FEBRUARY 2012 FOR MEMBERS AGED 36 TO 49

SuperScoopSuperheroSuperhero

Be your own

Hannah Carter member since 2010

Women and superpage 2

Managing your investmentspage 4

Talking aboutinsurancepage 6

What’s the scoop? page 7

FOR MEMBERS AGED 36 TO 49

Women make up just over half of Australia’s population, yet in 2006 they held only around one third of the country’s superannuation balances.1 Doesn’t really seem fair does it?

Lack of financial equity between the genders isn’t groundbreaking news – there’s been much commentary over the years about the disparity in pay between men and women. And it was inevitable that this would have a flow on effect on super balances, with a report highlighting that average superannuation payments for women in 2009/2010 were just over half that of men.2

One of the main reasons this is happening is that women are much more likely than men to leave the workforce for a prolonged period of time to care for children or elderly relatives. And if you are on leave without pay or leave work

entirely, you won’t be receiving employer contributions to your account. You may then return to the workforce on a part-time basis, which in turn means a reduced super contribution than if you had returned to work full-time. These issues are also compounded by the fact that despite the many victories women have achieved in the workforce over the past few decades, average salaries for women are still lower than those of men.

Add to this the fact that women also need their super to last longer, with the average female life expectancy 4.6 years more than the male3 (and the fact that it apparently costs 4% more to be a woman!4) and the situation does look a little grim.

The good news is the situation is getting better – workplace equality

are on leave without pay or leave work

The average female life

expectancy is 4.6 years longer

than that of a male.3

Be your own

SuperheroSuperheroSuperhero

1. The Association of Superannuation Funds of Australia Limited, ‘Retirement Savings Update’ (2008) written by Ross Clare. 2. ‘Developments in the level and distribution of retirement savings’, ASFA 2011. 3. ABS Australian Historical Population Statistics 2008. 4. Research conducted by Million Dollar Woman, May 2011. 5. ABS Marriage and Divorces Australia 2009. 6. ‘Household and family Projections, Australia 2006 to 2031’, Australian Bureau of Statistics, June 2010. 7. Economic Vitality report, Issue 3: March 2011, Commonwealth Bank. 8. ‘Super-Poor, But Surviving – Experiences of Australian Women in Retirement’, AIST 2011.

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 200Brisbane Qld 4001qsuper.qld.gov.au

Visit our website from March 2012 to download the other versions.

Did you know there are four different versions of Super Scoop tailored to different member audiences?

Important information This information is provided by the fund administrator, QSuper Limited (ABN 50 125 248 286, AFSL 334546), which is wholly owned by the Board of Trustees of the State Public Sector Superannuation Scheme (ABN 32 125 059 006) (QSuper Board). This information has been prepared for general purposes only without taking into account your objectives, financial situation, or needs. 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. All products are issued by the QSuper Board as trustee for the State Public Sector Superannuation Scheme (ABN 60 905 115 063) (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.

Super Scoop February 2012 is printed by a company with ISO 14001:2004 certified processes.

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.

SuperRatings does not issue, sell, guarantee or underwrite this product.

2 QSuper Super Scoop February 2012

Taking seven years out of the workforce costs

women an average of $70,000 in lost retirement

savings.8

Women on average have 20 peak earning years to save for retirement. Men have 40.7

is improving, and more importantly young women entering the workforce now will have a lifetime of superannuation guarantee payments to help build a substantial super balance. Women of the future will in all probability face retirement in a much stronger financial position, but what about the women who are already halfway or more through their working life and are already on the back foot due to broken work patterns?

Going it aloneEven if you’re married, it may pay not to rely solely on your partner’s superannuation. Most couples make the natural assumption that they will pool resources at retirement, and for a significant proportion that will happily be the case. However for many women the statistics are against them. Divorce rates are still relatively high and the median age at divorce is steadily increasing.5

The number of Australian women living alone is growing rapidly and is predicted to rise over 80% to 1.8 million by 2031,6 as the number of financially vulnerable older women is expected to jump dramatically as baby boomers reach retirement age. The Australian Government reports that the superannuation gender gap has led to many women being forced to rely on the Age Pension for their retirement income.

The moral of the story? While you shouldn’t go through life expecting the worst, it can pay to be prepared. Ensure your financial future is secure, and make sure your retirement is prepared for any eventuality.

SuperheroSuperheroSuperhero The good news is there are plenty of things you can do to empower your super.

Make extra contributionsThe Commonwealth Government may reward your super contributions by making a co-contribution on your behalf.

Salary sacrificeDepending on your salary and circumstances, this could allow you to increase your super contributions without affecting your take-home pay.

Review your investment choiceQSuper has nine investment options, so take the time to find out which option, or mix of options suits your circumstances best.

Roll in your superConsolidating multiple super accounts may save you fees as well as make your super easier to keep track of.

Spouse contributionsIf you are not working or are on a low income your spouse could get a tax offset for contributing to your super account.

To find out more about how these strategies work, and what you need to do to implement them, head online to qsuper.qld.gov.au/superhero

Of course you can also call us and talk to one of our friendly Information Officers. They’ll talk through the options you have to grow your super, and how QSuper can help you reach your goals. Your future is in your hands – right now the statistics aren’t great; but by working together, we can make a difference.

actionTake

3QSuper Super Scoop February 2012

Our decision to create an in-house investment team is in line with a broader global industry trend toward internal rather than external management, but it certainly wasn’t a decision made in order to ‘follow the crowd’. Rather, the QSuper Board was looking to take greater control of the strategic investment direction of the Fund, the assets we hold on behalf of members, and the underlying investment manager arrangements.

To successfully manage and direct the Fund’s investments, the Board knows it is essential to have a solid foundation in place. The � rst steps were to enhance the

Investment Committee and add external experts as members, to continue to put in place necessary investment strategies and ensure strong investment governance. A Chief Investment O� cer was then appointed, and one of his � rst priorities was to build the teams needed to manage the Fund’s investments.

Seeing the resultsWe have the right people and processes in place, and can start to see the bene� ts of internalisation. Most easily quanti� able is the reduction in fees that the fund pays as a result of the renegotiation and transfer of investment mandates. Even after taking into account the costs of running the in-house investment

capability, the investment fee savings for 2011/2012 are estimated to be around $30 million, and it is expected that these savings will rise to $50 million for the 2014/2015 � nancial year.

It’s therefore been possible for us to pass on cost savings to members in the form of lower management fees. For example, the management fee for the QSuper Balanced (Default) option decreased from 0.73% in 2008/2009 to 0.66% in 2010/2011.

A disciplined investorTogether, the internal investment governance structure and the considered decision making process allows us the ability to manage our investments in a disciplined way even under extreme market pressure. Ongoing concerns that some European countries will be unable to repay their debts has meant an increase in market turbulence, but

The investment fee savings for 2011/2012 are estimated to be $30 million, and it is expected that these savings will rise to $50 million for the 2014/2015 � nancial year.

INVESTMENTS

In the last couple of editions of Super Scoop we talked a little about the gradual introduction of the internal investment capability at QSuper. This goal was realised last year when our Investments team became fully operational – so what has that meant for the Fund, and your super?solid

foundations

Building on

Securing the best

possible retirement

outcomes for

members is at the

heart of everything

we do at QSuper.

4 QSuper Super Scoop February 2012

the QSuper Investments team has always taken the long-term view and continued to manage your investments in a calm, measured way. Markets are by their nature unpredictable, but our Investments team is con� dent that our long-term approach remains appropriate.

Our experts are also con� dent that there are no major mis-valuations in either the share or bond markets and that markets are liquid. This means not reacting on a day-to-day basis, as our Investments team continually assess, monitor and rebalance investments as necessary with a long term view in mind.

All of our Ready Made options are

pre-mixed from a range of di� erent asset classes, and the Board has set ranges around what percentage of each option can be invested in each asset type [for example the percentage of the QSuper Balanced (Default) option that can be invested in Australian shares must be between 20% - 40%].

So as our investment specialists continue to assess markets and the wider economic environment they will at times recommend that investments are adjusted within these set ranges.

However it’s not just the markets our experts keep an eye on – QSuper’s policy settings are also monitored and assessed

continually. If it’s felt a change to policy is required, the Investments team has the ability to engage with the Board to ensure that a change in strategy can be implemented in a smooth and e� cient manner.

Striving to secure the best possible retirement outcomes for members is at the heart of everything we do at QSuper. Bringing our investment capability in-house is very much a part of achieving this goal, and we will continue to develop processes and strategies designed to help members reach their retirement goals.

settings are also monitored and assessed

QSuper’sinvestmentspecialists The Investments team is made up of investment specialists from a range of backgrounds, including the Reserve Bank of Australia, investment banks and investment managers, and is split up into four smaller teams.

The Investment Strategy team is responsible for assisting the Board in setting the Fund’s investment strategy and asset allocation. They also undertake risk budgeting and research into asset classes and new investments.

The Funds Management team is responsible for researching and selecting external investment managers to manage QSuper’s investments. As well as negotiating contracts with these managers, the team monitors and reviews the performance of these external managers on an ongoing basis and also evaluates potential new managers.

The Capital Markets team is responsible for e� ciently implementing the Fund’s investment strategy. The team’s core responsibilities are rebalancing the portfolio in accordance with the asset allocation ranges set by the Board, implementing foreign currency hedging for QSuper’s international investments and ensuring the Fund is su� ciently liquid to meet its � nancial obligations. The team also manages � nancial risk and tax.

The Policy and Governance team coordinates investment policy advice to the Board, Investment Committee and senior management, oversees investment risk management and compliance, and ensures best-practice governance for the Fund.

Chief Investment Officer Brad Holzberger (left)

with the heads of QSuper’s four investment teams

5QSuper Super Scoop February 2012

Everyone’s talking about…

InsuranceThere are several legal � rms currently advertising their services to help with total and permanent disability (TPD) claims, but is legal help necessary? First of all, what exactly is TPD? Essentially it means that you have incurred a disability, which in the opinion of the QSuper Board (after obtaining advice from at least two medical practitioners) renders you unlikely to ever be able to work again in a job for which you are reasonably quali� ed by education, training, or experience.1

Do I need to have a lawyer to claim total and permanent disability?The short answer is no, as the actual process for applying for TPD through QSuper is generally a straightforward one. To make a claim you must � rst complete the appropriate form located in the back of the relevant QSuper disability bene� t guide. This can be downloaded from our website, or call us and we’ll send you a copy. With your claim you’ll need to supply any medical reports received from your current treating specialist, and you may need to provide more information for your claim to be assessed. You could engage a lawyer to help you complete this process, but in reality if your condition does not meet the criteria for TPD, then you won’t be eligible for the bene� t. It’s also worth remembering that if you enter into a ‘no win, no fee’ arrangement you may lose a proportion of any payment made to you to pay your lawyer’s fee/s.

Some lawyers are also using the ‘get everything you’re entitled to’ pitch in their advertising. However a TPD claim isn’t like a personal injury claim made through the courts, where the amount of payment depends on the severity of the disability. TPD insurance results in a set bene� t being paid if the TPD criteria are satis� ed.

What if I’m not happy with the outcome of a TPD claim – do I have to go to court?No, your � rst avenue is to lodge an appeal to your super fund. If that doesn’t get the result you are hoping for, you may be entitled to appeal to the Superannuation Complaints Tribunal (SCT). The SCT is an independent body that was set up by the Commonwealth Government to be an impartial adjudicator in disputes between superannuation funds and members, and has the power to make � nal decisions on issues. Essentially it’s a free, ‘user-friendly’ alternative to the court system.

For more information on QSuper’s TPD insurance, and other types of insurance we o� er, download a copy of the relevant insurance guide from our website, or call us and we’ll send you a copy.

The QSuper wayWe believe our insurance is an important part of what we o� er members, and our insurance team is here to support you in your time of need. Once you make a claim you’ll be assigned a personal claims manager, so you’ll usually only have to deal with one person. Our claims managers understand that this will probably be one of the most stressful times of your life and are there to o� er support or update you on the progress of your claim. We’ll do all we can to make the claims process as smooth as possible.

INSURANCE

Want additional death and TPD cover?The � nancial security of you and your family is important to us, no matter what stage of life you’re at. That’s why we make it easy to apply for additional insurance cover. If you already have insurance through QSuper, all you need to do is download and complete the relevant application form from the website and request as many units

of cover as you want (up to the applicable

maximum limits).2

1. Additional TPD de� nitions may apply for non-Queensland Government employees.

2. Pre-existing condition limitations do apply and can exclude/reduce the amount of your payment. Download the insurance guide relevant to your situation for more information on these and other eligibility conditions.

Want additional death and TPD cover?The � nancial security of you and your family is important to us, no matter what stage of life you’re at. That’s why we make it easy to apply for additional insurance cover. If you already have insurance through QSuper, all you need to do is download and complete the relevant application form from the website and request as many units

of cover as you want (up to the applicable

maximum limits).2

6 QSuper Super Scoop February 2012

What’s the scoop?

Additionally it is proposed that the upper income limit at which you are still eligible for some contribution be reduced to $46,920 from its current level of $61,920.

Superannuation guarantee age limit abolishedUnder current superannuation rules, Australians aged 70 and over who are still in the workforce are not entitled to receive any superannuation guarantee contributions from their employer. However it is now proposed that this age limit be scrapped from 1 July 2013, potentially bene� ting an additional 51,000 Australians aged 70 and over.

Freeze on concessional contribution caps It is proposed that the indexation of the concessional contributions be deferred until 2014/2015. This means that for the 2013/2014 � nancial year they will remain at $25,000 for members aged under 50,

Increase in the superannuation guarantee This was a measure � rst announced in the 2010 Commonwealth Budget, but only recently passed by the House of Representatives. If passed by the Senate, this bill will see the superannuation guarantee rate (i.e. what your employer contributes to your super account) gradually increase from 9% to 12%. Of course most eligible QSuper members that are employed by the Queensland Government and make standard contributions have been able to access employer contributions of up to 12.75% for many years now.

It is proposed that there be seven incremental increases between 1 July 2013 and 1 July 2019, as shown below.

Year commencing Increase Total

1 July 2013 0.25 9.25%

1 July 2014 0.25 9.5%

1 July 2015 0.50 10%

1 July 2016 0.50 10.5%

1 July 2017 0.50 11%

1 July 2018 0.50 11.5%

1 July 2019 0.50 12%

Change to co-contribution matching rate and thresholds The co-contribution is where the Commonwealth Government matches your personal after-tax contributions (eligibility conditions apply). The maximum co-contribution is currently $1,000, but it is proposed that from 1 July 2012 this be reduced to $500 for people on incomes of up to $31,920.

and $50,000 for members aged 50 and over with an account balance of less than $500,000. Concessional contributions are employer contributions and personal contributions made before tax (e.g. via salary sacri� ce).

It is expected that in 2014/2015 the cap for members aged under 50 will rise to $30,000. For individuals aged 50 and over with account balances under $500,000 it will be $55,000. This pause in indexation will also a� ect the non-concessional contributions cap (contributions made after tax), which is set at six times the ‘aged under 50’ concessional cap.

It’s important to remember!These measures (excluding the proposals to abolish the superannuation age limit and increase the superannuation guarantee) are proposals only at this stage and are dependent on legislation passed through Parliament. The superannuation guarantee legislation is dependent on Senate approval. We’ll keep you updated on current and future proposals on our website and in future editions of Super Scoop.

2013/2014 � nancial year they will remain at $25,000 for members aged under 50,

(eligibility conditions apply). The maximum

website and in future editions of Super Scoop.

Take part in a financial literacy survey and win!At QSuper we’re interested in the � nancial literacy of our members, so we are supporting

a Queensland University of Technology (QUT) School of Accountancy research project

which will examine the association between � nancial literacy and superannuation

investment choice decision-making.

In 2007, QSuper members participated in a similar survey and showed a sound basic

literacy of general � nancial and investment matters. However, the results showed that in

general, the understanding of more complex investment matters such as relative risks and

returns associated with speci� c products wasn’t as sound.

Five years on we’re keen to see what changes there have been in the � nancial literacy of

our members, so everyone who completes the survey will go in the draw to receive one

of ten $20 gift vouchers.

To complete this survey, go to tinyurl.com/qut-� n-survey. Or if you prefer

to complete a hardcopy of the survey, contact (07) 3138 1049 or email

� n_survey@qut.edu.au with your personal details, and a copy will be posted to you.

In recent months the Commonwealth Government has announced a number of measures which could have a signi� cant impact on members.

INDUSTRY NEWS

7QSuper Super Scoop February 2012

INV

ES

TM

EN

TS

QSuper Accumulation account returns

QSuper Balanced(Default)

QSuperModerate

QSuper Socially

Responsible

QSuper Indexed

MixQSuper

Aggressive CashDiversi� ed

BondsInternational

SharesAustralian

Shares

12 month return as at 31 December 2011 2.03% 3.16% -2.67% -0.95% -1.18% 4.02% 6.23% -3.25% -7.74%

3 year return p.a.as at 31 December 2011 7.78% 6.24% 5.00% 8.78% 7.38% 3.90% 8.79% 9.21% 9.60%

5 year return p.a.as at 31 December 2011 1.63% 3.09% -0.47% n/a* -1.06% 4.08% 7.18% -3.5% -0.94%

Unit priceas at 31 December 2011 2.2642 2.0512 2.0353 1.0688 1.7302 1.9351 2.2886 1.4916 1.8889

*The QSuper Indexed Mixed option commenced on 1 February 2008. Past performance is not a reliable indicator of future performance.

About Brad HolzbergerAs QSuper’s Chief Investment Officer, Brad’s role is to oversee and implement the investment policy of the Fund. Before his appointment at QSuper in February 2009, Brad spent 15 years at QIC as an executive in asset management. Brad is a Senior Fellow of the Financial Services Institute of Australasia (FINSIA), and is also a Director of The Association of Superannuation Funds of Australia (ASFA) and a member of its Investment Policy Committee.

All major markets experienced ongoing volatility amid intensi� cation of the European sovereign debt crisis, concern over the high government debt of major economies, and signs of a slowdown in global growth.

While European leaders announced a number of policy measures throughout the December 2011 quarter, it remains to be seen whether they will be e� ective in resolving the two year-old crisis. Doubts had begun to surface when the decision was made by Standard & Poor’s in January 2012 to downgrade nine Euro Area countries, including France. Additionally, France and a number of other countries were placed on a negative outlook, indicating further downgrades are possible. The December quarter also saw a number of major central banks announce additional monetary stimulus to help their economies weather the impacts of the European sovereign debt crisis.

The combination of high public debt and political obstacles were also a problem in the United States during this period. Following months of political deadlock, a Congressional ‘super committee’ � nally agreed on a package of � scal measures

Investment UpdateBrad Holzberger, Chief Investment O� cer, shares his opinion on the � nancial markets and investment performance for the period July to December 2011.

relatively stronger gains as global investors favoured less risky assets during this time.

Looking aheadThe major risks facing the global economy in the year ahead are the sovereign debt and banking problems in the Euro Area. If these risks materialise, it could result in a deep recession for Europe with � ow-on e� ects to the rest of the world, including Australia, through � nancial and trade linkages. The investment outlook is more uncertain than normal due to the role of politics in resolving problems in the Euro Area. As such, we continue to advocate a conservative approach with respect to � nancial market risk taking and will adjust the QSuper portfolio accordingly to balance the risks we foresee with the returns expected from our investments.

which extend an existing cut to payroll tax in the short-term. The Federal Open Market Committee held the cash rate at 0.25% and rea� rmed its view that current economic conditions continue to warrant exceptionally low levels through to at least mid 2013.

Australia, along with most other markets, has been impacted by this � nancial uncertainty which resulted in a decline in consumer and business con� dence. The Reserve Bank of Australia lowered the cash rate to 4.25% in two consecutive moves, re� ecting a softer in� ation outlook following recent weakness in Australia’s labour market and a slowdown in the global economy.

How has this a� ected QSuper’s investment options?Consistent with weaker global share market performance, those QSuper options with greater exposure to equities – QSuper Balanced (Default), QSuper Indexed Mix, QSuper Aggressive, QSuper Socially Responsible, Australian Shares, and International Shares – have generally earned small or negative returns over the past six months. In contrast, the Diversi� ed Bonds option and Cash option recorded

The second half of 2011 proved to be equally as eventful as the � rst half. However, while most major markets experienced moderate gains during the � rst half of the year, global stock markets, including Australia, fell over the last six months of 2011.