SuperScoop - QSuper - Queensland Government

AUGUST 2013WHAT’STHE SCOOP?Get the latestimportant superupdatesPage 10Growing your super togetherBEWAREBAD ADVICEIt could cost you everythingPage 4THINKINGSMSF?Make an informed choicePage 5YOUR RETIREMENTPAYCHECKRetirement income made easyPage 8PensionFund of the Year.Another great reasonto stay with QSuper.TOP MARKSYou’re with one of the biggest and best Page 3LyndelQSuper membersince 1990

A message fromQSuper’s CEO‘You’re probably starting to give very realconsideration to how you’regoing to fund your lifestyleover the next few decades.’Rosemary Vilgan> FROM THE COVERMeet LyndelI love hearing about memberslike Lyndel and her husband,Noel, who have made smart movesthroughout their working lives andnow look set to retire in comfort.My storyReal memberprofileLyndel and NoelQSuper membersWelcome2013 is a special year for QSuper, as we celebrate 100years of helping members reach their goals. It’s a historyI’m immensely proud to be a part of, but what I’m reallyexcited about is what the future holds.We know your needs are constantly evolving, so we’realways looking at ways we can do things better for you.Over the coming months you’ll see dynamic newdevelopments such as enhanced access to your superthrough Member Online, as well as easier access toa range of tailored financial advice services throughQInvest. 1 QInvest has also recently launched a newmortgage broking service, exclusive to QSuper members,their families and friends.A focus on the long termLast year we wrote to you about changes to the QSuperBalanced (Default) option designed to reduce volatilityand smooth returns. This option has been one of the bestperforming funds over virtually all time periods. 2 Howeverwe are focussed on the long term, and from talking tomembers we understand most of you want to protect yoursuper from the ups and downs of investment markets, evenif it means giving up some potential for higher returns in theshort term.With this in mind, we positioned this option to better protectagainst volatility, which means when markets are boomingour returns may be a little lower than other funds. Howeverwhen markets fall the opposite is true, and the QSuperBalanced (Default) option should deliver more stable returns.I know it can be tempting to judge investment performanceon year-by-year returns, but in reality super is a long-terminvestment so we believe it’s the long-term results that reallycount. Of course, with nine investment options you can alsochoose an investment strategy that suits your needs.Log in :) or miss out :(Log inmiss outCheck out the new, improved Member Online.The enhanced features are too good to miss!For more choice, control and conveniencelog in now at qsuper.qld.gov.auQSuper for lifeWe’re also about to embarkon an exciting investmentjourney with the launch ofour new QSuper Lifetimeoption. The enclosedbrochure gives you a tasteof things to come.An awardwinning fundI take great pride in knowing that everybody at QSuper iscommitted to providing members with the best possibleproducts and services. That’s why it was so pleasing to seeindependent ratings agency Chant West name the QSuperPension account Pension Fund of the Year 3 against the bestsuper funds in Australia.Another significant milestoneIn this 20th anniversary edition of our award-winningmagazine Super Scoop, we’ve put together a range of articlesdesigned especially for members who are starting to thinkabout retirement, or may have already retired.You’re probably starting to give very real consideration tohow you will fund your lifestyle over the next few decades,and may even be thinking about getting financial advice.‘Beware bad advice’ looks at the problems being caused bydisreputable financial planners and investment managementfirms. It is heartbreaking to hear of the difficulties somepeople are having after a lifetime of hard work.Whatever your situation, it’s never too late to take positiveaction to improve your retirement, so I hope you take thetime to read and enjoy this edition of Super Scoop.Rosemary VilganChief Executive Officer, QSuperQSuperSuper that changes and grows with youTrack your super 24/7Check your insurance coverManage your investments2 Super Scoop August 20131 QInvest Limited (ABN 35 063 511 580, AFSL and Australian Credit Licence number 238274) (QInvest) is ultimately owned by the QSuper Board (ABN 32 125 059 006)as a trustee for the QSuper Fund (ABN 60 905 115 063), and is a separate legal entity which takes full responsibility for the financial services and credit services it provides.2 SuperRatings SMART, Product Comparison Report as at 30 June 2012, accessed 19 July 2013. 3 Inaugural Chant West Conexus Financial Super Awards 2013.

Top marks.You’re with a top rated fund!One of the biggest super funds in AustraliaDid you know you’re partnered with one of Australia’s largestsuper funds? We have around $43 billion 1 in funds undermanagement, and with that size comes the security andbenefits of scale that we pass onto you in the form of low feesand great products and services. And you’ll never be lonely asa QSuper member – with over 530,000 1 members, we could fillthe Gabba nearly 13 times over!The investment choice you needAt QSuper we understand the importance of giving you thechoice, convenience and flexibility you need when it comesto investing your super. So, if you want to manage your owninvestments, we offer a premium range of options to choosefrom. But if you’d prefer to take the hassle out of managingyour super, we’re about to introduce a new default optioncalled QSuper Lifetime. This option is designed to deliver theright super strategy at the right time by seamlessly adjustingyour investments as you move through different life stages.Low feesThe more you payin fees, the less youhave in your accountworking for you. That’swhy we keep our feesas low as possible, 2with the fee for the0.57%0.99%QSuper 3AverageIndustry Fund 4Average RetailMaster Trust 41.44%QSuper Balanced (Default) option being less than half that of theaverage retail fund. When comparing fees you should be awarethat not all funds clearly outline the total costs which may bededucted from super accounts. It’s your money, so make sureyou always know what you’re paying.Great information and serviceIf you want to know more about your super, we’re here to help.Our award-winning Contact Centre answers around 300,000 callsa year, and we deliver more than 500 seminars, in nearly 60locations, to around 25,000 members annually. Our website hostsa comprehensive range of information and calculators all designedto give you the information you need, when you need it, and ina way that’s easy to understand.Advice you can trustWe know how important it is for our members to get the rightadvice at the right time, which is why we’ve been offering accessto quality financial advice from QInvest for almost 20 years.QInvest advisers are super experts with a detailed understandingof QSuper products. And with offices in convenient locationsthroughout Queensland, the right advice is never far away.1 As at 30 June 2013. 2 Past management fees should not be taken as an indication of future fees as each year the expenses of managing QSuper’s investmentoptions may vary. 3 QSuper management fee is the actual fee for 2012/2013. 4 Average Retail Master Trust Fee of 1.44% p.a and average industry fee of 0.99%p.a. are as at July 2012 and based on an account balance of $50,000 in an option considered by the ratings agency to be equivalent to the QSuper Balanced(Default) option. Source: Chant West Super Fund Fee Survey April 2013.PensionFund of the Year.Another great reasonto stay with QSuper.LyndelNeilPhilipGinetteWe’re proud to be one of Australia’stop funds, but you don’t have totake our word for it – our Pensionaccount has just been named thebest in the country.Members are at the heart of everything we doat QSuper, which is why we’re dedicated tooffering you outstanding products and services.And the experts agree – our accounts havereceived the highestratings from independentratings agencies SuperRatings and Chant West.Super Scoop August 20133

Beware bad adviceRecent high profile financial collapses such as Prime Trust, StormFinancial, Wickham Securities and Banksia Financial Group havehighlighted how superannuation members can have a lifetime ofsavings wiped out by choosing the wrong financial partner in retirement.In many cases, people placed their retirement savings intoinvestment vehicles where the risks may not have beenmade transparent or fully understood. In some cases theseinvestments were recommended by a financial adviserwho may have received financial incentives for theirrecommendation. In other words, they were not acting inthe best interests of their clients when recommending theseinvestments.These unfortunate situations really highlight why it is soimportant to do your homework to ensure you’re placingyour financial future in the hands of an adviser you can trust.A solid track recordQSuper has been looking after the super of QueenslandGovernment employees for one hundred years. It’s not aresponsibility we take lightly and over the decades we’vebuilt a high level of trust amongst our members. We knowmany of you feel secure in the knowledge that QSuper isyour partner on your journey through retirement. We alsoknow that to maintain this trust we have to continue to putyour interests first.We also understand how important it is for members tohave access to quality financial advice, especially close toand in retirement, when you’ve accumulated a significantsuper balance. That’s why we offer members accessto QInvest, our expert financial planners who’ve beenproviding trusted advice to our members for nearly 20 years.A matter of trustQInvest advisers have a specialised understanding of yourQSuper account, and pride themselves on putting your bestinterests first. Like QSuper, they understand that a goodpartnership has to be built on trust. At a time when manyadvisers received indirect fees in the form of commissionsand rebates from the products they offered, QInvest adviserswere, and still are, paid by salary only. In fact, you can alwaysbe confident that QInvest offers full transparency andcharges only for the financial advice provided, not for theproducts recommended.The Future of Financial Advice (FOFA) reforms came intoeffect on 1 July 2013. Under these Federal Governmentreforms, all advisers are now required to act in the bestinterests of their client, and are not able to receive paymentsor non-monetary benefits, such as commissions, if it is likelyto influence their advice (however any commisions onproducts held before this date will remain in place). Theseare obviously very positive steps for the industry, and shouldimprove the quality of advice available to all Australians.Research and compareThe moral of the story is to always do your homeworkbefore choosing an adviser, and the following questionsare a good place to start:✔ What will this advice cost me?✔ What are your areas of expertise?✔ Are you licensed, and what servicesdo you have a licence for?A final word of adviceIf you’ve been recommended a certain adviser by acolleague or friend, it’s a good idea to check if they’vebeen offered an incentive for their recommendation toyou. In some cases, they may be receiving benefits likeentertainment or free services to endorse certain products.You’ve worked hard to save for your retirement, so it’simportant you choose a financial partner you can trust.Sadly, as too many Australians have discovered, thewrong decisions could destroy your retirementdreams forever.Talk to an expertIf you want quality advice you can trustcontact QInvest today.Based in our Brisbane city office, GrahamMacDonald specialises in super, investmentsand retirement planning and he is driven by thedesire to make a positive difference to his clients’financial future. QInvest has more than 30 advisersbased in locations throughout Queensland.Why not book an appointment today?1800 643 893 qinvest.com.au4 Super Scoop August 2013

ThinkingSMSF?Self-managed superannuation funds(SMSFs) have become very popular overthe past few years. As at 30 June 2011they held 31% of the $1.34 trillion investedin super, and their assets grew in thepreceding five years by 89%. 1 You mayeven be considering one yourself.Understanding your obligationsThe most important thing to do before setting up an SMSF isto fully understand what you’re getting into, as many peopleunderestimate the time and effort involved in managingtheir own super. They also don’t factor in all the costs –essentially the more external help you need, the greater yourrunning costs will be. You should also consider investmentcosts – investing in property, for example, can incur fees suchas stamp duty, conveyancing and agent and legal fees.The help you needWe know that for some members an SMSF might be theright choice. We also know that many Australians set upSMSFs without doing their research first. That’s why QInvesthas established a new service to give QSuper membersaccess to the help and support they need to consider, orset up, an SMSF. By using this service you can ensure you’regetting the right information about whether an SMSF is rightfor you from advisers you can trust – for an obligation-freediscussion call QInvest on 1800 643 893.Make aninformedchoice.Both the ATO and the Government website MoneySmarthave some excellent resources for anyone thinking about anSMSF, including some important questions you need to askyourself, which we’ve included below.Offering the flexibility you wantAt QSuper we’re dedicated to offering our members theproducts and services they need to meet their retirementgoals. These include:✔ Nine investment options managed by investmentspecialists.✔ An extensive seminar program designed to meet yourinformation needs at different life stages.✔ Online access to your account, allowing you to manageyour super any time of the day and night.✔ Some of the lowest management fees in Australia. 2We’re also looking to expand our range of investmentoptions to give you even greater control over your super.Get the SMSF lowdown from the experts!Get a balanced view on what’s involved in managingyour own super at a QSuper SMSF seminar. In thisinformative and in depth session three experts –including an accountant and a lawyer – will giveyou all the facts you need to understand yourresponsibilities. Head to qsuper.qld.gov.au/seminarsto book your seat today.1 Self-managed super funds: statistical report. March 2012. Australian Taxation Office.2 Chant West Super Fund Fee Survey April 2013.Reproduced with permission of ASICIs an SMSF for me?The Government website MoneySmart has some greatresources available for anyone thinking about establishingan SMSF, including some important questions you shouldask yourself before taking the plunge.Will your self-managed fund perform better?Super funds use professional managers to invest yoursuper money. Can you do better than the professionals?Will you lose valued benefits?Super funds usually offer life and disability insuranceand a range of investment options. If you set up aself-managed super fund you will have to organiseand purchase these yourself.What if something goes wrong?Sometimes things can go wrong, for example, youmay lose money due to fraud. Unlike other superfunds members, you will not have access to any specialcompensation schemes.Do you know enough?Do you know all your legal responsibilities? Are you ontop of the investment market? Do you know the taximplications? Ultimately you will be responsible for yourfund even if you have received incorrect advice.Source: MoneySmart website, accessed May 2013.Super Scoop August 20135

AssetProfileAsset name:One Times SquareNew York, USADate of investment:December 2011Value of investment:$71.8m USD(as at 31 March 2013)Options with current exposure:QSuper Balanced (Default)QSuper AggressiveQSuper ModerateQSuper Indexed MixTo view other assetprofiles visit:qsuper.qld.gov.au/assetprofilesBig Apple.Big opportunity.Diversification is important when settingan investment strategy. That’s why weplace members’ money in a wide range ofquality investments, many of which are onlyavailable to institutional investors.The global financial turmoil of the past few years has led usto increase our exposure to assets such as infrastructure andproperty with the aim of providing members with stable,long-term growth. This means that as a QSuper memberyour super may be invested in assets such as airports,utility companies, shopping centres, and one of the mostrecognisable buildings in the USA, One Times Square.I want to be a part of it…Situated in the heart of Times Square, this New York icon hasbeen featured in countless TV shows and movies, is the siteof the famous New Years Eve ‘ball drop’, and its billboardsand LED signs can be seen from ten blocks away.Although 25 stories high, most of the floor space is infact empty. Retail currently makes up only 16% of therevenue source, with the only major tenant being Walgreenpharmacy – which has a flagship store over three floors. Thereal moneymaker is those billboards.Providing solid returnsDue to its extreme visibility – around 35 million people walkthrough Times Square every year and an estimated 1 billionwatch the new year festivities – advertising rates for thesesigns are among the highest in the world, and since 1998have increased at an average of 8.4% per annum. Coupledwith the fact that most signage leases are five to ten years,and that advertisers include blue chip companies such asToshiba, Sony and TDK, this makes One Times Square a qualityinvestment that the QSuper Board expects to continue toprovide solid returns over the long term. 11 Past performance is not a reliable indicator of future performance.Photo: Diana Beato / Shutterstock.comThe tax benefits of superAs retirement starts to draw closer, you’re probably givingmore and more thought as to whether you’ll have enoughsaved to finance a comfortable future, and what you needto do to reach your goals. There is no shortage of investmentvehicles to choose from – property, managed funds, termdeposits and shares are all viable wealth creation strategies.But super may have some real tax advantages.So, what’s so great about super?Because the Government wants you to support yourselfas much as possible in retirement there are numerous taxconcessions around saving with super:✔ All investment earnings are taxed at a maximum of 15%.Investments outside of super are generally taxed at yourmarginal tax rate, which can be as much as 46.5%. 1✔ If you open an account that provides a retirement incomestream, such as a QSuper Pension account, investmentearnings are tax-free. 2✔ No additional tax is payable on contributions to supermade from your after-tax pay. 3✔ Contributions made from pre-tax salary (salary sacrifice)are also taxed at only 15%. 3 This means, depending onyour circumstances, you could consider using a transitionto retirement strategy to boost your super in the lead upto retirement with minimal impact on your income. Youshould talk to a financial adviser to see if this strategycould work for you – call 1800 643 893 to talk to aQInvest adviser today.Tax-free livingOf course where super really comes into its own is when itcomes to accessing it. Once you hit 60, withdrawals fromsuper are tax free. And if you retire before 60 and are able toaccess your super, various other tax concessions mean thatthe tax you pay could be drastically reduced. So as you cansee, from a tax perspective super really can be a winner.For more info on the tax advantages ofsuper, head to qsuper.qld.gov.au/tax1 Including Medicare Levy. 2 The Government has announced that from 1 July 2014investment returns over $100,000 p.a. for assets supporting an income stream will be taxed at15%, however this recommendation has yet to be legislated. 3 Some exceptions apply. Pleaserefer to the Accumulation Account Guide or Defined Benefit Guide for more information.6 Super Scoop August 2013

Case studycornerBrought toyou by QInvestBy Manjinder AujlaFinancial AdviserHow do I boost my superbefore retirement?Name: Peter and Sally Age: Both are 55Annual Salary: Peter earns $75,000 p.a., and Sally earns $60,000 p.a.Current Accumulation account balance: Peter has $350,000 andSally has $75,000Peter and SallyPeter and Sally’s storyPeter and Sally came to me because they’re hoping to retirein about 10 years, and want to know what they can do toensure they will retire in comfort. They recently went to aQSuper Design Your Future Retirement seminar, and whenthey got home they used QSuper’s online Retirement IncomeCalculator to see if they were on track. When they ran theirfigures (using a life expectancy of 90) they saw that if theykeep going the way they are their super will provide anestimated combined income of around $45,000 a year.They didn’t think this would be quite enough, because at theseminar they heard about the ASFA Retirement Standard,which suggests that a couple will need an annual retirementincome of around $56,000 to support a comfortable lifestyle. 1They know they want to travel in retirement, and don’t wantto have to scrimp and save, so they came to me to find outwhat they could do to improve their outlook. Peter mentionedto me that a work colleague was topping up his superby salary sacrificing his standard 5% contribution and stillmaintaining the same take home pay, and wondered if thatwould be an option for them.Peter and Sally’s optionsI explained that as they are so close to retirement, simplyadding the extra dollars they would gain as a tax savingthrough salary sacrificing their standard contributionswouldn’t be enough to make a significant difference to theirfinal balance. To illustrate this I recalculated their retirementestimate with this extra contribution, and this showed thattheir estimated retirement income would only increase byaround $1,500 a year to around $46,400.We then discussed the possibility of making additionalcontributions to their super, although Sally was initiallyunsure they would be able to afford this. However beforethe appointment I had asked them to complete a detailedbudget. After going through it in depth, I discovered thateven by leaving a ‘buffer’ amount in reserve in case ofunexpected expenses, the couple could afford to contributean additional $500 a fortnight. Peter and Sally’s youngest sonhad recently left home, and Sally hadn’t fully appreciatedwhat a saving that represented in their weekly budget!By making this additional voluntary contribution beforetax,Peter and Sally could actually contribute almost $750 afortnight to their super, while only reducing their combinedpay by $500.Peter was initially reluctant to commit so much to super, ashe liked the idea of having a higher disposable income. Butonce he saw that their estimated annual income jumped toaround $56,600 by making this extra contribution, he startedto look at the longer-term picture.What did Peter and Sally do?By the end of the appointment, the couple decided theywould follow my recommendation of salary sacrificing theirstandard contribution, recontributing the tax saving, andalso making an additional before-tax contribution; Peter ofaround $450 a fortnight and Sally of $300. By implementingthe plan, this couple should now be on track for theretirement of their dreams.Peter and Sally’s optionsASFAComfortableLifestyleASFAModerateLifestyleAnnual income:$45,000Do nothingTalk to an expertAnnual income:$46,400Salarysacrificestandardcontributionandrecontributetax savingAnnual income:$56,600Salarysacrificestandardcontribution,recontributeand makeextra pre-taxcontributionIf you want quality advice you can trust, contactQInvest today. Our people are experts on financialmatters including QSuper products.QInvest has more than 30 advisers based in locationsthroughout Queensland – why not give them acall today?1800 643 893 qinvest.com.auAssumptions: These calculations were made using the QSuper Retirement Income Calculator and the QSuper Salary sacrifice calculator. 1. The calculation assumes expected net returns of6.5% p.a. before retirement and 7.55% p.a. in retirement. 2. Wage inflation of 4% p.a. has been assumed. 3. The calculation assumes a life expectancy of 90. 4. Any applicable Governmentpayments have not been included in this calculation. 5. All results are in today’s dollar. For all other assumptions see qsuper.qld.gov.au/assumptions. The members depicted are not realmembers and the case study is used for illustrative purposes only.1 ASFA Retirement Standard, March 2013 quarter. For more information on assumptions used by ASFA, visit www.superannuation.asn.au.Super Scoop August 20137

Plan yourretirementpaycheckIf you’re getting close to retirement, you’re probably starting to think about how you’re going tokeep paying the bills when your salary stops. Your super will probably play a large role but what isthe most effective use of the super you’ll be able to access when you retire?One popular way to fund retirement is by using your superto buy what is known as an account-based pension – such asthe QSuper Pension account. This makes sense in a lot of ways,and not least because you get a regular income to cover yourday to day living expenses.There are also plenty of other advantages. For a start youdon’t pay any tax on your super income once you reach 60,and your investment returns are tax-free, 1 no matter your age.There’s also the added benefit that this income is consideredmore favourably when it comes to assessing how muchAge Pension you’re entitled to. 2 That is to say you may getmore money from the Government than if your money wasinvested outside of super!Why the QSuper Pension account?Because we recognise how valuable an income streamaccount can be to retirees, we offer our members the awardwinning QSuper Pension account. This account is constantlyrated among the best in Australia by independent ratingscompanies, and was recently named Pension Fund of theYear. 3 Some of the great features of our flexible accountinclude:✔ your choice of monthly, quarterly or annual payments✔ the ability to withdraw lump sums of $1,000 or morewhenever you want in retirement 4✔ your choice of nine investment options, and no limit oninvestment switches✔ the flexibility to change your payment amount andfrequency if your needs change. 4New name, even better productBecause we’re always looking at ways we can make theproducts and services we offer members even better, we’rebringing in some changes to the QSuper Pension accountover the coming months. The most obvious of these will bea new name – in the coming months this account will beknown as the QSuper Income account to better reflect whatmembers are using it for. Other changes include:✔ Automatic inflation increases – if you wish, we’llautomatically adjust your regular payments at the startof every financial year so your income keeps pace withthe rising cost of living.✔ Control your payment drawdown – giving yougreater control over which investment option/s yourpayments are taken from.✔ Reduce paperwork – we’re overhauling our forms tomake them simpler, and more user friendly. Over thecoming months you’ll also be able to do more of yourtransactions online.Make the super smart moveIf you’re 50 or over, our retirement preparationseminar can help you plan for a great retirement.Register for you and a friend to attend atqsuper.qld.gov.au/seminars1 The Federal Government has recently proposed that tax on returns over $100,000 p.a. be taxed at 15%,however this has yet to be passed into legislation. 2 The Federal Government has recently proposed thedeeming rules on pension accounts be brought into line with other types of investments, however this hasyet to be passed into legislation. 3 Chant West Connexus Financial Super Fund Awards 2013. 4 Governmentrules apply around minimum and maximum withdrawal amounts, please refer to the QSuper Pension accountProduct Disclosure Statement for more information.AdvertisementIntroducing QInvest LoanFinder,our new mortage broking service.Another great benefit of your QSuper membership.QInvest’s specialist brokers have access to hundreds of lending productsand will go the extra mile to find the best deal for you. Our commissionrebate will also save you money so you can pay off your loan sooner.Why not make an appointment today?Exclusiveto QSupermembers, theirfamilies andfriends.Cecilia and Anthony,QInvest clients since 2006qinvest.com.au/loanfinder 1800 643 89350% rebate calculated on the amount of ongoing commission (excluding GST) payable to QInvest. Rebate offer not available to GST-registered borrowers. The credit services advertised are provided by QInvest, not the QSuper Board or QSuper Limited(together the QSuper Group). QInvest is ultimately owned by the QSuper Board (as trustee for the QSuper Fund), however the QSuper Group does not receive any direct payments or commissions from QInvest as a result of members using the LoanFinderservice. Members should make their own assessment regarding the suitability of this service for their individual needs.8 Super Scoop August 2013

Case studycornerBrought toyou by QInvestBy Victoria BarlowFinancial AdviserShould I pay out mymortgage on retirement?Name: John and Julie Age: Both are 60Annual Salary: John earns $75,000, and Julie earns $60,000Current Accumulation account balance: John has $550,000 and Julie has $60,000.Mortgage: The couple has $150,000 outstanding on a $530,000 property. They aremaking annual payments of $20,186 p.a. which will pay out the loan in 10 years.John and JulieJohn and Julie’s storyJohn and Julie have just retired and came to me looking forsome advice on how they should use their super to fundtheir retirement. They haven’t made any concrete plansfor the future, but know they want to be able to do sometravelling and maintain a reasonably good standard of living.I told them about the ASFA Retirement Standard, whichsuggests that a couple would need an annual income ofaround $56,000 to maintain a comfortable standard of livingin retirement. 1 They agreed that this is the kind of incomethey would ideally like to maintain after they retire.Their biggest question was whether they should use someof their lump sum to pay off their mortgage, or if they wouldbe better off using the full amount to buy an income streamproduct and continue making their monthly mortgagerepayments from their income.What are John and Julie’s options?I outlined to John and Julie the impact these two optionswould have on their retirement income, and also discusseda possible third scenario.Option 1Make a lump sum, tax-free withdrawal of$150,000 from super to repay the mortgage in fullDoing this would save John and Julie over $52,000in interest repayments over the remaining ten yearsof their mortgage, and give them certainty with theircashflow in retirement. I would then recommendthat they transfer the remaining funds into anaccount-based pension, such as a QSuper Pensionaccount, to provide them with a regular income.I explained that the main disadvantage of this approachwould be that by reducing their lump sum they wouldbe limiting investment growth and potential incomewould also be less. I ran the numbers for them andcalculated that using this strategy they should be ableto generate an income of $56,000 per year until the ageof 78, at which point they would become solely relianton the Age Pension.Option 2Convert the entire $610,000 lump sum to aQSuper Pension account and continue mortgagerepayments for the remaining 10 years of the loanI discussed with John and Julie that if they took thisoption, they would need an annual income of over$75,000 for the first 10 years of retirement if they wantedto be able to fund an ASFA-defined comfortable lifestyleafter making their mortgage repayments.I did the calculations for them, and explained that byfollowing this strategy they would only be able to funda comfortable lifestyle until the age of 76. After this timetheir funds would be exhausted and they would be solelyreliant on the Age Pension.Option 3Downsize to a smaller property and pay off theirexisting mortgage with the sale of their houseDuring our discussion John and Julie realised that theydidn’t have enough of a lump sum to be able to servicetheir debt and provide the standard of living they wantedfor what would hopefully be a long retirement. Theyweren’t keen on reducing their income in retirement,so I suggested they could sell their current home, pay offtheir mortgage and use the remaining proceeds to buya smaller property.I would then recommend that they invest their entiresuperannuation lump sum in an account-based pensionsuch as the QSuper Pension account, which wouldprovide them with their desired annual income of$56,000 until their mid-eighties and beyond. They will, ofcourse, still have to manage mortgage repayments ontheir current home until it sells.What did John and Julie do?Following our appointment, John and Julie decided theywould rather downsize their home than their expectationsfor their retirement lifestyle, and they put their home onthe market. They would then invest their super funds in aQSuper pension account to ensure a steady income streamto fund their retirement dreams.Assumptions for case study: Assumes mortgage interest rate of 5.8% p.a., CPI of 2.5% p.a. and Investment return rate for QSuper Pension account of 6.6% p.a. Annual income calculations include any entitlement to Age Pension, and current Centrelinkthresholds and rates have been used. All figures are in today’s dollars. Past performance is not a reliable indicator of future performance. The members depicted are not real members and the case study is used for illustrative purposes only.1 ASFA Retirement Standard, March 2013 quarter. For more information on asumptions used by ASFA see superannuation.asn.auSuper Scoop August 20139

What’s thescoop?Here’s the latest round-up of what’s new atQSuper, and for the super industry.Changes to QInvest feesQInvest offers quality financial advice to QSuper memberson a range of topics, including their QSuper benefit. QSupercontributes towards the cost of personal advice about yourQSuper benefit, but members are required to pay a smallpart of the total cost – this is called the member co-payment.From 1 November 2013, the member co-payment fees forQInvest financial advice will change in response to recentlyintroduced Federal Government legislation. More informationon QInvest’s fees can be found at qsuper.qld.gov.au/advice.Switch limit removedTo give you more control over how your super is invested,we have removed the limit on the number of investmentswitches you can make each year. 1MySuperMySuper is the name of the Federal Government reformsdesigned to provide Australians with access to low cost, easyto compare default superannuation products. Employersmust have a MySuper product as their default super fundfor all employees no later than 1 January 2014. Super fundsthat wish to accept contributions from employers where amember hasn’t made a choice of fund must have a MySuperproduct that has been licensed by the Australian PrudentialRegulatory Authority (APRA). QSuper will be offeringImportant information from the QSuper Boardmembers the new QSuper Lifetime investment option as ourMySuper product. More information about how MySupermay affect you can be found on the QSuper website.Superannuation co-contribution changesThe Government has recently passed legislation to reducethe superannuation co-contribution. The maximum amountyou can receive is now $500 per year. To be eligible to receivethe maximum contribution your total income must beno more than $33,516. The co-contribution progressivelyreduces for incomes over this amount. More informationabout the co-contribution can be found on our website.2013 Federal BudgetThis year’s Budget contained a few proposals in relationto superannuation. Some have already been passed intolegislation and are outlined below.More information on all the changes proposed can be foundat qsuper.qld.gov.au/budget.Increase of concessional contributions capA transitional cap of $35,000 has been introduced forolder Australians. However it is expected that the currentcap of $25,000 will increase with indexation, and reach$35,000 for all Australians by 2019. See qsuper.qld.gov.au/contributionscap for more information.Reform to penalties for exceedingconcessional contributions capAny contributions you make that exceed the concessionalcontributions cap will be taxed at your marginal tax rate,plus an interest charge. Additionally, you will now have theoption to withdraw any excess contributions from your superfund. See qsuper.qld.gov.au/contributionscap for moreinformation.Introduction of binding deathbenefit nominationsOn 1 July 2013, the QSuper Board introduced changes whichallow QSuper members to make a binding death benefitnomination for their QSuper account/s. Your superannuationbenefit does not form part of your estate, so in the event ofyour death it will be paid as a lump sum at the discretion ofthe Board, usually to your dependant or to your legal personalrepresentative. However a binding death benefit nominationallows you to nominate who receives your benefit in theevent of your death. 2You can nominate your legal personal representative and/orone or more of your dependants. However if you donominate more than one beneficiary you must specify whatproportion you intend each to receive. It is important to notethat for your nomination to be valid, all beneficiaries muststill be eligible at the time of your death. A binding deathbenefit nomination will be valid for three years from the dateit was made, renewed or amended. If you submit a bindingdeath benefit nomination, the Board will be obliged to payyour death benefit in accordance with this nomination,provided it is still valid at the time of your death. Therefore itis important that you review your nomination regularly, andwhenever your personal circumstances change. You canrenew, amend or revoke your nomination at any time bycompleting and returning a new form.More information can be found in the Binding Death BenefitNomination form and factsheet. You can download thispublication from our website, or call us and we’ll send youa copy.Changes to Accumulationaccount transfersFrom 1 July 2013, the QSuper Board is implementinga change to the rules around transfers out of yourAccumulation account. If you are a QueenslandGovernment and related entity employee you are nowable to transfer amounts related to your QueenslandGovernment employment to another complying superfund while still employed by a Queensland Government orrelated entity employer. These transfers can only be madeonce in any twelve-month period, and you must leave aminimum balance of $2,000 in your QSuper account. Moreinformation is available in the Accumulation Account Guide.10 Super Scoop August 20131 See the Accumulation account PDS for more information on our switching policy 2 QSuper’s governing rules contain provisions for State, Police andParliamentary accounts requiring the QSuper Board to distribute certain benefits automatically to a member’s spouse or eligible children upon the deathof a member. These provisions take precedence over an otherwise valid binding death benefit nomination. Please call us for more information.

THE INVESTMENTRisk OutlookAUGUST 2013Understanding the potential impacts of marketconditions on QSuper’s investment optionsQSuper has nine investment options, 1 each with different strategies, objectives and risk profiles. Wepublish a standard risk measure 2 that estimates the probability of negative annual returns over a givenperiod, but the level of investment risk that’s right for you is very individual, and the risks associated withdifferent asset classes can change over time. In this new regular feature, ourInvestments team provides details of how current market conditions couldimpact our investment options over the coming two to three years.For an expanded version, updated quarterly,head to qsuper.qld.gov.au/riskoutlookYOUR CHOICE OPTIONS (invested in a single asset class)READY MADE OPTIONS (diversified across asset classes)CashDiversifiedBondsInternationalSharesAustralianSharesQSuperBalanced(Default)QSuperModerateQSuperAggressiveQSuper SociallyResponsiblePotential for lower returns than normal. 3 The lingering effects of the GFC have seen central banks aroundthe globe continue to reduce their cash rates. While the rate in Australia has not dropped to the extreme lows ofsome countries, it is still below the average for the last decade, and market pricing suggests it will remain so fora number of years. Members who have planned, or are planning, their retirement income around a specific cashreturn should be aware that returns over the next few years may be lower than anticipated.Likely to be lower than recent strong returns. Another result of low cash rates is lower bond yields. Forexample, the yield on Australian Government ten-year bonds is currently 3.5% per annum, which is considerablylower than the rate of 6.5% seen in 2008. As yields have fallen significantly, the high returns for this option overthe past five years are unlikely to be repeated over the next five years. While the possibility of negative returns isrelatively low, bonds can and do experience losses.Slow growth and continuing volatility. There are currently a number of issues around the globe that arecreating uncertainty for international share markets in the foreseeable future. These include the potential for lowerthan expected growth in the US, high levels of debt in Japan and the ongoing economic problems plaguingEurope. While returns for International Shares over the last year have been strong, the outlook for this option meansthat it is likely to experience ongoing volatility.Global volatility and Chinese growth create uncertainty. Although this option is also impacted by the globaleconomic issues outlined above, factors like the Australian housing market and Chinese growth could affect thereturns of the Australian Shares option over the long term. There is a high concentration of mining and bankingstocks in the Australian share market which are sensitive to changes in these economic conditions. Despite recentstrong returns, this may lead to increased volatility for this option in the foreseeable future.Managing risk through diversification. Our Ready Made options consist of various mixes of the asset classesdiscussed above, as well as having a degree of exposure to property, infrastructure and alternatives. Because ofthis, many of the potential market risks already discussed will apply to our Ready Made options (see our website forcurrent asset allocations). For example, around half of the QSuper Moderate option is currently invested in cash, sothe challenges associated with cash will be a factor. However the risks posed to both the International and AustralianShares options will be of more relevance for the QSuper Aggressive option, as it’s dominated by equity risk.The QSuper Socially Responsible and QSuper Balanced (Default) options also have significant equity risk, so they willbe impacted by the global economic issues discussed above. These two options also invest in bonds, and althoughreturns are expected to be lower than in previous years, bonds can often perform well when shares do poorly, sohaving exposure to both may reduce volatility.All of our Ready Made options have exposure to property, infrastructure and alternative assets, such as shoppingcentres and airports, which are somewhat exposed to the economic cycle, but traditionally less so than shares. Thiscan help to reduce volatility through exposure to a number of asset classes, which creates a diversified portfolio.A challenging outlook. Our investment specialistsmanage our options within ranges set by theQSuper Board, and constantly monitor marketsin order to manage risk and identify emergingopportunities.However the current investment environmentposes a number of challenges, highlighting theimportance of taking a diversified approach to yourinvestments in order to protect against the risk oftoo much exposure to any single asset class.Talk to an expertIf you want advice on an investment strategythat is right for you, contact QInvest today.1800 643 893 qinvest.com.auPast performance is not a reliable indicator of future performance. 1 The QSuper Indexed Mix is closing in December 2013. 2 The Standard Risk Measure (SRM) is based on industry guidancewhich allows members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20 year period. The SRM is not a complete assessmentof all forms of investment risk, for instance it does not detail what the quantum of a negative return could be or the potential for a positive return to be less than a member may require to meettheir objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. For more information, please refer to the InvestmentChoice Guide, available on our website or call us and we can send you a copy. 3 Average annual return for the QSuper Cash option for the last ten years has been 4.13% per annum.Super Scoop August 201311

2013Annual ReportMore information aboutQSuper’s performancecan be found in ourAnnual Report, whichcan be downloaded atqsuper.qld.gov.au/annualreportfrom October 2013.If you would like aprinted copy just call us.Report Card As at 30 June 2013QSuper investment options 1 yearDEFAULT OPTIONQSuper Balanced(Default)READY MADE OPTIONS% p.a.Investment returnsAccumulation account3 year% p.a.5 year% p.a.7 year% p.a.Managementfees2012/2013% p.a.9.60% 8.06% 4.51% 4.63% 0.57%Get the latestinvestment newsGet up-to-date news on themarkets every Monday with theonline Weekly Finance Report.You can also get in-depthcommentary straight to yourinbox every quarterwith our InvestmentUpdate email.Subscribe nowqsuper.qld.gov.au/qusignupAt only 13 cents toprint a copy, SuperScoop is a greatway for us to stayin touch. We also useeco-friendly paper anda Queensland-based printingcompany that is committed to ahigh standard of environmentalawareness and preservation.QSuper Moderate 6.96% 6.06% 4.45% 4.55% 0.42%QSuper SociallyResponsible16.11% 7.31% 4.04% 3.77% 0.90%QSuper Indexed Mix 1 14.26% 8.40% 5.06% n/a 0.34%QSuper Aggressive 15.32% 9.26% 3.27% 3.71% 0.62%YOUR CHOICE OPTIONSCash 2.55% 3.44% 3.59% 3.89% 0.28%Diversified Bonds 4.92% 6.02% 8.31% 7.07% 0.36%International Shares 22.12% 12.72% 3.08% 3.03% 0.28%Australian Shares 20.11% 7.48% 3.25% 4.17% 0.28%1 The QSuper Indexed Mix option has only been available to members since 1 February 2008 and returns are based on the period of operation only.Past performance is not a reliable indicator of future performance. Returns may vary considerably over time. Each of our options has a different objective, riskprofile and asset allocation. Visit the Investment options page on our website for more detailed information. Changes to inflation, fees, asset allocations, optionobjectives and risk play a significant part in the return of any investment option.Contacting QSuperSuperRatings does not issue, sell, guarantee or underwrite Important information This information is provided by the fundthis product.administrator, QSuper Limited (ABN 50 125 248 286 AFSL 334546) whichContact CentresChant West has given its consent to the inclusion in this is ultimately owned by the QSuper Board (ABN 32 125 059 006) as trusteeedition of Super Scoop of the references to Chant West and for the QSuper Fund (ABN 60 905 115 063). This information has been70 Eagle Street Brisbanethe inclusion of the logos and ratings or awards provided prepared for general purposes only without taking into account your63 George Street Brisbaneby Chant West in the form and context in which they are objectives, financial situation, or needs and should not be relied on asincluded. The Chant West ratings logo is a trademark of Chant legal or taxation advice, nor does it take the place of such advice. AnyPh 1300 360 750West Pty Limited and used under licence. It is only current at statements of law or proposals are based on our interpretation of the law+617 3239 1004 (international)the date awarded by Chant West. The rating and associated or proposals as at the time of printing. As a result, you should considermaterial is only intended for use by Australian residents the appropriateness of the information for your circumstances and readFax 1300 241 602within the jurisdiction of Australia and is not permitted to the product disclosure statement (PDS) before deciding whether to+617 3239 1111 (international)be considered or used by a party outside of Australia.acquire, or continue to hold, a product. You can obtain a PDS at qsuper.qld.gov.au or by calling us on 1300 360 750. Unless stated otherwise, allMonday to Friday 8.30am to 5.00pm AESTproducts are issued by the QSuper Board as trustee for the QSuper Fund.GPO Box 200 Brisbane Qld 4001Find us on:Where the term ‘QSuper’ is used in this document, it represents theQSuper Board, the QSuper Fund and QSuper Limited, unless expresslyfacebook.com/qsuperfundqsuper.qld.gov.auindicated otherwise. If you do not wish to be contacted except whentwitter.com/qsuperfund required by legislation, please call us.youtube.com/qsuperfund12 Super Scoop August 2013© QSuper Board of Trustees 2013. 6206 08/13 50Plus