super scoop 2008 - for members thinking about retirement · 2016. 10. 28. · really is your...

2008 QSUPER ANNUAL REPORT TO MEMBERS

and your super

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super to suit you

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PLATINUM

C 0M 0Y 0K 60

C 0M 0Y 0K 85

QSuper annual report to members

Doug GolderQSuper member since 1976 Doug joined the police service as a cadet in 1975 and hasn’t looked back since. Currently a senior sergeant, Doug’s duties have taken him to various locations in and around Queensland, including Mt Isa, Maryborough and Bundaberg. ‘It’s a rewarding job, and I feel like I’m helping the community. A good day is when you can help someone and put them in a better position than before. It can be the little things that could make a big difference to their lives.’

Doug’s also a keen advocate for the wider community and is the director of the Police Legacy. ‘Legacy looks after the families of police officers who have lost their lives while on duty, and currently provides financial and other support to around 40 families in Queensland.’

Doug also takes an active interest in his super. ‘The QSuper website is really easy to navigate, and the calculators are fantastic and easy to use. I’m very active and interested in my super so I deal with QSuper a lot, and I always get a really good response from staff when I call with a query.’

4 You’re an individual – super to suit you Tailoring your super to meet your needs

10 Is work the new retirement? Discover the latest retirement trends

11 Transition to retirement Understanding the implications for your super

12 The real value of advice Short-term costs for long-term rewards

2 | Super Scoop 2008

Contacting QSuperContact Centre 63 George Street Brisbane

1300 360 750 +61 7 3404 0928

Monday to Thursday 8.30am to 5.00pm Friday 9.00am to 5.00pm

Postal address QSuper GPO Box 200 Brisbane Qld 4001

qsuper.qld.gov.au

Consent statementAll persons quoted in this annual report have agreed to their comments being published, and have not withdrawn this consent at the date of publication. SuperRatings has given its consent and not withdrawn it in relation to the inclusion of references to its ratings throughout this annual report. SuperRatings does not make, or purport to make, any statement in this annual report other than these references.General advice warningThis publication is issued by the QSuper Board of Trustees (ABN 32 125 059 006) of the QSuper Fund (ABN 60 905 115 063). The QSuper Board is not licensed to give financial product advice. There is no cooling off regime associated with QSuper. The information in this document is not personal advice and has been prepared for general purposes only, without taking into account your financial objectives, situation, or needs. Therefore, before making any decisions based on any information contained in this annual report, you should consider the appropriateness of the information, having regard to your objectives, financial situation, and needs. We also recommend you seek independent financial advice and consider the relevant product disclosure statement (PDS) before you make any decision concerning your benefit entitlements. You can download a PDS from the QSuper website, or call us and request one.DisclaimerAlthough we make every attempt to ensure the information in this document is accurate and up to date at the time of its publication, legislative and other changes after the date of publication may affect the accuracy of some of the information contained in this document. To find out about updated information which is not materially adverse to you, contact us as indicated on this page. The Board of Trustees (the Board) of the QSuper Fund and the State of Queensland do not guarantee the investment performance of the Fund or repayment of capital.

6 Legislative and business updates Providing you with up-to-date industry news

7 Your winning team QSuper Board of Trustees – delivering results

13 We’re moving! Better services for members

19 Financial highlights 2007/2008

QSuper annual report to members

You’re an individual – super to suit you

How much does Super Scoop cost?

Under Treasurer and Chairman of the Board

Year in reviewby Gerard Bradley

1 Past performance is not a reliable indicator of future performance.

8 Market volatility and your super What do recent market losses mean for you?

14 Rising to the challenge QSuper and QIC – creating investment strategies for your future

15 QSuper investment and fees update How recent changes affect you

16 Investment objectives and returns 2007/2008

PLATINUM

C 0M 0Y 0K 60

C 0M 0Y 0K 85

Super funds are required to send members a benefit statement and annual report each year. At QSuper, we also think it's a great opportunity to give you information on how to make the most of your super. And you might be surprised to learn the cost of printing Super Scoop was only 34 cents per copy this year, so it's a very cost-effective way to communicate with you and over 490,000 other QSuper members.

Check out our wide range of case studies inside...

We’ve used the calculators on our website at qsuper.qld.gov.au to calculate figures used in these case studies. Each calculator on the site shows the assumptions and methodology used to make the calculations.

case studies lift-out

CASE2008 SUPER SCOOP CASE STUDIES LIFT-OUT

Tax-free super Boosting your balance Getting the right advice How much is enough?

case studies including…

About the case studies in this lift-out

2008 QSUPER ANNUAL REPORT TO MEMBERS

and your superMarket

super to suit you

realof advice

The

You’re an

PLATINUM

C 0M 0Y 0K 60

C 0M 0Y 0K 85

Super Scoop 2008 | 3

The past year has been a tumultuous one, with sharemarket volatility causing uncertainty for some members as they have watched their super suffer much lower returns. This year’s downturn is a natural part of a financial cycle, and while it can be distressing when it happens, our returns over the longer term show that it is important not to panic and to keep the big picture in mind. In fact, the long-term results have remained solid, with an average return of 10.56% per annum for our Balanced option over the past five years.1 You’ll find more information on this year’s volatility and what it means for your super in the articles on pages 8 and 14.

Super to suit youWhat’s really important is to ensure you’re contributing as effectively as possible to your super and taking the actions that best suit your

current situation and retirement goals. There’s an article on page 4 that can help you tailor your super to your needs. We’ve

also included a case studies lift-out showcasing how QSuper members just like you can make the most of their super.

Always innovatingAt QSuper, we are always evolving to meet the demands of

our members. In February this year the Board introduced a ninth investment option, Basic Growth. The Basic Growth option is

designed for people who want exposure to traditional growth assets such as shares and property, but who may not value the diversification benefits of alternative assets. This option may be suited to members with Accumulation or Allocated

Pension accounts who are looking for a low-cost investment choice, and are prepared to accept short-term fluctuations in the

value of their investment due to a less diversified asset mix (relative to the Balanced option). More information on the Basic Growth option is available on our website.

We work hard to ensure we offer you the best possible products and services, so we’re delighted that both our Allocated Pension and Accumulation accounts have been awarded a Platinum rating by leading ratings company SuperRatings.

We are also currently considering the option of becoming a regulated fund, a process which we began last year, and you’ll find further information on our progress on page 6.

AcknowledgementsThe Board appreciates the support of the Auditor-General of Queensland, and would like to thank its major service providers, including QSuper Limited, QIC, Q Invest, Watson Wyatt, Ernst & Young, and the State Actuary.

You’re an individual – super to suit you

QSuper annual report to members4 | Super Scoop 2008

For many people retirement is still some time away, while for others it’s already here. But no matter what your stage in life, there are some simple steps you can take to tailor your super to better meet your needs.Just as everyone’s financial circumstances and expectations are different, so too is your super. There’s no one-size-fits-all approach, and what’s right for one person may not necessarily be the best option for another. But knowing your options and making the choices that are right for you can ensure you get the most from your super in retirement. While there are a wide variety of options to choose from, the good news is that tailoring your super to suit your circumstances can be much simpler than you think. Just making small changes could help you maximise your entitlements and enjoy a better lifestyle in retirement.

Consider your contributions Contributing extra money to your super is an effective way of boosting your balance, but there are ways to top up your account without breaking the budget. A strategy that can be effective for people with a taxable income greater than $34,000 is salary sacrificing. By deducting your super contributions from your salary before income tax is applied, you can reduce

your total taxable income. This means you are paying less income tax, which may increase your take-home pay. By putting the little extra you gain back into your super, you can boost your balance while keeping the same take-home pay you had originally. You should remember that you may pay tax on the money contributed to super via salary sacrifice if you withdraw it before the age of 60.

A little goes a long wayWe understand it can be a challenge putting away extra money towards super. So why not use other sources of funds that you won’t miss, like a tax return or pay increase? Even increasing your contribution by as little as $20 a fortnight could make a big difference in the long term. Also, if you are a Queensland Government employee and not making the full 5%1 standard contribution, increasing your standard contribution will also mean you receive a higher employer contribution.

It’s important to remember that any money you contribute to your super cannot be accessed until you reach your preservation age (see our website for more details).

Depending on your income,2 you might also be eligible for the Commonwealth Government super co-contribution. If your income for 2008/2009 is $30,342 or less, the government will contribute $1.50 for every $1 you contribute, up to a maximum of

$1,500 per year. This amount progressively reduces as your income goes up, and phases out completely when your earnings reach $60,342. You’ll find more information about co-contributions on our website.

Your investment options We recognise our members have different attitudes to risk and return, and that’s why QSuper offers nine investment options to choose from. This means that if you have an Accumulation or Allocated Pension account, you can choose how your super is invested to suit your needs and objectives.

Once you’ve considered your financial situation, investment goals, and attitude towards risk, you can mix your options and customise your super exactly the way you want. If you would like more help in figuring out your attitude to risk and return, you can check out the risk profiler quiz in our Investment choice guide.

super to suit youYou’re an

Julie BerryQSuper member

since 1981

Cash Plus

Socially Responsible

High Growth

Basic Growth

Balanced

Cash Fixed Interest

Australian Shares

International Shares

Ready Made

Your Choice

Choose from 9 investment options!

You’re an individual – super to suit you Super Scoop 2008 | 5

Bringing it all togetherIf you’ve had several different jobs it’s common to have super accounts with more than one fund. Rolling over all your accounts into one place can mean you pay less in fees, and will make it easier to keep track of your super. However, you should check with your other fund to see if they charge any exit fees or if you lose any insurance cover. Rolling over your other super to QSuper is easy – all you have to do is complete an Easy transfer form, which you can download from our website.

Transition to retirementTransition to retirement is a relatively new strategy that allows people who have reached their preservation age (i.e. 55 for those born before 1 July 1960) to draw on their super while still working. It can also be a tax effective way for members who salary sacrifice to boost their super – especially for those aged over 60, when withdrawals from super become tax-free. There’s more information on transition to retirement in the article on page 11, and on page 4 of the lift-out.

QSuper helps you reach your goals Having an understanding of your super and the many choices available to you is an important step in managing your future lifestyle – which is why educating our members on super and financial issues is one of our top priorities. We offer a wide selection of handy information and tools, such as guides, fact sheets, newsletters, and online calculators. We also hold over 500 seminars each year throughout Queensland, covering a huge range of superannuation and investment topics. So no matter what your situation, we have the right resources to help you.

Benefits of financial adviceYou might also want to consider getting advice from a financial adviser, who will be able to take a good look at your personal situation and see exactly what strategies can work best for you.

We understand how important financial advice can be, which is why the QSuper Board facilitates access by QSuper members to affordable personal financial advice from Q Invest.3 Q Invest advisers specialise in helping people employed in the Queensland public sector. If you would like to discuss your personal goals and options with a qualified adviser, please call Q Invest on 1800 643 893 or visit their website at www.qinvest.com.au.

Take action todayYou’ve worked hard to get to where you are, and now it’s time for your money to work hard for you. Planning in advance and creating a personal strategy can help you get the most from your super and other investments and put you on the path to financial security. So whether you have many years left in the workforce, are preparing for retirement, or have already retired and want to make sure your funds last the distance, it’s important to take action today – your financial future is in your hands.

Understanding your super and the choices available to you is an important step in managing your future lifestyle.

OVER 500 SEMINARS AROUND QUEENSLAND

Be guided and inspired by our expert QSuper tour guides. Don’t get off track, or miss out on the best your super has to offer.

>> RESERVE YOUR SEAT at qsuper.qld.gov.au

>> OR CALL US ON 300 360 750

The strategies in this article may or may not be an effective financial strategy for you, depending on your particular financial circumstances. You should seek financial advice prior to making any decisions concerning these strategies, and consider the relevant PDS.

1 6% for police officers. 2 Income means assessable income plus reportable

fringe benefits. Please note: the Commonwealth Government has proposed to expand the definition of income from 1 July 2009 to include certain types of salary sacrifice contributions, which could mean you may not qualify for the co-contribution in future years.

3 Q Invest Limited (ABN 35 063 511 580) (‘Q Invest’) AFS licence 238274. Q Invest is jointly owned by the QSuper Board of Trustees and QIC. QSuper and QIC do not accept responsibility for the financial advice or services provided by Q Invest, which is a separate legal entity.

Jeff GarnettQSuper member

since 1965

legislation. You may be asked in certain circumstances to provide QSuper with proof of identity.

Bankruptcy ActThe Bankruptcy Act 1966 now provides for the administrator handling a bankrupt’s affairs to recover certain contributions from a bankrupt member’s superannuation account. The administrator can only recover contributions that have been paid into superannuation after 28 July 2006, and that were paid with the intention of keeping the money from the bankrupt’s creditors.

So that the administrator can recover these contributions, the QSuper Board has the power to ‘freeze’ a member’s superannuation account, and pay an amount from the member’s account to the administrator. However, the QSuper Board can only exercise these powers on direction from the Commonwealth Government or a court. If the QSuper Board is directed to freeze a member’s account, or pay an amount from a member’s account, the member will be notified.

New preservation cashing condition QSuper regulations have recently been amended to provide a new preservation cashing condition for your super. If a member has a terminal medical condition they may be eligible to access their preserved super benefits tax-free. For more information see our website or give us a call.


Insurance gets even better!

QSuper is pleased to announce further improvements to our insurance arrangements. We’ve always been committed to providing members with the best possible coverage, and now the cover we offer is even better! For members with an Accumulation account who are employed in the Queensland public sector, or those with a Defined Benefit account who have taken out extra insurance units, premiums for death and total and permanent disability (TPD) still remain at $1 per unit per week ($2.75 for police officers). However, the value of insurance units has increased for most members under age 59. Someone aged 47 will now receive $29,000 per unit – an increase of around 18%.

Because we recognise how important it is to know you and your family would be financially secure should the unforeseen happen, we’ve also increased the maximum allowable death and TPD insurance to $2 million ($1 million for casual employees). We’ve also improved our income protection offering1 by again decreasing premiums – meaning you still get the same cover, but for less. So you can rest assured these changes will continue to keep you covered 24 hours a day, 7 days a week.2

Check out our website for more information about income protection premiums and the value of units for death and TPD cover.

Defined benefit notional taxed contributionIn last year’s Super Scoop we updated you on the Commonwealth Government’s

Better Super initiatives, which included the introduction of contributions caps. If you have an Accumulation account, measuring your contributions against the caps is as simple as adding up all your concessional (generally employer and salary sacrificed) and non-concessional (generally personal after-tax) contributions.

In defined benefit-style accounts, however, a formula is used to calculate the amount attributed to the concessional contributions cap, called the notional taxed contribution (NTC). This is because employer contributions for a defined benefit aren’t allocated to individual members, but to a pool of funds from which benefits are paid. Transitional arrangements apply as at 5 December 2006. More information can be found in the Options section of our website.

Regulation updateThe QSuper Board of Trustees is currently considering the process of becoming a regulated fund. We began this process last year, and discussions with the relevant Commonwealth bodies are ongoing. We are also looking at being able to cater for members who have left Queensland Government employment, but want their new employer to contribute to their QSuper account. We will, of course, keep you fully updated via our website.

Anti-money laundering measuresThe Commonwealth Government has introduced legislation to make sure Australian financial organisations introduce procedures to deter people from using their services to launder money or finance terrorism. We are currently enhancing our identification process as part of our program to meet the requirements of the anti-money laundering/counter-terrorism financing

and business updatesLegislative

1 Police officers, casual employees, and members with superannuation guarantee arrangements do not have income protection cover.

2 In the first ten years of cover, the insured benefit will not be paid if the cause of your death or disability is related to a medical condition that existed before the cover started. This year’s Commonwealth

Government Budget contained no major superannuation reforms, but there’s still plenty of other changes you need to know about.

Super Scoop 2008 | 7You’re an individual – super to suit you

Your winning team

Steve RyanPresident, Queensland Teachers’ UnionAppointed: June 1994

Gay HawksworthState Secretary, Queensland Nurses’ UnionAppointed: December 2007

Tom JeffersVice President, Australian Workers’ UnionAppointed: August 2007

Karen PeutRepresenting the Queensland Public Sector Union of EmployeesAppointed: May 1985

Bob ScheuberFormer Chief Executive, Queensland RailAppointed: December 2007

Peter HennekenDirector General, Department of Employment and Industrial RelationsAppointed: December 2007

Terri HamiltonDirector, Terri Hamilton Financial ServicesAppointed: June 2000

Natalie MacDonaldDirector General, Department of HousingAppointed: December 2007

Gerard BradleyUnder Treasurer and Chairman of the BoardAppointed: August 1998

The QSuper Board of Trustees is responsible for the operation of QSuper and has a particular focus on the future development of the Fund. Meeting 11 times in the 2007/2008 financial year, the Trustees made decisions about important issues, and closely supervised the management of QSuper. The Board is established under the Superannuation (State Public Sector) Act 1990, which was recently amended to expand the number of Trustees from ten to twelve in recognition of the growing size and importance of QSuper. The Board is now made up of six members who are selected by the Queensland Government, and six members nominated by public sector unions. The appointment of a representative of the Queensland Nurses’ Union also recognises that the employees of Queensland Health make up a substantial proportion of QSuper members.

After providing years of valuable contribution and dedication, QSuper farewelled Linda Apelt, Tony Hawkins, Garry Ryan, Chris Barrett, and Gary Wilkinson (and his deputy Merv Bainbridge). We would like to thank each of the former Trustees for their hard work and commitment over the years.

As a result of these changes, six new Trustees joined the Board. They were appointed based on their experience and integrity. QSuper would like to warmly welcome Peter Henneken, Natalie MacDonald, Bob Scheuber, Tom Jeffers, and Gay Hawksworth. QSuper would also like to thank Denis Fitzpatrick, who was appointed in August 2007, but due to changing work circumstances resigned in June 2008.

As QSuper continues to evolve to meet the demands of both our members and an ever-changing super industry, you can rest assured that our experienced and knowledgeable Trustees are confidently guiding the Fund into the future.

The Trustees of QSuper are known as the QSuper Board of Trustees of the State Public Sector Superannuation Scheme (ABN 60 905 115 063). The Superannuation (State Public Sector) Act 1990 provides for the indemnification of the Board of Trustees. The Board has a level of indemnification that is consistent with Commonwealth superannuation laws and other state legislation.

(nominated by the Combined Public Sector Union Superannuation Committee)

(nominated by the Queensland Government)Member representatives Employer representatives

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You can rest assured that our experienced and knowledgeable Trustees are confidently guiding the Fund into the future.

Meeting attendance record

John CarpendaleFormer superannuation fund executiveAppointed: June 2006

This position will be filled in the coming months by a nominee of the Queensland Council of Unions.

Position to be filled

Position to be filled

This position will be filled in the coming months by a nominee of the Queensland Council of Unions.

* Garry Wilkinson‘s deputy, Merv Bainbridge, attended Board meetings. Number of Board meetings attended

Number of Board meetings the Trustee was eligible to attend Super Scoop 2008 | 7


and your super

Many experts say it’s all about time in the market, not timing in the market. So before making any decision to switch, we recommend you seek financial advice.

It’s all about the long termRecent years have seen healthy returns for super funds, but as the saying goes, what goes up must come down. Pulling out of your investment when the markets are falling may be to your disadvantage, especially if you bought when the price was high.

It isn’t unusual for investments in shares to occasionally see negative returns, but it is important to step back and look at the bigger picture.

The graph below shows historical events, such as world wars, recessions, and sharemarket crashes, that have affected the Australian sharemarket in the past – in several cases much more seriously than the sub prime crisis – and each time the market has recovered and continued to grow steadily.

Volatile domestic and international sharemarkets have been big news throughout the year, and super funds have not been immune to the volatility. If you have an Accumulation or Allocated Pension account you are probably seeing a negative return on your statement for the first time in several years. But what does it really mean for your super in the long term?You have most likely heard of the United States’ sub prime crisis that sent shockwaves through markets around the world. The result was lenders being less willing to lend, and interest rates rising sharply to cover perceived risks and to curb overspending.

This has created a great deal of volatility, and many super funds across Australia have suffered negative returns. Seeing negative returns for your super can be upsetting, but it’s important not to panic. For many people the knee-jerk reaction might be to withdraw funds or switch to a lower risk investment option. However, super is a long-term investment, and attempts to choose the best investment for short-term results are rarely successful.

Market

Jim WaldronQSuper member

since 1973

Australian shares since 1900

Source: QICYear

8192409620481024

51225612864321684 Major sharemarket falls shown in brackets

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

All Ords price index

Start of WWI(-22.4%)

1929 crash(-46%)

WWII(-32%)

Credit squeeze(-23%)

1987 crash (-50%)

Bond crash (-23%)

Sub prime crisis (-24%)

Vietnam War

Recession(-32%)

1998 Liquidity

crisis

Tech wreck(-22%)

OPEC crisis/stagflation(-59%)

Korean War boom/Wool bust

(-34%)Sep 11 attacks


We’re looking out for youAlthough many of the factors which influence the performance of investment markets are out of our control, we are constantly working to provide as much protection as possible for your super during the ‘bad times’. Over the past two years, we have reduced our allocation to equities and raised our investments in unlisted assets in an effort to reduce the impact of listed market volatility. We have also been offering greater diversification, and alternative investments have been a feature of some of our options since July 2006.

The Board places the utmost importance on our investment performance, and has been monitoring the situation very closely. In fact, from 1 July 2008 the Board has approved changes to the strategic asset allocations of three of our investment options to take advantage of emerging opportunities and diversity – see page 15 for more information.

Still going strongThe short-term losses may seem worrying when they happen, but it’s important not to panic – when it comes to your super, it’s the long-term results that count. Our experts are working hard developing strategies to get you the best possible long-term results, and as a result the five-year return for our Balanced option is a very pleasing 10.56%. And QSuper members have more to smile about than most. According to industry research released earlier in 2008, our Balanced option outperformed nearly all the researched balanced investment options of Australian superannuation funds over a five-year period, ranking as one of the top three performers.1

In addition, for the second year in a row, SuperRatings has awarded our Accumulation and Allocated Pension accounts Platinum ratings – the highest possible – which puts their overall performance in key assessment areas in the top 15% of researched Australian funds. It positions us as one of the best value for money funds in Australia, reinforcing our commitment to keeping fees low. We are able to provide outstanding value for our members, with some of the lowest management fees of any super fund in Australia.2

This is because QSuper is a very large fund, with around $25 billion in funds under management and over 490,000 members, so we are able to use our size to negotiate lower fees with external providers, such as investment managers.

So while we might not be able to control overseas and domestic markets, we can ensure your money isn’t eroded by unnecessary fees.

1 Top 10 Super Returns per annum for 5 years ending 29 February 2008, SuperRatings. 2 SuperRatings 2007.

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QSuper Balanced option performance 1998 – 2008

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Past performance is not a reliable indicator of future performance.

Investor emotions move through cycles along with the market. As shown in the graph to the right, the returns from the Balanced option closely mirror the cycle of investor emotions. Unfortunately the high and low points of the market are only obvious after the fact, which highlights the importance of obtaining financial advice, having a long-term strategy, and not letting your emotions guide your investments.

Seeing negative returns for your super can be upsetting, but it’s important not to panic.

The cycle of investor emotions

The Board places the utmost importance on our investment performance, and has been monitoring the situation very closely.

PLATINUM

C 0M 0Y 0K 60

C 0M 0Y 0K 85

7.21% is the 10-year compound average annual return!


In the past the pattern of working life has been a very cut and dried affair, but the new millennium has seen a huge shift in attitudes towards both work and retirement.Just as the majority of younger workers no longer see the appeal of staying with one company for 40 years, today’s retirees and baby boomers are increasingly rejecting the retirement path of their parents.

In fact, recent research conducted by Citibank1 discovered that 62% of over 55s are planning to keep a hand in the workforce in some form or another, while 29% have no plans to retire at all.

Stay a little longerPart of the reason behind this general shift in attitude is, of course, financial. Life expectancies have increased by 40% in the past century alone, and that means the average superannuation balance has to stretch a lot further. Staying in the workforce longer has the dual effect of giving you longer to accumulate a sufficient nest egg, and reducing the length of retirement time this nest egg needs to last. Although many people are currently able to access their super at 55, working just a few more years can make a difference to the end result.

Similarly, working part-time or cycling in and out of paid work throughout your 60s, and even into your 70s, can give you extra cash to enjoy a more active lifestyle, and help boost your savings for later retirement.

Keeping busyBut there’s more to this trend than financial necessity. A 60-year-old retiring today realistically has around 25 years of retirement ahead of them, and for some that’s a few years too many of nothing more than gardening or golf! In fact, 78% of the over-55s surveyed by Citibank cited mental stimulation as one of the biggest motivators of working in some form past the traditional retirement age.

Respected social researcher Hugh Mackay, in his book Advance Australia… Where?, also puts this shift in attitude down to increased life expectancy and the fact that baby boomers feel younger than their parents did at a similar age. They perceive a continued participation in the workforce as a sign that they’re ‘not finished yet’. He goes on to highlight that a part-time job of less seniority and intensity has come to symbolise vitality and effectiveness for the current generation of retirees. He also puts forward the term ‘refocusing’ as being more representative than ‘retirement’ in summing up most baby boomers’ attitudes to this period of their life.

Refocus is in many ways an apt word, because this period of life gives you plenty of opportunity to focus on the things you really enjoy doing, and even turn them into a way of making money. Many people are now using their retirement from their ‘regular’ job to take the chance to try something new – retraining as a therapist or florist, opening a café, setting up a consulting business, or tutoring. It may be a cliché, but the world really is your oyster!1 Citibank Retirement Index, 2007.

Loraine EdwardsQSuper member

since 1995

Is work the new

Visit us at theBrisbane Retirement and Lifestyle expo at the RNA showgrounds 17-19 October 2008

Many people are now using their retirement from their ‘regular’ job to take the chance to try something new.

Are you missing out?Many people use transition to retirement as a tax strategy to boost their super, and the key to this is salary sacrificing. However, many people who are salary sacrificing are missing out on additional money from the Commonwealth Government in the form of the super co-contribution.

It’s important to remember that salary sacrificed contributions will not count towards the super co-contribution, so if you do earn less than $60,342, or if salary sacrificing reduces your taxable income below this amount, you may want to consider making a personal after-tax contribution.1

Don’t get penalisedIf you are salary sacrificing back into your super, you also need to make sure you don’t exceed the concessional contributions cap. Concessional contributions generally include your salary sacrificed contributions (both standard and voluntary) and employer contributions.

If you exceed the concessional contributions cap your super contribution will be taxed

at the top marginal tax rate plus the Medicare levy (an additional 31.5% on top of the original 15% paid on entry). Excess amounts will also be counted against your non-concessional contributions cap (money contributed after tax). You’ll find information about the contribution caps on our website, or give us a call.

Ask a specialistWhatever your current circumstances, we recommend seeking personal financial advice before starting a transition to retirement strategy. The QSuper Board facilitates access by QSuper members to affordable personal financial advice from Q Invest,2 who specialise in helping people employed in the Queensland public sector. To make an appointment to see a Q Invest adviser, please call 1800 643 893.

1 Please note: the Commonwealth Government has proposed to expand the definition of income from 1 July 2009 to include certain types of salary sacrifice contributions, which could mean you may not qualify for the co-contribution in future years.

2 Q Invest Limited (ABN 35 063 511 580) (‘Q Invest’) AFS licence 238274. Q Invest is jointly owned by the QSuper Board of Trustees and QIC. QSuper and QIC do not accept responsibility for the financial advice or services provided by Q Invest, which is a separate legal entity operating under its own Australian Financial Services licence.

Understanding the implications for your super

If you have reached your preservation age (i.e. 55 for those born before 1 July 1960), a transition to retirement strategy allows you to start accessing your super to replace or subsidise your existing income while you’re still working, and can be very beneficial when used effectively. However, research conducted by QSuper found some members may not be using it to their best advantage.

Supplementing with superSome people use a transition to retirement strategy when considering moving to part-time work, as they can then use an allocated pension to top up their salary. You should, however, be very careful when doing this, as drawing on your super without replacing it could mean that you’ve eaten up a significant amount of your retirement benefit before you even retire.

Defined Benefit accountsIf you have a Defined Benefit account, your salary is reported to QSuper each 1 July. So, if you receive a salary increase you should keep in mind that it will not be reported to QSuper until the following 1 July.

If you are over 54, your benefit is calculated using a time-weighted average of your last two 1 July salaries (final average salary). This means you would have to remain on a higher salary until the following July to have your new salary fully reflected in the calculation of your benefit. Therefore, the value of any tax benefits you may get through a transition to retirement strategy may not be as great as your future defined benefit growth.

Working full-time and with no plans to retire in the near future, Greg has recently found a passion for sailing on the weekends. Greg decides to start a transition to retirement strategy. This gives him extra money on top of his salary, which he uses for his new hobby.

Although this strategy may provide Greg with some funds to provide lifestyle improvements, it also means he is draining his super. So when he does come to retire his benefit may be significantly less. This may not have been the best strategy for Greg, and he could have benefited from seeking some personal financial advice.

Transition to retirement strategies are becoming more popular with members getting close to retirement age. However, if you’re not sure how it all works, you could do your super more harm than good.

Transition to retirement


Greg Occupation: Workplace training officer Age: 56 Current benefit: $250,000

Greg’s story

Drawing on your super without replacing it could mean that you’ve eaten up a significant amount of your retirement benefit before you even retire.

Financial advice. It’s one of those things many of us think about, but for one reason or another most of us just never get around to it. In fact, research conducted by the Financial Planning Association of Australia (FPA) discovered four out of five of us haven’t taken the step of seeing a financial adviser.1

What makes this figure really stand out is a survey conducted by Galaxy which indicates that nine out of ten Australians who did see an adviser benefited from the experience.2 When you look at these findings together, it suggests there’s a lot of people out there who are potentially missing out.

Money, money, moneyBut why are so many of us reluctant to seek financial planning advice? In many cases it’s a simple answer – money. Financial advice is perceived to be costly and in some cases it’s not an unjustified view, with a complex plan costing an average of $3,600.3 The key, however, is not to focus on the short-term cost but on the long-term benefit.

Rice Warner Actuaries recently undertook a study evaluating the value of advice, and as part of this assessed eight real-life case studies provided by the FPA. These case studies covered various scenarios, including a retired nurse, a post-retirement inheritance, a pre-retirement plan, and a wealthier family building wealth. But what they all had in common was that the value added from seeking advice was huge in comparison to the ongoing costs of the advice. In fact, the calculated value gained as a result of the advice was a combined $1.7 million for the eight case studies. How different could your financial situation be in ten years if you sought professional financial advice today?

a good financial plan. The Galaxy survey identified several key intangible benefits, including peace of mind, greater control of finances, and the prospect of a more comfortable retirement.

Understanding the advice processOnce you’ve taken the decision to get financial advice, it’s important you understand the process so you get every possible benefit from it. The FPA has an established six-step process that all professional advisers follow with every new client:

When to get advice?There are many different ways value is added by a financial adviser, including:

debt restructuring

cashflow management

goal setting

budgeting

tax management.

The important thing to remember is that financial advisers don’t just help people with a large amount of money to invest. Financial advice is primarily about setting a strategy that suits an individual, and a good financial adviser will fully review your situation and help you with issues such as debt management, wealth creation, retirement planning, and insurance.

Seeing an adviser can be beneficial whatever your stage of life, although there are some specific occasions when seeking financial planning advice may be of particular help, including:

receiving an inheritance

changing jobs

getting married or divorced

paying off your mortgage

retiring.

The emotional benefitsFor many people, good financial advice provides an emotional value that comes from the peace of mind associated with having

of adviceThe real


Gather financial information about the client.

Identify any financial issues.

Identify financial and lifestyle goals.

Prepare a financial plan.

Implement the plan.

Review and revise the plan at regular intervals, or when

circumstances change.

1.

2.

3.

4.

5.

6.


We’ve outgrown our building in George Street and will be moving to new premises later this year. This means we will be centrally located in one building and the modern layout will enable us to efficiently house staff.

Central Plaza 3 at 70 Eagle Street will feature a modern Contact Centre on the ground floor, and because of the space savings we gain in moving to the new building, the entire first floor will be dedicated to a seminar and member education facility. In the future, most of our Brisbane city seminars will be run from here.

There will be no change to our Contact Centre phone number, and our current Contact Centre at 63 George Street (corner of George and Mary Streets) will remain, providing you with even more convenience in the city.

However, it’s important you understand it’s a two-way relationship, and to get the best results you need to do some work, too! Before your initial appointment you may be asked to fill in a lifestyle questionnaire, which may be time consuming, but really is worth the effort. This is the information your adviser will use to complete steps two to four, so if you don’t take the time to fill it out properly, the only person who loses out is you.

A question of feesYou also need to make sure you’re aware of your adviser’s fee structure. There’s no single set way of charging fees – some have an upfront set fee, some charge by the hour, and others take a commission based on the funds you invest. You should always discuss fees with your adviser, and make sure you fully understand and agree with the fees being charged.

Trailing commissions Something else to be aware of is trailing commissions. A trailing commission is a percentage of the investment that is paid by the investment fund’s manager to the financial adviser every year, regardless of whether or not you receive ongoing advice from the adviser. The commission is paid as a percentage of your total investment per year – ranging from 0.10% to over 1%. Over the years this can really add up, so make sure you are aware of the true costs of any investments recommended.

Check out the case study on page 6 of the lift-out to see how to compare adviser fees.

Robert WilsonQSuper member

since 2006

How to find the right adviser for youSo where do you go to get advice on where to get advice? The FPA is a great place to start (www.goodadvice.com.au), and the ASIC consumer website (www.fido.asic.gov.au) allows you to check who holds a licence or is an authorised representative.

We understand how important financial advice can be, which is why the QSuper Board facilitates access by QSuper members to affordable personal financial advice from Q Invest.4 Q Invest advisers specialise in helping people employed in the Queensland public sector. You can consult a Q Invest adviser over the phone or face to face. Because the QSuper Board of Trustees subsidises the cost of Q Invest advice about your QSuper benefit, the most you’ll pay for QSuper related advice is $275, which can be deducted from your QSuper Accumulation or Allocated Pension account.

And don’t worry about trailing commissions – where Q Invest could receive them, they are rebated straight back to you. For more information about Q Invest, or to make an appointment to see an adviser, please call 1800 643 893, or check out their website at www.qinvest.com.au.1 FPA Consumer Attitudes to Financial Planning study 2007.2 Galaxy Research, March 2007.3 Based on FPA research of its own members.4 Q Invest Limited (ABN 35 063 511 580) (‘Q Invest) AFS

licence 238274. Q Invest is jointly owned by the QSuper Board of Trustees and QIC. QSuper and QIC do not accept responsibility for the financial advice or services provided by Q Invest, which is a separate legal entity operating under its own Australian Financial Services licence.

Some planners will have a Certified Financial Planner™ (CFP®) certification from the Financial Planning Association of Australia. The Australian Securities and Investments Commission (ASIC) also sets certain licensing and rigorous training requirements for individuals to become financial planners. To then continue practising, financial planners must also undertake ongoing professional development training.

Qualified to give advice?

™® Financial Planning Association of Australia

We’re moving!

Q Invest opened a new office at Chermside in July. Q Invest has two offices in Brisbane and offices in six regional centres throughout Queensland. This new office will provide even more accessibility for our Brisbane members, providing the convenience of advice when and where you need it.


In a year dominated by the credit crisis and the subsequent volatility in financial markets, the returns for most QSuper investment options were lower (and in many cases negative) for the financial year. While the past year’s returns were disappointing, members should be comforted by the solid longer-term returns achieved over the past five years (see page 16 for details).

This achievement is the result of the very strong relationship over many years between the QSuper Board of Trustees and QIC. Through this constructive and collaborative relationship, QSuper members will continue to benefit from a number of innovations. Initiatives in recent years which have had tangible results for members include:

• Managing investments to maximise after-tax returns.

• Increasing the diversification of the QSuper Balanced, High Growth, and Cash Plus investment options by investing in alternative investments – including infrastructure, private equity, and commodities – to smooth your investment returns.

• More flexible asset allocation ranges, which allow QIC to more dynamically manage QSuper portfolios to perform in a range of economic conditions.

After-tax investingWith tax on investment earnings one of the largest costs a superannuation fund faces, it is an obvious area for review. Obvious but not simple, especially given the significant complexities of tax legislation applying in the dynamic and fast-paced environment of investment management. After considerable effort, processes were put in place from July 2007 to manage your investments in order to maximise your after-tax returns.

Diversification into alternativesIn July 2006, we introduced a new range of alternative assets to some QSuper Ready Made options, with the aim of providing smoother returns with less overall risk. Since then, we have been prudently increasing our exposure to private equity, infrastructure, and commodities investments. For example, we now have major stakes in a United Kingdom water company (Thames Water), as well as European port facilities.

These investments, like our property investments, have helped reduce some of the impact of falling sharemarkets during the past year, and we continue to look for opportunities to increase our exposure to quality alternative investments.

Rising to theLinda Wheeler

QSuper membersince 2003

Brad HolzbergerChief Executive QIC Asset Management

While the past year’s returns are disappointing, members should be comforted by the solid longer-term returns over the past five years.


Delivering results in a difficult environment While we acknowledge negative returns are disappointing, the QSuper Balanced option has performed well compared to the balanced options of many other funds during this period of extreme market volatility. During this difficult time, we have implemented strategies aimed at smoothing short-term results and maximising long-term returns for members.

Some specific strategies we have implemented include:

• Reducing our exposure to shares well before this year’s market correction.

• Selling the Central Plaza office complex in the Brisbane CBD for a record price in what was very much a sellers’ market.

• Avoiding exposure to the Australian listed property market – which fell over 30% during the year – having believed for some time that this market was due for a significant correction.

Market outlookConditions in the coming year are likely to continue to be challenging, with lower global economic growth and volatile investment markets.

We are unlikely to see the same double digit returns of the past three to five years in a lower growth environment going forward. In this lower return environment, initiatives such as after-tax investing will have an even more relative impact on returns for members.

investment and feesQSuper

QSuper’s fees are ranked as some of the lowest in Australia.

1 MERs are generally the total expenses of the Fund as a proportion of the Fund’s net asset value.

SuperRatings 2007

This article was supplied by QIC.

Changes to strategic asset allocationsWhen investing your super, QIC works within strict asset allocation ranges as prescribed by the QSuper Board. These ranges apply to most of our Ready Made options and defined benefit monies. However, the Board made the decision from 1 July 2008 to make these asset allocations wider for some options, in recognition of the fact that different investment strategies may be required in different economic and market environments.

Increasing these ranges allows greater diversification and the ability to boost the acquisition of alternative assets, which in turn offers the potential to achieve solid returns with less risk. Additionally, it gives QIC more ability to react to market factors and take advantage of investment opportunities as they arise. All the asset allocation ranges can be found on pages 16 – 17.

Significant market movement policyQSuper’s unit pricing system operates on a two-day lag basis. This means that movements in investment markets for a given day are incorporated into the unit price released to members two business days later. If there is significant market movement – an abnormally large gain or loss within an investment option – QSuper will protect members by suspending processing until the market movement can be incorporated into the unit price.

QSuper uses materiality thresholds (the point at which the market movement has affected an option significantly) to determine whether a significant market movement has occurred. Information on

the current materiality thresholds for all our options can be found on our website.

Fees updateThe MERs for the 2007/2008 financial year for all our options can be found in the table below. The MER is made up of a fixed component (fund administration, services, and core investment management fees) and a variable component. The QSuper Board will provide at least 30 days’ notice of any increase in the fixed component, which is currently no more than 0.30% of a member’s Accumulation or Allocated Pension account balance. Given the nature of the variable component, these fees cannot be precisely calculated in advance. We will provide updated fees on the website throughout the year.

During the course of the year, changes made to investment strategies in the Balanced, Cash Plus, and High Growth options resulted in a higher MER than last year. At the same time changes to the Australian Shares and International Shares investment options resulted in a lower MER than last year.

Investment option MER1

Balanced 0.72%Cash Plus 0.47%Socially Responsible 0.95%Basic Growth 0.29%High Growth 0.85%Cash 0.32%Fixed Interest 0.39%Australian Shares 0.40%International Shares 0.42%

Investment objectives and asset allocations as at 1 July 2008The table below shows the objectives for QSuper’s nine investment options. The actual amounts invested in different asset types vary from time to time. The management of these asset allocations occurs within set ranges (as shown

Investment objectives and returns 2007/2008

Suited to medium to long-term investors who want exposure to assets with potentially higher returns.

Suited to investors who are seeking short to medium-term stability.

Suited to medium to long-term investors who want an approach that considers the investment’s impact on society and the environment.

Suited to medium to long-term investors who are willing to accept a higher level of volatility than the Balanced option in exchange for a lower fee.


Objectives

To achieve an average return over rolling 5-year periods of CPI + 4% p.a., after fees and tax.


To achieve an average return over rolling 5-year periods of CPI + 3.5% p.a., after fees and tax.

To achieve an average return over rolling 5-year periods of CPI + 3.5% p.a., after fees and tax.


Asset classAsset allocation Asset allocation Asset allocation Asset allocation Asset allocationRanges Ranges Ranges Ranges1 Ranges

Cash 0% – 20% 50% – 60% 0% – 6% 5% -2% – 10%Fixed interest 5% – 20%2 2.5% – 10%2 17% – 29% 25% 0% – 15%

Property 5% – 15% 2.5% – 7.5% 4% – 22% 10% 0% – 15%Australian shares 25% – 35% 12.5% – 17.5% 35% – 41% 35% 20% – 40%

International shares 20% – 30% 10% – 15% 11% – 33% 25% 30% – 50%Alternative assets 5% – 33% 2.5% – 16.5% 0% – 4% n/a 0% – 36%

2007/2008 returnsWhen you invest money in one or more investment options, you purchase a number of units (which work like shares). When returns are received on investments, your units increase in value. On an annual basis, investment returns are

Actual asset allocations Year ended 30 June





Asset class 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008Cash 12.7% 7.0% 56.3% 53.5% 6.9% 4.9% n/a 5.3% 6.2% 4.9%

Fixed interest 22.2% 24.7% 11.1% 12.3% 18.6% 24.3% n/a 25.0% 0% 0%Property 8.9% 9.5% 4.4% 4.8% 13.6% 11.4% n/a 9.6% 4.4% 9.5%

Australian shares 27.7% 28.6% 13.9% 14.3% 39.9% 37.5% n/a 35.1% 28.8% 26.5%International shares 23.9% 23.0% 12.0% 11.5% 21.0% 21.9% n/a 25.0% 52.2% 46.6%

Alternative assets 4.6% 7.2% 2.3% 3.6% 0% 0% n/a 0% 8.4% 12.5%100% 100% 100% 100% 100% 100% n/a 100% 100% 100%

Crediting rate3 Crediting rate3 Crediting rate3 Crediting rate3 Crediting rate3

Accum AP Accum AP Accum AP Accum AP Accum AP2007/2008 -3.61% -3.64% 0.26% 0.48% -8.25% -9.10% -0.74% 4 -0.81% 4 -8.31% -9.06%

Net return history5 Net return history5 Net return history5 Net return history5 Net return history5

Accum AP Accum AP Accum AP Accum AP Accum AP2003/20046 16.06% 17.65% 9.93% 11.30% n/a n/a n/a n/a 20.72% 23.60%2004/20056 15.11% 17.04% 9.77% 11.12% 2.10%7 2.40%7 n/a n/a 16.00% 18.08%2005/20066 14.76% 16.59% 9.65% 11.04% 16.68% 18.56% n/a n/a 17.70% 20.42%2006/2007 13.12% 14.79% 9.12% 10.46% 15.03% 16.79% n/a n/a 17.79% 20.44%2007/2008 -4.68% -4.81% -0.32% -0.17% -9.87% -10.88% -1.78%4 -1.94%4 -9.47% -10.33%

3 yr comp. avg. (p.a.) 7.36% 8.41% 6.05% 6.98% 6.55% 7.26% n/a n/a 7.87% 9.16%5 yr comp. avg. (p.a.) 10.57% 11.90% 7.55% 8.65% n/a n/a n/a n/a 11.94% 13.68%

Accum = Accumulation account AP = Allocated Pension account

Accumulation and Allocated Pension accounts

Balanced

Balanced

Cash Plus

Cash Plus



Basic Growth

Basic Growth

High Growth

High Growth

3 Crediting rates 2007/2008. Crediting rates differ from net returns, due to the two-day lag in unit prices. Crediting rates are net of fees and taxes.4 Based on partial year (option commenced 1 February 2008).5 Net return is net of fees and taxes.

1 The investment management of the Basic Growth option targets the specific asset allocation shown above.2 Transitional arrangements will apply to the Fixed interest allocation for the Balanced (5%-25%) and Cash Plus (2.5%-12.5%) MIC options.


below), and give QIC, QSuper’s investment manager, the flexibility to take advantage of investment opportunities.

reported as crediting rates, as shown in the table below. These crediting rates are net of management and tax expenses, and apply to members who have remained in the option/s for the entire year, and made no transactions.

Suited to very short-term investors who want to protect the value of their investments.

Suited to short to medium-term investors who are seeking steady returns.



To capture the return of a broadly diversified portfolio of cash investments after fees and tax.

To capture the return of a broadly diversified portfolio of global fixed interest investments after fees and tax.

To capture the return of a broadly diversified portfolio of Australian shares after fees and tax.

To capture the return of a broadly diversified portfolio of international shares after fees and tax.

Objectives

Asset allocation Asset allocation Asset allocation Asset allocationAsset classRanges Ranges Ranges Ranges

100% 0% – 5% 0% – 5% 0% – 5% Cashn/a 95% – 100% n/a n/a Fixed interestn/a n/a n/a n/a Propertyn/a n/a 95% – 100% n/a Australian sharesn/a n/a n/a 95% – 100% International sharesn/a n/a n/a n/a Alternative assets





2007 2008 2007 2008 2007 2008 2007 2008 Asset class100% 100% 0% 0% 0% 0% 0% 0% Cash0% 0% 100% 100% 0% 0% 0% 0% Fixed interest0% 0% 0% 0% 0% 0% 0% 0% Property0% 0% 0% 0% 100% 100% 0% 0% Australian shares0% 0% 0% 0% 0% 0% 100% 100% International shares0% 0% 0% 0% 0% 0% 0% 0% Alternative assets100% 100% 100% 100% 100% 100% 100% 100%

Crediting rate3 Crediting rate3 Crediting rate3 Crediting rate3

Accum AP Accum AP Accum AP Accum AP4.03% 4.81% 3.20% 3.83% -10.88% -11.05% -12.86% -14.63% 2007/2008

Net return history5 Net return history5 Net return history5 Net return history5

Accum AP Accum AP Accum AP Accum AP4.37% 5.20% n/a n/a n/a n/a n/a n/a 2003/20046

4.73% 5.63% 4.24%7 5.05%7 7.12%7 7.38%7 3.92%7 4.55%7 2004/20056

4.85% 5.78% 2.15% 2.58% 23.32% 24.47% 14.47% 16.71% 2005/20066

5.24% 6.24% 4.49% 5.35% 25.90% 27.75% 19.68% 22.79% 2006/20073.99% 4.77% 3.62% 4.32% -13.66% -13.93% -13.77% -15.66% 2007/20084.69% 5.60% 3.41% 4.08% 10.26% 11.03% 5.71% 6.52% 3 yr comp. avg. (p.a.)4.63% 5.52% n/a n/a n/a n/a n/a n/a 5 yr comp. avg. (p.a.)6 Please note: the investment returns for these years do not relate to the investment objectives shown above, but relate to the previous objectives that applied up to 30 June 2006. If you would like more information, please give us a call.

7 Based on partial year (option commenced 1 January 2005).

Cash

Cash

Fixed Interest

Fixed Interest

Australian Shares

Australian Shares



Super Scoop 2008 | 17You’re an individual – super to suit you

Continued over page

Defined benefit accounts

The table below shows the objective for QSuper’s defined benefit accounts. The asset allocation ranges applying from 1 July 2008 are also set out below. The actual amounts invested in different asset types vary from time to time. The management of these asset allocations occur within set ranges (as shown below), and give QIC the flexibility to take advantage of investment opportunities.

Objective To achieve an average return over rolling 10-year periods of AWOTE1 + 3.0% per annum, after fees and tax.

Asset allocation Ranges from 1 July 2008 2007 actual allocation 2008 actual allocationCash 0% – 15% 6.0% 0.8%Fixed interest 15% – 45% 35.0% 38.9%Property 5% – 15% 12.3% 12.6%Australian shares2 15% – 25% 20.2% 20.4%International shares 15% – 25% 21.8% 20.4%Alternative assets 0% – 25% 4.7% 6.9%Total n/a 100% 100%1 AWOTE is a measure of wage and salary levels of employees in Australia, as measured by the Australian

Bureau of Statistics and published quarterly. 2 The allocation to Australian shares includes an investment in Q Invest Limited.

Most defined benefit members are not affected by investment returns, as the final benefit is determined by a formula based on your salary, contribution rate, and length of membership. The crediting rates are net of fees deducted for management, insurance, and tax expenses, and apply to your personal contributions for your defined benefit account, but do not affect the final benefit you will receive. The details below are provided as information to members as part of our commitment to comprehensive reporting.

Investment returns – defined benefit accountsYear Defined Benefit State Police

Net earning rate

Crediting rate

Net earning rate

Resignation crediting rate

Preservation crediting rate

Net earning rate

Resignation crediting rate

Preservation crediting rate

2007/2008 -1.86% -3.61% -1.86% -4.01% -3.61% -1.86% -4.01% -3.61%2006/2007 14.17% 16.30%3 14.17% 13.78% 14.18% 14.17% 13.78% 14.18%2005/2006 16.67% 12.87% 16.67% 12.47% 12.87% 16.67% 12.47% 12.87%2004/2005 16.57% 15.38% 16.57% 14.98% 15.38% 16.57% 14.98% 15.38%2003/2004 18.76% 15.26% 18.76% 14.86% 15.26% 18.76% 14.86% 15.26%Compound average5 year (p.a.) 12.60% 10.97% 12.60% 10.16% 10.56% 12.60% 10.16% 10.56%

Investment objective and asset allocations as at 1 July 2008

2007/2008 returns

Continued from previous page


30 June 2008 30 June 2007 30 June 2006 30 June 2005$575.57m $665.49m $478.24m $324.99m

Derivative policyDerivatives are investment products where the value is linked to the value of another investment product, e.g. shares. Derivatives can be bought and sold and may be used to protect an investment portfolio against unfavourable movements, or to switch funds between different investments cost effectively. The QSuper Board of Trustees has obtained and accepted a risk management statement from QIC, which defines how QIC can use derivatives. Derivatives have not been used for speculative purposes.

Assets above 5% The following QSuper options had exposures over 5% at the end of the financial year: Accumulation and Allocated Pension accounts Cash option 11.23% exposure to ANZ Banking Group (cash, bank bills/promissory notes, floating rate notes and other corporate securities), 10.58% exposure to Commonwealth Bank of Australia (cash, bank bills/promissory notes, floating rate notes, and other corporate securities), 12.18% exposure to National Australia Bank Limited (cash, bank bills/promissory notes, floating rate notes, and other corporate securities), 5.77% exposure to St George Bank Limited (cash, bank bills/promissory notes, floating rate notes, and other corporate securities), 10.54% exposure to Westpac Banking Corporation (cash, bank bills/promissory notes, floating rate notes, and other corporate securities); Accumulation and Allocated Pension accounts Cash Plus option 9.40% exposure to ANZ Banking Group (cash, bank bills/promissory notes, floating rate notes, and other corporate securities), 8.92% exposure to Commonwealth Bank of Australia (cash, bank bills/promissory notes, floating rate notes, and other corporate securities), 10.24% exposure to National Australia Bank Limited (cash, bank bills/promissory notes, floating rate notes, and other corporate securities), 8.86% exposure to Westpac Banking Corporation (cash, bank bills/promissory notes, floating rate notes, and other corporate securities); Accumulation and Allocated Pension accounts Australian Shares option 13.89% exposure to BHP Billiton Limited, 5.06% exposure to Commonwealth Bank of Australia; Accumulation and Allocated Pension accounts Fixed Interest option 12.65% exposure to Fannie Mae (medium and long-term US Bonds).

Reserves Reserves are held aside to pay for specific items as they occur. The reserves held are a general reserve – which funds taxation and general administration expenses, an investment fluctuation reserve, and an insurance reserve. The reserves operate within an established reserving policy approved by the QSuper Board of Trustees, who also set and annually review the investment strategy of these reserves. In setting the investment strategy for the reserves, consideration is given to the purpose of the reserves, the nature of the underlying liabilities, and investment risk. The reserves are held in a mix of cash and balanced investments.

3 Last year we reported the QSuper Board of Trustees determined a crediting rate of 14.18%. However the actual rate applied, which will stay in effect, was 16.30%.

Top 5 property investments 30 June 2008

Top 5 international shareholdings 30 June 2008

Top 5 Australian shareholdings 30 June 2008

Castle Towers Shopping Centre, Castle Hill, NSW

Nestle S.A. BHP Billiton Limited

Merry Hill Shopping Centre, Brierly Hill, United Kingdom

Total S.A. Commonwealth Bank of Australia Limited

Canberra Centre, Civic, Canberra, ACT

Microsoft Corporation Rio Tinto Limited

Westpoint Shopping Centre, Blacktown, NSW

Occidental Petroleum Corporation

Telstra Corporation Limited

Robina Town Centre, Robina, QLD

E.ON AG National Australia Bank LimitedSource: QIC

Enquiries and complaints QSuper has procedures in place to ensure any enquiries or complaints are dealt with fairly and promptly. In most cases, we will advise you of an outcome within 14 days. You can download QSuper’s Enquiry and complaints procedure fact sheet from the QSuper website.

If you have a complaint about QSuper, either call us, or write to the Enquiries and Complaints Officer, QSuper, GPO Box 200, Brisbane Qld 4001, and mark your letter ‘Notice of enquiry or complaint’.

If you are not satisfied with the outcome of your complaint, you can take the matter to the Superannuation Complaints Tribunal (SCT), an independent body set up by the Commonwealth Government to assist members only after they have made use of QSuper’s internal complaints procedure.

If you want to find out whether the SCT is able to handle your complaint, you should contact them on 1300 780 808, or visit their website at www.sct.gov.au.

Superannuation surchargeThe superannuation surcharge was abolished from 1 July 2005. Any existing surcharge liabilities remain payable and will generally be paid when you first withdraw money from your account.

QSuper Net Assets available as at 1 July 2007 = $22,698.23m

TOTAL ASSETS $25,017.72mInvestments $24,771.49mOther assets $246.23m

TOTAL LIABILITIES $479.16mCurrent tax liabilities $244.96mOther liabilities $234.20m

Fund accountsThis summary of the Fund’s financial position was prepared before the audit of the accounts, using information available at the time of publication. The audited financial statements and auditor’s report will be available on the website in November 2008.

Total expenses $1,998.48m

Benefits paid $2,027.05mAdministration expenses $67.21m Income tax expense $(102.57m)Other expenses $6.79m

QSuper Net Assets available as at 30 June 2008 = $24,538.56m


We regularly undertake market research to find out first-hand what you want from your fund, and to ensure we provide the range of products and services you need.All QSuper surveys are conducted by professional research firms such as Enhance Management, and formal agreements ensure these firms comply with strict standards set by QSuper and national privacy legislation. The personal data we supply to researchers is generally limited to your name and contact

QSuper may be calling you!

Total revenue $3,838.81m

Investment income $(940.83m)Employer contributions $3,075.30m Member contributions $1,112.41mTransfers in $512.66mGain from net assets transferred in $78.20mOther income $1.07m

think superannuation is important in making sure they have adequate retirement savings.

would still contribute if superannuation was not compulsory.

consider QSuper to be trustworthy in looking after their investment in times of volatility.

prefer to receive their statements in hard copy.

of retired members didn't expect to retire at the age they did.

93%

89%

84%

71%

50%

Here are some interesting statistics we gained from surveying QSuper members last year.

details, and the results we receive never identify you. Your participation in the surveys is voluntary and your opinions are completely confidential. If you have questions about any QSuper research you participated in, please don’t hesitate to call our Contact Centre on 1300 360 750.

Financial highlights 2007/2008

Changes in the Net Assets

Net Assets as at 30 June 2008

The Net Assets are represented by: Accumulated funds: $23,962.99m and Reserves: $575.57m.


qsuper.qld.gov.au1QSuper Member Satisfaction Research 2007 – 2008.2SuperRatings 2007.

Lars KjaersgaardQSuper member since 2005

Low fees

Real service

Better knowledge

Solid returns

You’ve told us low fees are your number one priority.1

So you’ll be pleased to know our fees consistently rank as some of the lowest in the country.2

PLATINUM

C 0M 0Y 0K 60

C 0M 0Y 0K 85

Check out our wide range of case studies inside...

We’ve used the calculators on our website at qsuper.qld.gov.au to calculate figures used in these case studies. Each calculator on the site shows the assumptions and methodology used to make the calculations.

case studies lift-out

CASE2008 SUPER SCOOP CASE STUDIES LIFT-OUT

Tax-free super Boosting your balance Getting the right advice How much is enough?

case studies including…

About the case studies in this lift-out

2 | 2008 Super Scoop case studies lift-out

Welcome to the 2008 Super Scoop bonus case studies lift-out.Last year the Commonwealth Government’s Better Super initiatives were introduced, which saw the creation of superannuation rules designed to make it simpler to save for retirement.

However, despite the simplifications, we understand super can still be a complicated topic. That’s why we’ve put together some easy-to-understand case studies so you can see how the pieces of the super puzzle fit together.

This lift-out is designed to get you thinking about your super, and what you can do to make it really work for you. You’ll find detailed information on our website about all the topics in the lift-out, along with a great range of tools and calculators. Alternatively, give us a call and one of our Information Officers can give you all the help you need.

Of course, what works for one person may not necessarily work for you, which is why the QSuper Board facilitates access by QSuper members to affordable personal financial advice from Q Invest.* Q Invest advisers specialise in helping people employed in the Queensland public sector. If you would like to discuss your personal goals and options with a qualified adviser, please call Q Invest on 1800 643 893 or visit their website at www.qinvest.com.au. *Q Invest Limited (ABN 35 063 511 580) (Q Invest) AFS licence 238274. Q Invest is jointly owned by the QSuper Board of Trustees and QIC. QSuper and QIC do not accept responsibility for the financial advice or services provided by Q Invest, which is a separate legal entity operating under its own Australian Financial Services licence.

General advice warningThis publication is issued by the QSuper Board of Trustees (ABN 32 125 059 006) of the QSuper Fund (ABN 60 905 115 063). The QSuper Board is not licensed to give financial product advice. There is no cooling off regime associated with QSuper. The information in this document is not personal advice and has been prepared for general purposes only, without taking into account your financial objectives, situation, or needs. Therefore, before making any decisions based on any information contained in this annual report, you should consider the appropriateness of the information, having regard to your objectives, financial situation, and needs. We also recommend you seek independent financial advice and consider the relevant product disclosure statement (PDS) before you make any decision concerning your benefit entitlements. You can download a PDS from the QSuper website, or call us and request one.

DisclaimerAlthough we make every attempt to ensure the information in this document is accurate and up to date at the time of its publication, legislative and other changes after the date of publication may affect the accuracy of some of the information contained in this document. To find out about updated information which is not materially adverse to you, contact us as indicated on this page. The Board of Trustees (the Board) of the QSuper Fund and the State of Queensland do not guarantee the investment performance of the Fund or repayment of capital.

Peter Occupation: Senior project manager Age: 61 Salary: $84,500 Defined Benefit: $310,000

If you’re still working, a transition to retirement strategy could be a tax-effective way to receive your income while increasing your super.

Transition to retirement and salary sacrifice

Go to page 4

Barbara Occupation: Administration officer Age: 49 Salary: $35,000 Accumulation account balance: $70,000

It’s important to understand which investment option you’re in to ensure it’s in line with your long-term goals.

Understanding your investment strategy

Go to page 5

Jack and Noelene Occupation: Jack is a police officer and Noelene is a senior manager Age: Jack is 55 and Noelene is 54 Salary: Jack earns $75,000 and Noelene earns $90,000 Accumulation account balance: Jack has $400,000 and Noelene has $580,000

Before choosing a financial adviser, it is important to compare the services provided and the fees charged.

Comparing financial advisers

Go to page 6

Maria Occupation: Team leader Age: 48 Salary: $65,000 Accumulation account balance: $255,000

See how using the QSuper Super health check calculator can help you plan for a more comfortable retirement.

How much super is enough?

Go to page 7

Contacting QSuper Contact Centre 63 George Street Brisbane

1300 360 750 +61 7 3404 0928

Monday to Thursday 8.30am to 5.00pm Friday 9.00am to 5.00pm

Postal address QSuper GPO Box 200 Brisbane Qld 4001

qsuper.qld.gov.au

2008 Super Scoop case studies lift-out | 3

Loraine EdwardsQSuper membersince 1995

Read on… your future is in your hands

Over the next few pages you’ll find a variety of scenarios, so whatever your situation and stage of life there’ll be information and tips relevant to you.

Joan Occupation: Ranger Age: 52 Salary: $45,000 Accumulation account balance: $60,000

There are a few simple strategies you can use to boost your super without hurting your hip pocket too much. But if you’re not sure how, a Q Invest financial adviser may be able to help you.

Smart strategies to boost your super

Go to page 8

John Occupation: Teacher Age: 58 Salary: $58,000 Defined Benefit: $400,000

Are you under 60 and considering making a withdrawal from super? The tax payable on withdrawals may be less than you think.

Tax-free withdrawals before you turn 60

Go to page 9

Henry and Anne Occupation: Henry is a groundsman and Anne is an administration officer Age: Henry is 65 and Anne is 64 Salary: $35,000 each Accumulation account balance: Henry has $250,000 and Anne has $100,000

Are you wanting to work past your age pension age? Did you know you could still be entitled to social security benefits even if you continue working?

Centrelink benefits while you are still working

Go to page 10

Eddie and Li Occupation: Eddie is a nurse and Li is an administration assistant Age: Eddie is 56 and Li is 54 Salary: Eddie earns $59,000 and Li earns $36,000 Accumulation account balance: Eddie has $122,000 and Li has $66,000

Are you approaching retirement but aren’t sure whether you have sufficient super to meet your retirement income needs? A Q Invest financial adviser can help you get back on track.

Get back on track for the retirement you want

Go to page 11


Peter’s situationPeter is considering retiring at 65, and would like to maximise his super to ensure he can enjoy a comfortable retirement. Peter has heard from his work colleagues about transitioning to retirement using a QSuper Allocated Pension account and the tax benefits it can provide – especially when combined with salary sacrificing.

Peter is currently salary sacrificing his standard 5%1 super contribution, which results in his assessable income falling into the highlighted tax bracket below.

What does Peter do?Peter visits a Q Invest financial adviser to better understand this strategy and gain assistance with implementing it.

Peter learns a QSuper Allocated Pension provides him with the flexibility to choose an income amount within certain limits. Because Peter is 61 he can draw an income between 4% (minimum) and 10% (maximum) of his account balance. He decides to transfer his total balance to an Allocated Pension account and then draw the maximum 10% of his account balance, which will provide an annual income of $31,000.

The adviser explains that super can be withdrawn tax-free if you are age 60 or over, so because Peter is 61, he would not pay tax on any income he received from his Allocated Pension. This will allow him to salary sacrifice even more and still maintain around the same take-home pay. Peter decides to salary sacrifice an additional $45,975 to his super. He knows that these contributions will count towards the concessional cap, but as he is over 50 he can contribute up to $100,000 per financial year (transitional limit until 2012).

Peter also chooses to remain in the Defined Benefit account, and any future standard contributions while still working will be directed towards this account. This will ensure his multiple begins to grow again at the same rate.

The resultsAs Peter is 61, any income he draws from his Allocated Pension is tax-free. After seeking financial advice, Peter is able to implement a strategy that takes advantage of this and results in him maintaining the same take-home pay while increasing his contributions to super.

By salary sacrificing Peter has also reduced his assessable income to well below the upper super co-contribution threshold ($60,342). However, to qualify for the super co-contribution he will need to make an additional after-tax contribution. But Peter will need to keep in mind the Commonwealth Government has proposed to expand the definition of income from 1 July 2009 to include certain types of salary sacrificed contributions, which could mean Peter will not qualify for the co-contribution in future years.

Peter Occupation: Senior project manager Age: 61 Salary: $84,500 Defined Benefit: $310,000

Case study

If you’re over your preservation age and still working, a transition to retirement strategy could be a tax-effective way to receive your income while increasing your super.

1 Standard contribution rate becomes 5.88% when salary sacrificing.2 Salary sacrifice contributions are calculated net of 15% contributions tax and are generally preserved until retirement.3 Net contribution into super of $43,302 minus Allocated Pension income of $31,000.4 Does not include $31,000 from the Allocated Pension as this income is not assessable.5 Includes $31,000 from the Allocated Pension.You should read the relevant PDS, which you can obtain by calling us, then seek financial advice before making a decision to invest.

Compare the difference Before AfterGross remuneration $84,500 the same as $84,500Net contributions to super $4,2242 compared to $12,3022 3

Assessable income $79,529 compared to $33,5544

Income tax paid $19,202 compared to $4,226Take-home pay $60,327 compared to $60,3275

Medicare levy of 1.5% is applied to all assessable income. Tax rates applicable from 1 July 2008.

Peter has $8,078 more going into his super...

and makes a $14,976 tax saving!

Transition to retirement and salary sacrifice

Income Tax

$0 – $6,000 Nil

$6,001 – $34,000 15% of amount over $6,000

$34,001 – $80,000 $4,200 plus 30% of amount over $34,000


$180,001+ $58,000 plus 45% of amount over $180,000



Barbara’s situationBarbara had heard a lot in the media about market volatility and the effect it’s had on superannuation fund returns. This concerned Barbara, as she didn’t know how her super was invested. She rang QSuper to check and found out her Accumulation account was invested in the Balanced option.

Some of Barbara’s friends have switched their investments to the more conservative Cash option, as they feel it has less risk during these volatile times. Influenced by this, she wonders if she should do the same.

What does Barbara do?After researching the Balanced option on the QSuper website, Barbara learns the Balanced option has exposure to growth assets like property and shares, and is expected to produce a negative return one out of every six years. Barbara believes she has a much longer investment timeframe than this, as she is still some years from retirement. She also realises that her investment strategy needs to take into account the years she will be in retirement.

While Barbara is influenced by her friends who are switching to the Cash option, she believes the long-term returns of the Cash option aren’t expected to be as high as the Balanced option and she is willing to accept the associated higher risk.

Barbara would like to maximise her super before she retires and doesn’t think she’ll be able to do this if she switches her money to the Cash option.

The resultsBarbara maintains her investments in the Balanced option as it meets her long-term objectives.

She understands investments will fluctuate in the short-term, but her long-term objectives are to maximise her super prior to and after retirement. The Balanced option provides Barbara with a diversified portfolio of investments with a level of risk she is comfortable with. She believes this will help her meet her long-term needs.

Barbara Occupation: Administration officer Age: 49 Salary: $35,000 Accumulation account balance: $70,000

Case study

It’s important to understand which investment option you’re in to ensure it’s in line with your long-term goals.

Past performance is not a reliable indicator of future performance. Returns may vary considerably over time. Changes to inflation, fees, asset allocations, option objectives, and risk play a significant part in the return of any investment option. The graph shown above is based on unit prices for the Accumulation account, which are net of fees and taxes. The graph uses the first unit price available in a given month. Unit price history is from February 1998.You should read the relevant PDS, which you can obtain by calling us, then seek financial advice before making a decision to switch.

Short-term volatility, long-term performance

This graph shows the growth of $10,000 invested in the Balanced option since its inception in 1998. As you can see, there have been dips, but overall growth has been positive and trending upwards. You can also find a graph showing the annual net return history for the Balanced option on page 9 of Super Scoop.

Understanding your investment strategy

$25,000

$20,000

$15,000

$10,000

$5,000

$0

Date

Short term volatility in context

Jun 1

998

Jun 1

999

Jun 2

000

Jun 2

001

Jun 2

002

Jun 2

003

Jun 2

004

Jun 2

005

Jun 2

006

Jun 2

007

Jun 2

008


Jack and Noelene Occupation: Jack is a police officer and Noelene is a senior manager Age: Jack is 55 and Noelene is 54 Salary: $75,000 and $90,000 Accumulation account balance: Jack has $400,000 and Noelene has $580,000

Case study

Before choosing a financial adviser, it’s important to compare the services provided and the fees charged.

Jack and Noelene’s situationJack and Noelene are both employed by the Queensland Government and are looking to retire in the next couple of years. They each have a QSuper Accumulation account, with money invested in the Balanced option. At a recent conference, Jack was approached by a financial adviser who invited him and Noelene to an interview to discuss their financial situation and objectives.

As the adviser required up-to-date details about both their QSuper accounts, Jack and Noelene rang the QSuper Contact Centre to ask for the information. At the time of their enquiry, the QSuper Information Officer also highlighted that as QSuper members, they have access to competitively-priced financial advice through Q Invest.

What do Jack and Noelene do?Jack and Noelene think it would be a good idea to compare the services and fees charged by Q Invest with those of the other financial adviser, so they decide to consult a financial adviser from each organisation.

They discover a big difference in the fees charged by Q Invest and the other financial adviser. Regardless of their super account balances, for a flat fee of $275 Jack and Noelene are able to receive written advice, in the form of a comprehensive financial plan, about their QSuper benefits. Alternatively, for $55 each session, they can seek specific advice over the phone about a limited number of issues regarding their QSuper benefits.

They compare this to the other financial adviser, who charges an upfront advice and implementation fee of $5,400 and an ongoing fee of 0.65% on the balance of their account. As you can see from the table below, for Jack and Noelene this would be a difference of $5,000 just to meet and implement a financial plan! Even though these fees cover service for the entire year, they believe it is quite expensive compared to Q Invest, considering the other adviser’s fee is paid every year regardless of whether or not they receive ongoing advice. Jack and Noelene are comforted to know they control the cost of advice under Q Invest’s fee structure.

The resultsJack and Noelene are happy to establish their financial plan with Q Invest, and resolve to review it periodically at a cost of $275 each time, knowing that this is still far less than the other adviser’s fees.

Q Invest advice Other financial adviser

Financial advice$275 – comprehensive$55 – specific (regardless of their balance)

$600 – financial plan $4,800 – implementation

Ongoing advice feeAs above, when requested by Jack and Noelene1

0.65% – $6,370 (of their joint balance $980,000)

Fees

How much would you prefer to pay?

When you seek financial advice through Q Invest about your QSuper benefit, QSuper subsidises the cost. As a result, you only pay a small portion of the total cost of the advice, with the maximum cost to you being $275. Even better, the fee can be deducted directly from your QSuper Accumulation or Allocated Pension account.

Did you know?

Jack and Noelene are comforted to know they control the cost of advice under Q Invest’s cost structure.


1 This information is correct as at 1 July 2008


$575,000$550,000$525,000$500,000$475,000$450,000$425,000$400,000$375,000$350,000$325,000$300,000$275,000$250,000

1 2 3 4 5 6 7 8 9

Fortnightly voluntary contribution1

Retirement income (approx.)

$400 $32,900$200 $30,100$100 $28,700$50 $28,000$0 $27,300

Years to retirement

Maria’s situationMaria is planning for retirement but she isn’t sure if she has enough super to meet her income needs when she leaves the workforce. She currently salary sacrifices her 5% standard contribution, but doesn’t make any additional voluntary contributions to her super.

Maria recently read an article which quoted the ASFA/Westpac retirement income standards. She was interested to see that according to the research, a single woman could expect to live a modest lifestyle in retirement with an annual income of $18,920, or a more comfortable lifestyle with an annual income of $36,607. Maria has forecast her own budget and feels she could live the lifestyle she wants in retirement with an income of approximately $30,000 per annum coming from her super. Maria would like to retire at the age of 57, and she is willing to contribute more into her super if she can achieve her lifestyle goals.

What does Maria do?Maria uses the Super health check calculator on the QSuper website. She discovers that at her current rate of contributions, her super balance at the age of 57 would generate an approximate income of $27,300 per annum. While this income is higher than the modest income suggested by the ASFA/Westpac figures, she would like her super to generate an income of $30,000 per annum.

Of course at retirement Maria may also be eligible for Centrelink benefits, which could further boost her retirement income.

Maria uses the Super health check calculator to model the various outcomes she could achieve by making additional salary sacrificed voluntary contributions of $50, $100, $200, and $400 per fortnight. She also bears in mind that any contributions she makes will generally be preserved until her retirement.

The resultsAs she has her mortgage under control, Maria decides to start making additional (salary sacrificed) voluntary contributions of $200 per fortnight.

She is satisfied she has taken positive steps in working towards her retirement goals, and her super is now on track to generate an approximate annual income of $30,100.

Maria Occupation: Team leader Age: 48 Salary: $65,000 Accumulation account balance: $255,000

Case study

See how using the QSuper Super health check calculator can help you plan for a more comfortable retirement.

The difference voluntary contributions can make!

Single CoupleModest $18,920 $26,531Comfortable $36,607 $48,962

According to the latest ASFA/Westpac retirement standards figures, $18,920 p.a. is the minimum income required for a modest lifestyle in retirement. This figure is the average of the male and female figures for Brisbane, December 2007, and reflects the needs of a single person. All figures assume the retiree owns their own home.

ASFA/Westpac retirement income standards Brisbane, December 2007


How much super is enough?

1 Employer and salary sacrifice contributions are shown gross of tax.

For details of the assumptions used to project these outcomes please see page 12.


Case study

Joan’s situationJoan is hoping to retire in eight years. She has only been making standard contributions of 2% to her super while paying off her high interest debts. But Joan is now debt-free and feels she needs to increase her super contributions.

What does Joan do?Joan visits a Q Invest financial adviser, who assesses her situation. Joan tells her adviser she is happy to decrease her take-home pay slightly if it means she can take advantage of contribution and tax benefits.

The first opportunity the adviser identifies is to increase her standard contribution rate. Joan is currently contributing the minimum 2% herself, which means her employer is contributing 9.75%. The adviser explains that if she were to increase her standard contributions to the maximum rate of 5%, her employer contribution would jump to 12.75% – that would be a total of 17.75% of her salary hitting her super account each year, instead of her current 11.75%.

The next thing the adviser suggests is for Joan to start salary sacrificing her newly increased 5% standard contribution. The adviser explains that any before-tax (salary sacrificed) contributions to super only incur 15% tax.

The adviser also tells Joan that if she were to make an additional after-tax voluntary contribution, she would currently qualify for a higher Commonwealth Government super co-contribution.

Joan Occupation: Ranger Age: 52 Salary: $45,000 Accumulation account balance: $60,000

There are a few simple strategies you can use to boost your super without hurting your hip pocket. But if you’re not sure how, a Q Invest adviser may be able to help.

The contributions table to the right shows the link between your employer contributions and your standard contributions for an Accumulation account. As you can see, the more you contribute, the higher the employer contribution.

Different rates of member and employer contributions apply for police officers.

How much extra could you be receiving from your employer?

You pay Your employer pays3

2% 9.75%3% 10.75%4% 11.75%5% 12.75%

Joan could have 17.75% going into her super!

For more info on salary sacrifice visit our website

2 The Commonwealth Government has proposed to expand the definition of income from 1 July 2009 to include certain types of salary sacrifice contributions, which could mean Joan will not qualify for the co-contribution in future years.

3 Core Queensland Government departments only.

The resultsJoan puts this advice into practice by salary sacrificing her standard contributions, which she also increases to 5%. She then re-contributes the extra tax saving she generates as a result of this salary sacrificing strategy back into her super as an additional salary sacrificed voluntary contribution.

As a final bonus, the change in income tax rates from 1 July 2008 means Joan’s take-home pay increases. So she also decides to contribute this income tax cut

back into her super as an after-tax voluntary contribution. This also makes her eligible to receive some super co-contribution.2 Joan is aware that any contributions she makes to super will be preserved until her retirement.

In the first year alone, Joan is able to contribute $3,947 into her super without any trouble – an increase of over $3,000!

Joan is satisfied she is doing everything she can to maximise her super in preparation for retirement, without causing too much stress on her current finances.

Smart strategies to boost your super

Before (2% after-tax)

After (5% salary sacrifice and voluntary contributions)

Employer contributions1 $3,729 $4,876Standard contribution $900 $1,9121

Voluntary before tax contribution1 $0 $1,096Voluntary after-tax contribution $0 $939Super co-contribution $767 $934

Joan’s before and aftersituation

1 Net of 15% contributions tax


John’s situationJohn is keen to retire now at age 58, and would like to use his super to repay the outstanding $50,000 on his mortgage. John knows there have been major changes to super rules as a result of the Commonwealth Government’s Better Super reforms, but he doesn’t completely understand them. He’s heard that super is only tax-free after 60, so is concerned that he may incur a large tax debt if he retires now and draws on his super. John is prepared to wait until 60 to retire if it means he will pay no tax.

What does John do?John speaks to a QSuper Information Officer who explains the tax changes to super introduced by the Commonwealth Government in 2007.

The Information Officer identifies that John has a balance of $400,000 in his super, and as a result of the Better Super rule changes the tax components of his superannuation benefit are now simplified to just two components:

• $300,000 taxable component • $100,000 tax-free component.

The Information Officer explains that all withdrawals from super must now be proportionately withdrawn from the taxable and tax-free components.

John’s account is currently made up of 25% tax-free component and 75% taxable component. So if he makes a total withdrawal of $50,000, $37,500 will be drawn from the taxable component and $12,500 will be drawn from the tax-free component.

The tax that applies to a withdrawal is dependent on John’s age when the withdrawal is made. John is happy to find that because he’s over his preservation age, he’s entitled to the low rate cap. This means he won’t pay any tax until he has withdrawn

$145,000 from his taxable component.

Any withdrawal from his taxable component over the low rate cap will be taxed at 16.5% (including Medicare levy of 1.5%).

Of course, John knows any super he withdraws once he reaches 60 is entirely tax-free.

The resultsJohn decides to retire now and is delighted to discover he’s not required to pay tax on the $50,000 withdrawal from his super because it is below the low rate cap. At the same time, he has cleared his mortgage, which also saves him interest!

John Occupation: Teacher Age: 58 Salary: $58,000 Defined benefit: $400,000

Case study

Are you under 60 and considering making a withdrawal from super? The tax payable on withdrawals may be less than you think.

Example

John’s account balance is $400,000 and his tax components on the date of his withdrawal are 25% tax-free and 75% taxable.

John withdraws $50,000$12,500 (or 25%) of which will come from his tax-free component and $37,500 (or 75%) from his taxable component. But because John is over his preservation age, but under 60, the first $145,000 he withdraws from super is tax-free.1

$100,000 tax-free

$300,000 taxable

John is delighted to discover he’s not required to pay tax on the $50,000 withdrawal.

1 This is known as the low rate cap, and is a lifetime limit.

Tax-free withdrawals before you turn 60


Henry and Anne Occupation: Henry is a groundsman and Anne is an administration officer Age: Henry is 65 and Anne is 64 Salary: $35,000 each Accumulation account balance: Henry has $250,000 and Anne has $100,000

Case study

Do you want to work past the age when you qualify for the pension? Did you know you could still be entitled to Centrelink benefits even if you continue working?

Henry and Anne’s situationHenry and Anne have reached the age where they both qualify for the age pension. They are both in good health and still enjoy working casually at a local high school.

They would like to take advantage of any social security benefits they may be eligible to receive, but assumed they wouldn’t be entitled to anything because they are earning too much.

What do Henry and Anne do?After reading an article in the newspaper about the Commonwealth Government’s pension bonus scheme, Henry and Anne make an appointment with Q Invest to discuss their eligibility for Centrelink entitlements.

Their adviser confirms they’ve both reached age pension qualifying age, but as both

their incomes are above the allowable threshold, they would not be entitled to any age pension. She explains the amount of age pension is calculated according to their incomes as well as their assets, which includes the value of their super, but not their family home.

The only other assets Henry and Anne own are their car and home contents, which have a combined value of $50,000.

Henry and Anne are advised that if they wish to continue working, they could apply for the Commonwealth Government’s pension bonus scheme, which provides them with a lump sum based on how long they’ve worked past their age pension qualifying ages and the amount of age pension that will be available to them at the time of their claim. Their adviser explains their bonus period starts once they’ve applied for the pension bonus scheme, but they’re not able to receive

other Centrelink payments (except for carer payment) during the bonus period.

Henry and Anne are informed they must also meet a work test of at least 960 hours of paid work each year to continue to qualify for the pension bonus scheme.1

Henry and Anne qualify to receive up to the benefits below, depending on how many years they continue to work from the time they register for the pension bonus scheme.

There are a range of other government benefits Henry and Anne could be entitled to, such as:

Health care cardPensioner concession cardCommonwealth seniors health cardQueensland seniors cardQueensland seniors business discount card.

The resultsHenry and Anne apply for the pension bonus scheme as soon as possible in order to start their bonus period. They both meet the 960 hours required in the next year of the bonus period.

Henry and Anne will continue to work, as they’re both aiming to achieve the maximum pension bonus, which they can only claim at the time they apply for the age pension. Continuing to work means they can contribute to their super for a longer period of time, which should provide them with a larger balance when they eventually retire.

Centrelink benefits while you are still working

1 The pension bonus scheme is subject to further terms and conditions – for more information see www.centrelink.gov.au.

Years (bonus periods)

Single2 Partnered2 (each)

1 $1,336.40 $1,116.402 $5,345.50 $4,465.703 $12,027.40 $10,047.804 $21,382.10 $17,862.705 $33,409.50 $27,910.50

2 These figures represent the maximum pension entitlement at the time of claim. They are as of 20 March 2008 and are a guide only. For further information on the amount you could be entitled to, please see www.centrelink.gov.au.


Eddie and Li Occupation: Eddie is a nurse and Li is an administration assistant Age: Eddie is 56 and Li is 54 Salary: $59,000 and $36,000 Accumulation account balance: Eddie has $122,000 and Li has $66,000

Case study

Are you approaching retirement but aren’t sure whether you have sufficient super to meet your retirement income needs? A Q Invest financial adviser can help you get back on track.

Eddie and Li’s situationEddie and Li both enjoy their jobs but at the same time are looking forward to retirement. Their goal is to retire when Eddie turns 60, which is about four years away. Eddie and Li are both currently salary sacrificing their standard 5% contributions.

Last year they paid off their mortgage. Eddie used some of the excess income they had to start making additional salary sacrifice contributions of $100 per fortnight into his super. But Eddie still had a nagging feeling they wouldn’t have enough super to maintain their lifestyle, and suspected they should probably contribute more while they were still working.

What do Eddie and Li do?They decided to attend the two-day QSuper Retirement preparation seminar, where they learnt more about the options and choices available to them to improve their situation. Realising they were a bit off track and wanting to understand their financial position, they used QSuper’s Budget planner calculator to figure out their current expenses. This confirmed they did have some money left over to contribute to super if necessary.

With this information, they made an appointment to see a Q Invest adviser. The adviser assessed their situation, with a view to increasing their retirement savings, and provided them with the following three strategies:

a) Put more in Contribute $300 more per fortnight into Eddie’s super and $100 more into Li’s super, and stick to their original retirement age goals of age 60 for Eddie and age 58 for Li.

$284,000 $321,000

$427,000

$519,000$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0

Eddie retires at 60 and voluntarily contributes $100Li retires at 58 and voluntarily contributes $0


Eddie retires at 65 and voluntary contributes $100Li retires at 63 and voluntary contributes $0

Current situationOption A

Option B


Option C

b) Work longer Maintain their current contribution rates, but delay retirement until age 65 for Eddie and age 63 for Li.

c) Put more in and work longer a combination of both A and B.

Their adviser showed them that by implementing strategy C, they can best maximise their super to meet their retirement income needs. He also reminded them that any contributions they make to super will be preserved until retirement.

The resultsEddie and Li are amazed by how much more they can save implementing option C, and are now aiming to continue working a bit longer, while also contributing more to their super. They have committed to reviewing their situation regularly in future to ensure they remain on track.

They are now looking forward to their retirement, with the comfort of knowing they are taking action to help them meet their retirement income needs.

For details of the assumptions used to project these outcomes please see page 12.

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QSuper is the State Public Sector Superannuation Scheme (ABN 60 905 115 063). This product is issued by the Board of Trustees of the QSuper Fund (ABN 32 125 059 006). We recommend you obtain and read the product disclosure statement (PDS) relevant to you before you make a decision to invest. The PDSs are available on our website at qsuper.qld.gov.au, or you can call us on 1300 360 750. Q Invest* is jointly owned by the QSuper Board of Trustees and QIC. *Q Invest Limited (ABN 35 063 511 580) AFS Licence 238274 (‘Q Invest’). © QSuper Board of Trustees 2008. QSuper and QIC do not accept responsibility for the financial advice or services provided by Q Invest, which is a separate legal entity operating under its own Australian Financial Services licence.

The figures in these case studies were calculated using the QSuper Super health check calculator, which can be found at qsuper.qld.gov.au/public/members/member_services/calculators/calculators.asp. You should take note of the following assumptions:• It is not uncommon for actual benefits to vary from projections due to actual crediting rates

being different to those projected. As an example, a rate 1% p.a. higher or lower than the rate chosen could result in a benefit significantly higher or lower than that projected.

• It is important to remember none of these figures are guaranteed. A change in circumstances affecting any of the other factors used in the calculations could similarly result in a benefit significantly higher or lower than that projected.

• A net crediting rate of 7.5% p.a. has been used. This rate is used to project all accumulation style monies to retirement. At retirement, if a pension is taken, 0.5% p.a. is added to the crediting rate to reflect the fact there is no tax within a superannuation fund on assets used to purchase retirement pensions.

• By default, results are shown in ‘today’s dollars’ so that they are consistent with today’s living standards.

• Salary increases are taken to be constant for the whole period. Crediting rates are also taken to be constant (apart from the 0.5% change at retirement described above).

• Indexation of salary and superannuation contributions is applied annually. A salary inflation rate of 3.5% has been used to achieve this.

Assumptions for case studies four and eight• Chosen working status assumed to be continuous to retirement and inputs and results are based on

whole numbers of years. • No allowance has been made for any super co-contribution that may be paid. • All employer and employee contributions have been taxed at 15% to take into account contributions

tax. In effect this means all employee contributions are assumed to be salary sacrificed making them concessional contributions.

• Insurance and income protection premiums have been projected. Premiums are indexed each year by salary inflation.

• The Accumulation account balance is assumed to grow with the net crediting rate. • In case study four, the annual gross retirement income is calculated as if taken in equal proportions

over years in retirement, allowing for salary inflation, and drawn in the middle of each year. It is important to recognise this income is not guaranteed for life.

• When calculating the retirement income in case study four, a projected retirement period of 30 years has been used.

• Taxation of benefit payments has not been taken into account, nor has provision been made for any existing surcharge debt.• No allowance has been made for any Centrelink entitlements retirees may be entitled to.Please note: The Queensland Government Actuary has confirmed the projections appearing in case studies four and eight, and that the above underlying assumptions are reasonable.

super scoop 2008 - for members thinking about retirement · 2016. 10. 28. · really is your...

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