Telstra Super Pty Ltd ABN 86 007 422 522
Telstra Super Pty Ltd ABN 86 007 422 522 OCTOBER 2011 VOLUME 14 ISSUE 2
IN THIS ISSUE: Volatile markets and your super + Anti-detriment payments + Top notch ratings + Investment update
We’ve planned for the twists and turns October 2011 movingforward
October 2011
www.telstrasuper.com.au
Page 1
TELSTRA SUPER MOVING FORWARD
Volatile markets and your
INSIDE THIS ISSUE
4
Understanding anti-detriment payments Learn about anti-detriment payments and how they are calculated.
6
Increased levels of market volatility over the past month have understandably prompted concern from many investors and super fund members, but it is important to remember that super is a long-term investment, designed to take into account both positive and negative market movements.
Telstra Super’s top notch ratings Telstra Super was one of just seven funds to receive the highest quality accolade.
7
All members now pay the same fees Find out how the new fee structure translates to your statement.
Telstra Super members should be reassured that they belong to a strong super fund that is consistently rated as one of the top funds in Australia, has a proud record of strong long-term performance, and regularly beats the average performance of both industry and retail super funds.
Investment update Uncertainty and fear rattled markets throughout the last quarter.
The latest figures from independent ratings agency SuperRatings (July 2011) show Telstra Super has recorded Top 10 returns over 10 years for our Growth, Balanced and Conservative investment options, providing between 0.5% and 1% higher returns than the industry median.* Telstra Super
7
Fund average
6 This magazine has been prepared by Telstra Super Pty Ltd, ABN 86 007 422 522, AFSL 236709, the trustee of the Telstra Superannuation Scheme (Telstra Super), ABN 85 502 108 833. PO Box 14309 MELBOURNE VIC 8001 Telephone 1300 033 166 © Telstra Super Pty Ltd, October 2011 The information contained in this publication is correct as at October 2011 and may change in the future. This information is general advice only and does not take into account your individual objectives, financial situation or needs. Before acting on any advice you should assess whether it is appropriate for you and consider talking to a financial adviser. Before making any decision about acquiring any product, you should obtain and review its product disclosure statement by calling 1300 033 166 or visiting www.telstrasuper.com.au. Telstra Super Pty Ltd does not recommend that any member make a decision concerning superannuation arrangements based solely on this publication. References in this document to Telstra Super Financial Planning are references to Telstra Super Financial Planning Pty Ltd (ABN 74 097 777 725). Telstra Super Financial Planning Pty Ltd is a legal entity separate to Telstra Super Pty Ltd. Telstra Super Financial Planning Pty Ltd is a licensed financial adviser (AFSL 218705) and is able to provide financial advance about Telstra Super products to members of Telstra Super. Telstra Super Pty Ltd does not endorse or accept responsibility for the information or advice provided by Telstra Super Financial Planning Pty Ltd. The investment returns from any Telstra Super product are not guaranteed.
5
% return
8
4 3 2 1 0
Growth
Balanced
Conservative
* Past performance is not a reliable indicator of future performance. [1] Source: Australian Bureau of Statistics
We have been able to maintain our above-average returns because of our commitment to active investment management, which takes advantage of research, forecasts and specialist expertise to make independent decisions on where and how to invest. This flexibility allows us to take advantage of growth opportunities in the market, and make changes to protect against expected market downturns.
™ are registered trademarks in Australia of the Telstra Corporation Limited. ® is a trademark in Australia of the Telstra Corporation Limited.
Page 2
movingforward
super Twists and turns are all part of the plan. Telstra Super’s long term strategy plans for times of market uncertainty
The importance of looking long-term It can be challenging to focus on longterm results in times of market instability, but the benefit of superannuation is that you have a bigger picture in mind. While it may be tempting to react quickly and switch into lower risk options, you would effectively be ‘selling low and buying high’. To switch to another investment option, units in your current option/s are effectively sold for their low market price as valued during a downturn. By moving out of the market and therefore crystallising a reduction in your investment value, you may have lost the opportunity to receive the benefits of a market recovery. And if you do see markets rebound and want to re-enter growth options, you would then be purchasing growth option units for a higher price than you sold them for in the first place! When emotion is removed, you can see how important it is to take a longer-term view with your superannuation.
Are you nearing retirement? For members who are getting closer to retiring or changing the way they work and live, it is important to keep in mind that even after you do retire, you may rely on your super savings for another twenty years or more, depending on when you actually retire and how long you live. Australian men have an average life expectancy of 79.3 years, while for women the average is 83.9 [1]. Retiring at 65 will mean your retirement savings, and any potential government assistance, will support you for another 14 to 19 years – and often much longer.
October 2011
If you choose to convert your super into an income stream by setting up a Telstra Super RetireAccess® account, you can continue to invest the money you are not immediately using, and enjoy the returns that long-term performance typically provides.
We’re here to help Telstra Super has a range of resources available to help make understanding and managing your super easier in all market conditions.
Online Watch our short, informative SuperBites videos covering topics such as ‘Market Volatility’ and ‘How much super is enough?’ Use the Telstra Super Simulator and stress test your super balance against various potential investment climates. Phone Receive expert advice over the phone from a Super Adviser, available between 8.00am and 5.30pm, Monday to Friday on 1300 033 166. Face to face For personalised advice on your retirement savings, it’s best to speak with a qualified financial planner. Telstra Super Financial Planning provides individual advice for all Telstra Super members at no additional cost. To take advantage of this and discuss your personal situation, call us on 1300 033 166 or visit our website and complete the online booking form.
www.telstrasuper.com.au
Share your membership benefits with family A strong and secure fund like Telstra Super may help your loved ones achieve the retirement lifestyle they deserve. With our expanding service offering and collection of useful tools, there has never been a better time to invite members of your extended family to share the benefits you enjoy, including: • competitive fees • expert financial planning advice at no additional cost • 12% discount on HCF private health insurance • competitively priced death, disability and income protection insurance • useful tools including the Telstra Super Simulator, our industry leading retirement income calculator and Super Bites educational videos. All adult family members are welcome so why not help them save for a better future. Simply visit www.telstrasuper.com.au/family
Read on to find more reasons for your family to join Page 3
Understanding anti-detriment payments
Many members may not be aware that Telstra Super can increase lump sum death benefits paid to eligible dependants. These payments are known as anti-detriment payments, and while not a well-known concept, can provide significant financial benefits.
An anti-detriment payment is a refund of the contributions tax paid by a deceased member. As such, it restores the death benefit to what it would have been if the 15% contributions tax had not been paid on taxable contributions. In 1988 when the Federal Government introduced the 15% contribution tax they asserted no-one would be worse off with this tax. To deliver on that promise the anti-detriment payment was introduced. An anti-detriment payment is paid if the benefit is taken as a lump sum and paid to a spouse, former spouse or child (of any age) of a deceased member. It can also be paid indirectly to the above beneficiaries through the deceased member’s estate. Lump sum payments consist of two components, taxable and tax-free. Anti-detriment payments are only paid on the taxable component of the lump sum.
To calculate an anti-detriment payment Telstra Super applies a formula provided by the Australian Taxation Office (ATO): Anti-detriment = 0.15P/(R-0.15P)*C
P= days in eligible service that occur after 30 June 1988 R= days in eligible service that occur after 30 June 1983 C= taxable component of lump sum death benefit
Example: Peter passed away on 1 July 2011. His superannuation benefit in his accumulation account totals $600,000 of which $200,000 forms the tax-free component and $400,000 the taxable component. Based on this information Peter’s antidetriment payment comes to a total of $56,206.09. Therefore the superannuation death benefit paid from Peter’s superannuation account to his eligible dependants is $656,206.09.
As the above example shows, the anti-detriment payment can substantially increase the final death benefit and provide much needed relief to the deceased’s eligible beneficiaries. Telstra Super routinely administers anti-detriment payments to ensure eligible beneficiaries get the benefit they are entitled to. If you would like to find out more on estate planning please make an appointment with Telstra Super Financial Planning by calling 1300 033 166. Their services are available to you at no additional cost.
Page 4
movingforward
Stay in the loop with SuperBites A little over a year ago we announced our new and innovative investment option, ‘Defensive Growth’. Today, we are delighted to announce that the option has achieved a fantastic return of 10.09% for the 2010/2011 financial year. A direct result of member feedback and the changing financial climate, the Defensive Growth option has been well received with a significant number of members embracing the option. Uniquely structured for members who might be looking to access their super in the short and medium term, whilst still participating in capital growth through the exposure to growth assets, the implementation and subsequent success of Defensive Growth has been a significant achievement that we are very much proud of. The flexibility to adapt to changing markets has provided members with more certainty in the short term and with a 2011/2012 return objective of CPI plus two per cent, we will continue to work hard to exceed expectations as Defensive Growth heads into its second year. Members wishing to invest in this option can make an investment switch through SuperOnline or by completing an Investment Choice form (Telstra Super RetireAccess members should complete a different form). The table below highlights our full range of impressive investment returns to 30 June 2011 Investment Option
1 year
7 years
10 years
Growth
11.40%
6.28%
5.30%
Balanced
10.64%
6.69%
5.92%
Defensive Growth
10.09%
-
-
8.56%
5.98%
5.59%
International Shares
10.35%
4.16%
2.13%
Australian Shares
14.23%
9.62%
8.70%
Property
Conservative
10.55%
1.80%
-
Fixed Interest
6.20%
4.86%
-
Cash
4.24%
4.72%
4.56%
Our online SuperBites videos have continued full-steam ahead, with a number of new videos released over the past few months and more to be released by the end of the year. The latest additions to our range are the annual Member Update, which provides an overview of some of the fund’s key achievements over the past 12 months; and our Investment Performance video, which looks more specifically at our impressive investment results for the 2010/2011 financial year. To watch these videos or access our SuperBites archive, simply visit the Member Education section of our website. Stay tuned also for new videos looking at Investment Choice, Defined Benefit and Transition to Retirement strategies, due to be released in the coming months.
Visit www.telstrasuper.com.au/superbites
Please note: These returns do not apply to Telstra Super RetireAccess members. Past performance is not a reliable indicator of future performance.
October 2011
www.telstrasuper.com.au
Page 5
Telstra Super’s top notch ratings Telstra Super has come out on top in the latest ratings process from both Rainmaker Information and Heron, achieving the highest quality accolade available from both independent bodies.* In addition to being one of just seven funds awarded an AAA rating in the Rainmaker SelectingSuper Fund Quality Assessments for all our super and retirement products, our Telstra Super Personal Plus product was also given the highest available 5 Heron Quality Stars rating. According to Rainmaker, the AAA rating is awarded to super funds of an ‘exceptional quality’ that have achieved a comprehensive range of best practice measures and benchmarks in areas such as investments, performance, fund organisation, communications, insurance options and ancillary services. Similarly, the 5 star rating from Heron is awarded to ‘outstanding’ products that offer a strong range of features and flexibility, with a primary focus on investments and insurance. Judged according to strict criteria, these independent ratings not only recognise the strength of our investment returns, but the high quality of additional benefits and services offered to all our members. We are proud that the rating reinforces our position as one of Australia’s leading superannuation providers, and provides members with the comfort of knowing we are a super fund they can rely on.
Celebrating the Telstra Super family
About Rainmaker SelectingSuper Fund Quality Assessments SelectingSuper Fund Quality Assessments review a super fund against a combination of industry best practice benchmarks and the wider market. The Quality Assessment takes into account research and opinions using a mixture of both quantitative and qualitative assessments. The Quality Assessments are not statements of future performance and do not constitute specific investment or financial advice.
About Heron Quality Star Ratings The Heron Partnership reviewed over 259 superannuation and retirement products in the 2011/2012 assessment, covering key product features across five Areas of Importance: Investment Arrangements, Insurance, Contributions, Ancillary Benefits and Communications. Investments and Insurance are the most heavily weighted criteria, counting for 85% of the total assessment. * Rainmaker SelectingSuper Fund Quality Assessment, July 2011
AAA Page 6
Annual Report 2010/2011
Annual Report Celebrating families They say no two families are alike, and this is certainly true when it comes to the diverse range of characters that we are proud to call Telstra Super members. As well as reporting on your super fund’s performance and membership benefit enhancements over the past financial year, this year we celebrate those funny, inspiring and heartfelt moments that make each family unique, and that become only more special with the passing of time. Three of our valued members have been kind enough to share some of their favourite family memories with us, and it is they who form the heart of this Annual Report. We thank them for their generosity of time and spirit, and hope you enjoy reading their stories as much as we enjoyed bringing them to you. If you would like a copy sent to you please call 1300 033 166.
movingforward
All members now pay the same fees On 1 July we introduced a revised fee structure which means all accumulation members now enjoy the same, low fee structure right throughout their working lives and into retirement. Our revised fee structure makes Telstra Super one of the most competitive superannuation providers in Australia, and places us in a better position than many well-known industry and retail super funds to provide strong value over your lifetime. It also ensures we can continue to provide valued services such as: • financial advice at no additional cost • discounted health insurance through our alliance with HCF • free member education seminars (including live webinars), and • our growing range of online information and education tools, including the Telstra Super Simulator and our online Super Bite videos.
Your statement explained When looking at your most recent quarterly statement, you will see the member fee of $1.50 per week deducted from your account. This figure can be found under the ‘Total fees you paid’ section of your statement and will also be listed within the transaction history of your account. Applicable administration and investment management fees are included under the ‘Other Management Costs’ section of your statement, as they are deducted in the calculation of unit prices prior to declaring investment earnings, rather than applied directly to your account.
The table below shows the revised fees: Management costs
When applied
As part of our revised fee structure, we have now also moved to a ‘user pays’ system for member-initiated transactions. This means that the costs of all memberinitiated transactions are covered by the individual member via a buy/sell spread, rather than shared across the entire membership. The opening and closing value of your account on your statement is based on the sell unit price for the applicable investment option(s) as at the date of calculation and takes into account other management costs and buy/sell spreads. Some members may also see a fee rebate amount(s) included on their statement, if they are eligible for the member and administration fee cap. If you are an individual with a balance of $1.461m, or an eligible couple with a combined balance of $1.422m, you will see the fee rebate amount (paid monthly in arrears) listed in the transaction history on your statement.
Member fee
$1.50 per week
End of each quarter
Need help? We’re here
Administration fee
0.2% of balance p.a. (administration fee cap applies)
Daily, as part of unit price calculation
Investment management fee
0.14% - 0.60%
Daily, as part of unit price calculation
If you have any questions about your statement or would like to discuss any aspect of our revised fee structure and your Telstra Super membership, please call us on 1300 033 166 between 8.00am and 5.30pm, Monday to Friday, and we’ll be happy to help.
October 2011
(depends on investment option/s)
www.telstrasuper.com.au
Page 7
Investment update An atmosphere of uncertainty and fear rattled markets throughout the quarter. On the back of US woes and the Euro zone crisis, markets entered free-fall, only to stage remarkable and at times same-day recoveries. Rumours of Greece’s bailout and potential default continued, but the focus largely became the health of the comparatively more substantial economies of Italy and Spain. European bank exposure to Italian and Spanish assets as well as the shock resignation of European Central Bank chief economist, Juergen Stark, brought about significant fluctuations in the market. US markets also fluctuated. For the first time in any month since World War II, US job figures showed precisely zero net jobs were created during the month of August. On the back of these figures and with the unemployment rate a little over 9%, many investors held fears that the US economy was headed into recession. A presidential announcement of a $US447 billion ($A423.06 billion) plan to stimulate
US employment soon followed and at the time of writing it remains to be seen how this will affect investor confidence. [1][2] Perhaps most significantly, the US lost its Standard and Poor’s AAA credit rating in August. Concerned about growing budget deficits, Standard and Poor’s downgraded the world’s largest economy following a political stalemate that threatened to bring the country to default. The ensuing market turmoil saw world stocks fall to an 11-month low during the quarter.[3][4] Having reached record highs the Australian dollar fell closer to parity with its US counterpart during the quarter. However, strong demand for Australia’s mineral commodities continued as a result of ongoing Chinese economic growth. Due to this and the dissipation of disruptions caused by Japan’s earthquake, the Reserve Bank of Australia (RBA) expects growth to pick up stating that there was “little available evidence to gauge any effects of the European and US problems on other regions” in its September Monetary Policy Statement. [5] Also following its September meeting, RBA Governor Glenn Stevens announced that cash interest rates would remain unchanged at 4.75%. Notwithstanding
interest rates are predicted by many to decrease in the latter half of 2011, which is once again good news for homeowners. Speaking of Australian inflation statistics in his September Statement, Glenn Stevens stated “While they have, to date, remained consistent with the 2 - 3% target on a year-ended basis, the Board remains concerned about the mediumterm outlook for inflation. A key question will be the extent to which softer global and domestic growth will work, in due course, to contain inflation.” [5] Looking forward, volatility affecting local and international share markets is unlikely to dissipate in the immediate future with investors expected to carefully watch as Europe continues to face the issues surrounding its currency system, as well as how the embattled US economy reacts to initiatives announced by President Obama. [1] The Sydney Morning Herald: Aussie bonds firmer on risk aversion, 12 September 2011 [2] CNBC: Economy Gains No Jobs in August, Rate Holds at 9.1%, 2 September 2011 [3] Reuters: United States loses prized AAA credit rating from S&P, 6 August 2011 [4] The Economic times: World stocks near 11-month low on recession fears, 22 August 2011 [5] RBA media release, “Statement by Glenn Stevens, Governor: Monetary policy decisions”, 6 September 2011
You get more with HCF health insurance. 12% discount on your health insurance. Telstra Super members and their immediate families receive a 12% discount on HCF private health insurance. This could save you hundreds of dollars a year.
Immediate access to 20+ benefits. HCF will also waive the usual 2 and 6 month waiting periods on over 20 health benefits when you take out HCF hospital and extras cover. Some longer waiting periods and conditions apply.
Find out how HCF can give you more today. Contact HCF on 1800 888 434 or visit www.telstrasuper.com.au/hcf
Page 8
movingforward