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Make the Most of Your Super

Make the Most of Your Super. Presented by John Frogley, DFP Manager – Employer Services, Catholic Super February – June 2010. Disclaimer.

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Make the Most of Your Super

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  1. Make the Most of Your Super Presented by John Frogley, DFPManager – Employer Services, Catholic Super February – June 2010

  2. Disclaimer The information provided is about the Fund and is not intended as financial advice. It does not take into account specific needs, so you should consider your personal position, objectives and requirements before taking any action. The information is also subject to change. Authorised by the Trustee of Catholic Super, CSF Pty Limited (ABN 50237986957) (AFSL 246664) (RSE L0000307) (RSE R1000597).

  3. Agenda • Catholic Super Overview & Returns • Catholic Super Fund Merge • Superannuation Rules • Super Salary Sacrifice – How it works • Transition to Retirement • Government Super Co-Contribution • Insurance Options Overview

  4. History • Established in 1971 • Over 70,000 members* (approx. 2,500 pension members) • Over $3.7 Billion in assets* • All profits to members • Member Services 1300 655 002 Peter BugdenChairman * Approx. 02/2010 Frank PeganChief Executive Officer

  5. About Catholic Super • Your choice of “Build Your Own” investment options • Access to CSF Financial Planning Services • Account based Pensions • Member Online – access to account online facility • Education Seminars • Public Offer (Personal Plan) • Information including newsletters and brochures • Member Services 1300 655 002

  6. Summary – Super Rules … • No Super Lump Sum Benefits Tax from age 60 • No Income Tax on Super Pensions from age 60

  7. Summary – Super Rules … • Employer contribution limit from $50,000 to $25,000 under age 50 • effective 1st July 2009 • - Employer contribution limit Age 50+ from $100,000 to $50,000 till • 2011/12 then to $25,000 for all ages • ‘Transition to Retirement’ Strategy • After tax contribution limit of $150,000 per year** • 1st July 2009, access to co-contribution via salary sacrifice changed * Conditions apply ** $450,000 up front or limit can be averaged over 3 years.

  8. Your Account Super – How does it work? You Investments - MIC Options - Fund Managers Contributions Employer Admin Costs Taxation Insurance Costs

  9. Investment Options % Defensive investments • Cash • Fixed interest • Alternative assets % Growth investments • Property • Shares • Alternative assets LowerRisk Vs ReturnHigher • more stable • tend to produce lower long-term returns • can be more volatile • potential for higher growth over the long term • required to achieve higher return in excess of inflation

  10. Investment Choice • FIVE ‘Managed Choice’ options • Aggressive • Moderately Aggressive • Balanced • Moderately Conservative • Conservative or • FIVE Asset class specific Choices • Australian Shares • Overseas Shares • Property • Diversified Fixed Interest • Cash

  11. We have 44 Investment Managers to provide Diversification Australian Share Managers : 7 (including 1 large and 1 small cap manager) Overseas Share Managers : 9 Private Equity Managers : 6 Currency Manager : 1 Direct Property Managers : 9 Listed Property Managers : 1 Fixed Interest Managers : 3 Cash Manager : 1 Infrastructure Managers : 5 Absolute Return Managers : 2 Catholic Super Managers grouped by asset class. Source CSF Website @ 09/02/2010; listing current @ 18/05/2009

  12. What are the 15 Major Share Investments within the Fund, both in Australia and Overseas? Australian Shares: % BHP Billiton Limited 7.9 National Australian Bank Ltd 5.3 ANZ Banking Group 5.1 Commonwealth Bank of Aust 4.5 Westpac Banking Corporation 4.5 Rio Tinto Limited 3.2 Woolworths Limited 2.6 CSL Limited 2.0 Telstra Limited 1.6 Coca Cola Amatil Limited 1.5 Amcor Ltd 1.4 QBE Insurance Group 1.3 Insurance Australia Group 1.2 Asciano Group 1.2 Oil Search Limited 1.2 Total weighting 44.5 Overseas Shares: % Microsoft Corporation 1.1 Nestle’ SA 1.0 Samsung Electronics Limited 0.9 Roche Holdings 0.7 Johnson & Johnson 0.7 Vodaphone Group 0.6 Intel Corporation 0.6 SBI Holdings 0.6 Heineken 0.6 Cisco Systems Inc. 0.6 T & D Holdings 0.5 Wellpoint Inc 0.5 CVS Caremark Corporation 0.5 Vivendi S.A 0.5 Linde Ag 0.5 Total weighting 9.9 Source CSF Website @ 09/02/2010; listing current @ 30/09/2009 Guide Only

  13. Catholic Super Returns *FYTD 31/03/2010 Catholic Super website

  14. Catholic Super Returns - Financial Years As at 30 June 2009

  15. How do I increase my Super? Maximise your returns Make extra contributions • Either regular payments or lump sum • Before tax(Salary Sacrifice)or after • Member Investment Choice • Consolidate super accounts • Find your lost super

  16. Income Tax Rates - 2009/10 Medicare Levy is also payable at the rate of 1.5 to 2.5 % of taxable income

  17. Compare super to other investments

  18. Compare super to other investments 24.8% +

  19. Transition to Retirement Pension Examples: You could finish full-time work but continue part-time & use some of your super to supplement your incomeor Continue to work full-time & direct more salary into super while drawing a tax effective super account based Pension* to repay debt, improve lifestyle or enhance savings *Also previously known as an Allocated Pension

  20. Account Based Pension Rules • You must be minimum of 55* years of age • You can continue to work either full time or part time • A 10% maximum super income limit per year • A 4%* minimum super income limit per year up to age 65 • Tax free income if over age 60 • New employer contribution limit of **$50,000 till 2011/12 then $25,000 • Tax concessions between age 55 – 59 e.g. 15% tax offset • *Temporary halving of minimum drawdown percentage extended to 2009/10 * Phase in to age 60.**2009/10

  21. Pensions – Yearly Income Payments

  22. Overview – Transition to Retirement; How it Works Your Super Account 9% Employer & Salary Sacrifice $$$$$$ Account Based Pension $$$$$$ Pension Income

  23. Case Study - Brenda • Aged 60 will retire at age 65 • Gross Salary $79,648 • Currently salary sacrifices $7,965 (10%) • Pre tax salary is therefore $71,683 • Super balance is $200,000 • Needs $55,000 after tax income How can the rules help Brenda?

  24. Brenda’s current situation is therefore … 2009/10 tax scales – includes medicare levy, lower income tax offset and mature age workers tax offset (if applicable). $79,648 x 90% (10% salary sacrifice) = $71,683

  25. Under the super rules Brenda: • Draws a $19,800 tax free pre–retirement super pension • Salary sacrifices $38,946 to increase her super • Reduces her pre tax salary to $36,816 • Pays only 15% tax on her super contributions compared to 31.5% • Is not entitled to the $1,000 Government Co - contribution Post 01/07/2009 Transitional Concessional Cap of $50,000 Brenda must leave a minimum $2,000 in her superannuation account; therefore transfers $198,000 to TTR strategy

  26. What does this mean for Brenda? $6,534 extra SGC (9%) on $79,648 is $7,168 less 15% tax = $6,093 2009/10 tax scales – includes medicare levy, lower income tax offset and mature age workers tax offset (if applicable). $50,000 Transitional Concessional Cap effective 01/07/09 (Brenda uses $46,114 of this cap)

  27. Government Super Co-Contribution Scheme • Encourage super savings for lower income earners • Additional contribution up to a maximum of $1,000 per year • Must make after-tax contribution • Reduces by 3.33 cents for every dollar over $31,920 • Gross income* • Phases out completely at $61,920 • Part time or casual workers (e.g.. teenage children) *Temporary Reduction to Scheme * Plus reportable fringe benefits and salary sacrifice * 10% + income from eligible employment.* Restored in full 2014/15

  28. Government Co-contribution Scheme Temporary Reduction to Scheme * Member must be an eligible employee & make a personal after tax contribution. Assumes member contribution of $1,000. Changes apply for 2009/10 to 2011/12 then increasing back to $1500 by 2014/15 ** Plus reportable fringe benefits. Beware salary sacrifice rule change - assessable income 1st July 2009.

  29. Insurance • Managing Risk • Protect your Assets • Protect Yourself and your Family • Life Insurance • Income Protection Insurance

  30. 3 Types of Insurance Cover • Death Only • Death and Total and Permanent Disablement (TPD) • Income Protection

  31. 2 Ways to Structure your Insurance Cover • Basic Cover – an automatic level of cover for all employer-sponsored members • Build Your Own Cover – allows you to increase your cover to suit your own needs

  32. Insurance * • Automatic Basic Cover is 2 Units of Death Only Insurance and 2 Units of Total & Permanent Disablement • Automatic default is 5 Units of cover for Income Protection - 60 day wait period & 5 year benefit period • Can purchase additional Cover under Build Your Own Cover options subject to limits and evidence of health • Cover is 24 hours 7 days a week for members * All employer sponsored members

  33. Death & TPD Cover Basic cover of 2 units provided upon joining the Fund up to age 65 Death cover only is provided to age 70; if required Aged Based Example:

  34. Income Protection Insurance * • Benefit payable is 85% (includes 10% Superannuation) of your stated monthly income • Optional waiting periods – 60 days or 30 days • Optional benefit payment periods – to age 65 or 5 years • Each Unit provides a gross monthly benefit of $585* * Limits apply Indexed to Average Weekly Ordinary Times Earnings

  35. Super - Accumulation Stage Taxation Accumulation Fund Balance $$$ 15% Max Tax Rate on Earnings Before Retirement

  36. How much Income do I need? • Westpac-ASFA Retirement living Standard Research September 2008 • To be used as a guide only Victoria Melbourne homeowners. Modest – better than just surviving on age pension but still only being able to afford fairly basic activities. Comfortable – broad range of leisure and recreational activities and a good standard of living. Able to purchase household goods, private health insurance, reasonable car, good clothes, electronic equipment and domestic & occasional int’l travel.

  37. For a couple, comfortable lifestyle in retirement $50,561 per year How much do I need to Retire? Approx 6.31% pa CPI 2.31% pa

  38. CSF Financial Services • Wholly owned by Catholic Super • Salaried employees - no commissions • No fee to discuss your situation • Your personal Financial Plan in writing - Fee $1,210* • Contact us on 1300 655 002 *$958 Net fee - after fund tax credit if deducted from your Super account

  39. Financial Planning Process Consultation Your Goals Your Investment Attitudes Your Current Situation Your Personal Plan Wealth Accumulation Wealth Protection Income Generation Final Distribution

  40. MemberAccess • Manage your account in our secure online facility, MemberAccess: • Change your details such as email, address, phone number. • View your balance, transactions, investment options • Switch your investment options. (No fee for switching) • Receive your statements electronically • Link your accounts for a single login (if you have a super and pension account). • Register for access online: • You’ll need your member number, name, postcode and birthday to register (The same as we have them recorded) • Call 1300 655 002 if you have any questions

  41. Online Statements • Helps us reduce our use of natural resources • Enables you to store your statements electronically and keep track of past statements • Available through MemberAccess, our secure online facility

  42. Why Catholic Super? • An Industry Fund - all profits returned to members • SuperRatings Platinum Rating • SuperRatings Fund of the Year Finalist in 2009 & 2010 • Low fees • Investment Performance • Seminars and school visits • Access to CSF Financial Services

  43. Contact Us Member Services1300 655 002 Email info@csf.com.au Website www.csf.com.au Questions?

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