten about you. Look out for the next issue of Insight and our article on tips for managing your super savings in retirement.
The second in a series of articles to highlight important considerations about super at different ages.
By the time you hit your fifties, retirement is often starting to become more front of mind. Whether you are planning for retirement or still have some time, you might want to start thinking about consolidating and growing your super for your long-term financial future.
You may be in a position where your kids have grown up, left home and you are lucky enough to have your mortgage under control. Regardless of your circumstances, by the time you're in your fifties, we encourage you to start thinking about forming a well-informed superannuation plan so that you can work towards achieving the lifestyle you want in retirement.
The APSS recommends that you seek the input and advice of a licensed financial planner to help you understand your personal super decisions, and the long term impacts that a decision you make now might have on your retirement outcomes.
Whether you are married or single, with or without children, by the time you are in your fifties you may be starting to think about when you will retire, whether you will have enough, and what your lifestyle will be like in retirement. It's now time to start preparing for a better retirement sooner rather than later.
Some of the things you should ask yourself are:
The APSS can provide you with a number of useful resources to help you plan your retirement. Our new Retirement Simulator allows you to test the impact of different contribution rates, investment allocations and retirement ages on your super savings.
The Retirement Simulator can help you decide whether you should be making changes to your current arrangements to reach the retirement outcomes you desire. The reports generated by the Retirement Simulator can be shared with your licensed financial advisor to assist in your retirement planning.
As reported in the last edition of Insight, to enjoy a 'comfortable' retirement lifestyle (as defined by the Association of Superannuation Funds of Australia), single members who retire at Pension Age, would need a balance of approximately $430,000, and couples would need a balance of approximately $510,000. If your living standards are more modest, then the lump sum requirements may be lower. See https://www.superannuation.asn.au/resources/retirement-standard for more information about ASFA's retirement standards.
If you are an employee member, you can make personal contributions from either your before-tax salary or after-tax salary into your APSS Employee Account. If you are a spouse or rollover member, you can make after-tax contributions into your APSS Spouse or Rollover Account. Any additional contributions you can afford to make are further boosted by the benefits of compounding which means that over time, you start to earn interest on interest. There are however, limits on the amount of contributions that can be made to super in each financial year that are taxed concessionally. See the fact sheet Superannuation taxes for more details.
If you've had more than one job, it's quite likely you have more than one super account. Consider consolidating super from other funds into the APSS, as well as any lost super that you may have. Doing this may save you money on fees and make it easier to track by keeping your super in one place with one lot of paperwork.
Combining your super accounts can be a fast and easy way to boost your retirement savings. You can use the Transfer other super into the APSS form to get started, or call SuperPhone on 1300 360 373 today to help you get your super sorted. You can also go to the ATO's website and use the SuperSeeker tool to search for any lost super accounts or unclaimed super you may have.
Before rolling your accounts over though, it's important to consider any exit fees, changes to your insurance cover or loss of benefits or investment options that may result from closing your other super accounts.
When you reach your preservation age, the government provides tax benefits to help you prepare for the end of your working life and retirement. You may be able to move your money from your super into a transition to retirement strategy such as an APSS Pre-retirement Pension, or PREP for short. An APSS PREP account lets you receive some of your super as a pension while you're still working.
When you are ready, the APSS offers the benefits of a regular income stream which could help you manage your spending more easily. To learn more, please read the fact sheet Getting ready for retirement and the information in Your APSS Pension PDS
It's important that your super is working as hard as possible to help your nest egg grow. To achieve the lifestyle you'd like in retirement and help your super grow, you can choose an investment allocation that suits the level of risk you're prepared to take from either the APSS Cash Return or Market Return investment options or a combination of the two.
Historically, an investment option with a higher allocation to riskier assets may often, over the long-term, outperform a more conservative investment strategy, such as cash (but remember that past investment returns are not necessarily indicative of future investment returns). If you're unsure about your investment choices, retirement age or contribution rates the APSS recommends that you speak to a licensed financial advisor.
If you need assistance with any of the tips listed above, please contact the APSS SuperPhone on 1300 360 373 and one of our highly trained representatives will be able to assist you.
Introducing the new APSS Retirement Simulator and secure website update
We are delighted to announce the launch of two key resources to make managing your super with APSS even easier.
The APSS Retirement Simulator is an illustrative calculator designed to help you understand what your future superannuation benefits might be. It can show you how your superannuation balance could grow over time and project how much annual income you may be able to draw down during retirement.
The Retirement Simulator can also help you to identify any gap between your projected superannuation savings position at retirement and the balance you may need to meet your retirement goals, and show the impact of changes you could make to help you reach those retirement goals.
The reports generated by the Retirement Simulator can be printed out or emailed to discuss with your licensed financial advisor.
The other great new tool that is now available for members is the updated secure section of the APSS website. Remember, the APSS website is divided into two sections, a bit like a bank website. The public site is accessible to everyone, but the secure section which contains your personal information is only accessible by you using an APSS personal login and PIN code.
Last year we updated the public website to bring it into line with more contemporary standards. This year we have updated the secure section in a similar way, and to make it easier for you to navigate and access your personal information.
We hope you enjoy using the new Retirement Simulator and secure website and welcome any feedback that you may have.
If you have any trouble finding anything, or have a question about your super, you can either email us directly from the Contact us page or call SuperPhone on 1300 360 373 between 9am and 5.30pm (AEST) Monday to Friday.
The first in a series of helpful articles to guide members on important considerations about super at different ages.
Many members don't give their super much thought until they hit 'a certain age'. That age will be different for different people, but for most of us it will be somewhere in the 40's. Retirement may still seem like a long way off, but it's not, and retirement planning starts to become more important. The thing to remember is that whilst it is never too late to start thinking about superannuation, the sooner you do, the better. The APSS recommends that you seek the input and advice of a licensed financial planner to help you understand your personal super decisions, and the long term impacts that a decision you make now might have on your retirement outcomes.
Whether you are married or single, with or without children, by the time you are in your 40's you may be wondering if you will have enough to look after yourself and your family in retirement. You may not be expecting a lavish lifestyle, but may want to be comfortable in retirement and have enough for the occasional holiday and maybe a new car.
Some of the things you should ask yourself are:
The kind of lifestyle you have in retirement greatly depends on your level of superannuation savings, so it is vital to start with the question 'how much will I need in retirement?' Once armed with that information, you can then determine if you have enough; and if you don't, you can take steps to improve your retirement outcome. The Association of Superannuation Funds of Australia (ASFA) defines a 'comfortable' retirement lifestyle as a good standard of living, which enables you to purchase a broad range of leisure and recreational activities, household goods, a reasonable car, electronic equipment, and domestic and occasional international holiday travel.
To enjoy a 'comfortable' retirement lifestyle, single members would need to retire on a balance of approximately $430,000 and $510,000 for couples (these figures are based on the ASFA Retirement Standard as at 31 December 2014 and certain assumptions, including your eligibility for the Age pension, and that you retire at Pension Age). If your living standards are more modest, then the lump sum requirements may be lower.
Although you have peace of mind that your APSS Defined Benefit super can never go down if you are an employee member, you will need to consider whether this will be enough for you to retire on. Making additional contributions is a useful way to boost your super but be aware, there are annual limits to the amount you can contribute to super without paying additional tax. For more information see contribution limits
If you make contributions to your super from your before-tax salary (also known as 'salary sacrifice') tax benefits may result. It's important to understand your options and the impact this will have on your take home pay, and later on, how it might affect your eligibility to Government benefits, such as the Age Pension. For more information see making contributions.
This is a way to boost the superannuation savings of a partner with a low account balance or lower income. You don't have to be married to benefit from this option. For more information see splitting your contributions.
In your 40's, retirement may still be a fair way off, so you want to check that you're in a suitable investment option to grow your super until you retire. In the APSS there are currently two choices: The Market Return and the Cash Return (or a combination of the two). Remember that you may need to live off your savings for well over 25 years after you stop working, so you will need to earn a sufficient return.
Historically, an investment option with a higher allocation to riskier assets will, over the long-term, outperform a more conservative investment strategy, such as cash (but remember that past investment returns are not necessarily indicative of future investment returns). In your 40's, you still have a very long term investment horizon so you may want to aim for higher returns and a higher balance at retirement. If you're unsure about your investment choices, you should speak with a licensed financial advisor.
Have a say in how your money is distributed in the event of your death. Nominating your beneficiaries and keeping them up to date, makes your wishes known to the APSS Trustee. For more information see relationship changes .
If you have more than one superannuation fund, you might be paying too much in fees, not to mention the added complication of keeping track of multiple accounts. The APSS can help you to bring your super together to make keeping track of it easier.If you need assistance with any of the tips listed above, please contact the APSS SuperPhone on 1300 360 373 and one of our highly trained representatives will be able to assist you.
For employee members, making before-tax contributions to your super via salary sacrifice may be tax effective-15% tax is deducted from your before-tax contributions, which is lower than most people's personal tax rate (which can be as high as 49% including the Medicare and the Temporary Budget Repair levies). But there are also caps on the concessional or before-tax contributions you can make each financial year without incurring significant additional tax.Limits on contributions
For the 2014-15 financial year, there is a concessional contribution limit of $30,000 if you are aged under 50, or $35,000 if you are aged 50 and over. For employee members, your concessional contributions include your before-tax contributions via salary sacrifice and the amount of notional taxed contributions to provide your Defined Benefit. For more information, refer to contribution limits.
So remember to check your annual limit carefully-the APSS does not do this for you!
If you (or your partner) earn less than $34,488 in the 2014-15 financial year, consider making an after-tax contribution to your super (or your partner's super) in the APSS and the Government will match your contribution at the rate of 50 cents for each dollar you contribute, with a super co-contribution-up to a maximum of $500 for the 2014-15 financial year. The co-contribution gradually decreases as your annual income goes up from $34,488 until it ceases at $49,488 for the 2014-15 financial year. For more information see receiving co-contributions.
If you're a low income earner or you take a break from working for a while, your spouse can help you continue building your savings by contributing to your super.
There's a benefit for the person who makes the spouse contributions too-the maximum tax offset is 18% of $3,000 worth of spouse contributions-a handy $540. The full offset is available if a spouse's assessable income is $10,800 per year or less. This rebate reduces by $1 for every assessable dollar over $10,800 and stops when the spouse's income reaches $13,800. For more information see making spouse contributions.
You may be able to split your personal before-tax super contributions (in certain circumstances) with your spouse at the end of the financial year. The maximum amount that can be split for a particular financial year is 85% of your before-tax contributions in that year. (The amount to be split is net of the 15% contributions tax.)
Depending on your situation, it may be beneficial for employee members to share a portion of their before-tax contributions across two accounts in the APSS-yours and your spouse's.
For more information on splitting, including which contributions you can split, and who can split, please refer to splitting your contributions.
From 1 July 2015, if you are aged 56 and over and still working you can start accessing some of your super early using a 'transition to retirement strategy' like the APSS Pre-retirement Pension . There may be tax advantages in starting a pre-retirement pension as once you turn 60, payments you receive from a pension become tax free.
For more information visit the fact sheets and download Getting ready for retirement.
Before deciding what's right for you, we recommend that you speak to a licensed financial adviser because tax and super can be a complex area.
For many of us the festive season and start of a New Year can bring a chance to reflect on the important things in life-our well-being and the well-being of our loved ones, friends and colleagues. For those of us in the later stages of our working lives, our thoughts naturally turn to our future financial security and the kind of lifestyle our superannuation might afford us when we stop working. Although financial security is only part of the retirement story, thinking about super and other investment decisions is not something to be taken lightly. Members with an APSS Defined Benefit have the peace of mind and certainty of a superannuation benefit that is unaffected by investment markets and returns. However, for members with an APSS Member Savings account, the value of those savings will depend on past and future crediting rates (or investment returns) of the investment option(s) that you select. .
APSS members manage the investment options of their Member Savings in different ways. Many leave their savings in the same option since opening their account, while others switch frequently between the two investment options. There is no single 'right way' to invest, which is why we encourage members to seek independent financial advice before making investment decisions. However, there are risks both in never making an active decision about where to invest your savings and in switching between investment options often in the hope of achieving higher investment returns. This is sometimes referred to as 'performance chasing'.
The expectation that investment returns of the past will repeat their successes in the future drives some members to switch to and from investment options after learning about a higher crediting rate in another option or after the option they are in has a negative crediting rate. Switching investment options in this way, with hindsight, can erode the value of your savings because investment returns are unpredictable. By the time your investment switch is processed, you may have missed the upswing altogether and be in a worse position than not switching at all. Although obviously some members get this timing right some of the time, it would be difficult to conceive of members being able to get this right all the time. Even investment experts cannot do this consistently!
Rather than responding to past crediting rates, some members may be prompted to switch in and out of their Member Savings investment options when they observe positive or negative share market returns. It is important for members to be reminded that the APSS Market Return investment portfolio is highly diverse, with a large portion of private market investments, bond investments as well as international and Australian shares. There is a relatively small allocation to listed Australian and international shares (currently around 25%). For this reason, members should not expect to see investment returns in the APSS Market Return portfolio that are reliably in line with public share markets.
An alternative both to the 'do nothing' approach and to 'performance chasing' is to make and maintain an appropriate and informed investment choice that changes over time as your circumstances change, for instance as you near retirement. It is about having the right balance of investment security and long-term investment growth to suit your personal circumstances, despite short term fluctuations in investment returns. So, as we begin a New Year, we encourage you to think about your superannuation, consider whether your current investment choices remain appropriate for your age and particular circumstances and how much income you might need in retirement. The APSS website has a wealth of information to assist you. You can also login to the APSS website to obtain a current or projected benefit estimate to help you understand your future superannuation outcomes. Being informed about what you have and what you might need in retirement will help as you make those important decisions about your super as you get closer to retirement or as your financial circumstances change. The APSS Trustee would like to wish all of our members and their loved ones a safe and happy new year. As always, if you need any help with your super in the APSS, please call SuperPhone on 1300 360 373.
The APSS Trustee is not licensed to provide financial product advice. Before making a decision about switching Member Savings investment options, please read the relevant PDS. You should also seek the advice of a licensed professional financial and tax adviser
From 1 January 2015, new deeming rules may reduce Government benefit entitlements for some APSS Pension members
With the recent passing of legislation, new deeming rules apply to income received from APSS Pension accounts that are opened (or substantially changed) from 1 January 2015 for those who are also receiving an eligible income support payment from Centrelink. Eligible income support payments include the Age Pension, Disability Support Pension or Carers' payment. This may impact members immediately or in the future and may reduce their entitlement to Government benefits.
If you were in receipt of a Government benefit and are receiving income from an APSS Pension account that was opened prior to 1 January, 2015, you are exempt and therefore unaffected by this change. However, if you were in receipt of an APSS Pension prior to 1 January 2015 but only became eligible to receive a Government benefit after 1 January 2015, then the new deeming rules will apply.
From 1 January 2015, unless the 'grandfathering' provisions apply, income received by members from an APSS Pension account will ordinarily be assessed by Centrelink in the same way as income received from financial investments (such as cash, shares and managed funds). For these members the income received from an APSS Pension account will be subject to deeming rules for Income Test purposes when determining an individual's entitlement to Centrelink and DVA benefits
You can lose any applicable 'grandfathering' exemptions if you make certain changes to your APSS Pension account, including:
If you are in doubt about whether these changes affect you, please contact Centrelink on 132 300 or APSS SuperPhone on 1300 360 373.
A new way to make after-tax contributions to your Member Savings account
From early February, BPay facilities will be available for members who wish to make after-tax contributions to their existing APSS Member Savings account.
To transfer money to your APSS Member Savings account using BPay, contact your bank and provide the APSS BPay biller code (237628), and your unique Customer Reference Number (CRN).
To obtain your unique CRN, you can either call SuperPhone on 1300 360 373 or login to your APSS account via apss.com.au, click on BPay and your unique details will be shown on screen
There is a maximum BPay transaction of $100,000 per day, and BPAY payments may take up to three business days to process.
Please note: BPay is not available for Pension members or for employee members wishing to make before-tax (salary sacrifice) payments.
There are annual limits on the amount of contributions that can be made to your super and different limits apply to before and after-tax contributions. Go to apss.com.au for more details.
The low income super contribution (LISC) is a government payment of up to $500 to help low-income earners who earn less than $37,000 each year to save more in their superannuation.
If you are eligible, a payment will be automatically made by the Australian Tax Office (ATO) into your APSS Member Savings account. If you do not already have an APSS Member Savings account, one will be automatically opened so that the payment can be allocated to you. You don't need to do anything to receive a LISC. The maximum payment you can receive for a financial year is $500 and the minimum is $10. If you receive a LISC payment, the ATO will write to you to let you know – usually in October each year.
For more information visit ato.gov.au and search for Low income super contribution
By now you should have received your APSS annual benefit statement. This is a very important document and you should take some time to look over the details and check that everything is as you expect it to be.
Receiving the annual statement serves as a timely reminder to keep the APSS updated with your current details and to 'take stock' of your super decisions. Follow this handy checklist:
The new financial year heralds changes to the limits, caps and tax affecting superannuation. It's important for you to be aware of the changes and how these changes might impact your superannuation and retirement planning decisions. Below is an outline of the changes and how they may impact you.
If you make personal after-tax contributions to your super, and your income is below $49,488 for the 2014-15 financial year, you may be eligible for the Federal Government's co-contribution payment.
For the 2014-15 financial year, the maximum co-contribution is $500 and is available to people with income of $34,488 or less who make personal after-tax contributions of at least $1,000. This maximum co-contribution amount then phases down for each dollar of additional income over $34,488 and cuts out completely for incomes of $49,488 or more.
To be eligible, you must be under age 71 at the end of the financial year and at least 10% of your income must be derived from employment or business. The co-contribution is not available to most temporary residents. You must also lodge your income tax return for the relevant financial year.
The amount of the co-contribution and the income thresholds may be subject to change every year. If you are eligible to receive a co-contribution, the Government will pay the contribution directly to your account.
The Government imposes limits on the amount of contributions that you can make to super in each financial year that are taxed at concessional rates. If you exceed these limits you could potentially pay extra tax. The tables below detail the new limits and how they apply.
The concessional (before-tax) contributions limits are:
|Age under 50||Age 50+|
|2014-15 Financial year||$30,000||$35,000|
The non-concessional (after-tax) contributions limits are:
|Any age||Under age 65: 'bring forward' option (over 3 years )|
|2014-15 Financial year||$180,000||$540,000|
To learn more about contribution limits and how they apply to your super in the APSS, you can read the fact sheet Boost your super savings from the Fact sheets page.
The Superannuation Guarantee (SG) is the minimum amount of superannuation that employers have to provide their employees to satisfy their obligations under SG legislation.
Effective from 1 July 2014, the SG rate is scheduled to increase from 9.25% to 9.5%. The SG rate is currently scheduled to gradually increase each financial year to reach 12% from 1 July 2019 onwards. However, there is legislation currently before Federal Parliament to change the timing of the scheduled SG rate increases. As at the date of this document, these proposed changes have not been enacted into law.
What does it mean for you?
If you are an SG Defined Benefit employee member, your APSS defined benefit accrual rate will increase in line with the SG rate. So the rate increases over the next few years is good news for your super savings.
If you are a 14.3% Defined Benefit employee member, the legislative changes to the SG rate generally do not affect your APSS defined benefit entitlements.
When you have an account-based pension like the APSS Allocated Pension or Pre-Retirement Pension (PREP) account, by law, you must receive a minimum amount of pension payments each year.
How much do I have to receive each year?
The minimum annual pension payment depends on your age:
|Age||Annual payment as a % of account balance|
Each July, the APSS will write to you and ask if you wish to vary your regular pension payment amount above the minimum limit. The minimum amount that must be paid each financial year is calculated on 1 July each year by multiplying the balance of your APSS Pension account by a percentage that depends on your age, as set out in the above table.
For PREP accounts in the APSS, there is also a maximum amount that can be paid each financial year. The maximum amount is also calculated every 1 July by multiplying the balance of your APSS Pension account by 10%.
To find out more about Allocated Pensions and the PREP account, you can read the APSS Pensions PDS on the PDS's and other booklets page.
The Australian Taxation Office administers this tax (also known as Division 293 tax) for 'very high income earners' who are generally defined as being those whose 'income' plus concessionally taxed super contributions (known as 'low tax contributions') exceeds $300,000 in a financial year. If this applies to you, you will be required to pay an additional 15% tax and you will automatically receive an assessment notice from the ATO.
For more information, please refer to the Superannuation taxes fact sheet available from apss.com.au or visit ato.gov.au and do a search for 'Division 293 tax'.
When it comes to superannuation, women can face additional challenges regarding saving for retirement compared with men. Australia's superannuation system is based on the assumption that you'll work full-time for your entire working life - around 35 years. Women in Australia are generally expected to live longer than men, and typically take time off work throughout their time in the workforce to raise children or care for family members. Generally speaking, women are also paid less than men and make up a large proportion of part-time employees. Combined, these facts may mean inadequate retirement savings if you don't take action.
Here are some things you can do to help yourself:
If you are working, and can afford it, consider making personal contributions to your super. If you are an employee member, you can make personal contributions from either your before-tax salary or after-tax salary into your APSS Employee Account. If you are a spouse or rollover member, you can make after-tax contributions into your APSS Spouse Account or Rollover Account. Any additional contributions you can afford to make is further boosted by the benefits of compounding which means that over time, you start to earn interest on interest.
The Government's co-contribution scheme is a payment that supplements personal contributions made from after-tax salary for those on low to middle incomes. If your income is less than $33,516 and you make personal contributions of $1,000 in a year to your super from your after-tax pay, you may be eligible for a Government co-contribution of up to $500. Smaller co-contribution amounts may apply if your income is between $33,516 and $48,516 for the year. All figures are based on the 2013-14 financial year and may change for later years. Visit receiving co-contributions for more information.
The spouse contribution scheme offers a tax offset for after-tax contributions made to your spouse's super, if your spouse is not working or has a low income. If your spouse's taxable earnings are less than $10,800 in a financial year and you make after-tax contributions to your spouse's APSS Spouse Account, you may be entitled to a tax offset of 18% of the first $3,000 you contribute (i.e. a maximum of $540). Smaller tax offsets may be claimed if your spouse's taxable earnings are between $10,800 and $13,800 in a financial year or if you make less than $3,000 after-tax contributions to your spouse's super. Once your spouse's taxable earnings are $13,800 or over, the tax offset is not available. For details on the full conditions you need to satisfy to receive the offset, visit the ATO website.
Superannuation splitting is another way to contribute to a spouse's super while they take time off work. It allows the transfer of before-tax contributions into your spouse's APSS Spouse Account. Before-tax contributions to super are taxed at a lower rate of 15%* compared with marginal income tax rates - provided you don't exceed contribution limits. These additional contributions, over time can help boost your spouse's super savings.
If you've had more than one job, it's quite likely you have more than one super account. Consider consolidating super from other funds into the APSS, as well as any lost super that you may have. Doing this may save you money on fees and make it easier to track by keeping your super in one place with one lot of paperwork. Before rolling your accounts over though, it's important to consider any exit fees, changes to your insurance cover or loss of benefits or investment options that may result from closing your other super accounts.
You're likely to need a regular income for at least 20 years once you retire, and like most people you may be intending to fund your retirement through a combination of your super savings and the Government age pension. To get an idea of whether your retirement savings are on track, use the calculators on the secure section of the APSS website to estimate your future retirement savings. You can also adjust some of the calculator settings like your personal contributions, investment returns and retirement age to see what a difference this could make to your overall benefit.
If you are aged 55 and over, a transition to retirement strategy like the APSS Pre-Retirement Pension (PREP) may help you top up your super before you permanently retire, while also drawing down on some of your existing super through regular pension payments. You can learn more about the APSS PREP by reading the fact sheet: Getting ready for retirement.
If you are getting divorced or separated, you should review any beneficiaries you have previously nominated to the APSS and update them accordingly. Making sure your loved ones are listed as beneficiaries will help the Trustee in determining how to distribute your APSS benefits if you die.
So, while women have some distinctive challenges when it comes to saving enough for retirement, it's up to you to take control and advantage of the opportunities outlined. Super is a complex field and it's important to understand the opportunities and possibilities. The APSS recommends you get licensed financial advice to help create an overall plan for your retirement savings.
APSS's new website is divided into two sections, a bit like a bank website. The public site is accessible to everyone and the secure section is only accessible to APSS members by using personal login and PIN codes. You can learn more about navigating the website by clicking here.
We've created a new public section to better serve your needs and expectations as well as to bring the current website into line with more contemporary standards. Here you will find general information about superannuation and specific information about your super in the APSS including information about your benefits, contributing to super and APSS's investments.
In the near future, we will be updating the secure section of the website in a similar way to the public section. The secure website holds your personal superannuation information and lets you check your current account balance, view your transactions and make changes to your investment choices and beneficiaries.
To access the secure section, you must login using your APS number and your PIN. Your APS number is printed on your Annual Benefit Statement. Remember to keep your PIN in a safe place. If you've lost or forgotten your PIN, don't worry, you can request a new one by via the Login link.
If you have any trouble finding anything, or have a question about your super, you can:
Many of us start off a new year by setting ourselves some goals, or resolutions, to achieve in the year ahead. One simple thing you can do this year to ensure your super savings don’t slip away is to find any lost super that you may have and get it together. It’s more straight forward than you think and with recent Federal Government changes, it may be better to do this with the APSS sooner rather than later.
There are billions of dollars in lost super waiting to be claimed in Australia. Some of it may even be yours! You can reclaim your lost super in three easy steps:
If you’ve changed jobs, moved house or even changed your name then you may have lost track of your old super. Don’t let your super savings slip away. You can search for your lost super now by using the ATO’s online tool SuperSeeker.
This tool searches the ATO’s Lost Members Register and other ATO records, such as unclaimed super money, for your lost super accounts. You can also use the ATO’s phone service (13 28 65). As an added incentive to find your lost super; if you don’t track down your lost super, it could end up in the bank account of the Federal Government!
Once you’ve found your other super accounts, you may want to consider getting it all together into your APSS account. Some of the benefits of consolidating your super savings may include:
• paying one set of fees and charges,
• having less paperwork to deal with each year,
• having flexibility with your investment options.
Combining your super is easy - just fill in the Rollover Form for each super account you want to combine with the APSS. You can download a form from the Publications & Forms section of the website at apss.com.au, or call SuperPhone on 1300 360 373 for a copy to be mailed to you.
Before rolling your accounts over though, it’s important to consider any exit fees, changes to your insurance cover or loss of benefits or investment options that may result from closing your other super accounts.
Once you are reunited with your lost super, the more it is likely to grow. This is because the longer super is invested, the more it could benefit from compound interest. Furthermore, rolling over into the one account in the APSS could potentially save you fees and help you readily keep track of your super savings.
Some developments since the Election, along with key aspects of the Coalition’s pre-election policy on superannuation, are summarised below.
We will continue to keep you updated on what the new Government has in store for super, and how it could affect you.
If you’re currently 55 or over and still working, an APSS Pre-Retirement Pension (or ‘PREP’ for short) can in the lead up to retirement:
• Offer access to your super while you’re still working
• Help you build your super, and
• May provide a tax-effective option to boost your income.
A PREP allows members aged 55 or over, access to some of their super in the form of regular pension payments (similar to a salary) without having to stop work or retire permanently. This is provided you have reached your ‘preservation age’, which is generally between the ages of 55-60 depending on your date of birth. If you are under age 65 and still working, you can withdraw between 4% and 10% of your pension account balance each financial year. Note that this is based on current legislative limits which are subject to change in the future.
To learn more about how a PREP works and the eligibility rules that apply, please refer to the APSS Pensions PDS available at apss.com.au or by calling SuperPhone on 1300 360 373.
A PREP can enable you to:
Cut your working hours and maintain the same take home income level
Starting a PREP could help you by enabling you to reduce your working hours without reducing your take-home income level. You can work part-time and supplement your salary with income from your PREP account. You could receive the same take home income level using this approach.
Boost your retirement savings and take advantage of tax concessions
A PREP allows you to contribute extra to your super from your before-tax salary (i.e. salary sacrifice) while at the same time receiving income from your PREP account. For most people aged 60 and over, both before-tax contributions to super and pension payments from a PREP account will be taxed at a lower rate than their salary. Any tax savings could then be used to boost your super.
Boost your income if you want to keep working full time
Income from a PREP account can supplement your current salary and can be used for other investments or to spend as you wish. Be careful however, of using super savings that you’ll need in retirement.
Before you open a PREP account, you need to consider if this type of income stream is right for you and how it fits with your work, retirement and super plans. Some things to consider:
A transition to retirement strategy can be complex and whether it is the right option for you will depend on your personal situation. We strongly recommend that you seek licensed financial advice that is tailored to your individual financial and tax situation, objectives and needs before starting a PREP account in the APSS.
If you leave your job at Australia Post or an Associated Employer, you can continue to enjoy the benefits of APSS membership by opening an APSS Rollover Account. This option is also available to your spouse if they have a Spouse Account in the APSS.
To keep your super or your spouse’s super in the APSS after you leave employment, all you need to do is simply let us know within 60 days of the APSS writing to you after you cease employment. You will also need to read the current Product Disclosure Statement (PDS) and complete and return the required forms.
He brings a wealth of knowledge and significant strategic experience to this position.
The appointment follows the retirement of the current Chairman, Len Early, after 13 years of dedicated and loyal service. Len will serve as a consultant until the end of the 2013 financial year, to assist Mark and the Board with the transition.
After steering the APSS through volatile times during the GFC, Len leaves the fund in a solid position and with Mark at the helm, well positioned to build on our successes and manage the challenges ahead.
Super is money for your retirement and not money that you can access legally before the ages of 55 to 60, depending on your date of birth. There are exceptions in circumstances such as terminal illness, permanent incapacity or where an early release is approved on limited severe financial hardship or compassionate grounds.
So, if someone is trying to convince you that they can help you access your super early, watch out! Be very wary of:
Promoters of illegal super scams often target people who are in financial distress. If you are experiencing financial hardship, please contact SuperPhone on 1300 360 373 to discuss the options available to you.
A typical super scam involves someone posing as a financial adviser who might ask you to sign over your super to a self-managed super fund (SMSF), and then they will transfer the money to you, less a commission. Except that often they don’t, and your money can be lost forever.
To add to the pain of this, you may face significant tax and/or penalties under tax laws for the illegal withdrawal from your super.
If you have been approached about accessing your super early, you should report it to ASIC by calling 1300 300 630 or the ATO on 13 28 61. You should also tell your friends and family to protect them.
What you can do to protect yourself from scammers