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December 2014

Chasing past investment returns can be risky

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.

Making active decisions

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 risks of 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!

Switching based on share market returns

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.

Investing for the long term

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.

Important

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

December 2014

New Pension deeming rules

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.

'Grandfathering' provisions

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.

What are the new rules?

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

Beware

You can lose any applicable 'grandfathering' exemptions if you make certain changes to your APSS Pension account, including:

  • adding or removing a reversionary beneficiary from your APSS Pension account
  • cancelling an APSS Pension account and converting to an accumulation account
  • commencing a new APSS Pension account from 1 January 2015, even if you have an existing pre-1 January 2015 Pension account
  • converting a pre-1 January 2015 APSS Pre-Retirement Pension Account (PREP) to a Pension.

More information

If you are in doubt about whether these changes affect you, please contact Centrelink on 132 300 or APSS SuperPhone on 1300 360 373.

December 2014

BPAY facilities available

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.

Remember

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.

December 2014

LISC-are you eligible?

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.

Don't forget to tell us

For more information visit ato.gov.auOpens in new window and search for Low income super contribution

September 2014

About your 2013-14 annual benefit statement

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:

  • Ensure that the APSS has your most up to date address and phone contact details.
  • Ensure that your beneficiaries are kept up to date, particularly if your personal circumstances have changed since you last updated your beneficiaries.
  • If you haven't already done so, consider providing your Tax File Number to the APSS.
  • Check that your contributions (if you make any) are on track to ensure that you don't exceed the annual limits. For more details on annual limits see contribution limits.
  • For employee members, you and your spouse may like to consider opening an APSS Spouse Account for your spouse, if they are eligible. You can make after-tax contributions to your spouse's Spouse Account and, providing they earn less than $13,800 p.a., you may be eligible for a tax offset for your after-tax contributions up to $3,000. For more details on eligibility, see making spouse contributions.
  • For eligible members, you could consider opening an APSS Pension or Pre -Retirement Pension account. For more details on eligibility, see your pension options.

June 2014

New superannuation rates and limits for the 2014-15 year

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.

Co-contribution income thresholds

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.

Annual contribution limits

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

Note: 'age' means your age as at the end of the relevant financial year.

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

Note: If you are under age 65 on 1 July in a financial year, you can 'bring forward' up to two years' worth of concessional contributions. If you are considering making contributions in excess of the annual limit, please call SuperPhone on 1300 360 373 for further information about how this 'bring forward' provision operates.

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.

Super Guarantee increase

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.

Minimum annual pension payments for 2014-15

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
Under 65 4%
65-74 5%
75-79 6%
80-84 7%
85-89 9%
90-94 11%
95+ 14%

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.

Additional contributions tax for high income earners

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 Opens in new window fact sheet available from apss.com.au or visit ato.gov.au and do a search for 'Division 293 tax'.

March 2014

Women and the super gap

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:

Make personal contributions to super

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.

Check your eligibility for co-contributions

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.

Check your eligibility for the spouse tax offset

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.Opens in new window

Split your super with your spouse

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.

*Additional 15% tax may apply to very high income earners (i.e. whose income and before-tax contributions exceed $300,000 in a financial year).

Consolidate your super

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.

Plan for retirement

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.

Consider a transition to retirement to boost super savings

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.Opens in new window

Keep your beneficiaries up-to-date

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.

The challenge ahead

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.

March 2014

New APSS website launched

Welcome to the APSS's new website

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.

What's new?

  • New navigation menu plus search tool to help make the site easier to use.
  • Latest industry news, as well as what's making news in the APSS.
  • Access to educational tools including new fact sheets on 'hot' topics.
  • New content under 'Life changes' to help you better understand the decisions you need to make and the choices available to you in the APSS when your personal circumstances change.
  • More links to other useful sites.

What's next?

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.

Help and contacts

If you have any trouble finding anything, or have a question about your super, you can:

  • Email us directly from the Contact us page, or
  • Call SuperPhone on 1300 360 373 between 9am and 5.30pm EST weekdays.