Super-size your retirement savings

Information correct as at 1 September 2012.

CP/SS/BRO 854.2 09/12 ISS2 i

Super-size your retirement savings Super is one of the easiest and most tax-effective ways to save for retirement.

Contents

Modest vs. comfortable retirement

If you’re working, your employer is obliged to make regular contributions to your nominated super account. These are Superannuation Guarantee (SG) payments, and by law they must at least equal 9% of your before-tax salary.

01 Super-size your retirement savings 02 Who can contribute to super?

In the 2012-2013 Federal Budget, the Government said it will gradually raise SG contributions to 12% by 2020. While this is a significant increase, it still may not be enough to ensure a comfortable retirement.

03 Limits on contributions 03 Salary sacrifice contributions

This guide shows how to super-size your retirement with contributions over and above those made by your employer. Some of these strategies are also tax-effective, further enhancing your super’s growth potential.

05 After-tax personal contributions 09  FORM – Financial planning interest

Even topping up your contributions by $10 or $20 per week can make a big difference to your retirement income. The earlier you start, the more time your savings have to grow and benefit from the effect of compounding interest.

Five easy ways to contribute to your super

60,000

Payroll deduction Your employer can deduct personal and/or salary sacrifice contributions from your pay and include them with their SG contributions to Club Plus Super.

BPAY® Contribute to your Club Plus Super account with BPAY®. Log in to MemberAccess to get a biller code and reference number, or call us on 1800 680 627.

Direct debit Complete the direct debit form on our website to make regular contributions to your Club Plus Super account.

BPAY® is registered to BPAY Pty Ltd, ABN 69 079 137 518

Electronic Funds Transfer (EFT) Make contributions online through your banking facility, then email [email protected] confirming your member number, name and the amount contributed.

On the other hand, a comfortable retirement extends your budget to things like quality household goods, private health insurance, a reasonable car, nice clothes and electronic equipment. You may even indulge in occasional domestic or overseas holidays, if you budget for it.

Achieve the retirement you deserve The chart below shows how much you’ll need to enjoy a modest or comfortable lifestyle in retirement (assuming you retire at age 65 and live to 85).

Government Age Pension per annum* Annual income needed for modest retirement

50,000



$55,080

Annual income needed for comfortable retirement

40,000

$40,297

30,000

Cheque Send cheques to us with a letter stating your member number, name and that you are making a personal contribution. Payee: Club Plus Super Mail to: Locked Bag 5007 PARRAMATTA NSW 2124

To picture a modest retirement lifestyle, imagine living on the Age Pension. Although slightly better, a modest retirement is characterised by tight budget limitations. Overseas travel, dining out and many other leisure activities are out of your reach.

$31,643 $27,253.20

20,000

$21,946 $18,077.80

10,000

0

Single

Couple

Source: Association of Superannuation Funds of Australia May 2012 The ASFA Retirement Standard. * As at 20 March 2012, sourced from centrelink.gov.au. These amounts exclude the Pension Supplement amount which is currently a maximum of $60.20 per fortnight for singles and $90.80 per fortnight for couples (combined).

1

Limits on contributions

Salary sacrifice contributions

There are limits (caps) to how much you can contribute to super each year before being subject to extra tax. These caps differ for concessional and non-concessional contributions.

Salary sacrifice is an efficient way to boost your super. It’s also tax effective, with contributions taxed at only 15% - not your marginal income tax rate of up to 45%, plus the Medicare levy. Salary sacrificing will also reduce your annual assessable income. For example, if your income’s $50,000 and you sacrifice $1,000, your assessable income becomes $49,000.

Concessional contributions are those for which a tax deduction has been claimed, and are subject to 15% tax. They include employer and salary sacrifice contributions. From 1 July 2012 all individuals have a concessional contributions cap of $25,000*. * For the latest information about contribution caps, visit www.ato.gov.au

Who can contribute to super? In general, anyone can contribute to super. After age 65 you must work at least 40 hours during a consecutive 30 day period each financial year to make super contributions.

Who

Type of contribution

Your employer

SG contributions are paid by employers on your behalf. The minimum contribution rate is currently 9% of your Ordinary Time Earnings (OTE).

You

If you are under 65, you can make voluntary before-tax salary sacrifice contributions, or after-tax personal contributions. Once you turn 70 you can only make personal after-tax contributions to your super.

Your spouse

Your spouse can contribute to your Club Plus Super account, and you can contribute to theirs (if their fund allows).

The government

If you make personal after-tax contributions, you may qualify for a government co-contribution. To find out how much you could receive, visit www.clubplussuper.com.au/calculators

2

Non-concessional contributions are after-tax contributions for which no tax deduction has been claimed. The cap for non-concessional contributions is $150,000 a year. If you are under age 65, you may take advantage of the ‘bring forward’ and contribute $450,000 in one year, but you won’t be able to make any personal contributions for the next two financial years. The Government does not tax these contributions as tax has been previously paid.

There are a few things to consider before making a salary sacrifice.

It’s voluntary. Ask your employer if they offer a salary sacrifice option. If so, ensure your salary sacrifice agreement is clearly documented in writing.

Importantly, confirm your SG contributions are calculated on your pre-sacrifice income.

Any tax savings depend on your level of income. Salary sacrifice may be tax effective if you fall in the highest tax bracket. If your marginal tax rate is 15% or less, making personal after-tax contributions could be more effective, as you might qualify for a government co-contribution (see page 6).

Salary sacrifice counts toward concessional contribution caps. Contributions exceeding concessional contribution caps will be taxed at 31.5%. Tax may apply to salary sacrifice contributions if withdrawn from super before age 60.

Salary sacrifice summary The above points underline the importance of seeking good advice before you enter into strategies like salary sacrifice. You need to balance what you can afford with how much you want to contribute, taking care not to exceed your contribution cap.

3

Here’s an example: Andrew earns $80,000 p.a. and receives annual SG contributions of $7,200 (9% of his Ordinary Time Earnings). Andrew decides to boost his super with an annual salary sacrifice of $10,000, also reducing his taxable income to $70,000. To ensure his SG contributions are not adversely affected, Andrew gives clear written instruction to his employer to pay SG contributions based on his $80,000 pre-sacrificed salary. If his employer based SG contributions on his post-sacrifice salary of $70,000 by mistake, Andrew would lose $900 p.a.

After-tax personal contributions After-tax contributions are those made to super from after-tax income. No tax is deducted for these contributions and they are deemed non-concessional. You can make regular after-tax contributions to Club Plus Super through payroll deductions or direct debit. One-off payments can be made using BPAY® or by cheque. By making after-tax contributions, you may be eligible to receive a government co-contribution.

To receive a co-contribution you must*: • make an after-tax personal contribution to super and not claim a tax deduction for it • earn at least 10% of your income from eligible employment, or as a self-employed person (or a combination of both) • earn total an annual income of less than $46,920, including reportable fringe benefits and any salary sacrifices • be under 71 years of age • be a permanent resident of Australia and not have held an eligible temporary working visa for any part of the year • provide your tax file number to Club Plus Super

Here’s an example: Rebecca (45) salary sacrificed $24,000 in the 2011/2012 financial year. She also received $12,000 in SG contributions, bringing her total concessional contribution to $36,000 - exceeding her cap by $11,000. This $11,000 was subject to 15% contributions tax and a penalty tax of 31.5%. That’s a total of 46.5% in tax, and a loss of an extra $3,465. On top of that, the $11,000 contributed to her non-concessional cap.

• lodge a tax return. Co-contribution entitlement depends on income level and after-tax contribution amounts. If you’re eligible (see page 6) and earn up to $31,920 p.a., you could receive a co-contribution of up to $500 a year. Co-contribution amounts steadily decrease as income exceeds $31,920. Reducing amounts are paid up to a maximum income of $46,920, after which eligibility ceases. * This is based on 2012/13 Budget announcements, with legislation yet to be passed.

Find out how to super-size your retirement with a salary sacrifice strategy. Make an appointment with a Club Plus Financial Planner by calling (02) 9376 9422, or email [email protected] 4

5

Co-contribution guide* This table shows proposed maximum cocontributions based on assessable income. Assessable income is your total salary plus any fringe benefits, bank interest and investment returns. As co-contributions are based on your pre-sacrifice salary, anything you salary sacrifice is also part of your assessable income. If self-employed, your assessable income is your gross income less any tax deductions.

Jack (50) is a permanent resident with a salary of $35,000 p.a. On top of this, he earns $5,000 from investments. In the 2012/2013 tax year he makes personal contributions of $600 to super. To qualify for a co-contribution, Jack must satisfy the following criteria:

Maximum co-contribution entitlement ($)

Personal contribution required to receive maximum co-contribution ($)

500

1,000

35,000

397

794

40,000

230

460

45,000

64

128

0

0

31,920 or less

46,920 or more



* This is based on 2012/13 Budget announcements, with legislation yet to be passed.

Please contact me to discuss my financial planning options and arrange my FREE initial consultation. Full name: Member number (if known):

D.O.B:

Partner’s name (if applicable): Partner’s member number (if applicable):

Did he make personal contributions? Total income including salary sacrifice & reportable fringe benefits ($)

Financial planning interest

Here’s an example:

Yes. $600 Address:

Did he earn at least Yes. 90% 10% as an employee? came from employment Did he earn less than the Yes. higher income threshold His total (currently $46,920)? assessable income is $40,000 Is he below age 71?

Yes

Does he live in Australia?

Yes

Did he hold a temporary working visa at any time during 2012/2013?

No

Based on the co-contribution guide (left), Jack is eligible for a maximum co-contribution of $230.

Phone:



Email:

Preferred contact method: Preferred contact time:

Areas of interest (tick all that apply): Retirement planning



Investment options

Pensions/Income streams



Tax-effective strategies

Boosting your super



Personal insurance needs

Salary sacrifice



Centrelink entitlements

Super consolidation



Transitioning to retirement /Accessing your super

Other:

For the latest information about co-contributions, call the ATO Hotline on 13 10 20.

6

Register your interest Please return this form to Club Plus Financial Planning and a consultant will contact you as soon as possible. To post this form, simply detach along the perforation, fold it in half and stick along the gummed edge. Alternatively, scan and email the form to [email protected] or fax it to 02 9231 6955.

7

Calculate your dream retirement We’ve developed a suite of online calculators that offer practical strategies to boost your super, optimise investment decisions and secure enough insurance cover. The calculators produce tailored, printable programs to help you achieve the retirement you deserve. • Government co-contribution calculator Find out if you’re entitled to a government co-contribution - and how much. • Contributions and retirement calculator See how to turbo-charge your super and achieve the retirement you deserve. • Investment choice calculator Discover the best investment options for you.

AFFIX STAMP

• Insurance calculator You’re more important to your family than you realise. Is your health and income properly insured?

HERE

Club Plus Financial Planning GPO Box 3774 Sydney NSW 2001

8

Get calculating To access our handy calculators visit www.clubplussuper.com.au/calculators

9

Member Hotline: 1800 680 627 Website: www.clubplussuper.com.au

by your side

Issued by Club Plus Superannuation Pty Ltd ABN: 26 003 217 990, AFSL No. 245362, RSEL No. L0000529, as Trustee for Club Plus Superannuation Scheme. ABN 95 275 115 088, RSER No. R1000757. The information contained in this brochure is general information only and does not take into account your individual investment objectives, financial circumstances or needs. You should not rely on this information as a substitute for professional advice. Information provided does not constitute financial, taxation or other professional advice and should not be relied upon as such. You should not rely upon this information without your obtaining financial, taxation and other professional advice. If you would like to consult a qualified financial planner before making your decision, you can obtain no commission based professional financial advice from Club Plus Financial Planning on a range of financial issues including superannuation, retirement planning, wealth creation, income protection and personal life insurance. Club Plus Financial Planning Pty Ltd (ABN 14 143 636 766) is a corporate authorised representative #367058 of Mercer Investment Nominees Limited