In this issue:
> We asked
> Will you have
> Personal service
our new fund positioning
members what they think
enough to enjoy retirement?
and support to members
Introducing our new fund positioning
Combined Fund is the super fund for workers in the education and related sectors. To better reflect our focus, we’ve introduced a new positioning or “tagline” for the fund: YOU KNOW EDUCATION. WE KNOW SUPER We know our members in the education sector lead busy lives. They want a super fund with the expertise to look after their money while they get on with what they do best. Just as “you know education, we know super”. Combined (as in “Combined” Fund), it’s a strong partnership! We’re also proud to introduce a new look for the fund. We wanted a design that really puts the focus on our members in education and related sectors, as well as being visually engaging. This issue of IntheKNOW is the first RSE ABN 32 064 976 138 Fund ABN 46 921 400 504 communication in the new look. One thing that hasn’t changed is our “inter-locking blocks” logo. That’s because members told us they like it. The logo is simple, looks solid and has a permanency and professionalism about it (see “We asked members what they think” on the next page).
That we’ve been here for over 50 years lends weight to that stability and permanency. The interlocking blocks also reinforce the message that the fund is a combination of two strong parties – education experts and super experts. Another thing we won’t be changing is our focus on servicing members. As an industry fund for the education sector, we’re run only to profit members. That means we won’t be spending members’ money on changing our communications all at once. Instead, you’ll see our new look and tagline gradually introduced as publications and communications need to be updated or reprinted.
In thIs Issue:
RSE ABN 32 064 976 138 Fund ABN 46 921 400 504
Superannuation update deferral of higher conceSSional contributionS cap froM 1 July 2012 higher tax on conceSSional contributionS for Very high incoMe earnerS froM 1 July 2012
May 2012, Vol. 47
other bitS and pieceS Stronger Super reforMS coMbined fund inVeStMent optionS – reduction of feeS MeMber inVeStMent optionS – unit priceS inVeStMentS optionS coMpetition
The actual details of the operation of the higher concessional cap for over-50s have not been finalised and will be addressed over the
We asked members what they think In developing our new look and “You know education. We know super” tagline we asked members for their thoughts. We commissioned an independent company, Transform, to run member focus groups (small discussion groups) on what members think about the fund and our logo, how satisfied they are with current communications and what improvements might be made to the fund’s communications.
About the fund generally Participants told us that: The personal service members receive
Thank you to the members who participated in the focus groups You can see the Trustee has already taken on board your valuable input with the changes we’ve made to the fund tagline and look. The content of this newsletter is also designed to be relevant to members aged 40 and over, with members aged under 40 receiving a newsletter specifically for them. Further proof that we’ve listened to what our members told us. More initiatives are planned in future in response to your feedback.
when they phone the fund sets it apart from other super funds, particularly that you get a person picking up the phone (not a voice recording) who either knows you or others at your work. They like that the fund is not motivated by profit for share holders and that as an industry fund, all profits are returned to members. Confidence in super is low following the investment market volatility of recent years, but it is reassuring to know that the fund has been here for over 50 years.
Name and logo Participants told us that: The current “inter-locking blocks” logo is
seen as simple, rock solid, permanent and professional. However, the fund needs to explain what “Combined” in Combined Fund means. “You know education. We know super” is a strong, reassuring message that will better promote that the fund is here specifically for the education sector.
Satisfaction with current communications and suggested improvements Satisfaction with current communications
was significantly higher amongst older members than younger members but all seek information that is relevant to their life stage and personal interests. The fund needs to get better at explaining how the fund works, particularly when members first join. Members want to know if they are on track for a comfortable retirement and if not, what they can do to get there. Even when the news is bad, members want information delivered in an honest and upfront way. Communications need to be visually engaging, but “glossy/glitzy” material is considered to be a waste of members’ money.
The personal service members receive when they phone the fund sets it apart from other super funds. 2
Will you have enough to
enjoy retirement? Modest lifestyle vs comfortable lifestyle? Figures provided by the Association of Superannuation Funds of Australia (ASFA) are a commonly used starting point for working out how much is needed for retirement. ASFA has for the past few years researched the lifestyles of retirees and estimated how much people need for both a ‘modest’ and ‘comfortable’ retirement lifestyle. A ‘modest’ lifestyle in retirement, according to ASFA, is better than the Age Pension (the pension is currently $27,328 p.a. for a couple) but still only provides for fairly basic activities. For example, the communication budget for a couple with ASFA’s modest lifestyle is $71 per month. Think about how much you currently spend on internet, home phone and mobile phone combined in a month and consider whether you’d be able to stay under $71 month?
Few people know how much money they will need for retirement. The answer will depend on your lifestyle expectations. Unfortunately, for most people, expectation will fall short of reality. But much can be done to boost your super savings and make your retirement dreams a reality.
A ‘comfortable’ retirement lifestyle, on the other hand, is defined as one that enables a healthy retiree to be involved in a broad range of leisure and recreational activities and have a good standard of living. This includes the purchase of things such as household goods and electronic equipment, good clothes, a reasonable car, and domestic and occasionally international travel. It also allows for eating out more often and a greater spend on health cover, gap payments and pharmaceuticals. The figures below were current at 30 June 2012. Bear in mind that by the time you retire, costs will have increased and are likely to increase over your retirement. Modest
ASFA’s estimates suggest that if you’re a couple seeking a comfortable retirement you’ll need about $55,000 per year. Singles seeking a comfortable retirement will need about $40,000 per year. The next question is how much money will you need at retirement to generate your targeted income?
Will you have enough to
enjoy retirement? How much will I need? To afford the kind of retirement lifestyle you seek, you’re going to need a fair chunk of money. It’s estimated that a 65-year old couple who both live to their average life expectancy will need a combined super balance of about $520,000* to achieve ASFA’s comfortable lifestyle. A single person aged 65 would need about $430,000*. If you want to retire earlier than 65, it’s likely you’ll need even more. The unfortunate thing is most of us won’t achieve the lump sum we need. According to Federal Government Treasury figures, the average retirement lump sum for men is currently about $245,000 and the average for women $170,000. That’s short of the amount needed for ASFA’s ‘modest’ retirement lifestyle, let alone ‘comfortable’ lifestyle. So, what can you do to boost your super to achieve your retirement dream?
Estimate your projected super benefit at retirement Using ASFA’s Retirement Projector at www.superguru.com.au you can estimate the size of your projected retirement benefit based on your current super balance and expected contributions. The Retirement Projector also lets you check whether your projected benefit will be enough to generate your target income in retirement.
* Assumes the couple or a single person invests in an account based pension at age 65 earning a net investment return of 7.0% p.a., an inflation rate of 3.0% p.a. and the pension is being drawn annually at the end of the financial year. Source: ASFA SuperGuru calculator. 4
Making your retirement dream a reality There are many ways to boost your retirement savings. Even if you have only a few years until retirement you can still make a difference to your super balance and in turn, your retirement savings. You might want to consider:
1 2 3 4 5 6
Topping up your retirement savings with additional contributions either from after-tax pay or on a before-tax basis (known as salary sacrifice), subject to Government limits;
If your income is below $46,920, you may eligible for a ‘free’ co-contribution from the Government by making an after-tax contribution;
Consolidating the number of super accounts you have and potentially saving fees;
Making spouse contributions and getting a tax rebate;
Reviewing your investment choice to make sure it’s the right one for your needs;
If you’re over 55 and still working, using a transition to retirement strategy to increase your retirement savings without losing income.
Combined Fund offers you a number of ways to boost your super and make your retirement dream a reality. For more information call us on 1800 200 801 or speak to your financial adviser.
Boosting your super example Sharon is 45 with $130,000 in super and income of $75,000 p.a. Sharon is hoping to retire at age 60.
Currently, Sharon makes no additional contributions to her super – the only contributions going in are compulsory employer (Superannuation Guarantee) contributions. Based on this information, ASFA’s Retirement Benefit Projector at www.superguru.com.au estimates her projected super balance at age 60 is $339,819. Sharon realises that $339,819 will not be enough to support the comfortable lifestyle she seeks for retirement. ASFA’s Retirement Projector estimates that her retirement income will run out at 72 and her life expectancy is much longer than that (currently 83 for females). She decides to put an extra $500 per month ($6,000 p.a.) in salary sacrifice contributions to her super between now and retirement. Doing this boosts her estimated retirement benefit at 60 to $437,713. Sharon’s new projected benefit is estimated to last until 80. Although Sharon will be reliant on an aged pension after 80, she’s comfortable with that. 5
Responsible investing Since 2006 Combined Fund has offered members a Sustainable Responsible Investment (SRI) Balanced option (prior to this it was called the Ethical Investment Option). The objective of the SRI option is to provide an investment return that exceeds changes to the Consumer Price Index (CPI) by 3% per annum over rolling 3-year periods. To achieve that objective, the SRI option invests in a cross-section of diversified assets with an emphasis on growth from sustainable responsible investments.
What is Responsible Investing? Responsible Investing focuses on investing in companies that contribute to a socially and environmentally sustainable world.
The Combined Fund SRI Balanced Option is managed by AMP Capital Investors. From a social and environmental perspective, AMP Capital seeks out managers that identify leaders across industries, in their responsible approach to the following SRI issues:
Environmental Considerations including energy and resource use and product stewardship (for example, where a company takes into account the life cycle of the product, from manufacture to the extent to which the product can be recycled);
Social Considerations including indigenous relations and community involvement;
Ethical Considerations including meeting fundamental human rights and articulating and implementing a Code of Conduct;
Labour standards including the Occupational Health and Safety, International Labour Organisation standards, working conditions and the exclusion of child labour; and
Governance considerations including meeting corporate governance guidelines on board structures and remuneration. Additionally, investment managers and funds must also be well regarded if they actively participate in corporate engagement and governance initiatives.
Managers are also required to avoid companies operating within sectors with recognised high negative social impact. This means that investments will avoid exposure, either directly or indirectly through underlying managers and funds, to companies with material exposure to the production or manufacture of alcohol, armaments, gambling, pornography, tobacco and uranium. Material exposure is considered to be where a company derives more than 10% of its total revenue from these industries.
Combined Fund is one of only eight funds in Australia which are certified by the Responsible Investment Association Australasia (RIAA) under their Certification Program in the category of Superannuation Fund and is one of only two funds which have been certified since the program commenced in 2006. The Certification Symbol signifies that a product or service offers an investment style that takes into account environmental, social, governance or ethical considerations. The Symbol also signifies that Combined Fund has adopted strict disclosure and education practices required under the Responsible Investment Certification Program for the category of Superannuation Fund.
The Certification Symbol is a Registered Trade Mark of the Responsible Investment Association Australasia (RIAA). Detailed information about the RIAA, the Symbol and Combined Fund’s methodology and performance can be found at www.responsibleinvestment.org.au together with details about other responsible investment products certified by the RIAA.*
* The Responsible Investment Certification Program does not constitute financial product advice. Neither the Certification Symbol nor the RIAA recommends to any person that this financial product is a suitable investment or that returns are guaranteed. RIAA is not a financial services business and does not hold an Australian Financial Services Licence.
INVESTMENT OPTIONS – UNIT PRICES The following are the unit prices and returns for each Combined Fund investment option as at 31 July 2012:
The following are the unit prices and returns for each Combined Fund Pension investment option as at 31 July 2012:
Return Calendar year to date
Return 1 year
Return 3 years per annum
Return Calendar year to date
Return 1 year
Return 3 years per annum
Note: Past performance is not an indicator of future performance.
Personal service and support to members Member research told us you really value that when you ring Combined Fund you speak to a real person, not just a voice recording. So we thought it would help if you actually knew the faces behind the voices at the end of the phone.
Client Services Manager
Enquiries & Complaints Officer
Senior Fund Administrator
Senior Fund Administrator
Senior Fund Administrator
Senior Fund Administrator
This newsletter is intended to provide general information and not advice. It should not be relied upon as advice or take the place of professional advice. This newsletter has been prepared without taking into account your individual objectives, financial situation or needs. Before acting on the contents of this newsletter, you should consider whether it is appropriate for you, having regard to your objectives, financial situation and needs. You should consider obtaining professional advice from a licensed financial adviser. Issued by SuperBPO Pty Ltd ABN 83 082 989 142 (Australian Financial Services Licence 239636) on behalf of the Trustee of Combined Fund.
ENVI 50/50 ENVI 50/50 is an Australian Government certified Greenhouse Friendly Product.
Combined Fund Level 9, 155 Queen Street, Melbourne Vic 3000 GPO Box 4559, Melbourne Vic 3001 Telephone: (03) 9691 2900 or 1800 200 801 Fax: (03) 9640 0787 Email: [email protected]
You can contact Combined Fund on 1800 200 801