wealth creation & protection - unisuper/media/0431c10d41e14a1b8163... · 2016-12-07 ·...

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Wealth Creation & Protection

29 August, 2013

Wealth Creation & Protection – 29 August, 2013 2

The information contained within this presentation is intended to provide general advice only. It has been prepared without taking into account your objectives, financial situation or personal needs. Prior to making any investment decisions, you should speak with a financial adviser to consider whether this information is appropriate for your needs, objectives and circumstances.

You should obtain a copy of the relevant product disclosure statement (PDS) prior to making a decision regarding any investment in any financial product.

This information is current as at July 2013 and is based on our understanding of legislation at that date.

Information relating to the 2012/13 & 2013/14 Federal Budgets, and announcements made by the Federal Government on 5 April 2013 is based on our understanding of the proposals. The information provided in this presentation in relation to these announcements is subject to change and certain proposals may not become effective until they are enacted by Parliament. You should not rely on this information and it should be verified prior to making any decision

The information contained in this presentation is not legal, taxation or accounting advice. Professional advice should be obtained before making any decisions. Whilst care has been taken in the preparation of this information, the accuracy or completeness of the information is not guaranteed.

This presentation was prepared and issued by UniSuper Management Pty Ltd ABN 91 006 961 799, AFSL No: 235907, which is also the administrator of, and wholly owned by, the UniSuper Superannuation fund (ABN 91 385 943 850). UniSuper Limited (ABN 54 006 027 121) is the trustee of the fund. If you would like to contact us please do so on 1800 331 685 or alternatively send us an email to [email protected]

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Wealth Creation & Protection – 29 August, 2013

UniSuper’s awards - Super

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SuperRatings, a superannuation research company,has awarded UniSuper a Platinum rating for itsAccumulation products. SuperRatings InfinityRecognised is awarded to super funds that clearlydemonstrate excellent sustainable business practicesand responsible investment principles. Go towww.superratings.com.au for details of its ratingcriteria. SuperRatings does not issue, sell, guaranteeor underwrite this product

Chant West, has awarded UniSuper a 5 Apples ratingfor its Accumulation products. Further informationabout the rating methodology used by Chant West,see www.chantwest.com.au


About UniSuper

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Run exclusively for the higher education sector

Covers 37 universities and over 200 related bodies

Low fees & competitive insurance

Spouse membership available

Online access with weekly switching available

In-house administration & investment teams

Most employers can contribute to UniSuper

Superannuation & Income Streams

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UniSuper investment performance

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Balanced option performance over 1, 3, 5, 7 and 10 years (to 31

December 2012) is above the SuperRatings median*

- Best performing Balanced fund in 2012 according to

SuperRatings - return for 12 months to 31 December 2012 was

14.96%

UniSuper’s 9 year rate of return across all products and investment

options to 30 June 2012 ranks 4th (out of 159 funds)**

*SuperRatings return data 31 December 2012 as published on 21 January 2013. Does not take into account anysubsequent revisions or corrections made by SuperRatings.

**(APRA) Statistics Superannuation Fund‐level Rates of Return Report 9 January 2013.

The past performance of an investment option should not be relied upon as an indicator of future performance.


How our balanced option has performed

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Source: SuperRatings return data 30 June 2013 as published on 23 July 2013. Does not take into account any subsequent revisions orcorrections made by SuperRatings. Note: Returns greater than one year are annualised returns.

The past performance of an investment option should not be relied upon as an indicator of future performance. Option and benchmarkreturns are calculated net of investment expenses and fund taxes but are gross of account-based fees. SuperRatings median returns areas published by SuperRatings and reflect returns calculated using SuperRatings/participants methodology.

Returns (Accumulation) to 30 June 2013

0%

4%

8%

12%

16%

1 year 3 year (p.a.) 5 year (p.a.) 7 year (p.a.) 10 year (p.a.)

UniSuper Balanced Option SuperRatings Balanced Option All Funds Median

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What we will cover

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Overview: Investing inside v outside of super

Paying down non-deductible debt

Contributions & Caps overview

Contribution Incentives

Your insurance options

Your risk profile & Investment options

Where to from here?


Overview: Investing inside v outside of super

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Investing inside versus outside of super

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Inside Superannuation Outside Superannuation

Tax on earnings (Accumulation)

Maximum of 15%*

At marginal rate (up to 46.5%)*

Tax on assessable capital gains(Accumulation)

10% if asset is held for at least 12 months (15% where asset is

held for under 12 months)

Tax on earnings & assessable capital gains (Pension)

Tax Free

Contribution incentives

Pre-tax contributions allowed. Government contribution

incentives available

No pre-tax contributions & few (if any) Government

contribution incentives

Minimum contribution

No minimum contribution to an accumulation account

Some investments have minimum investment amounts

* Further reduced by any imputation/franking credits received



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Inside Superannuation Outside Superannuation

Access to investments

Pooled funds allow access to investments generally inaccessible

for individual investors (e.g. wholesale funds)

Limited access to wholesale funds unless part of a pooled

investment fund

Estate PlanningBenefits can be directed to

nominated beneficiaries without the need to go through the estate

Generally, benefits must go through the estate

Access to fundsGenerally no access to funds until you reach preservation age (age 55

to 60)

Generally, you can access funds at any time unless the product limits

access

Contributions CapsStrict limits on how much you can

contribute each yearGenerally no limits on how much

you can contribute

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Pension Accumulation Non Super

10% return $50,000 $50,000 $50,000

Tax on return 0%15%*

($7,500)Up to 46.5%*

($23,250)

Net return $50,000 $42,500 $26,750

After-tax return 10% 8.5% 5.35%

Example: Consider the tax treatment of an account balance of $500,000 and a before

tax return of 10% . . .

* Further reduced by any imputation/franking credits received.


Paying down non-deductible debt

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$0

$100,000

$200,000

$300,000

$400,000

$500,000

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Expedite non-deductible debt repayments

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Home loan example:

Mortgage amount: $500,000

Loan term: 30 years

Interest rate: 7.5% p.a.

Standard Repayment: $3,496 per month

Interest cost savings from extra repayments (present value)^

• $100 per month = $28,225

• $200 per month = $50,747

^Based on inflation of 3% p.a.

Total Payments*

• $3,496 per month = $1,258,538

• $3,596 per month = $1,172,253

• $3,696 per month = $1,107,095

Standard

Extra $100pm

Extra $200pm

Term (years)*Across the term of loan


Contributions and Caps Overview

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Building an adequate retirement lump sum

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Relying on employer contributions alone may not be enough

Most individuals will need to contribute additional amounts to

achieve their retirement income goals

‐ Remember: we are living longer in retirement

The earlier you start contributing the better

Understanding the effectiveness of a regular contribution regime

and dollar cost averaging is important


Remember: A little goes a long way

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$‐

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

25 30 35 40 45 50 55 60

Scenario 1: $2,000 a year from age 25 until age 60 (total contributions of $72,000)

Scenario 2: $5,000 a year from age 40 until age 60 (total contributions of $105,000)

Data assumes an investment return of 8% p.a.. No allowance has been made for fees, costs and taxes.

Scenario 1 ends up being more than $120,000 better off

$372,204(Scenario 1)

$247,115(Scenario 2)

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Dollar Cost Averaging

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Relying on employer contributions alone may not be enough

Timing the investment market is almost impossible

Dollar cost averaging looks to reduce the risk of investing when

prices are high

It is the method of investing a consistent amount over a sustained

period of time

‐ e.g. regular contributions to a superannuation account

Seeks to lower the total cost per investment (e.g. share price)


Purchased 430 shares for $1,600

Average Purchase Price: $3.72 ($1,600 / 430)

Note: Dollar cost averaging does not guarantee against losses

Dollar Cost Averaging Example

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Amount Invested Share Price Quantity

$400 $2 200

$400 $4 100

$400 $8 50

$400 $5 80

$1,600 $4.75 (average listed price)

430

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Types of contributions

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Concessional

(from before-tax income)

Contribution taxed at 15%

Non-Concessional

(from after-tax income)

Contribution not taxed


Contributions and caps

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Contribution TypeConcessional (before-tax)

Non-Concessional (after-tax)

Employer

Standard Member before-tax (e.g. 8.25%)

Standard Member after-tax (e.g. 7%)

Voluntary – salary sacrifice

Voluntary – after-tax

Deductible e.g. self employed or retired)

Spouse Contribution

* Plus potential interest charge

2013/14 Contribution Limits Concessional Non-Concessional

Under age 60 $25,000 p.a. $150,000 p.a. or$450,000 (over 3 years

and under age 65)Age 60 or over $35,000 p.a.

Tax on Excess ContributionsMarginal tax

rate*46.5%

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Contribution Incentives

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Understanding Salary Sacrifice

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Is a before‐tax (concessional) contribution to superannuation

Example: Heather is considering salary sacrificing $10,000

If taken as income(fully taxable e.g. at 34%)

If Salary Sacrificed

(taxed at 15%)

SuperannuationAccount

SuperannuationAccount

$10,000 of Salary$10,000 of Salary

Note: Concessional contributions limits apply

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Co-contribution benefit

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Federal Government will contribute $500 into your account

where:

You are aged less than 71

Your assessable income is less than $33,516

At least 10% of your income is from gainful employment

- includes self employment income

You have made a non-concessional contribution of $1,000 into

your account

You lodge a tax return


Low Income Superannuation Contribution

Federal Government will provide a LISC of up to $500 for those

individuals with taxable income up to $37,000

Effectively refunds the tax paid on their employer superannuation

guarantee contributions (up to a maximum of $500)

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Spouse Contribution tax offset

Available for couples

Where one member of the couple has little/no income

Allows partner to claim a tax offset of $540 where:

- They contribute $3,000 as an after tax contribution into receiving spouse’s

account

- Receiving spouse is under age 65 (if over age 65 – must meet work test)

- Receiving spouse earns less than $10,800 in income p.a.

Partial tax offset is available where receiving spouse’s income is up to

$13,800 p.a.

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Your insurance options

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DBD or accumulation 2> Inbuilt death & disablement benefits

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Monthly Disablement Benefit:

In event of disablement; or

Temporary incapacity

Lump Sum Benefit:

In event of death; or

Terminal medical condition

Designed to give you and your beneficiaries a level of protection

Monthly Disablement benefit = to 60% of benefit salary

- This will take into account how much of your work has been full time.

Your super continues to accrue. UniSuper will pay your employer

contributions and standard member contributions during this time.


Additional cover available to you

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Type of cover DBD / Accum 2 Accum 1

Optional Death & Disablement insuranceOne default unit of death and disability cover, with option to opt-out

*

Optional Death & Disablement insuranceAdditional units of death and disability cover available if you need more

*

Optional Income Protection insurance

* Restrictions apply. For example, if a member elects contribution flexibility, they may not be able to access optional insurance cover.

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Benefits of Insurance through super

Generally lower insurance premiums

where cover is through a group life basis (e.g. UniSuper)

Lower out of pocket expenses

due to premiums being deducted from super account

Insurance premiums can be funded from pre-tax

contributions

e.g. from salary sacrifice or employer contributions

Less onerous insurance underwriting requirements

including disclosure of personal medical information

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Benefits of Insurance through super

Premiums for Life, TPD (Total & Permanent Disablement) and

Income Protection are often tax deductible

- results in less contributions tax (normally 15%) deducted from

before-tax (concessional) contributions

- Note: income protection premiums for policies outside of super

are also tax deductible

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Insurance through super - Disadvantages

Accessing insured benefit in the event of TPD

- in addition to satisfying insurance policy requirements, you must

satisfy a superannuation condition of release (e.g. permanent

incapacity)

Payment process can take longer

- step 1: Insurer pays benefit to super fund

- step 2: Super fund pays benefit to you or your beneficiary

Life insurance only payable to certain parties including your:

- spouse, children, financial dependants and your estate

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Insurance through super - Disadvantages

Tax-free Life insurance payments only apply to certain beneficiaries

- e.g. spouse or a child under 18 years of age

- non-super life insurance policies are usually tax-free regardless of who

the recipient is

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Your Risk Profile & Investment Options

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Get to know your tolerance to risk

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Low Expected risk High

Hig

hLo

wP

oten

tial r

etur

n

The higher the potential return,

Defensive assets

Growth assets

Single-asset class options

Australian Bond

Conservative Balanced

Listed Property

Australian Shares

International Shares

High Growth

Socially Responsible High Growth

Cash

Capital Stable

BalancedSocially Responsible Balanced

GrowthGlobal Environmental Opportunities

Australian Equity Income

Global Companies in Asia

the higher the potential risk . . .

This is a conceptual chart showing the risk/return trade offs where ‘risk’ means volatility as opposed to the risk of a negative return

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Making the most of your Accumulation account

Choose your investment option

Tax-free Life insurance payments only apply to certain beneficiaries

A single Pre-Mixed investment option or elect your own mix from our

range of:

- 6 Pre-Mixed investment options, and

- 9 Single Asset Class investment options

UniSuper offers separate investment choice functionality to:

- Direct how future contributions are invested

- Direct how rollovers are invested

- Switch your existing investments independent of which options your future

contributions are invested

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Pre-Mixed investment options

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Investment option Strategic Growth/Defensive asset mix (%)

Performance objective over suggested

investment horizon

Capital Stable 30/70 2.0% pa + CPI

Conservative Balanced 50/50 2.5% pa + CPI

Balanced 70/30 3.0% pa + CPI

Socially Responsible Balanced 70/30 3.0% pa + CPI

Growth 85/15 4.0% pa + CPI

High Growth 100/0 5.0% pa + CPI

As at 30 June 2013. Each investment option has a strategic asset allocation to various asset classes. Actual allocations to each asset class (and therefore to growth and defensive assets) may deviate within permitted ranges. Strategic asset allocations and permitted ranges may change from time to time. Refer to our website for further details. Source: www.unisuper.com.au/investments/options-and-performance.

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Sector investment options

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Investment option Strategic Growth/Defensive asset

mix (%)

Performance objective over suggested investment

horizon

Cash 0/100 0.5% pa + CPI

Australian Bond 0/100 1.0% pa + CPI

Listed Property 100/0 3.0% pa + CPI

Australian Shares 100/0 5.0% pa + CPI

International Shares 100/0 5.0% pa + CPI

Socially Responsible High Growth 100/0 5.0% pa + CPI

Global Environmental Opportunities 100/0 5.0% pa + CPI

Australian Equity Income 100/0To exceed the Australian equity

market dividend yield, and provide potential for capital growth

Global Companies in Asia 100/0 5.0% pa + CPI

As at 30 June 2013. Each investment option has a strategic asset allocation to various asset classes. Actual allocations to each asset class (and therefore to growth and defensive assets) may deviate within permitted ranges. Strategic asset allocations and permitted ranges may change from time to time. Refer to our website for further details. Source: www.unisuper.com.au/investments/options-and-performance.


Where to from here?

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Next steps…

Consider a regular contribution regime to build your super

- The earlier you start the better

Take advantage of contribution incentives if relevant to your situation

Consider your insurance requirements

Consider how your accumulation funds are invested

- Do they match your risk tolerance?

Visit UniSuper’s website: www.unisuper.com.au

Call UniSuper’s Helpline 1800 331 685

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Call UniSuper Advice today on 1300 331 685 for a complimentary initial assessment on the level of advice that might suit you

How UniSuper can help

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UniSuper offers 3 levels of advice:

General Advice (phone-based)

- Not specific to your personal situation

Limited Advice (phone-based)

- Single issue personal advice specific to your situation

Comprehensive Personal Advice (face to face)

- Full personal advice covering multiple issues specific to your

situation

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MemberOnline

Straightforward registration

Account balance (updated daily)

Investment switching

Statements & transaction history

Fact sheets, tutorials & calculators

Insurance cover and much more . . .

Register today at www.unisuper.com.au

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Any questions?

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wealth creation & protection - unisuper/media/0431c10d41e14a1b8163... · 2016-12-07 ·...

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