True Wealth February 2016 by NGS Super

true wealth FEBRUARY 2016

Building

WEALTH YOUR WAY HOW TO REACH YOUR RETIREMENT GOALS

BUSTING +HOME + TRUTHS THE JARGON Is downsizing right for you?

12 key financial terms explained

THERE IS NO WEALTH LIKE PEACE OF MIND. OK, LOTS OF MONEY WOULD BE NICE TOO.

We all know money can buy us freedom. But nothing can free the mind like knowledge. That’s why we’re dedicated to educating our members. It’s all about empowerment. By this we don’t mean sending you a yearly letter stuffed with information. From the start of your career through to retirement, our people are there to guide you along the way. We have dedicated professionals available to talk over the phone even late into the evening. Our online education tools and services will also allow you to build your knowledge at a pace that suits you. We offer seminars and workplace sessions right across the country. If you wish, we’ll even come and talk about your financial plans in person at your workplace. True wealth, as our members will tell you, starts with a wealth of knowledge. For more information visit ngssuper.com.au or call 1300 133 177.

Issued by NGS Super Pty Limited ABN 46 003 491 487 AFSL No 233 154 the Trustee of NGS Super ABN 73 549 180 515

WELCOME If you’ve ever been confused or uncertain about how much you will need for retirement, you are certainly not alone. There is often a lot of confusion around this question, especially when each of us has unique circumstances and varying assets and income to take into consideration. This frequently asked question has traditionally been answered by approximations and national aggregate figures such as the ASFA Retirement Standard, which are not tailored to your situation. At NGS Super, we understand that you want a more accurate, personal and easy-to-understand projection of your retirement forecast—what retirement is going to look like for you. In response to this, we are pleased to tell you that in September we launched our new True Wealth Retirement Calculator. This calculator can tell you how you are tracking as you approach retirement and during retirement. Whatever stage in your life you’re at, this calculator can provide valuable and relevant insights. Visit our website www.ngssuper.com.au and click on ‘Financial Education’ and then ‘Calculators’ to get started, or head straight to www.ngssuper.com.au/super/financial-education/calculators.

NEWS AND NOTES

Short snippets, from a photographic journey across Australia to the winners of the NGS Super education scholarship.

ENSURING A BRIGHT FUTURE

NGS Super’s approach to investment aims to protect both your nest egg and the future of the planet.

FOR THE LOVE OF LIFE

NGS Super trustee director Georgina Smith shares her experience of working in education and planning for retirement.

WEALTH 8 BUILDING YOUR WAY

Making the right investment choices plays a huge role in ensuring you reach your retirement goals.

DOWN 10 BRINGING THE HOUSE

Thinking of downsizing your house? You could free up some handy cash and unlock a new lifestyle.

THE 12 BUSTING JARGON

Here’s our guide to some of the most commonly used words in superannuation.

IMPORTANT 13 8FACTS FOR

UNDERSTANDING PENSIONS

Anthony Rodwell-Ball, CEO, NGS Super

www.truewealth.com.au

Learn about the NGS Income Stream product.

www.facebook.com/ngssuper

www.twitter.com/ngssuper

www.pinterest.com/ngssuper

THE TRUE WEALTH TEAM NGS Super Loyce Cox-Paton Senior Manager, Brand and Digital

Sophie Horwood Marketing and Comms Manager

Published by Hardie Grant Media

General Manager Amy Copley

Managing Editor Sophie Hull

Nicole Slarke Communications Officer

Cover image Getty

Publisher Alison Crocker

Art Director Dan Morley

Designers Hayley Richards, Hugh Hanson Print Offset Alpine Printing

The information in True Wealth is general information only—it does not take into account your objectives, financial situation or needs. Please assess your own financial situation, read the Member Guide (PDS) for any product you may be thinking of acquiring and consider seeking professional advice before acting on this information. Past performance is not a reliable indicator of future performance.

TRUE WEALTH

INSPIRATIONAL READS

+ PHONES ARE A PAIN IN THE NECK Our frequent smartphone usage could be damaging to our posture, according to research by Dr Kenneth Hansraj, Chief of Spine Surgery at New York Spine Surgery & Rehabilitation. Although an average head only weighs 4.5-5.5kg, the weight impacting the spine increases when the head is bent forward, ranging from about 12kg to 27kg depending on the angle. To help prevent the inevitable spine wear and tear, take regular breaks when using your phone, adjust your phone posture (raising your head) and use voice recognition to text or email, or call people instead.

NEWS Beware of the contribution limits Thousands of Australians make additional contributions to their super every year, which is a great way to save on tax and to ensure you will have enough retirement savings. But did you know that there is an annual limit on how much you can contribute? The limit depends on whether your contributions are made before or after tax. Exceeding these limits means you may be taxed at your marginal tax rate (your highest rate). Take a look at the limits to the right and for more information call NGS Super on 1300 133 177.

2 + TRUE WEALTH

Our skin gets drier as we get older, so keep your showers short for healthy skin from head to toe. It’s also best to use warm rather than hot water and to use mild, unscented soaps. Watersaving sources recommend a 4-5-minute power shower, while health sources advise a maximum of 10 minutes. CONTRIBUTIONS

ANNUAL LIMITS 2015–16

BEFORE-TAX (concessional) Includes employer and salary sacrifice contributions

$30,000 $35,000 for people aged 49 and over on 30 June 2015

AFTER-TAX (non-concessional) Includes spouse contributions

$180,000—applies to personal contributions for which you do not claim an income tax deduction Or $540,000 over a three-year period (age limits apply)

Sources: University of Iowa Hospitals & Clinics. The Harvard Medical School Guide to Tai Chi. Images: iStock

Shorten your showers

When politician Bob Brown retired, he and his partner Paul set out on a 19,000km journey to the Bush Heritage Australia sites across the country. Green Nomads (Hardie Grant Books, $45) is a photographic record of their incredible journey, from their coastal home in Tasmania to the salty plains surrounding Lake Frome in SA and the rich red dirt of Boulia in outback Queensland. It’s an inspiring look at the diversity of wild places in Australia, and the people, flora and fauna that make these beautiful and precious places their home.

NEWS & NOTES

Australia’s education innovators NGS Super recently announced the 2015 winners of the Dedicated to the Dedicated Awards. These awards provide an opportunity for professional development and foster lasting and positive change in the education sector. A big congratulations goes to: Ryan Gill, Masada College, NSW: who is seeking to visit schools in America that are pioneers in student-centred classrooms, for insights into how this can be embedded and enhanced in his own school and across the national curriculum. Jarrod Johnson, Pulteney Grammar, SA: who is developing resources that will allow teachers to incorporate Arduino Boards into their classrooms. These simple devices can be used to control lights, motors and robots, as well as receive data.

We chat to John Pedersen, NGS Super Product Manager.

Laurence Lee, Cedar College, SA: for bringing cutting-edge literacy programs to classrooms in Australia and abroad by garnering the expertise of Systemic Functional Grammar pedagogy.

Timothy McNevin, AIS, ACT: who is investigating what can be learnt about visionary leadership in education across the world and how that learning can be applied to schools in the ACT and Australia-wide.

Mark Liddell, Northern Beaches Christian School, NSW: who will attend the Computer Based Maths Education Summit in London to learn more about using technology in order to provide engaging learning experiences for students.

Andrew Spencer, St Michael’s College, SA: who will tour British Columbia, Canada, to meet experienced vocational educators and gather resources to improve math courses across Australia for vocational students, including those seeking apprenticeships.

What will my retirement look like? This is one of the most common questions NGS Super is asked. The new True Wealth Retirement Calculator was developed to provide you with some quick and easy answers. This calculator will provide a projection based on your unique circumstances to show how you are tracking, in a matter of minutes. You can access the calculator via your Member Online account or at www.ngssuper.com.au/super/ financial-education/calculators.

What does your role involve? I manage product development in areas such as our investment menu, direct investment platform, insurance benefits and other initiatives, including our online calculators. That involves lots of researching, planning, and looking into what’s best for our members. What is the most satisfying aspect of your job? Seeing the various components of any project come together. Whether it’s a small task such as updating member statements or a transformation such as our new award-winning insurance design, to see all those elements working together successfully is a buzz. What sets NGS apart from other super funds? I think it is really our ‘doing it better’ approach. Our Income Generator product is an example of where we could have taken a simple ‘plain vanilla’ approach, but it’s in our DNA to innovate. What is your top tip on looking after your finances? It’s not exciting, but it’s important to protect yourself and your loved ones by having life, disability and income-protection cover. And getting that through super is very effective.

TRUE WEALTH

ENSURING A BRIGHT

future

SOCIAL RESPONSIBILITY

NGS Super is taking an environmentally friendly approach to investment, protecting your savings for the future and the future of the planet. By Rebecca Douglas

n recent years, the scientific community has become almost unanimous in accepting that humans have been causing greenhouse gas emissions through fossil fuel consumption, tarnishing our environment and contributing to global warming. The Paris Agreement struck in December 2015 and coming into effect in 2020 requires all countries to take action to keep the increasing warming of the earth below two degrees above pre-industrial levels by reducing their reliance on fossil fuels, namely coal, oil and gas. For this to be achieved, everyone from international organisations and whole countries to companies and individuals will need to pull together and do their bit to contribute towards the agreement’s success. On its part, NGS Super accepts that climate change is a very real threat to the environment, the economy and civilisation as a whole and is keen to take part in the solution. As Ben Squires, NGS Super financial controller, puts it, “We certainly support the science behind climate change and we acknowledge that it poses real financial risk in the long term.” While NGS Super has a duty to act in its members’ best interests at all times and maximise their investment returns, it recognises a sound strategy for investing members’ money also takes climate change into account and attempts to minimise its ill effects. In addition, NGS Super has listened to its members, who have advised they are concerned about the issue and would like their superannuation company to make financial decisions accordingly. “Our members have told us that they believe in climate change. It’s certainly the feedback that we have from our members and they want us to take it into consideration,” says Ben.

investment to be free from fossil fuels. A coal mine would clearly be out, but what about a company where fossil fuels form only a small part of their business? Or how about the company that transports the coal, or the bank that lends them money? Lastly, this approach eliminates the opportunity to positively influence these companies as an investor with a say in their direction.

Taking a holistic approach

Instead, NGS Super favours a more holistic approach. Ben explains that their investment strategy certainly takes into account future government policies and technological advances affecting the shares they choose, but this is not the sole consideration. “If we’re not prepared and aware of what the implications are of government policy change and also the disruption that will occur in terms of new technologies coming into the market, we’ll be caught unaware, and that would have an effect on the ultimate returns for our members,” he says. NGS Super embraces responsible investment through its internal policies and contracts with external managers (such as an agreement to exclude tobacco companies) and by including carbon and fossil fuel risks and performance in its investment reports. In addition, NGS Super collaborates with other businesses in the industry through being a member of and active participant in a number of organisations, such as the Investor Group on Climate Change. Together with other industry players, NGS Super has also been involved in wider discussions on carbon pricing, environmental and disclosure regulation and alternative energy sources by participating in government inquiries, public debate and in communications with both the business sector and the community at large. Through the combination of these efforts in responsible investing, communication with other companies and public advocacy, NGS Super hopes to contribute to a brighter and more environmentally friendly future for all.

Illustration: Christy Lundy

Im portan t investm en t considerations

But how can this be done? One approach would be to point blank refuse to invest in companies involved in fossil fuels. Those who advocate for this approach argue there is an unacceptable risk that these shares will lose value in the future because of governments changing regulations and imposing tariffs, taxes and other sanctions, as well as from technological advances in alternative energy sources. Although this may seem like a simple solution, in reality it poses several conundrums. Firstly, it could rule out companies that are solid investments with high returns, leaving only riskier options. It can also be tricky to nail down what it means for an

COMBATTING CLIMATE CHANGE NGS Super is running a number of other initiatives to help combat climate change and protect the environment: Offsetting the fund’s greenhouse gas emissions each year.

Donating used toners to a breast cancer charity for recycling.

Purchasing environmentally friendly products and services.

Sponsoring a marine discovery centre in SA.

TRUE WEALTH

RETIREMENT

For the

LOVE OF LIFE Building wealth takes work, and by planning ahead you can live life to the fullest in your later years. We find out more from NGS Super trustee director Georgina Smith. By Kristy Barratt

ife is short, or so the saying goes. For Georgina Smith, this saying acts as a positive affirmation, reminding her to make the most of every moment, and to embrace life. As a trustee director on the board of NGS Super, Georgina jokes that her energy levels are those of a 30-yearold, and she looks forward to what has become a Friday afternoon tradition: sipping a glass of champagne in the garden. “NGS has the tagline in their communications: ‘Living well, loving life’,” she says. “I think it’s brilliant. It sums up exactly the way I see things.” Originally from a small country village in Scotland, Georgina has more than 40 years’ experience in education. From leadership roles as a principal to developing strategic partnerships with Durham and Oxford universities and presenting conference papers in Shanghai, it has been an amazing tapestry of experiences.

Wh at does being on the board of NGS Super m ean ?

I’ve been a trustee director for one year now, and as part of that I’m an employer representative. I represent Catholic education in South Australia. There are a number of stakeholders, and the board is made up of 50 per cent male and 50 per cent female members, which I think is really special. 6 + TRUE WEALTH

How would you describe your leadership style? I’d hope that people would say I’m a listener and that I have enabled students and staff members to be the best they can be. Helping people realise their potential means challenging them as well as affirming them.

How are you using these skills today?

As a trustee director you have to listen, watch, analyse and then draw it all together so you can fulfill your role. I’m also a reviewer for school education in South Australia and I chair the panels for principal selection in Catholic education.

What have been som e high lights of your career?

I’ve worked with children ranging from ages five to 17. When a fiveyear-old discovers they can read, they get this ‘a-ha’ moment. To stand there and watch that moment is extraordinary. At the other end of the scale, watching a 17-year-old dressed in their school uniform at their very last school assembly is beautiful. Seeing they are well equipped to take on life and knowing I had some input in that is very humbling.

Which NGS Super investm ent option do you have?

When I was an employee I was in the defined benefit scheme, which was managed by my employer. Now I’m receiving an income stream and my account is invested in the Diversified option. I’m not interested in a selfmanaged super fund—I want other people to do the work for me, and I’m confident for this stage of my financial life that NGS will continue to do this.

How has NGS helped you as a m em ber? I’ve been a member for as long as I can remember and they’ve always offered

Georgina’s top finance tips

Photography: Meg Hansen

personalised, timely, efficient advice that I’ve trusted. It’s not just about the feel-good factor either— they get results. They’ve enabled my husband and I to set up a very sound financial platform to move into the next stage of our life.

How do y ou feel about retirem en t?

I never use the word ‘retire’ because it’s got ‘tire’ in it [laughs]. I’m still working as a freelance independent consultant but I like to think I’m now in a phase of life where I have more choices than ever before. I see it as an

extraordinarily satisfying time. It’s about having freedom and more choices.

Can you share an y advice on how to plan for retirem en t?

It’s a process that can go on for 40 years, which requires prudent, sensible and timely planning. You have to get good advice, have a plan and know what it is that you want. It’s a challenge and you need to have the discipline to do a stocktake on your finances every six months. Real wealth is something you have to start planning for at an early age.

Have financial independence: Women in particular need to stop, plan and think about themselves, not just the kids. The younger you start, the better: Financial results are based on long-term plans. It’s a bottom-line principle for investment. Commit at least every six months to doing one action that looks towards your long-term future. Salary sacrificing is critical: If you get a three per cent pay rise annually, try not to take the pay rise but put it into salary sacrifice. It’s money you’ve already managed without.

TRUE WEALTH

WEALTH

Building wealth

YOUR WAY Making the right superannuation investment choices plays a huge role in ensuring you reach your retirement goals.

efore you decide where to invest your hard-earned money, there are a few important questions to think about, such as: how many years will your money be invested? What are your thoughts toward risk? What previous experience have you had with investing? The less risk you take, the more confidence you’ll have in respect to returns, but you must lower your expectations of long-term returns. The more risk you take, the more you can raise your expectations, but you have less assurance with regards to what return you will receive, particularly in the short term. We all have different objectives when it comes to how much risk we are willing to accept. For example, your objective could be to maximise returns over a 20-year period. Alternatively, your main priority if you are nearing retirement may be to avoid a negative return in the coming years, while

still achieving some growth in the hope that your investment lasts the distance. One way to measure the risk associated with an investment is to see how the return has fluctuated over a longer period of time. Shares, for example, can be highly volatile and unpredictable, particularly in the short term. Their values can fluctuate significantly so that in the short term, the risk of a lower than expected or negative return is fairly high. As a result, shares are generally perceived as a riskier investment than investments such as cash or fixed interest, where the chance of a lower‑than-expected or negative return is less. Everyone has a different tolerance for risk, and your choice of investment should suit this as well as your personal circumstances and objectives. On the next page are two examples of different investment strategies.

NGS SELF-MANAGED CHANGES From 4 March 2016, NGS Super will be making the following changes to the NGS Self-Managed option: There will be an increase in the number of exchange traded funds offered—making a total of 26 options available. ANZ will be added as a term-deposit provider (joining Macquarie Bank, ME Bank and National Australia Bank in offering one, three, six and 12-month term‑deposit options). The direct investment gateway access fee will be $4.75 per week ($247 per annum).

For more information, refer to the NGS Super Member Guide and the ‘Investing your super’ factsheet available at www.ngssuper.com.au. For personal advice on finding an investment strategy that is right for you, call an NGS Super financial planner on 1300 133 177.

8 + TRUE WEALTH

Image: iStock

+ LEARN MORE

A defensive APPROACH

A growth APPROACH

A defensive portfolio option would require a minimum timeframe of three years, and the likelihood of a negative return is about one to two years in every 20. This portfolio generally provides:

A growth portfolio would require a minimum timeframe of at least five to seven years, and the likelihood of a negative return is about five years in every 20. This portfolio generally provides:

A reasonably high degree of stability over the medium to long-term.

A small degree of inflation protection and tax effectiveness.

A level of return that is potentially higher than cash and fixed-interest funds over the medium to long‑term.

Typically 15 per cent in growth assets (Australian and international shares and property) and 85 per cent in defensive assets (cash and fixed interest).

DEFENSIVE INVESTMENT EXAMPLE

A reasonably low degree of capital stability.

A level of return that is potentially higher than cash and fixed-interest funds over the medium to long-term, with the potential for a moderate level of capital growth.

A reasonably high degree of inflation protection and tax effectiveness.

Typically has 70 per cent in growth assets (Australian and international shares and property) and 30 per cent in defensive assets (cash and fixed interest).

GROWTH INVESTMENT EXAMPLE

NGS SUPER OPTION(S)

NGS SUPER OPTION(S) Cash and Term Deposits (sector-specific) option

13%

NGS SELF-MANAGED OPTIONS

Indexed Growth (pre‑mixed) option

12%

Term Deposit

NGS SELF-MANAGED OPTIONS

Cash and Term Deposits (sector-specific) option

ME Bank—six months term deposit

20%

Exchange traded funds (ETFs)

Exchange traded funds (ETFs) Vanguard Australian Government Bond Index

7.5%

Vanguard Australian Government Bond Index

22.5%

Russell Australian Semi-Government Bond

22.5%

Vanguard MSCI Index International Shares —Hedged*

12.5%

2.5%

Vanguard MSCI Index International Shares —Hedged* Vanguard MSCI Index International Shares*

12.5%

Vanguard MSCI Index International Shares*

2.5%

Vanguard Australian Shares Index

27.5%

Vanguard Australian Shares Index

7.5%

Vanguard Australian Property Securities Index

10%

Vanguard Australian Property Securities Index

2.5%

Total

100%

Total

100%

*NEW ETF BEING ADDED FROM 4 MARCH 2016.

TRUE WEALTH

WEALTH

Bringing down

THE HOUSE Thinking of selling your house and downsizing? We look at what to consider before making the decision. By Rebecca Douglas

t’s no longer just retirees who are interested in downsizing their homes—many people tired of modern-day stresses are streamlining their possessions and moving to smaller residences or embarking on a sea or tree change. While it makes sense if the kids have left home and you’re not relishing the task of maintaining the house, or the layout isn’t suited to an older person with limited mobility, not everyone wanting to move does so to downsize. In fact, Ian Yates, chief executive of the national peak body on ageing, Council on the Ageing, favours the term “rightsizing” over “downsizing”. Downsizing, he says, “makes the assumption that just because you become a retiree you don’t need as big a house”, when you may actually be both living and working from your home in retirement and still need a similar amount of space, just in a different configuration. Ian explains that the reasons for a person wanting to sell their home can be diverse. “For example, it needs a lot of maintenance, it has a big garden or people think ‘Okay, it’s fine for me now, but in 20 years, will it be fine?’ and they might want to make that decision now rather than be forced into it.” Alternatively, your reasons could be financial. “If the house is worth quite a lot of money because of where it’s located, and you’re prepared to move, 10 + TRUE WEALTH

then you might make a bit of money out of selling the house and buying somewhere else.” There are several ways you could use the money you’ve saved. These include keeping it as a nest egg or putting it to work by purchasing Not sold on downsizing? Here are some an income stream (an annuity other ways to free up cash for your retirement: or an allocated pension) that Take out a reverse mortgage, which involves pays you a regular income. borrowing money using your home as security.

Alternatives to downsizing

Selling your hom e

Sell part of the value of your home at a significantly reduced cost under a home reversion scheme.

When considering selling, Convert your home to dual occupancy there are some important or rent out a room. costs to consider, including stamp duty, tax and how it Remember to do your research and seek affects your eligibility for the independent financial advice before committing to any of these courses of aged pension. action. You can seek advice by calling Ian recommends talking NGS Super’s financial planners through your situation with on 1300 133 177. friends and family and seeking independent legal and financial advice from professionals, like the NGS Super financial planners, who of tea. “For some people that’s great; have a thorough understanding for other people, the last thing they of social-security rules, to decide want is to be living with a whole lot of what’s right for you. “The big, big people of a similar age.” rule is don’t do anything in a rush,” He points out that usually you’re he advises. not actually buying the retirement Although it may not be overly village property but are purchasing pleasant to ponder, it’s also important a licence (ie the right to occupy it). to consider your future health, For more information on the costs of aged-care needs and how long you living, read our the article ‘Retirement might live. Would it be better to Living’ at www.truewealth.com.au/ move to a retirement village or a retirement/retirement-living. private residence? If you do move to another house, Ian says living in a retirement would you prefer owning or renting? village is certainly not everyone’s cup

Renting can be a great option if you hate maintenance, as the landlord is responsible for repairs, but many people find it difficult to adjust to the loss of control. Apartments and units might also come with hidden costs such as body-corporate fees.

Image: Getty

Adjusting to a sm aller house

There are several steps you can roadtest to determine whether you could live in a smaller house. Firstly, de-clutter your living space and free yourself of unnecessary possessions. Next, try living in half your house. Lock yourself out of some rooms and test how this impacts your lifestyle.

YOU MAY ACTUALLY BE BOTH LIVING AND WORKING FROM YOUR HOME IN RETIREMENT AND STILL NEED A SIMILAR AMOUNT OF SPACE, JUST IN A DIFFERENT CONFIGURATION. Similarly, have a think about the impact on your social life. A sea or a tree change might sound enticing, but you may find that being in an isolated area may put you too far away from friends and family, and you may miss having those support networks close to you.

Overall, it’s important to carefully weigh up the risks of moving, both financial and personal, versus the potential gains. If you do go ahead with the change, careful planning and consideration may mean you look back and think it’s the best move you’ve ever made. TRUE WEALTH

+ 11

WEALTH

Busting

THE JARGON There are lots of terms to grasp when it comes to super. Here’s our guide to some of the most commonly used words.

A particular group of assets that have similar characteristics, such as shares, property and fixed interest.

Asset allocation

Involves combining different asset classes, such as stocks, bonds and cash, to achieve a portfolio that best meets your investment risk profile.

Beneficiary

The person who receives your super when you die. Super funds ask members to choose a beneficiary in one of two ways. A ‘non-binding nomination’ is where you choose a person (or people) to receive your super but your super fund can choose to pay the benefit to your dependant or your legal representative instead. A ‘binding nomination’ requires your super fund to pay your benefit to the person or people you nominate. However, this type of nomination must be updated or confirmed every three years and will lapse if you don’t do so.

Concessional and non-concessional contributions

When you choose to add part of your salary to your super before tax is deducted. You pay a concession rate of tax (15 per cent) which is quite a lot lower than the ‘marginal’ tax rate you pay on your income. These types of contributions are also called ‘beforetax’ or ‘salary sacrifice’ contributions. Non-concessional contributions are super payments you make once income 12

+ TRUE WEALTH

tax has been deducted from your salary. As tax (paid at your marginal rates) has already been deducted from your salary, these contributions do not attract any further tax. These types of contributions are also called ‘after-tax contributions’.

Dependant

A person who is financially dependent on you, for example your partner or your children.

Diversification

Having different investments in different asset classes as well as within each asset class (such as different shares) to manage risk. This comes with the expectation that if one or more investments are performing poorly, the others may be doing better.

Growth and defensive assets Defensive assets are lower-volatility investments that generally produce lower returns over the long term. These types of assets are generally included in an option to stabilise returns. Examples of defensive assets include cash, fixed interest and term deposits. Growth assets tend to produce higher returns over the long term, but are also expected to experience significant volatility. These types of assets are used to promote growth in an investment portfolio, along with some investment income. Examples of growth assets include Australian and international shares and property.

Preservation age

The age you must be in order to access your super if you want to access it before you turn 60. Your preservation age depends on the year you were born—see the graph on the opposite page. For more information, visit www.ngssuper.com.au/super/learn/ claiming-your-super.

Rollover

The transfer of money from one or more super funds to another. This is also called ‘consolidation’. The benefits include keeping your super in one place—making it easier to manage and reducing the payment of administration fees on multiple accounts.

Superannuation guarantee

The compulsory contributions that employers pay into your super. These payments are currently set at 9.5 per cent of your earnings.

Volatility

Volatility is a measure of risk—the likelihood of price (such as with an investment) going up and down in value over time. High volatility implies a lot of movement but higher risk; low volatility implies a steady investment.

Illustration: Christy Lundy

Asset class

RETIREMENT

IMPORTANT FACTS

for understanding pensions

There are lots of different names used for pensions. A couple of common ones are ‘allocated pension’ and ‘account-based pension’. At NGS Super your pension account is referred to as your NGS Income Stream. NGS Super chose this name because you can draw down on your super as a regular income stream— either fortnightly, monthly, quarterly, half-yearly or yearly, or in lump sum amounts as you need them. If you find you need payments more or less frequently, you can change the frequency of your payments online. Here are some key facts about the NGS Income Stream.

You can open an income stream account when:

You reach your preservation age (see the table below) and you have retired from the workforce. If you are still working but have reached your preservation age, you may be eligible to open a Transition to Retirement Pension. You leave employment after age 60. You meet other qualifying conditions— visit www.ngssuper.com.au/pension for more information.

You only need a minimum of $20,000 to set up an income stream with NGS Super, and there are no joining or withdrawal fees.

When starting an income stream, it’s a good idea to bring all your super accounts together to create a single ‘pot’. Once your income stream is set up, you won’t be able to make contributions or transfer other super savings into your account (without ‘resetting’ your account), so it’s important to have everything in the one place from the start.

An income stream with NGS Super has low fees and you can choose from a range of investment options, from conservative to high growth, or you can invest in the NGS Self‑Managed product or our new option, the Income Generator.

An income stream with NGS Super offers a flexible range of estate-planning options, including the ability to nominate either binding or non-binding beneficiaries in the event of your death.

If you are aged 60 or over, your income stream payments will be tax-free. If you are aged between 55 and 59 years of age, tax may be payable on your income-stream payments.

You must receive a minimum one-off payment from your income-stream account each financial year—these minimums depend on your age.

NGS Super can assist you if you are thinking of setting up an income-stream account—simply call 1300 133 177. The fund can help you with your application and guide decisions such as your income-stream payment amounts, frequency of payments, beneficiary options and investment options. The following online factsheets will also provide more information: Understanding account-based pensions at www.ngssuper. com.au/assets/Downloads/understanding-account-basedpensions.pdf Tax and your income stream at www.ngssuper.com.au/assets/ Downloads/tax-and-your-income-stream.pdf

WHEN CAN YOU ACCESS YOUR SUPER?

Preservation age

You can access your super when you reach your ‘preservation age’:

55 Before 1 July 1960

56 1 July 1960 – 30 June 1961

57 1 July 1961 – 30 June 1962

1 July 1962 – 30 June 1963

1 July 1963 – 30 June 1964

After 30 June 1964

Your date of birth TRUE WEALTH

+ 13

IT’S HARD TO BEAT THE RETURNS ON SOME INVESTMENTS.

We are a super fund. It’s our job to help build your wealth. However we believe that doing well is also about doing good. As a teacher, school or community worker, you couldn’t set a better example. So while we are proud of our track record as a high performing, low cost industry super fund, we know that’s not all you care about. You could say we’ve learnt from our 103,000 members who have dedicated their lives to helping others. We’re dedicated to educating our members and providing peace of mind. We’re invested in being responsible corporate citizens committed to helping the community and the environment. As any good superannuation fund should tell you, it’s all about giving a little to get a whole lot back. For more information visit ngssuper.com.au or call 1300 133 177.

Issued by NGS Super Pty Limited ABN 46 003 491 487 AFSL No 233 154 the Trustee of NGS Super ABN 73 549 180 515