growing your super together together beware...a range of tailored ˜ nancial advice services through...

Growing your super together

AUGUST 2013

Growing your super together

Lyndel QSuper member

since 1990

It could cost you everything

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BEWAREBAD ADVICE

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WHAT’S

THE SCOOP?

Make an informed choice

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THINKING SMSF?

Retirement income made easy

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YOUR RETIREMENTPAYCHECK

You’re with one of the biggest and best Page 3TOP MARKS

Another great reason to stay with QSuper.

Pension Fund of the Year.

Track your super 24/7 Check your insurance cover Manage your investments

For more choice, control and convenience log in now at qsuper.qld.gov.au

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1 QInvest Limited (ABN 35 063 511 580, AFSL and Australian Credit Licence number 238274) (QInvest) is ultimately owned by the QSuper Board (ABN 32 125 059 006) as a trustee for the QSuper Fund (ABN 60 905 115 063), and is a separate legal entity which takes full responsibility for the � nancial services and credit services it provides. 2 SuperRatings SMART, Product Comparison Report as at 30 June 2012, accessed 19 July 2013. 3 Inaugural Chant West Conexus Financial Super Awards 2013.

A message from QSuper’s CEO

Rosemary Vilgan

‘You’re probably starting to give very real consideration to how you’re going to fund your lifestyle over the next few decades.’

QSuper for life We’re also about to embark on an exciting investment journey with the launch of our new QSuper Lifetime option. The enclosed brochure gives you a taste of things to come.

An award winning fundI take great pride in knowing that everybody at QSuper is committed to providing members with the best possible products and services. That’s why it was so pleasing to see independent ratings agency Chant West name the QSuper Pension account Pension Fund of the Year3 against the best super funds in Australia.

Another signi� cant milestoneIn this 20th anniversary edition of our award-winning magazine Super Scoop, we’ve put together a range of articles designed especially for members who are starting to think about retirement, or may have already retired.

You’re probably starting to give very real consideration to how you will fund your lifestyle over the next few decades, and may even be thinking about getting � nancial advice. ‘Beware bad advice’ looks at the problems being caused by disreputable � nancial planners and investment management � rms. It is heartbreaking to hear of the di� culties some people are having after a lifetime of hard work.

Whatever your situation, it’s never too late to take positive action to improve your retirement, so I hope you take the time to read and enjoy this edition of Super Scoop.

Rosemary VilganChief Executive Officer, QSuper

Welcome2013 is a special year for QSuper, as we celebrate 100 years of helping members reach their goals. It’s a history I’m immensely proud to be a part of, but what I’m really excited about is what the future holds.

We know your needs are constantly evolving, so we’re always looking at ways we can do things better for you. Over the coming months you’ll see dynamic new developments such as enhanced access to your super through Member Online, as well as easier access to a range of tailored � nancial advice services through QInvest.1 QInvest has also recently launched a new mortgage broking service, exclusive to QSuper members, their families and friends.

A focus on the long termLast year we wrote to you about changes to the QSuper Balanced (Default) option designed to reduce volatility and smooth returns. This option has been one of the best performing funds over virtually all time periods.2 However we are focussed on the long term, and from talking to members we understand most of you want to protect your super from the ups and downs of investment markets, even if it means giving up some potential for higher returns in the short term.

With this in mind, we positioned this option to better protect against volatility, which means when markets are booming our returns may be a little lower than other funds. However when markets fall the opposite is true, and the QSuper Balanced (Default) option should deliver more stable returns.

I know it can be tempting to judge investment performance on year-by-year returns, but in reality super is a long-term investment so we believe it’s the long-term results that really count. Of course, with nine investment options you can also choose an investment strategy that suits your needs.

2 Super Scoop August 2013

> FROM THE COVER

Meet LyndelI love hearing about members like Lyndel and her husband, Noel, who have made smart movesthroughout their working lives and now look set to retire in comfort.

Noel, who have made smart movesthroughout their working lives and

Lyndel and NoelQSuper members

I love hearing about members

My story

profilememberReal

Super that changes and grows with you

QSuper

Track your super 24/7 Check your insurance cover Manage your investments


Check out the new, improved Member Online. The enhanced features are too good to miss!

Log in :) or miss out :(

Members are at the heart of everything we do at QSuper, which is why we’re dedicated to o� ering you outstanding products and services. And the experts agree – our accounts have received the highest ratings from independent ratings agencies Super Ratings and Chant West.

We’re proud to be one of Australia’s top funds, but you don’t have to take our word for it – our Pension account has just been named the best in the country.

Another great reason to stay with QSuper.

Pension Fund of the Year.

1 As at 30 June 2013. 2 Past management fees should not be taken as an indication of future fees as each year the expenses of managing QSuper’s investment options may vary. 3 QSuper management fee is the actual fee for 2012/2013. 4 Average Retail Master Trust Fee of 1.44% p.a and average industry fee of 0.99% p.a. are as at July 2012 and based on an account balance of $50,000 in an option considered by the ratings agency to be equivalent to the QSuper Balanced (Default) option. Source: Chant West Super Fund Fee Survey April 2013.

One of the biggest super funds in Australia Did you know you’re partnered with one of Australia’s largest super funds? We have around $43 billion1 in funds under management, and with that size comes the security and bene� ts of scale that we pass onto you in the form of low fees and great products and services. And you’ll never be lonely as a QSuper member – with over 530,0001 members, we could � ll the Gabba nearly 13 times over!

The investment choice you needAt QSuper we understand the importance of giving you the choice, convenience and � exibility you need when it comes to investing your super. So, if you want to manage your own investments, we o� er a premium range of options to choose from. But if you’d prefer to take the hassle out of managing your super, we’re about to introduce a new default option called QSuper Lifetime. This option is designed to deliver the right super strategy at the right time by seamlessly adjusting your investments as you move through di� erent life stages.

Low feesThe more you pay in fees, the less you have in your account working for you. That’s why we keep our fees as low as possible,2 with the fee for the QSuper Balanced (Default) option being less than half that of the average retail fund. When comparing fees you should be aware that not all funds clearly outline the total costs which may be deducted from super accounts. It’s your money, so make sure you always know what you’re paying.

Great information and serviceIf you want to know more about your super, we’re here to help. Our award-winning Contact Centre answers around 300,000 calls a year, and we deliver more than 500 seminars, in nearly 60 locations, to around 25,000 members annually. Our website hosts a comprehensive range of information and calculators all designed to give you the information you need, when you need it, and in a way that’s easy to understand.

Advice you can trustWe know how important it is for our members to get the right advice at the right time, which is why we’ve been o� ering access to quality � nancial advice from QInvest for almost 20 years. QInvest advisers are super experts with a detailed understanding of QSuper products. And with o� ces in convenient locations throughout Queensland, the right advice is never far away.

0.57%0.99%

1.44%

QSuper3

Average Industry Fund4

Average Retail Master Trust4

Top marks.You’re with a top rated fund!

to stay with

Lyndel

to stay with

Neil

QSuper.

Ginette

to stay with QSuper.to stay with QSuper.

Philip

3Super Scoop August 2013

Self-managed superannuation funds (SMSFs) have become very popular over the past few years. As at 30 June 2011 they held 31% of the $1.34 trillion invested in super, and their assets grew in the preceding � ve years by 89%.1 You may even be considering one yourself.Understanding your obligationsThe most important thing to do before setting up an SMSF is to fully understand what you’re getting into, as many people underestimate the time and e� ort involved in managing their own super. They also don’t factor in all the costs – essentially the more external help you need, the greater your running costs will be. You should also consider investment costs – investing in property, for example, can incur fees such as stamp duty, conveyancing and agent and legal fees.

The help you needWe know that for some members an SMSF might be the right choice. We also know that many Australians set up SMSFs without doing their research � rst. That’s why QInvest has established a new service to give QSuper members access to the help and support they need to consider, or set up, an SMSF. By using this service you can ensure you’re getting the right information about whether an SMSF is right for you from advisers you can trust – for an obligation-free discussion call QInvest on 1800 643 893.

Both the ATO and the Government website MoneySmart have some excellent resources for anyone thinking about an SMSF, including some important questions you need to ask yourself, which we’ve included below.

O� ering the � exibility you wantAt QSuper we’re dedicated to o� ering our members the products and services they need to meet their retirement goals. These include:

� Nine investment options managed by investment specialists.

� An extensive seminar program designed to meet your information needs at di� erent life stages.

� Online access to your account, allowing you to manage your super any time of the day and night.

� Some of the lowest management fees in Australia.2

We’re also looking to expand our range of investment options to give you even greater control over your super.

Make an informed choice.

Get the SMSF lowdown from the experts!Get a balanced view on what’s involved in managing your own super at a QSuper SMSF seminar. In this informative and in depth session three experts – including an accountant and a lawyer – will give you all the facts you need to understand your responsibilities. Head to qsuper.qld.gov.au/seminars to book your seat today.

Thinking SMSF?

The Government website MoneySmart has some great resources available for anyone thinking about establishing an SMSF, including some important questions you should ask yourself before taking the plunge.

Will your self-managed fund perform better?Super funds use professional managers to invest your super money. Can you do better than the professionals?

Will you lose valued bene� ts?Super funds usually o� er life and disability insurance and a range of investment options. If you set up a self-managed super fund you will have to organise and purchase these yourself.

What if something goes wrong?Sometimes things can go wrong, for example, you may lose money due to fraud. Unlike other super funds members, you will not have access to any special compensation schemes.

Do you know enough?Do you know all your legal responsibilities? Are you on top of the investment market? Do you know the tax implications? Ultimately you will be responsible for your fund even if you have received incorrect advice.

Is an SMSF for me?

Source: MoneySmart website, accessed May 2013.

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1 Self-managed super funds: statistical report. March 2012. Australian Taxation O� ce. 2 Chant West Super Fund Fee Survey April 2013.


In many cases, people placed their retirement savings into investment vehicles where the risks may not have been made transparent or fully understood. In some cases these investments were recommended by a � nancial adviser who may have received � nancial incentives for their recommendation. In other words, they were not acting in the best interests of their clients when recommending these investments.

These unfortunate situations really highlight why it is so important to do your homework to ensure you’re placing your � nancial future in the hands of an adviser you can trust.

A solid track recordQSuper has been looking after the super of Queensland Government employees for one hundred years. It’s not a responsibility we take lightly and over the decades we’ve built a high level of trust amongst our members. We know many of you feel secure in the knowledge that QSuper is your partner on your journey through retirement. We also know that to maintain this trust we have to continue to put your interests � rst.

We also understand how important it is for members to have access to quality � nancial advice, especially close to and in retirement, when you’ve accumulated a signi� cant super balance. That’s why we o� er members access to QInvest, our expert � nancial planners who’ve been providing trusted advice to our members for nearly 20 years.

A matter of trustQInvest advisers have a specialised understanding of your QSuper account, and pride themselves on putting your best interests � rst. Like QSuper, they understand that a good partnership has to be built on trust. At a time when many advisers received indirect fees in the form of commissions and rebates from the products they o� ered, QInvest advisers were, and still are, paid by salary only. In fact, you can always be con� dent that QInvest o� ers full transparency and charges only for the � nancial advice provided, not for the products recommended.

The Future of Financial Advice (FOFA) reforms came into e� ect on 1 July 2013. Under these Federal Government reforms, all advisers are now required to act in the best interests of their client, and are not able to receive payments or non-monetary bene� ts, such as commissions, if it is likely

to in� uence their advice (however any commisions on products held before this date will remain in place). These are obviously very positive steps for the industry, and should improve the quality of advice available to all Australians.

Research and compareThe moral of the story is to always do your homework before choosing an adviser, and the following questions are a good place to start:

A � nal word of adviceIf you’ve been recommended a certain adviser by a colleague or friend, it’s a good idea to check if they’ve been o� ered an incentive for their recommendation to you. In some cases, they may be receiving bene� ts like entertainment or free services to endorse certain products.

You’ve worked hard to save for your retirement, so it’s important you choose a � nancial partner you can trust. Sadly, as too many Australians have discovered, the wrong decisions could destroy your retirement dreams forever.

Beware bad adviceRecent high pro� le � nancial collapses such as Prime Trust, Storm Financial, Wickham Securities and Banksia Financial Group have highlighted how superannuation members can have a lifetime of savings wiped out by choosing the wrong � nancial partner in retirement.

Talk to an expertIf you want quality advice you can trust contact QInvest today.

Based in our Brisbane city o� ce, Graham MacDonald specialises in super, investments and retirement planning and he is driven by the desire to make a positive di� erence to his clients’ � nancial future. QInvest has more than 30 advisers based in locations throughout Queensland. Why not book an appointment today?

wrong decisions could destroy your retirement

Graham specialises in super, investments

1800 643 893 qinvest.com.au

� What will this advice cost me?� What are your areas of expertise?� Are you licensed, and what services

do you have a licence for?

Self-managed superannuation funds (SMSFs) have become very popular over the past few years. As at 30 June 2011 they held 31% of the $1.34 trillion invested in super, and their assets grew in the preceding � ve years by 89%.1 You may even be considering one yourself.Understanding your obligationsThe most important thing to do before setting up an SMSF is to fully understand what you’re getting into, as many people underestimate the time and e� ort involved in managing their own super. They also don’t factor in all the costs – essentially the more external help you need, the greater your running costs will be. You should also consider investment costs – investing in property, for example, can incur fees such as stamp duty, conveyancing and agent and legal fees.

The help you needWe know that for some members an SMSF might be the right choice. We also know that many Australians set up SMSFs without doing their research � rst. That’s why QInvest has established a new service to give QSuper members access to the help and support they need to consider, or set up, an SMSF. By using this service you can ensure you’re getting the right information about whether an SMSF is right for you from advisers you can trust – for an obligation-free discussion call QInvest on 1800 643 893.

Both the ATO and the Government website MoneySmart have some excellent resources for anyone thinking about an SMSF, including some important questions you need to ask yourself, which we’ve included below.

O� ering the � exibility you wantAt QSuper we’re dedicated to o� ering our members the products and services they need to meet their retirement goals. These include:

� Nine investment options managed by investment specialists.

� An extensive seminar program designed to meet your information needs at di� erent life stages.

� Online access to your account, allowing you to manage your super any time of the day and night.

� Some of the lowest management fees in Australia.2

We’re also looking to expand our range of investment options to give you even greater control over your super.

Make an informed choice.

Get the SMSF lowdown from the experts!Get a balanced view on what’s involved in managing your own super at a QSuper SMSF seminar. In this informative and in depth session three experts – including an accountant and a lawyer – will give you all the facts you need to understand your responsibilities. Head to qsuper.qld.gov.au/seminars to book your seat today.

Thinking SMSF?

The Government website MoneySmart has some great resources available for anyone thinking about establishing an SMSF, including some important questions you should ask yourself before taking the plunge.

Will your self-managed fund perform better?Super funds use professional managers to invest your super money. Can you do better than the professionals?

Will you lose valued bene� ts?Super funds usually o� er life and disability insurance and a range of investment options. If you set up a self-managed super fund you will have to organise and purchase these yourself.

What if something goes wrong?Sometimes things can go wrong, for example, you may lose money due to fraud. Unlike other super funds members, you will not have access to any special compensation schemes.

Do you know enough?Do you know all your legal responsibilities? Are you on top of the investment market? Do you know the tax implications? Ultimately you will be responsible for your fund even if you have received incorrect advice.

Is an SMSF for me?

Source: MoneySmart website, accessed May 2013.

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1 Self-managed super funds: statistical report. March 2012. Australian Taxation O� ce. 2 Chant West Super Fund Fee Survey April 2013.



The tax benefits of superAs retirement starts to draw closer, you’re probably giving more and more thought as to whether you’ll have enough saved to � nance a comfortable future, and what you need to do to reach your goals. There is no shortage of investment vehicles to choose from – property, managed funds, term deposits and shares are all viable wealth creation strategies. But super may have some real tax advantages.

So, what’s so great about super?Because the Government wants you to support yourself as much as possible in retirement there are numerous tax concessions around saving with super:

� All investment earnings are taxed at a maximum of 15%. Investments outside of super are generally taxed at your marginal tax rate, which can be as much as 46.5%.1

� If you open an account that provides a retirement income stream, such as a QSuper Pension account, investment earnings are tax-free.2

� No additional tax is payable on contributions to super made from your after-tax pay.3

� Contributions made from pre-tax salary (salary sacri� ce) are also taxed at only 15%.3 This means, depending on your circumstances, you could consider using a transition to retirement strategy to boost your super in the lead up to retirement with minimal impact on your income. You should talk to a � nancial adviser to see if this strategy could work for you – call 1800 643 893 to talk to a QInvest adviser today.

Tax-free livingOf course where super really comes into its own is when it comes to accessing it. Once you hit 60, withdrawals from super are tax free. And if you retire before 60 and are able to access your super, various other tax concessions mean that the tax you pay could be drastically reduced. So as you can see, from a tax perspective super really can be a winner.

1 Including Medicare Levy. 2 The Government has announced that from 1 July 2014 investment returns over $100,000 p.a. for assets supporting an income stream will be taxed at 15%, however this recommendation has yet to be legislated. 3 Some exceptions apply. Please refer to the Accumulation Account Guide or De� ned Bene� t Guide for more information.

For more info on the tax advantages of super, head to qsuper.qld.gov.au/tax

Ass

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ofile Asset name:

One Times SquareNew York, USADate of investment: December 2011Value of investment: $71.8m USD(as at 31 March 2013)

Options with current exposure:

QSuper Balanced (Default)

QSuper Aggressive

QSuper Moderate

QSuper Indexed Mix

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Options with current exposure: Options with current exposure: Options with current exposure:

QSuper Balanced (Default)QSuper Balanced (Default)To view other asset pro� les visit:qsuper.qld.gov.au/assetpro� les

Big Apple.Big opportunity.

The global � nancial turmoil of the past few years has led us to increase our exposure to assets such as infrastructure and property with the aim of providing members with stable, long-term growth. This means that as a QSuper member your super may be invested in assets such as airports, utility companies, shopping centres, and one of the most recognisable buildings in the USA, One Times Square.

Diversi� cation is important when setting an investment strategy. That’s why we place members’ money in a wide range of quality investments, many of which are only available to institutional investors.

I want to be a part of it…Situated in the heart of Times Square, this New York icon has been featured in countless TV shows and movies, is the site of the famous New Years Eve ‘ball drop’, and its billboards and LED signs can be seen from ten blocks away.

Although 25 stories high, most of the � oor space is in fact empty. Retail currently makes up only 16% of the revenue source, with the only major tenant being Walgreen pharmacy – which has a � agship store over three � oors. The real moneymaker is those billboards.

Providing solid returns Due to its extreme visibility – around 35 million people walk through Times Square every year and an estimated 1 billion watch the new year festivities – advertising rates for these signs are among the highest in the world, and since 1998 have increased at an average of 8.4% per annum. Coupled with the fact that most signage leases are � ve to ten years, and that advertisers include blue chip companies such as Toshiba, Sony and TDK, this makes One Times Square a quality investment that the QSuper Board expects to continue to provide solid returns over the long term.11 Past performance is not a reliable indicator of future performance.

fortnight to their super, while only reducing their combined pay by $500.

Peter was initially reluctant to commit so much to super, as he liked the idea of having a higher disposable income. But once he saw that their estimated annual income jumped to around $56,600 by making this extra contribution, he started to look at the longer-term picture.

What did Peter and Sally do?By the end of the appointment, the couple decided they would follow my recommendation of salary sacri� cing their standard contribution, recontributing the tax saving, and also making an additional before-tax contribution; Peter of around $450 a fortnight and Sally of $300. By implementing the plan, this couple should now be on track for the retirement of their dreams.

Peter and Sally’s storyPeter and Sally came to me because they’re hoping to retire in about 10 years, and want to know what they can do to ensure they will retire in comfort. They recently went to a QSuper Design Your Future Retirement seminar, and when they got home they used QSuper’s online Retirement Income Calculator to see if they were on track. When they ran their � gures (using a life expectancy of 90) they saw that if they keep going the way they are their super will provide an estimated combined income of around $45,000 a year.

They didn’t think this would be quite enough, because at the seminar they heard about the ASFA Retirement Standard, which suggests that a couple will need an annual retirement income of around $56,000 to support a comfortable lifestyle.1 They know they want to travel in retirement, and don’t want to have to scrimp and save, so they came to me to � nd out what they could do to improve their outlook. Peter mentioned to me that a work colleague was topping up his super by salary sacri� cing his standard 5% contribution and still maintaining the same take home pay, and wondered if that would be an option for them.

Peter and Sally’s optionsI explained that as they are so close to retirement, simply adding the extra dollars they would gain as a tax saving through salary sacri� cing their standard contributions wouldn’t be enough to make a signi� cant di� erence to their � nal balance. To illustrate this I recalculated their retirement estimate with this extra contribution, and this showed that their estimated retirement income would only increase by around $1,500 a year to around $46,400.

We then discussed the possibility of making additional contributions to their super, although Sally was initially unsure they would be able to a� ord this. However before the appointment I had asked them to complete a detailed budget. After going through it in depth, I discovered that even by leaving a ‘bu� er’ amount in reserve in case of unexpected expenses, the couple could a� ord to contribute an additional $500 a fortnight. Peter and Sally’s youngest son had recently left home, and Sally hadn’t fully appreciated what a saving that represented in their weekly budget!

By making this additional voluntary contribution before-tax, Peter and Sally could actually contribute almost $750 a

Name: Peter and Sally Age: Both are 55 Annual Salary: Peter earns $75,000 p.a., and Sally earns $60,000 p.a.Current Accumulation account balance: Peter has $350,000 and Sally has $75,000

How do I boost my super before retirement?

Case study corner

By Manjinder AujlaFinancial Adviser

Brought to you by QInvest

Peter earns $75,000 p.a., and Sally earns $60,000 p.a.Peter earns $75,000 p.a., and Sally earns $60,000 p.a.Peter earns $75,000 p.a., and Sally earns $60,000 p.a.Peter earns $75,000 p.a., and Sally earns $60,000 p.a.Peter and Sally


Assumptions: These calculations were made using the QSuper Retirement Income Calculator and the QSuper Salary sacri� ce calculator. 1. The calculation assumes expected net returns of 6.5% p.a. before retirement and 7.55% p.a. in retirement. 2. Wage in� ation of 4% p.a. has been assumed. 3. The calculation assumes a life expectancy of 90. 4. Any applicable Government payments have not been included in this calculation. 5. All results are in today’s dollar. For all other assumptions see qsuper.qld.gov.au/assumptions. The members depicted are not real members and the case study is used for illustrative purposes only.

Peter and Sally’s options ASFA ComfortableLifestyle

ASFA ModerateLifestyle

Annual income:

$56,600

Annual income:

$46,400Annual income:

$45,000

Do nothing

Salary sacri� ce standard

contribution and

recontribute tax saving

Salary sacri� ce standard

contribution, recontribute

and make extra pre-tax contribution

Talk to an expertIf you want quality advice you can trust, contact QInvest today. Our people are experts on � nancial matters including QSuper products.

QInvest has more than 30 advisers based in locations throughout Queensland – why not give them a call today?


1 ASFA Retirement Standard, March 2013 quarter. For more information on assumptions used by ASFA, visit www.superannuation.asn.au.


Plan your retirement paycheck

One popular way to fund retirement is by using your super to buy what is known as an account-based pension – such as the QSuper Pension account. This makes sense in a lot of ways, and not least because you get a regular income to cover your day to day living expenses.

There are also plenty of other advantages. For a start you don’t pay any tax on your super income once you reach 60, and your investment returns are tax-free,1 no matter your age. There’s also the added bene� t that this income is considered more favourably when it comes to assessing how much Age Pension you’re entitled to.2 That is to say you may get more money from the Government than if your money was invested outside of super!

Why the QSuper Pension account?Because we recognise how valuable an income stream account can be to retirees, we o� er our members the award winning QSuper Pension account. This account is constantly rated among the best in Australia by independent ratings companies, and was recently named Pension Fund of the Year.3 Some of the great features of our � exible account include:

� your choice of monthly, quarterly or annual payments

� the ability to withdraw lump sums of $1,000 or more whenever you want in retirement4

� your choice of nine investment options, and no limit on investment switches

� the � exibility to change your payment amount and frequency if your needs change.4

New name, even better productBecause we’re always looking at ways we can make the products and services we o� er members even better, we’re bringing in some changes to the QSuper Pension account over the coming months. The most obvious of these will be a new name – in the coming months this account will be known as the QSuper Income account to better re� ect what members are using it for. Other changes include:

� Automatic in� ation increases – if you wish, we’ll automatically adjust your regular payments at the start of every � nancial year so your income keeps pace with the rising cost of living.

� Control your payment drawdown – giving you greater control over which investment option/s your payments are taken from.

� Reduce paperwork – we’re overhauling our forms to make them simpler, and more user friendly. Over the coming months you’ll also be able to do more of your transactions online.

Make the super smart moveIf you’re 50 or over, our retirement preparation seminar can help you plan for a great retirement.

If you’re getting close to retirement, you’re probably starting to think about how you’re going to keep paying the bills when your salary stops. Your super will probably play a large role but what is the most e� ective use of the super you’ll be able to access when you retire?

1 The Federal Government has recently proposed that tax on returns over $100,000 p.a. be taxed at 15%, however this has yet to be passed into legislation. 2 The Federal Government has recently proposed the deeming rules on pension accounts be brought into line with other types of investments, however this has yet to be passed into legislation. 3 Chant West Connexus Financial Super Fund Awards 2013. 4 Government rules apply around minimum and maximum withdrawal amounts, please refer to the QSuper Pension account Product Disclosure Statement for more information.

Register for you and a friend to attend at qsuper.qld.gov.au/seminars

Introducing QInvest LoanFinder, our new mortage broking service.Another great benefit of your QSuper membership.QInvest’s specialist brokers have access to hundreds of lending products and will go the extra mile to find the best deal for you. Our commission rebate will also save you money so you can pay off your loan sooner. Why not make an appointment today?

50% rebate calculated on the amount of ongoing commission (excluding GST) payable to QInvest. Rebate offer not available to GST-registered borrowers. The credit services advertised are provided by QInvest, not the QSuper Board or QSuper Limited (together the QSuper Group). QInvest is ultimately owned by the QSuper Board (as trustee for the QSuper Fund), however the QSuper Group does not receive any direct payments or commissions from QInvest as a result of members using the LoanFinder service. Members should make their own assessment regarding the suitability of this service for their individual needs.

qinvest.com.au/loanfinder 1800 643 893

Cecilia and Anthony, QInvest clients since 2006

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Name: John and Julie Age: Both are 60 Annual Salary: John earns $75,000, and Julie earns $60,000Current Accumulation account balance: John has $550,000 and Julie has $60,000.Mortgage: The couple has $150,000 outstanding on a $530,000 property. They are making annual payments of $20,186 p.a. which will pay out the loan in 10 years.

Should I pay out my mortgage on retirement?

Case study corner

By Victoria Barlow

Financial Adviser

Brought to

you by QInvest

John has $550,000 and Julie has $60,000. John has $550,000 and Julie has $60,000. John has $550,000 and Julie has $60,000.

mortgage on retirement?

John has $550,000 and Julie has $60,000. John has $550,000 and Julie has $60,000. John has $550,000 and Julie has $60,000.

John and Jul ie

Assumptions for case study: Assumes mortgage interest rate of 5.8% p.a., CPI of 2.5% p.a. and Investment return rate for QSuper Pension account of 6.6% p.a. Annual income calculations include any entitlement to Age Pension, and current Centrelink thresholds and rates have been used. All � gures are in today’s dollars. Past performance is not a reliable indicator of future performance. The members depicted are not real members and the case study is used for illustrative purposes only.

1 ASFA Retirement Standard, March 2013 quarter. For more information on asumptions used by ASFA see superannuation.asn.au

John and Julie’s storyJohn and Julie have just retired and came to me looking for some advice on how they should use their super to fund their retirement. They haven’t made any concrete plans for the future, but know they want to be able to do some travelling and maintain a reasonably good standard of living.

I told them about the ASFA Retirement Standard, which suggests that a couple would need an annual income of around $56,000 to maintain a comfortable standard of living in retirement.1 They agreed that this is the kind of income they would ideally like to maintain after they retire.

Their biggest question was whether they should use some of their lump sum to pay o� their mortgage, or if they would be better o� using the full amount to buy an income stream product and continue making their monthly mortgage repayments from their income.

What are John and Julie’s options?I outlined to John and Julie the impact these two options would have on their retirement income, and also discussed a possible third scenario.

Option 2Convert the entire $610,000 lump sum to a QSuper Pension account and continue mortgage repayments for the remaining 10 years of the loanI discussed with John and Julie that if they took this option, they would need an annual income of over $75,000 for the � rst 10 years of retirement if they wanted to be able to fund an ASFA-de� ned comfortable lifestyle after making their mortgage repayments.I did the calculations for them, and explained that by following this strategy they would only be able to fund a comfortable lifestyle until the age of 76. After this time their funds would be exhausted and they would be solely reliant on the Age Pension.

Option 3Downsize to a smaller property and pay o� their existing mortgage with the sale of their houseDuring our discussion John and Julie realised that they didn’t have enough of a lump sum to be able to service their debt and provide the standard of living they wanted for what would hopefully be a long retirement. They weren’t keen on reducing their income in retirement, so I suggested they could sell their current home, pay o� their mortgage and use the remaining proceeds to buy a smaller property.I would then recommend that they invest their entire superannuation lump sum in an account-based pension such as the QSuper Pension account, which would provide them with their desired annual income of $56,000 until their mid-eighties and beyond. They will, of course, still have to manage mortgage repayments on their current home until it sells.

What did John and Julie do?Following our appointment, John and Julie decided they would rather downsize their home than their expectations for their retirement lifestyle, and they put their home on the market. They would then invest their super funds in a QSuper pension account to ensure a steady income stream to fund their retirement dreams.

Option 1

Make a lump sum, tax-free withdrawal of $150,000 from super to repay the mortgage in full Doing this would save John and Julie over $52,000 in interest repayments over the remaining ten years of their mortgage, and give them certainty with their cash� ow in retirement. I would then recommend that they transfer the remaining funds into an account-based pension, such as a QSuper Pension account, to provide them with a regular income.

I explained that the main disadvantage of this approach would be that by reducing their lump sum they would be limiting investment growth and potential income would also be less. I ran the numbers for them and calculated that using this strategy they should be able to generate an income of $56,000 per year until the age of 78, at which point they would become solely reliant on the Age Pension.


scoopWhat’s the?Here’s the latest round-up of what’s new at QSuper, and for the super industry.Changes to QInvest feesQInvest o� ers quality � nancial advice to QSuper members on a range of topics, including their QSuper bene� t. QSuper contributes towards the cost of personal advice about your QSuper bene� t, but members are required to pay a small part of the total cost – this is called the member co-payment. From 1 November 2013, the member co-payment fees for QInvest � nancial advice will change in response to recently introduced Federal Government legislation. More information on QInvest’s fees can be found at qsuper.qld.gov.au/advice.

Switch limit removedTo give you more control over how your super is invested, we have removed the limit on the number of investment switches you can make each year.1

MySuperMySuper is the name of the Federal Government reforms designed to provide Australians with access to low cost, easy to compare default superannuation products. Employers must have a MySuper product as their default super fund for all employees no later than 1 January 2014. Super funds that wish to accept contributions from employers where a member hasn’t made a choice of fund must have a MySuper product that has been licensed by the Australian Prudential Regulatory Authority (APRA). QSuper will be o� ering

Introduction of binding death bene� t nominations On 1 July 2013, the QSuper Board introduced changes which allow QSuper members to make a binding death bene� t nomination for their QSuper account/s. Your superannuation bene� t does not form part of your estate, so in the event of your death it will be paid as a lump sum at the discretion of the Board, usually to your dependant or to your legal personal representative. However a binding death bene� t nomination allows you to nominate who receives your bene� t in the event of your death.2

You can nominate your legal personal representative and/orone or more of your dependants. However if you do nominate more than one bene� ciary you must specify what proportion you intend each to receive. It is important to note that for your nomination to be valid, all bene� ciaries must still be eligible at the time of your death. A binding death bene� t nomination will be valid for three years from the date it was made, renewed or amended. If you submit a binding death bene� t nomination, the Board will be obliged to pay your death bene� t in accordance with this nomination, provided it is still valid at the time of your death. Therefore it

is important that you review your nomination regularly, and whenever your personal circumstances change. You can renew, amend or revoke your nomination at any time by completing and returning a new form.

More information can be found in the Binding Death Bene� t Nomination form and factsheet. You can download this publication from our website, or call us and we’ll send you a copy.

Changes to Accumulation account transfersFrom 1 July 2013, the QSuper Board is implementing a change to the rules around transfers out of your Accumulation account. If you are a Queensland Government and related entity employee you are now able to transfer amounts related to your Queensland Government employment to another complying super fund while still employed by a Queensland Government or related entity employer. These transfers can only be made once in any twelve-month period, and you must leave a minimum balance of $2,000 in your QSuper account. More information is available in the Accumulation Account Guide.

Important information from the QSuper Board

members the new QSuper Lifetime investment option as our MySuper product. More information about how MySuper may a� ect you can be found on the QSuper website.

Superannuation co-contribution changesThe Government has recently passed legislation to reduce the superannuation co-contribution. The maximum amount you can receive is now $500 per year. To be eligible to receive the maximum contribution your total income must be no more than $33,516. The co-contribution progressively reduces for incomes over this amount. More information about the co-contribution can be found on our website.

2013 Federal BudgetThis year’s Budget contained a few proposals in relation to superannuation. Some have already been passed into legislation and are outlined below.

More information on all the changes proposed can be found at qsuper.qld.gov.au/budget.

Increase of concessional contributions capA transitional cap of $35,000 has been introduced for older Australians. However it is expected that the current cap of $25,000 will increase with indexation, and reach $35,000 for all Australians by 2019. See qsuper.qld.gov.au/contributionscap for more information.

Reform to penalties for exceeding concessional contributions cap Any contributions you make that exceed the concessional contributions cap will be taxed at your marginal tax rate, plus an interest charge. Additionally, you will now have the option to withdraw any excess contributions from your super fund. See qsuper.qld.gov.au/contributionscap for more information.

1 See the Accumulation account PDS for more information on our switching policy 2 QSuper’s governing rules contain provisions for State, Police and Parliamentary accounts requiring the QSuper Board to distribute certain bene� ts automatically to a member’s spouse or eligible children upon the death of a member. These provisions take precedence over an otherwise valid binding death bene� t nomination. Please call us for more information.

QSuper has nine investment options,1 each with di� erent strategies, objectives and risk pro� les. We publish a standard risk measure2 that estimates the probability of negative annual returns over a given period, but the level of investment risk that’s right for you is very individual, and the risks associated with di� erent asset classes can change over time. In this new regular feature, our Investments team provides details of how current market conditions could impact our investment options over the coming two to three years.

Understanding the potential impacts of market conditions on QSuper’s investment options

Risk OutlookTHE INVESTMENT

AUGUST 2013

Past performance is not a reliable indicator of future performance. 1 The QSuper Indexed Mix is closing in December 2013. 2 The Standard Risk Measure (SRM) is based on industry guidance which allows members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20 year period. The SRM is not a complete assessment of all forms of investment risk, for instance it does not detail what the quantum of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. For more information, please refer to the Investment Choice Guide, available on our website or call us and we can send you a copy. 3 Average annual return for the QSuper Cash option for the last ten years has been 4.13% per annum.

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Potential for lower returns than normal.3 The lingering e� ects of the GFC have seen central banks around the globe continue to reduce their cash rates. While the rate in Australia has not dropped to the extreme lows of some countries, it is still below the average for the last decade, and market pricing suggests it will remain so for a number of years. Members who have planned, or are planning, their retirement income around a speci� c cash return should be aware that returns over the next few years may be lower than anticipated.

Likely to be lower than recent strong returns. Another result of low cash rates is lower bond yields. For example, the yield on Australian Government ten-year bonds is currently 3.5% per annum, which is considerably lower than the rate of 6.5% seen in 2008. As yields have fallen signi� cantly, the high returns for this option over the past � ve years are unlikely to be repeated over the next � ve years. While the possibility of negative returns is relatively low, bonds can and do experience losses.

Slow growth and continuing volatility. There are currently a number of issues around the globe that are creating uncertainty for international share markets in the foreseeable future. These include the potential for lower than expected growth in the US, high levels of debt in Japan and the ongoing economic problems plaguing Europe. While returns for International Shares over the last year have been strong, the outlook for this option means that it is likely to experience ongoing volatility.

Cash

Diversi� ed Bonds

International Shares

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QSuper Moderate

QSuper Aggressive

QSuper Socially Responsible

Global volatility and Chinese growth create uncertainty. Although this option is also impacted by the global economic issues outlined above, factors like the Australian housing market and Chinese growth could a� ect the returns of the Australian Shares option over the long term. There is a high concentration of mining and banking stocks in the Australian share market which are sensitive to changes in these economic conditions. Despite recent strong returns, this may lead to increased volatility for this option in the foreseeable future. Australian

Shares

Managing risk through diversi� cation. Our Ready Made options consist of various mixes of the asset classes discussed above, as well as having a degree of exposure to property, infrastructure and alternatives. Because of this, many of the potential market risks already discussed will apply to our Ready Made options (see our website for current asset allocations). For example, around half of the QSuper Moderate option is currently invested in cash, so the challenges associated with cash will be a factor. However the risks posed to both the International and Australian Shares options will be of more relevance for the QSuper Aggressive option, as it’s dominated by equity risk.

The QSuper Socially Responsible and QSuper Balanced (Default) options also have signi� cant equity risk, so they will be impacted by the global economic issues discussed above. These two options also invest in bonds, and although returns are expected to be lower than in previous years, bonds can often perform well when shares do poorly, so having exposure to both may reduce volatility.

All of our Ready Made options have exposure to property, infrastructure and alternative assets, such as shopping centres and airports, which are somewhat exposed to the economic cycle, but traditionally less so than shares. This can help to reduce volatility through exposure to a number of asset classes, which creates a diversi� ed portfolio.

A challenging outlook. Our investment specialists manage our options within ranges set by the QSuper Board, and constantly monitor markets in order to manage risk and identify emerging opportunities.

However the current investment environment poses a number of challenges, highlighting the importance of taking a diversi� ed approach to your investments in order to protect against the risk of too much exposure to any single asset class.

Talk to an expertIf you want advice on an investment strategy that is right for you, contact QInvest today.


For an expanded version, updated quarterly, head to qsuper.qld.gov.au/riskoutlook


Report Card As at 30 June 2013

QSuper investment options 1 year% p.a.

3 year% p.a.

5 year% p.a.

7 year% p.a.

2012/2013

% p.a.

DEFAULT OPTION


9.60% 8.06% 4.51% 4.63% 0.57%

READY MADE OPTIONS

QSuper Moderate 6.96% 6.06% 4.45% 4.55% 0.42%

QSuper Socially

Responsible16.11% 7.31% 4.04% 3.77% 0.90%

QSuper Indexed Mix1 14.26% 8.40% 5.06% n/a 0.34%

QSuper Aggressive 15.32% 9.26% 3.27% 3.71% 0.62%

YOUR CHOICE OPTIONS

Cash 2.55% 3.44% 3.59% 3.89% 0.28%

Diversi� ed Bonds 4.92% 6.02% 8.31% 7.07% 0.36%

International Shares 22.12% 12.72% 3.08% 3.03% 0.28%

Australian Shares 20.11% 7.48% 3.25% 4.17% 0.28%

Investment returns Accumulation account

Managementfees

1 The QSuper Indexed Mix option has only been available to members since 1 February 2008 and returns are based on the period of operation only.

Past performance is not a reliable indicator of future performance. Returns may vary considerably over time. Each of our options has a different objective, risk profile and asset allocation. Visit the Investment options page on our website for more detailed information. Changes to inflation, fees, asset allocations, option objectives and risk play a significant part in the return of any investment option.

Contacting QSuperContact Centres70 Eagle Street Brisbane63 George Street BrisbanePh 1300 360 750+617 3239 1004 (international) Fax 1300 241 602+617 3239 1111 (international)Monday to Friday 8.30am to 5.00pm AESTGPO Box 200 Brisbane Qld 4001qsuper.qld.gov.au

Find us on:facebook.com/qsuperfundtwitter.com/qsuperfundyoutube.com/qsuperfund

SuperRatings does not issue, sell, guarantee or underwrite this product.Chant West has given its consent to the inclusion in this edition of Super Scoop of the references to Chant West and the inclusion of the logos and ratings or awards provided by Chant West in the form and context in which they are included. The Chant West ratings logo is a trademark of Chant West Pty Limited and used under licence. It is only current at the date awarded by Chant West. The rating and associated material is only intended for use by Australian residents within the jurisdiction of Australia and is not permitted to be considered or used by a party outside of Australia.

Important information This information is provided by the fund administrator, QSuper Limited (ABN 50 125 248 286 AFSL 334546) which is ultimately owned by the QSuper Board (ABN 32 125 059 006) as trustee for the QSuper Fund (ABN 60 905 115 063). This information has been prepared for general purposes only without taking into account your objectives, financial situation, or needs and should not be relied on as legal or taxation advice, nor does it take the place of such advice. Any statements of law or proposals are based on our interpretation of the law or proposals as at the time of printing. As a result, you should consider the appropriateness of the information for your circumstances and read the product disclosure statement (PDS) before deciding whether to acquire, or continue to hold, a product. You can obtain a PDS at qsuper.qld.gov.au or by calling us on 1300 360 750. Unless stated otherwise, all products are issued by the QSuper Board as trustee for the QSuper Fund. Where the term ‘QSuper’ is used in this document, it represents the QSuper Board, the QSuper Fund and QSuper Limited, unless expressly indicated otherwise. If you do not wish to be contacted except when required by legislation, please call us.

12 Super Scoop August 2013 © QSuper Board of Trustees 2013. 6206 08/13 50Plus12 Super Scoop August 2013

More information about QSuper’s performance can be found in our Annual Report, which can be downloaded at qsuper.qld.gov.au/annualreport from October 2013. If you would like a printed copy just call us.

2013 Annual Report

At only 13 cents to print a copy, Super Scoop is a great way for us to stay in touch. We also use eco-friendly paper and a Queensland-based printing company that is committed to a high standard of environmental awareness and preservation.

Get up-to-date news on the markets every Monday with the online Weekly Finance Report. You can also get in-depth commentary straight to your inbox every quarter with our Investment Update email.

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