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- Good evening, everyone, and welcome back to those of you who were with us last week for this our second session.  For those of you that are joining us for the first time, welcome to tonight's session, building for your retirement.  My name is Josh van Gestel, I'm the Senior Manager of Education here at Australian Retirement Trust and I'm joined tonight by my dearest friend and colleague, Ruth Weaver.  How are you, Ruth? 

- I'm really well.  It's lovely to be back again tonight. 

- There is a lot for us to get into tonight.  So we are going to get straight into it as well as introducing a very special guest shortly. 



Tonight's session is going to focus on the two levers that we talked about last week, around thinking about your investments with super as well as thinking about contributions that you can make to your superannuation to boost your retirement. 



Now, before we do talk about those, though, I would first like to make three acknowledgements.  The first is to each one of you for taking the time, for investing that time in thinking about your own super and your own retirement.  Welcome and thank you for joining us. 



The second acknowledgement is to our First Nations People, not just here in Brisbane where we are coming to you from, but right around our country.  We would like to acknowledge and pay our respect to Elders past, present and emerging, as well as acknowledge any First Nations People that may be joining us tonight.  Welcome, welcome. 



Our third acknowledgement is to remember that tonight's information and what we're talking to you about is of a general advice nature only.  So we encourage you to, throughout tonight's session, do take notes, do take in the information, but also consider how it applies to your own circumstances.  And as we get towards the end of the session tonight, we'll talk to you about how you can engage with it further. 



But to talk to us about what we're going to cover off tonight, I'm going to hand over to Ruth.  But firstly, just that reminder that we are tonight on that second session when it comes to this Retirement Ready Program and we encourage you as well to remember that you've got that digital workbook at your disposal to take notes as we go throughout the session this evening.  But Ruth, over to you. 



- Thank you, Josh.  We did mention last week we had thousands of questions come through and we formed the content we brought to you last week, this week and what we bring to you next week on those questions. 



Now, the questions that are pertinent to tonight's content were very much around how I can contribute to super, the best way to contribute so I get maximum advantage out of that.  We also had lots of questions about thinking how do I invest my superannuation as I get close to and into retirement.  There was a couple of references around people concerned about global events and how, you know, things around the world might impact the investment portfolios, as well as our local economy here in Australia, and what kind of considerations we should have around those.  And finally, how you can take positive steps to maximise your own superannuation balance.  So we'll go through all of that tonight. 



Now, if you cast your memory back, many of you who were with us last week, might remember this couple.  We used them as a scenario.  The coupled were aged 60 and 58.  When we looked at what they were trying to achieve, a retirement income of about $72,000-odd a year, which we know, based on the statistics, is classed as a comfortable lifestyle for many.  We could see once we modelled through the data and realised that this particular couple earning $120,000 between the two of them, and we looked at what their superannuation projection would be. 



What we were able to identify, by using our own retirement forecaster tool that is available on the Australian Retirement Trust website - and anyone here tonight is welcome to use that tool - but what we were able to determine from that tool was that that particular couple, assuming they don't take any action now with their superannuation, were certainly not on track to achieve what they wanted.  They only had $100,000 in their super between them both when they started this particular exploratory stage of prepping for retirement. 



What you're seeing here in the navy and the teal colour is how reliant on the age pension they were, and you will see in the blue shades where superannuation is contributing.  Clearly this couple had a couple of decisions to make.  They were very able to identify from the scenario that they were not able to achieve the $72,000-odd a year that we use as a bit of a benchmark for a comfortable retirement. 



What did they have at their disposal to think about?  The first thing we recommended you do is reassess your actual retirement goals.  So think about the income needs that you have said you wanted.  This particular couple might have been able to run scenarios and say, well, what would happen if we were only going to have $65,000 a year, for example.  That would have significantly changed the outlook for them. 



The other lever you could work with is the age at which you wanted to retire.  Now, for this couple, they were very hard on the fact they wanted to both retire at 67.  You can move around the dial on those two elements but neither of them are ideal.  Most of us have a fairly good idea of the income we would like to be able to generate at retirement and we also kind of know the age at which we would like to retire. 



So if you are not willing to negotiate on those two things, the next discussion is around, well, what can your superannuation do?  And that's what we're here to do tonight.  If you cast your memory back to last week - for those who weren't there last week we worked hard at setting up a bit of a context for you on how to come to that income level, explaining how it would be different depending on what you're trying to do.  But if you're not able to negotiate on the age you retire or that income is a little bit too high, you do have options with your superannuation to help you achieve what it is you wanted to achieve. 



We talk about two main levers you have to work with in superannuation:  (1) being the ability to get money into the system in different ways - and we will cover that tonight - and the other is thinking about what happens to that money once it's actually in the super system and the control that you can have to try and make sure that the money is invested in the way it's going to help you achieve your goals. 



- So also last week we introduced to you some research about how our members, and Australians more broadly, were feeling about retirement, and specifically how they were feeling about the income they needed in retirement.  Tonight we want to talk about how they actually feel about their investments.  And a bit like the research we presented last week is that we do see that some people have good feelings around their investments, but they also have some areas of concern. 



So we saw in the results that we had a very, very strong response of people who were saying they're very, very conscious of their super investments in relation to market volatility.  And this is something we do want to spend some time talking about.  And in one moment I'm going to introduce the new guest on our show --



- Our show? 



- We haven't talked about our show, but we're going to have Andrew Fisher, who is our Head of Investment Strategy at Australian Retirement Trust, join us.  But before we pass to Andrew, what I just want to set up is that Andrew is going to talk around a lot of underlying assets that we invest in on your behalf, and the different states of the economy and impacts around the globe do affect some of these assets and the way he is going to talk about them this evening. 



To set the lay of the land a little bit, what we see in superannuation is a lot of people aren't quite sure what it invests in.  A lot of people aren't actively involved in their super's investments.  So it's important that you're aware, especially if you've never made an investment choice with your super, that about half of it is likely to be invested in growth-orientated assets like shares, both internationally and domestically. 



So your super is market exposed unless you've taken an active choice to actually reduce that.  But as superannuation funds, we know that things like shares are volatile.  They give us great long-term performance, historically, but they do come with short-term risk.  As the last slide showed, that research from members said that they do get concerned about volatility. 



So to try and balance some of that out, we also invest your super in income generating assets, things like cash and fixed term.  But as a superannuation fund, we are part of a three trillion dollar industry in Australia, one of the largest pension schemes globally.  So that means we cannot find all of your investment opportunities in shares and cash alone.  In fact, we do not see cash generating the returns that our members expect. 



So we've had to look for new opportunities.  And as a large superannuation fund, we have, at Australian Retirement Trust, for many years been investing your money in things like infrastructure, both traditional assets like roads, rail, airports, but also new and emerging technologies, and some of those Andrew will refer to in a moment. 



We also invest in properties, here in Australia and around the globe, which he will also refer to, and also private equity, companies, major companies around the world that we invest in that aren't listed on the stock market. 



So as Andrew presents to you, keep in mind that you have all of these assets working hard within your superannuation, particularly where you, yourself, haven't made an active investment choice. 



To bring this altogether, though, I would like to pass over to our special guest joining us from Sydney - good evening, Andrew, how are you? 



- Very good, thank you, Josh.  Good evening to you as well. 



- Welcome to the Ruth and Josh show.  As our first special guest, welcome, and we will pass over to you.  And we will be back to you with Q&A in about 20 minutes' time.



- Thanks very much, Josh, and thank you, Ruth, and thank you for having me as your first special guest.  That is a very exciting privilege.  I want to talk to you a little bit about what's happening in markets and how investment markets impact on our investment strategy, and hopefully give you some insights on what that might mean for you when you are thinking about your retirement savings. 



To start with sharemarkets - Josh mentioned this at the beginning - if you are in a Balanced Option, somewhere around half of your investments will be invested in shares.  And the reason why we put half of your investment in shares is because shares are one of the most reliable assets over the very long term that generate equity value.  So you will often hear things, when you pick up the newspaper or listen to the television, that sharemarkets are all time highs.  I think it is important to remember when you hear a comment like that that sharemarkets are supposed to reach all time highs fairly regularly because sharemarkets go up over time.  It is not like interest rates or cash returns that tend to be quite stable.  We expect shares will increase over time and that's why they are a really important core part of an accumulation portfolio where we try and accumulate wealth over the long term. 



The other really important advantage about shares is they're inflation sensitive assets.  Thinking about when you go to the shops, you are buying things from companies, shares are investments in those companies.  So whilst inflation is impacting the cost of living on the one hand, it is also something that passes through to the long-term revenues that we earn on our share investments and it's one way we can use your retirement savings to insulate you against that cost of living increase over time. 



The point of the slide here really was to demonstrate just how volatile shares can be.  This is a somewhat shorter horizon look at shares, and the sort of slide earlier that mentioned concerns around market volatility.  Being invested in shares does require you to accept some market volatility.  This is a three-year roughly chart that you can see here, 2 to 3 years.  What you can see there is quite a bit of volatility and not much else from sharemarkets. 



If we go forward to the next slide, I can give you some insight into why that is.  This is a longer horizon chart.  But what you can see from the past 2 to 3 years on this chart is interest rates have gone up quite a bit.  The impact of interest rates going up tends to be negative for pretty much every asset class and every investment in a portfolio.  When we think about the value of any asset it is a stream of future cash flows, and then we would discount those future cash flows based on the current interest rates. 



So when interest rates go up, what that tends to mean is future cash flows are worth less than they were when interest rates were lower.  The one exception to this is obviously investments in cash which tend to do a little bit better when interest rates go up.  It is important to remember when you look at cash returns that the interest rate you earn today is not necessarily the interest rate you earned for the last year.  We often get a lot of inquiries from members asking why didn't the cash option return 5% in the last year, because the cash rate is 5%.  The return over the last year will be what the average cash rate was over the last year and 5% is the go forward rate on cash. 



If we go to the next slide.  Why have cash rates been increasing?  The simple answer to that is cash rates are used by central banks as a tool to try to manage inflation in the economy and inflation has been particularly high.  A range of factors influence that.  I think COVID is probably the biggest factor.  So what happened during the COVID crisis, economies were - a manufactured shutdown of the economy and governments in response to that tried to hold things together. 



So they stimulated economies quite dramatically.  Putting that stimulus into an economy is one thing, pulling it back out again can be a little bit more challenging, and the inflation impulse, coupled with some real supply side shocks, war in Ukraine, challenges in getting ships around the world because of COVID, all those things sort of created a perfect storm where after a multi-decade period of low and falling inflation, we faced into an environment where inflation was rising particularly sharply.  So central banks did exactly what central banks should do, which is raise interest rates. 



What we've now seen more recently, you can see from this chart it's quite clear that inflation has certainly started to trend back in the right direction, but if you are reading newspapers this week and last week you would probably notice that that perhaps trend isn't as persistent as markets would like, so we've seen a little bit of stabilisation at a higher level than we might like for inflation and that has caused some jitters in markets over the last couple of weeks. 



I think when you're thinking about your superannuation, and certainly when my team is thinking about investing, we're thinking about the long term.  We're certainly not trying to react to what happens in markets over a week or a month;  it's where do we think inflation is going, and we certainly think inflation is moderating from here, which is good news.  We also think that higher interest rates underpin better long-term returns as well, which again is good news looking forward from here. 



If we go forward to the next slide.  Interest rates is one thing.  Bond yields is probably a better measure.  What bond yields reflect is long-term interest rates and, in particular, the long-term interest rates that governments can borrow at.  When we invest the defensive part of our portfolio, we invest some into cash - we need to maintain some liquidity - but we generally think that longer term interest rates will give us a better return. 



Longer term interest rates give us better diversification.  What tends to happen when equity markets fall, interest rates tend to fall as well and bonds valuations go up, and that's a really nice sort of diversifying factor.  So a traditional diversified portfolio makes use of those two levers. 



What's been challenging in the past little while, when interest rates go up, that tends to be detrimental to everything, and in particular bonds can be quite challenging. 



So I think what this chart sort of seeks to put into perspective, I think, for all of us is that whilst interest rates and bond yields have gone up quite a bit in the past 1 to 2 years, and that has been somewhat painful, they haven't gone up to particularly challenging levels from an investment perspective.  If anything, they've gone up to levels where we actually see the forward looking return from defensive assets being quite good.  And then also if you think about the starting level, if you are relying on interest rates to fall to have that diversifying characteristics, if you are looking at a period like 2020 when interest rates were already at 0, very hard for those defensive assets to do much in your portfolio in a downturn in equities. 



Right now though, where rates have risen back up to 4 to 5% in some markets, we certainly see a much more attractive environment for putting together a really well diversified portfolio. 



Now, the other thing that we do which is really important is invest in unlisted assets.  I think Josh touched on this in the preamble, but we aim to have roughly 30% of any of our diversified portfolios invested in what we call unlisted or alternative assets.  These are things like property, infrastructure, private equity and private debt.  What those assets enable us to do is invest in things that don't necessarily behave in the same cycles as traditional listed market assets, that diversification is really powerful particularly in an environment like we saw in the 2020/2021 period. 



Interest rates going up is challenging but some of the assets that we have in our unlisted portfolios enable us to invest in assets that have really strong inflation protection.  And if I go forward one more slide I've got a really good example of one of those.  So the next slide shows an asset called Amplitel.  Amplitel is Telstra's mobile phone tower network.  This was an investment we made just before COVID, around 2018, 2019.  This was something that actually in the period immediately post-COVID when interest rates were going up and inflation was getting much higher, this was one of the better performing investments in our portfolio returning somewhere in the order of 8 to 12% over that period. 



The reason why it's able to achieve that, though, this was still an asset that was quite impacted by the past interest rates.  So higher interest rates impacted the expected return of the asset and that certainly had a detrimental impact.  But when we own the asset directly and it's an unlisted asset, we can be a little bit more creative in how we put the debt side of the business together. 



So we have actually hedged a lot of the risk out of the debt side of the business.  So that meant it was much more resilient to those rising interest rates, much more so than typical public market assets. 



The other thing that was really powerful, though, is the underlying cash flows on the asset were incredibly closely linked to inflation.  So what that meant was whilst interest rates suffered a little, we had a really well insulated, really sort of powerful income stream that was coming into the asset, and what that meant was it was really popular.  So people were trying to buy it off us at higher and higher prices.  That meant that even though interest rates were going in one direction, the actual attractiveness of the asset was offsetting that, so much so we actually delivered quite strong positive returns over the course of that year. 



It's one example.  There was a number of examples that really sort of held our portfolio up really well over that period.  Another good example of an unlisted asset in the portfolio is student accommodation.  So you are probably hearing an awful lot about the challenges in the commercial property sector.  Commercial property has been pretty tough, particularly office properties in major cities. 



Really, this is two parts, really, to this, I think.  One part is there's a structural element to what is going on.  So work from home didn't get created because of COVID but it certainly got accelerated to an extreme extent.  What that means is less people coming into the offices.  There was a bit of a lag to what happened, but the unsurprising result was that office properties around the world have faced some real challenges as rents have started to roll through. 



Contrast to that, though, this strategy and this investment for us, we've been really focused for a number of years now, sort of 4 to 5 years, really focused on diversifying away from traditional property.  It wasn't just office buildings.  Shopping centres was another area we felt the forward looking trajectory was quite challenging.  Typically, shopping centres and office buildings would make up 60 to 70% of the typical unlisted real estate portfolio. 



For us, we target a level at 30 to 40% of those two sectors and we try and invest in a lot more industrial property, industrial one of the biggest winners of COVID, if you think about the losers being the shopping centres where people weren't going, the winners was all of the industrial properties where the likes of Amazon are trying to set up their warehouses to get all of the home shopping out to you and delivered to their customers. 



So this is where diversification is really important when you think of a portfolio.  We don't not own shopping centres or not own office buildings.  There's certainly a place for them in the portfolio, but by being much more diversified, we like to have something that has the opportunity to react really well regardless of the market. 



This is where this investment comes in.  So this is actually student accommodation in Norway.  When we go into sort of a diversifying alternative property sector like this, we're looking for generally two things.  One is the structural underpinning that supports the narrative and the investment thesis.  In this case, you might be aware Norway is a fairly rich country in terms of resources, oil in particular.  So one of the largest sovereign wealth funds in the world is Norwegian, relatively high tax rates, essentially free education, tertiary education there as a result.  So student housing is basically on a loan basis to students, but you have some fairly well-off, low fee paying University students that can afford to (a) go to University, so University rates are very high, but they can also afford to pay for University housing as well. 



So the structure underpinning was very strong.  At the same time we were able to access this at an attractive price point.  So do we have a really strong investment thesis, is there a really good catalyst for why this will be a very good investment.  In this case again, there was a necessary willing to sell it to us at that right price point, so we were able to put those two things together and make a really good investment on behalf of you, our members, in this student accommodation. 



The last example I have is called Elevation.  It is UK retirement living.  I think the structural demographic elements of this are pretty well known, ageing populations all around the world.  What you possibly also would be aware of and think about when you think about retirement living is some of the challenges investing in that sector, particularly here in Australia.  It has been quite challenging at times. 



UK, the regulatory environment is a lot better, is one thing.  The other element which is a little bit unique about the UK, which is why this one was particularly attractive to us, is there is a real supply challenge there as well.  In the UK, you don't have the newer buildings that we have here as prolifically.  A lot of retirement living properties in the UK are converted older buildings, they don't have big enough doorways, they don't have accessible bathrooms, a lot of challenges to try and build, so there is a supply shortage. 



Again, we got this at the right price.  These are actually new buildings.  A provider had sort of built these, needed to get out.  We had new buildings in a supply constrained market where demand looked really, really strong.  We've actually expanded this portfolio substantially since setting up, so when I sort of talk about some of the challenges given our experience with the domestic market, we were quite tentative in the first steps moving into this, but given some of the success we've had we've actually expanded the portfolio quite dramatically.  Again, it's been a really positive success story and also a real diversifier away from office buildings, shopping centres where those structural factors are really going in the wrong direction.  We're looking for things that there is some structural tailwinds to support us. 



If we move on a little.  Those are a few examples.  Now I'm going to talk about behaviours and behavioural elements.  What's really important - we talk about this with members a lot - is the concept of crystallising losses or understanding how volatility sort of impacts on your investments.  It's really important when you're thinking about making an investment choice, if you're going to make one, understanding what your profile and risk tolerance is, because it's really important to be able to invest for the long term. 



So this is just a simple example.  So if we click forward one more slide you will see this is sort of the peak of interest rates is the start of this.  When things felt really, really bad, interest rates were going terribly, we thought central banks couldn't get a hold of it, everything was going to be a disaster, and then you see what happened after that.  In particular, the period from around sort of November last year, that was sort of a real turning point in markets, and it certainly didn't feel like it at the time.  In fact, I think US interest rates - US bond yields were close to 5%, the fed was never going to get back in control of inflation, markets were really worried then. 



And then you look at what happened in the subsequent six months, our market has done a complete tear.  All time highs in every market again.  You will pick up the newspapers, you will hear about it all again.  If we looked at the last couple of weeks, you would start to see that stress come back in again.  I think the inflationary environment is a challenging one.  It does tend to push up volatility in markets.  And so we certainly see that right now, that volatility is a little higher.  But at the same time the rewards certainly seem to be there.  Equity markets are doing quite strong, interest rates are relatively high.  So whilst volatility and the uncertainty may seem a little high, you are certainly being rewarded for it from our perspective in terms of long-term investment returns.  So we're really happy with all of our investment strategies at the moment. 



Before I finish up, I will just sort of run through some messages, because I think it is really important to, first and foremost, remember that superannuation is a really long-term investment.  The longest term investment most of us will ever have in our lives, which is a really good way of framing it.  Certainly will be the longest term investment I will ever have in my life. 



Second, and really importantly, we're not economic forecasters.  We certainly understand economic behaviour and we know what's going on in markets.  But the reaction function and the linkage between what is happening and what actually sort of manifests in markets can be really challenging to predict.  So we're not here trying to predict markets and be smarter than everybody else.  I know a lot of people that work in similar jobs to me and they're all really, really smart people.  We're not going to deliver better returns by being smarter than them. 



What we can do, and try to do, is deliver better returns for you by having a long-term focus and understanding where it is that we, as a largescale, positive cash flow super fund, have a competitive advantage and we use that to deliver the best returns we can for you. 



Geopolitics exactly the same.  I am consistently and persistently amazed at the ability for markets to just absorb geopolitical conflict.  I came in on Monday morning and equity markets were up after the events of the weekend.  If you think you can predict what geopolitics will do to markets, you are better at this job than me. 



The one thing we do know - and it is absolutely true - equity markets will once again reach an all-time high.  Crises, downturns, they always end.  Actually, one of the things we think really hard about when we're designing investment strategy and putting the portfolios together is not try and avoid crises because they are absolutely inevitable.  There is nothing you can do about that.  But when that crisis comes to an end, and when it happens, how are we going to react to it, because that is something that is very much within our control and something we can use to deliver better returns to our members. 



So we don't try and predict the crisis, we don't try and get out of the way of it, but we certainly want to make sure that we're really, really prepared so if a crisis does come, we can manage our portfolios but also take advantage of the inevitable opportunities that arise, and opportunities always arise. 



So on that note, I'm going to pause there and hand back to Josh and Ruth to see if there is any questions that have come in. 



- Thank you, Mr Fisher.  Before we do go to Q&A, I just want to cover off a couple of slides to bring home some of the messages that you have outlined.  Mate, just relax for 5 minutes, grab a glass of water, and we will come back to you for Q&A. 



So in thinking about what Andrew was talking about - and he actually did go to some of the specifics here - and to try and make this relevant to your own account with Australian Retirement Trust, what I'm showing here is a lot of those underlying assets that Andrew talked about.  And here they're reflected in our Balanced Investment, which is currently for members under the age of 55.  They were in our Lifecycle Investment Option and this is largely where your money is invested. 



As Andrew talked about, you can see here about half of your money is invested in shares and about 70% of your money invested in growth-orientated assets, shares, property and private equity, for example. 



With our lifecycle strategy, what we then do, between the ages of 55 and 65, is we currently then progressively move you from the Balanced Option to retirement.  You can see here again the same underlying assets but a much more softer make-up of those assets.  It's actually giving you a more conservative exposure.  You still have growth exposure but you have a lower weighting to those.  Again, our lifecycle investment strategy will take our members, who have not made an investment choice, from the Balanced Option to that retirement option progressively between the ages of 55 and 65. 



But Australian Retirement Trust currently offers a range of investment menus which also includes our growth option and our conservative option.  Again there you can see that the underlying assets are largely the same.  There is just different exposures and weightings to those. 



So the point we're trying to make here is that when it comes to your super, you know you have investment choice.  But know, too, that we have a glide path that we take you on and, to Andrew's point, that we are very focused on the way we invest for all of our members. 



So what about the performance of these investments?  What I'm showing here is our Balanced Option.  And in the grey is the median return of the 50 largest super funds in Australia as measured by the Super Ratings Index.  The blue bar you see above that is Australian Retirement Trust's outperformance.  This is up to the end of February.  It actually shows you that after all fees, all taxes, that you are getting very strong consistent returns over all time periods on your account.  And this is real return that is coming into your account, as I said, after fees and taxes. 



This is replicated not just with the Balanced Option but across many of our other options, including here the Growth Option and also the Retirement Option.  Again, it's important for you to think about that risk return, to think about where you're comfortable.  Obviously, if you are going into an option like the Growth Option, you should expect with the higher exposure to things like shares, that it is going to have more volatility to it. 



Again to Andrew's point, he talked about superannuation being one of the longest term investments that you may actually hold.  What I'm showing here is if you invested $1,000 about 20 years or so ago, according to inflation what would that be worth today?  Today that money would be worth about $1,500, $2,000. 



But what if you invested in our Balanced Option or our Retirement Option?  And you can see in both cases, in spite of the volatility, the global financial crisis is seen there way back in 2008 barely as a blip, and then the COVID downturn - that in spite of those downturns, as Andrew said, have come opportunities.  And it is important that you consider the impact of those opportunities in the decisions you make. 



Here I'm showing the sharemarket as it has performed over the last 4 or 5 years.  But I overlay that again with our Balanced Option's performance and the Retirement Option's performance in the same period.  And you can see that they are all actually performing to this point about the same success or the same outcome.  But what you will see is the glide path is softer for the Balanced Option than to shares, and it is softer still with the Retirement Option.  We are smoothing out that volatility.  You are still exposed to it, you are still exposed to the growth opportunity, but that volatility has been softened for you. 



I promise I'm coming to you in a second, Andrew.  One more slide to go, mate.  And so you do need to think about the impact of the decisions that you make over the long term.  Let me bring some of those slides together.  What I'm showing here is a person who had $300,000 and decided just before the global financial crisis to start a retirement income account.  What that means is that from that point forward they have been required to draw a minimum of 4% income from their account each year. 



So this is showing them invested in the Balanced Option but not just having those returns put on their account but also receiving a minimum of 4% income.  In spite of that, in spite of the volatility that we have seen in markets over the last 20 years or so, you can see that they have actually ended up today in a better position, even though they've been withdrawing money year after year after year. 

But there was some horrendous volatility that came into the mix. 



I'm showing here the Retirement Option.  Again, you can still see volatility although it has been smoothed out.  But the point I want to make on this slide is what if at the depths of that crisis, when you really saw that markets were falling and you decided to pull your money out before you had the opportunity for growth, what would the impact be? 



And what I'm showing here is if you decided to move your money from Retirement or Balanced, and instead in the depths of the GFC move it to the cash option.  And what you can see is that in this case or in both cases it has locked in that loss and actually meant that you have been in a lower performing investment over that period at the same time you're withdrawing income from your account. 



So why I raise this is it is really important that before you make an investment decision you think about how you feel as an investor.  And there is a couple of tools at your disposal on our website that allow you to get a better understanding of how you maybe should invest.  But I also encourage you to reach out to us, to reach out to your super fund before you make an investment decision that could have a long-term impact to make sure you're invested in a way that you feel safe with, secure with, but also gives you access to those opportunities that Andrew talked to. 



On that point, I'm going to pass over to Ruth to open up Q&A and we will bring Andrew back into the conversation. 

- Thank you, Josh.  Welcome back, Andrew.  Before we do go to Q&A, I am watching the chat here and the live questions and there has been a lot of you asking about session 1 and the recording.  I will reiterate those recordings will be available to you very shortly.  You will be able to go back and watch the first episode as well as tonight as well, because there was a lot of information there and no doubt people will want to go back and relisten to some of Andrew's update. 



Now, bringing in the Q&A, again welcoming your questions.  I can see there is plenty of questions coming through.  We did, Andrew, have an initial question that came through here.  It was: does ART monitor Australian dollar against other strong currencies?  And will this have an adverse impact on the investments over the short term.  Thank you for your question there.  Andrew, I might give that one to yourself. 



- Thank you.  Yes, we definitely do monitor the Australian dollar.  I think the important thing to remember - and this is something we certainly think about when we're building our diversified portfolios - is the role and the interaction and the way the Australian dollar tends to interact with other things in the portfolio. 



So we talk about a word correlation which is the degree to which things move together.  And the one really important element of the Australian dollar which is quite good, I think, when we're building diversified portfolios is the tendency when equity markets are weak, the Australian dollar tends to fall.  So it is a risk on currency, is the way we describe it.  It tends to reflect what you're seeing in equity markets. 



What that means is we can use international exposure as a little bit of diversifier in the portfolio.  This was actually something we did when interest rates got quite low in 2020.  We had less bonds in the portfolio, what we did to offset that to maintain the level of diversification, we increase our foreign currency exposure so less Australian dollar exposure in the portfolio.  We do that by having more unhedged international equities and less hedged international equities. 



So, yes, certainly something we think about a lot.  We often think about the level of the Australian dollar and also its capacity to perform - foreign currency to perform a role in the portfolio that is defensive. 



- Thank you, Andrew.  We must have a lot of Davids online tonight because I've had four questions in a row from David.  And one which, Josh, I might get you to start and then we will send over to Andrew for his reflections.  David's question was:  is it better to have one fund or one portfolio, for example, with your super invested in, as you are approaching retirement, or is it better to have a multiple options managing your super? 



- I think - and Andrew, I will throw to you very quickly - but I think it really comes down to one of the advantages of being with a large fund like Australian Retirement Trust is the diversification that that affords you.  And when you think about the investments that we offer at Australian Retirement Trust, some of which Andrew has spoken to and I have spoken to, we do have some diversified ready-made mixed investments.  We also have direct - we have single asset investments, so if you just want to invest in property, for example. 



So there is the ability for you to actually decide, but I think, Andrew, I will throw to you on the point that ultimately I think the important thing here is really about diversification. 



- Yeah, I think that's a really good way of framing it.  We aim to offer a fairly comprehensive range of ready-built diversified options to suit different members and different members' needs.  So there shouldn't really be a need to diversify between them because they are already diversified portfolios. 



What the real thing, I think, a member would be thinking about is what is my risk appetite, what is my risk tolerance, and this is really a personal advice type question, which isn't something that I could necessarily help with, but you could certainly talk to someone at ART who can help you with that. 



The other element is there is a range of single sector asset class options.  So we do give you the opportunity to build diversified portfolios for yourself if you don't want to use one of the ones that myself and my team builds for you. 



- Yep.  You don't get offended if we choose not to use those prebuilt ones, do you, Andrew? 



- Not particularly offended, Josh.  Maybe a little. 



- I'm going to stick with the Davids for the moment because we are getting a lot of David questions.  Andrew, I will send this one to you.  It has just come in from David:  can we see performance relative to the inflation rate or outperformance, if you like, over inflation?

 

- For each of our diversified options - we certainly can.  For each of our diversified options, they each have an inflation objective.  So to use the Balanced Option as an example, its main purpose, goal and objective is CPI outperforming inflation by 3.5% per annum. 



We target that objective over 10 years because it can be quite challenging over short-term horizons.  Having said that, the performance of equity relative to inflation has been quite strong, so I would imagine over pretty much every time horizon you would see all of our diversified options are meeting their inflation relative objectives. 



We talk about cash quite a bit and I was talking about equity before.  It is a really important thing to remember when you are thinking about returns, is real returns or like the return relative to inflation is critically important.  And even though interest rates seem higher right now and they are higher, and they seem more attractive, they are still generally not a particularly attractive place to accumulate wealth. 



It is a safe place to invest, absolutely, but our general expectation is that cash returns will be something pretty close to inflation.  If you invest in the cash option, $100 today is probably going to be worth $100 in a year, or two years or three years.  That's our long-term expectation around cash.  So that's something you have to be thinking about, is if you want to accumulate real wealth - and when I say "real", I don't mean like tangible, I mean like inflation-adjusted wealth - what that really does require is you need to invest in some risk seeking assets, things like equities and even bonds to a degree.  Those are necessary to generate returns over and above inflation over the long term. 



- I have lost the name, apologies, for who submitted this question.



- Probably David. 



- It probably was David, because the trend we are going, Davids love investments by the looks of tonight.  I might get you both to address this question.  Andrew, I will start with you, because Josh, I would like you to wrap up the consequences of it.  The question is:  is it better for me to have a chunk of cash in a high interest account in the bank, for example, as a just-in-case scenario, and what are the implications of leaving it in the bank versus is it better to put it into super? 



We will talk about the challenges of that, Josh can cover.  If you could just talk about the difference between holding funds, I guess, in the bank account and getting cash rate versus investing that money into super? 



- Yep.  And so I probably touched on that a little bit in the last response in terms of money in the bank is not really going to accumulate much by way of wealth.  We all - perhaps not all, but I certainly had like a Commonwealth Bank Dollarmite account, and we're all encouraged to save and interest was going to save our life when we're kids, but the reality is if you want to accumulate long-term wealth to fund your retirement, you need to invest in assets that are going to generate returns over and above cash. 



That's not to say money in the bank doesn't have a role to play, and we invest some of our diversified portfolios in cash as well.  There's certainly a role to play.  Liquidity is an important thing we think about when we're building our portfolios.  Something that can play an important role in giving us ability to take advantage of opportunities.  When I spoke earlier about what do you do in a crisis?  One of the ways we take advantage of an opportunity in a crisis is by having some cash at all times so that when the crisis comes, you can use that cash.  But as a long-term sustainable investment strategy, cash is not something that we think as an important role to play. 



- Sorry, Josh, I was going to get you to wrap up the point on the implications of putting money into super and the other things you need to think about as opposed to just the investment side. 



- A couple of things just on the investment side.  The other thing to be aware of is superannuation as an investment vehicle is one of the most concessionally taxed investment vehicles in the country.  So not having it in super already puts you at a tax disadvantage. 



The other thing I would make a comment on is in having it in super it is, for many of us, going to be one of the largest investment pools we personally have.  And so it is important to think about, well, if I've got that in my super, it is benefitting as well from the exposures that Andrew has talked about, but also the compound interest of that long-term nature of the investment. 



If you have that in your bank account, okay, there's going to be a compounding effect but it is definitely not going to have the same opportunities that diversification through your super fund could. 



The only other comment I would make - and this is something we actually talk about in next week's session - is if you choose to withdraw that money out of your super, for example - let's assume that you can withdraw it, that you meet a condition to do so - you invest that in your bank account.  If you then want to change your mind and get the money back in, it's not necessarily going to be straightforward.  Much easier once you reach 60 in particular to get that money out but much more difficult to get that back in.  But that's something we'll cover off in a lot more detail next week.



- And just being careful of using super as a stop gap for emergency funds because you do need to make sure and check that if you did ever need to access that money that you can meet the criteria to be able to get it out again, one such piece being the preservation age, and we talked about all of that last week. 



Now, we're pushing on with time.  I do want to get towards the end but there is one very simple question that's come through and it is to strip it back to the very basics.  Someone asking about how they actually switch in between the portfolios.  We have given you all the information but we haven't actually given you any insights as to how you could physically move your money from one portfolio to the other. 



Look quite simply, you can do it yourself online.  You can log into your account online and you can execute that switch yourself and we won't charge you an administration cost for it at all.  You can do it through the mobile app if you've downloaded that and you are connected that way or if you want a bit of guidance on how to do it you can contact us on 13 11 84 and our Member Services Team can talk you through it. 



It is very, very easy to make an investment switch and we certainly don't limit you on how often you would want to do that and there is no charge involved. 



There is a question, Andrew, and it actually wraps up this conversation beautifully.  Believe it or not - I am not actually joking - it is from a David as well.  I don't know if David is the same person putting all these questions in or whether there is lots of Davids online.  The question is actually around a piece of communication David has received recently about changes to our investment menu.  He is just wondering what implication that might have for somebody that's entering into retirement and should he be concerned by that? 



- Andrew, can I also put - maybe an opportunity to think about the opportunities that the upcoming investment change will provide as well. 



- Okay, thank you.  And so look, I think one thing for me to start - I think where I would start with this, so I am heavily involved in the project to deliver this new investment menu.  It is one of the most exciting things that I have had the opportunity to work on in my entire career.  The merger that's created ART and the opportunity to bring together two phenomenal funds and two phenomenal capabilities together to bring together a single investment menu and offer it to our menus is really, really exciting. 



I think from a Super Savings member side, so former SunSuper members coming into ART, the biggest change you are probably going to see is the introduction of two new diversified options.  One of those is a high growth index option, but perhaps more importantly QSuper's default Balanced Option was called the Risk Balanced Option.  We are going to call it Balance Risk Adjusted when we offer it to our members.  That's going to be the new default option for members in pension. 



So if you don't make a choice when you open a new pension account, this would be the choice we would make for you.  This is a brand new option for most of the people listening to this call.  What's really exciting about it is what this option sets out to do is - our previous similar sort of option would have been the Retirement Option.  What this option does is it delivers for a similar amount of risk, 1/2 to 1% extra return each year.  That's what it's designed to do.  There is a lot of innovation in the way it's put together, in particular the way we access fixed income in that portfolio. 



But the nutshell of why it's so exciting is for the same level of risk we can actually deliver better returns.  And what that really reflects to us, I think, is a recognition that members in retirement do still need to accumulate wealth.  Members are living longer, they're using their super for longer, and we have a responsibility to try and support you and help you through that.  So, yeah, that's the biggest change, I think, within the individual asset class option.  There is a little bit of consolidation.  Some minor changes at the edges to make it a little bit simpler. 



The other thing I would say about the investment choice menu is Josh was sort of joking about it before but do I feel offended if someone doesn't want to use one of the options we build?  In actual fact, we create the investment choice menu so you can literally rebuild the investment options that my team builds, or you can make one for yourself.  There is no disadvantage there.  You have access to the exact same building blocks that go into all of the options we have. 



I think that's a really important feature and something we're able to offer to our members.  We're really proud of the menu that we are able to sort of offer up to you as our members and hopefully you will find what you want in it. 



- Thank you.  And we look forward - thank you for joining us, firstly, but we look forward to Andrew, I'm sure there is going to be lots more opportunity to bring you in.  Mate, thank you for your time.  Thank you very much for your insight, and the value you provide.  And just for full disclosure, I am fully invested in our diversified option, so I'm very reliant on you and your team, mate. 



- Thank you very much.  Good to hear. 



- Have a good night.  Thank you. 



- Thank you.  Goodnight.



- To everyone else, don't leave us.  We are pushing on with the show.  Before we do, though, Andrew was talking about the investment menu change that we do have coming up from the 1st of July this year.  And we do want you to engage with that further.  You will be receiving additional information and communications from us throughout May.  We are also going to be running an additional special event in early June, I believe, and information about that will be coming out during May. 



But in the meantime, just visit our website, our investment hub, or scan the QR code there and you can find out a lot more about the investment menu change we've got coming up on the 1st of July. 



- Thank you, Josh.  Before we move on to talk about contributions and the different ways you can get money into your superannuation, there are various questions coming through around the menu that might be available for people as they enter retirement stage and the income stream products.  I just want to put to bed any concerns here.  The menu we're talking about and the options we spoke about is available to both your stages of accumulating your superannuation, but also when you're retired and you're using one of the retirement products, it is the same menu and, yes, you will be able to invest in those particular options during your retirement phase as well.  Will we move on and talk about contributions?



- I'm going to hand control to you, I think. 



- Thank you. 



- You're steering from here. 



- Thank you.  Look, we're going to talk about feeding money into superannuation tonight because all of the investment work needs to work on something, all of those investment options, we need money in the system to invest.  And the bulk of the money that sits in our superannuation accounts have come through our employer under what we call the concessional contribution method. 



This is where the money is coming in generally at a tax rate of about 15%, which for most of us is far friendlier than the tax that we would pay to get money to our bank account, for example. 



The main concessional contribution or concessional method of getting money in is through our employer when we're working, and that, of course, is through the employer contribution which is gradually starting to move up to 12%.  But for a lot of people that wasn't enough, it isn't enough and it won't be enough to do what you might want to do in retirement, which is why you might decide to take advantage of some of that method yourself through different ways.  And one of the most common ways of taking advantage of concessional contributions while you're working and you've got a payroll department to refer to, will be through salary sacrifice, where you will request your payroll to redirect some of your pretax income into your superannuation.  We will have a look at that again in a moment. 



But another way to get money in under that concessional method is your own DIY version.  This is where you can contribute money from your bank account into your superannuation account, claim it as a tax deduction when you are doing your tax return, and what you've done there is basically the exact same as salary sacrifice, you've just gone the long way around it. 



Up until recently, this was the way self-employed people, for example, would be able to take advantage of the concessional method.  They didn't have a payroll department to arrange salary sacrifice.  That's the three different types of contributions that might enter the system under what we call the concessional method. 



But, Josh, there are actually limits and things to be mindful of under this particular method of contributing. 



- Absolutely.  There is a catch, and I think people often get confused by contributions to super.  They say it's always changing.  Let me be really frank.  The contributions, the way that we can put money in super generally hasn't changed a lot with the exception of a few things over about the last 20 years. 



What changes on a constant basis is how much we can actually get in.  So at the moment, up until this current financial year, you can contribute through all of these methods as much as you want, but only the first $27,500 will receive that concessional tax treatment Ruth talked about.  Anything up to $27,500 will be taxed at 15%. 



If you do go over that $27,500, though, it's going to be taxed as normal income.  In other words, the government says, "We are no longer going to discriminate it as being in super.  We will treat it as if it's just normal income and there could also be penalties involved in that." 



Now, I said that this changes often.  It's going to change again on the 1st of July this year.  It is going to increase from $27,500 to $30,000.  And that's just happened through indexation that applies to this part of legislation. 



But it does get even more complicated than that.  If you've got a balance of less than half a million dollars, then you have an additional advantage to other people.  Where your balance is less than half a million dollars, if you have not used up all of that cap in any year, you can actually carry it forward.  If you have not utilised your full $27,500 in a year, what you have not used you can roll forward.  And you can do that up for five years. 



In the example we're showing here, we've got a person who didn't contribute or received the lower contributions in a number of years.  They, therefore, have a higher amount of unused contribution that they can maximise in later years, in this case we're perhaps suggesting as they get closer to retirement. 



Remember, if your balance is less than half a million dollars, you do have more flexibility around these caps, but I encourage you to reach out to us and have a discussion around these before you take any action just to make sure you don't cause yourself any unexpected tax issues. 

Ruth, maybe going back to the concept, though, of these pretax contributions --



- I might just wrap up this particular point, though, for anyone who is looking at that and thinking, "Ooh, I haven't been reaching the limit in previous years.  I wonder how I go back and figure out what my carry forward amount is or what kind of a limit I'm working with."



 One of the easiest ways to do that is to actually log into your MyGov account.  If you have registered your MyGov, it is actually tracking it live at the moment.  You don't need to go back over five years worth of statements and try and manually calculate it.  If you do have less than half a million, you have not been reaching that limit in previous years, you have a broader amount to work with compared to that 27,500, so log in to MyGov and that's a really easy way to be able to figure out how much you have got to work with. 



That's a beautiful thing for someone who might have money in their bank account.  We talked in the investment section about people saying, you know, is it better to put this cash that I have in my bank account into super or leave it invested in the bank account.  If you decided super was a vehicle to put it in, you may be able to take advantage of this particular strategy here if you met the criteria. 



It is about being mindful, as well, of the different ways, the different advantages and those limits, which is why I would say do reach out and have a conversation.  This might be something you never even realised was a possibility. 



We did talk about salary sacrifice as probably the most common way we get money in under that concessional bubble but it is a very simple concept to think about.  But let me show you here very quickly what it is.  If I would say to you let's say and pretend you wanted to consider $100 a month to start off with, thinking about a small number.  If you were to take that $100 a month in your bank account as pay, depending on your marginal tax rate it might be somewhere between 60 or $70, depending on your tax rate, by the time it gets to your bank account.  But if you approach payroll and said, "You know what, I'm going to start contributing as a salary sacrifice to my account so I can take advantage of the 15% tax bracket."  Then you would have $85 invested in your super because it would only be taxed at 15%.  That's what salary sacrifice is.  Would I prefer to have that $85 in my superannuation account or would I prefer to have the 60 or $70 in my bank account? 



Now, the thing to be mindful of is once it's in the superannuation system, it is preserved until you're allowed or you've met the criteria to take it out.  Not a lot of risk attached to that if you're over 60, but for anyone who is here tonight that's still in their mid-50s or tracking up towards 60, it could be trickier for you to get the money back out in an emergency in the short term if you needed it. 



The other way to take advantage of the concessional method I mentioned earlier on was to put money from your bank account into your superannuation account.  And then go the long way around and claim it as a tax deduction when you are doing your tax return. 



Now, this requires a bit more steps, but ultimately, at the end of it you get the same result as if you had approached a payroll and salary sacrificed.  Josh, we talked last week about my own husband.  This is how he gets money into his account.  He is self-employed.  I'm his payroll department and I won't do it for him.  So he has to actually --



- You're not his CFO? 



- CFO - what am I, chief everything in our house.  But he has to physically make a BPay contribution from his bank account into his superannuation account, and then when it's time to do his tax return he tells the super fund "I'm going to claim a tax deduction on that", and that's called the notice of intent to claim a tax deduction form and it is available on the website.  So you need to notify the fund, "You know what, that money I put it from my bank I'm going to claim it as a tax deduction".  Then you claim it as a tax deduction when you are doing your tax return. 



It is a bit clunky, but it is one way of getting the same advantage you could have got if you had a payroll department and you wanted to take advantage of the 15%. 



- I know when it comes to doing my tax return at the end of each year, my tax agent knows I salary sacrifice.  Ian will call me and say, "Hey, you have got some capacity here.  Do you want to make a personal contribution and claim that in your tax return?"  So these are actually both contribution strategies.  As Ruth said, they have the same outcome.  You can do them side by side.  One is simply through payroll, one is one that you do yourself.

 

- The other thing then, if you link back to where Josh was talking about the ability to use unused amounts from previous years, assuming you had less than half a million in your account, and you might say, "Oh, I have missed out through the opportunity through payroll."  Maybe you haven't.  This is the way that most people would tend to use that, isn't it, is by making a lump sum contribution and claiming it as a tax deduction. 



It warrants a conversation.  Get your timing right, get the financial year you contributed into your super, right, and make sure you're familiar with your limits.  So that's the concessional method.  That's the method that a lot of us are attracted to, particularly as we're working, because we want to pay less tax. 



But it is not the only way money comes into superannuation, and many of us will, particularly as we get close to retirement, start to feed money in as an after-tax or non-concessional method.  Now, this is where the money is in your bank account.  So we talked about money sitting in the bank account.  You put it into your superannuation account, but you do not claim it as a tax deduction.  So you have 10,000 in the bank account.  You have 10,000 in superannuation.  And this is something that's very commonly used by people who are getting close to retirement, particularly where you might have a lump sum of money that comes from the sale of an asset or maybe even an inheritance, isn't it?  We see a lot of retirees --



- You see a lot of people as they approach retirement actually starting to consolidate some of their assets in super, because as we talked about last week, when you start a retirement income account from your super, tax effectively disappears completely.  So we do see a lot of people winding down assets outside of super and contributing those in. 



So as a result, the government is actually a lot more generous here.  But thinking about it's not just money you put in yourself, is it? 



- No.  You might actually look at this as an opportunity to pick up some government benefits.  So if you think about the type of person that benefits from salary sacrifice, it isn't someone earning $30,000 a year.  It tends to be someone whose salary is on the more higher end.  Generally you don't get much benefit from salary sacrifice until you are getting close to $50,000 a year + just because of the way the tax system works. 



When you have a lower income earner - and I was one of these for many years when I was at home looking after kids and I was working part-time and on maternity leave.  There are sometimes incentives to get money in, this method where the government will give you a little bit of a boost. 



Like all the other methods, though, this particular way of getting money in after tax from your bank account has limits as well, doesn't it?  They are far more generous though, so we have a bit of leeway to work with. 



- Absolutely.  It's $110,000 a year.  Again, you might scoff at that figure and go, "If I had 110,000, I wouldn't throw that in super."  But as Ruth said, it might come through inheritance, it might come through another windfall that really is unexpected.  So $110,000 a year or in fact you can put up to three times that amount once every three years. 



So if you had $330,000, you could put that in.  Again, these limits are changing on the 1st of July this year.  From 1st of July for the new financial year, these limits will increase from $110,000 to $120,000, and it will increase from $330,000 every three years to actually being - what's the maths - $360,000. 



- 360, yeah. 



- So they are going to become more generous still.  That is due to indexation that is built into the legislation here. 



But going back to Ruth's point, although they do allow you larger amounts, it is actually lower income earners who also benefit from this.  Probably the two things to think about is, firstly, if you are a spouse - where your spouse is a lower income earner or also where you yourself are a lower income earner and want to do something. 



So if you're earning less than about $60,000 a year - and this salary amount changes every year - if you put in up to $1,000, then the government will put a co-contribution of up to half of that.  So if you're earning less than $43,000, you put $1,000 in, the government will put in 500.  The more you earn above that, up to $58,500 will decrease how much the government puts in.  But it is a really great way, as Ruth said, even in her case when she was taking time off work when she was working part-time, still putting a bit into your super and the government picked up some slack. 



The other way is where you have a lower income earning spouse.  This is something I did with my wife for some years where she wasn't working, in actually putting money into her account.  And what that provided was to me, as the contributor to her account, I actually received a tax offset from the government of up to $540.  So I did my tax return, I get my tax bill, and then I could take $540 off it. 



So the government provides incentives here.  In my wife's case, she was actually doing both.  She was making a contribution she was receiving a government co-contribution on, and at the same time I was making a contribution to her account, I was getting a tax offset from.  And it really did help to fill the gap and keep her super going in those years that she was actually off work after our son was born.  So do think about it. 



The other thing I would say is if neither of those situations apply to you, think about your kids or grandkids.  If they're a low income earner, maybe in their first job or starting out in their career, if they have got lower income, can you encourage them to put money in or maybe give them some money yourself, and take advantage of that government co-contribution. 



But Ruth, there are age considerations when it comes to contributing into your super, aren't there? 



- There is.  We actually have a question from Roger just on this.  So thank you --



- Not David? 



- No, not David.  The Davids must have been interested in the investments.  Roger has asked a question about can you just dump some cash into your superannuation after you've retired?  The answer is actually it doesn't really matter whether you're working or retired.  It is all age-based, Roger.  Whether you are 60 or 70 and still working, it is not really around whether you're working or not;  it's around what the milestones are which are all very much age-based. 



I will talk about a new contribution opportunity around downsizing the home in a moment, but the age for that has recently reduced down to 55.  I will address that which is basically separate to everything we've already covered, so separate to those limits. 



Now, if you are 67 and you are liking the sound of getting money into superannuation and claiming it as a tax deduction, you will have to provide what we call a work test to be able to claim it as a tax deduction.  What that means is you have to be able to prove that you have worked for 40 hours within a 30 consecutive day period. 



Basically, yes, you can get the money in after 67, but if you are wanting to claim it as a tax deduction you do need to prove you've actually been employed at some point.  If you are not looking to claim it as a tax deduction, you can actually continue to contribute money into superannuation right up until the age of 75.  Whether you're retired or not is irrelevant here because you are not looking to claim it as a tax deduction, you are just wanting to put the money into superannuation and invest it. 



To answer that question, it is very much age-based as opposed to whether you're actually working or not. 



- Can I just make the reflection here, it's really important you may have retired some years ago.  The contribution age or the contribution opportunity used to end at age 65.  It's only been in recent years the government has actually opened that up, albeit that there is a work test that applies, the government has only in recent years allowed you to contribute up to that age of 75. 



So for some of you, you may have, some years ago, actually finished contributing super, set up your income stream, and maybe not aware that you could actually still be putting money into your super today.  So please just note that these rules have changed, these ages have opened up.  The government's just aware that a lot of people are working far later into life.  And you could have people even who are receiving age pension and at the same time still putting money into super.  It is really based on your circumstance and the opportunities that are presenting themselves to you. 



- Thank you, Josh.  Moving on now in the interests of time, I just want to wrap up that conversation around where you can get more information;  how you can have a look at what's going into the account;  how close to those limits you are.  For many people, if you are an Australian Retirement Trust member, our mobile app or your accounts online are one of the easiest ways for you to be able to manage and track what's going in there. 



But as we mentioned, if you are wanting to take advantage of that carry forward amount from the previous five financial years, then your MyGov is actually a really great source of truth.  They are actually getting very good at the ATO at keeping their records very up to date at the moment.  Please do use your digital assets if you can to have a look at where you're going, how you're tracking and what kind of capacity you might have left to get money through. 



Very quickly I will just touch on this one.  We won't go into detail too much on it because it is something the minority would probably be in a situation to take advantage of.  But it is around the conversation with downsizing your property.  There was one or two questions that came through on this.  On 1 January 2023, just last year, the government reduced the age you could use this particular strategy to get an additional $300,000 into your superannuation, completely separate to all the limits we've talked about up until this point.  Effectively, the idea of this was that you would downsize your principal place of residence.  I guess the strategy here was to open up those larger properties maybe for the market for new families coming through, recognising that many retirees may live alone or maybe with one spouse or partner, for example.  So space often becomes a bit of an issue and people do like to downsize.  This was a little bit of incentive or boost for you to be able to do that. 



Be careful with this one, though.  Remember in episode 1 we talked about the age pension and we talked about how your principal place of residence is not assessed by Centrelink as an asset when they are looking at your assets.  It doesn't matter what your house is worth where you are living, Centrelink don't assess it.  The 300,000 you decide to put into your super from the proceeds of the sale of your principal place of residence would actually be assessed. 



So it can have implications for age pension recipients.  If you know you are not going to qualify for age pension anyway, this may not be something that you are as concerned about.  Again, reach out and have the conversations.  Don't try and absorb it all in one hit, but just know these opportunities are out there and there's lots of different ways and different reasons you might get money into superannuation.  So giving you an opportunity now to just digest that through a visual.  We won't go back through it all. 



- And this visual is in your workbooks.  So certainly you can reflect back on what we've covered here. 



- Yes.  Speaking of the workbook, we haven't mentioned it too many times tonight, but I will mention it now before I pass over to Josh to wrap up, and then we will go to Q&A.  There are lots of tools that we have available on our website.  We have modelled the whole first session off our retirement forecaster, actually.  And that was an important tool, and I hope anybody that did attend last week was able to go in there and have a play around with that and really put into context some of the information we shared. 



I'm asking you to do the same tonight with this particular tool.  This is a fantastic tool, again available on our website, and it is about the ability or the impact making contributions can have on your superannuation.  So it's really going to give you a little bit of a guide as to potentially the best way you might think about getting money in based on your circumstances, your age, your income, for example. 



But what I do love about the tool, it is an all-rounder one.  It won't just show you the impact making the contribution has on your balance.  It actually takes it a step further and shows you what that additional balance can do for you during those retirement years.  Now, I know our audience tonight are close to retirement, and this is an incredibly powerful tool for anyone who has many years ahead of them, but it is still powerful if you did have some money in your bank account and you were thinking I'm three or four years off retirement, if I popped this extra contribution through what impact will it have by the time I get to 67. 



But it's not really that you are looking for because you can almost guess the additional balance.  It is what can that turn into as an income that I can draw from during retirement.  So it is a lovely all rounder tool, Josh, that I think is probably the only piece of homework we set for people tonight.  We gave them lots last week. 



- I think so.  Well, I might take control back, thank you.  It's not often I relinquish control.  The other thing in your workbook is we do have in there some things you can go further on that we've talked about today.  That investor tool to actually see how you might feel or your comfort level with different investments.  Think about how you can boost your super including thinking about that contributions tool.  And we didn't cover it tonight, but also you should be thinking about, as you approach retirement, the insurance needs you have.  And certainly there's some information in your workbook that I encourage you to explore and jump on to our website later. 



I also would encourage you, after last week, to now thinking about investment choices, thinking about contribution opportunities.  If you redid the forecaster after last week, if you did it, can you actually improve that situation that you found yourself in?  Can you use those levers to actually grow your super further? 



Now, we do have one more session left.  Session 3 next week is where we bring this altogether and actually talk about how you can access super and also some strategies as you really come close to retirement in reducing tax but also setting up your estate to make sure you're reducing tax for those that you may leave behind.  It is quite a heavy session.  It is actually, though, one of my favourites, so I encourage you, if you have not yet registered, to do so. 



We also, again, encourage you that if we have talked about anything tonight that really does for you raise questions, concerns, opportunities that you would like to take advantage of, then reach out to us on 13 11 84 and seek out some guidance or some financial advice to assist you further. 



Just a reminder, when it comes to the investment menu changes, before you hop on the phone to us about that, just remember you will be getting a significant amount of information from us throughout May.  We will also be doing an event in early June, so there will be plenty more opportunities for you to engage with that and understand that.  But if you want to think about broader investments and contribution opportunities, do that. 



I am conscious of time.  We want to get to Q&A.  Last but not least.  Last week Ruth and I - we were actually looking at feedback coming in in the hours following the event last week and it meant a lot to us, both in terms of how we were going, but also what we were covering.  We do appreciate that and we do encourage you again if you've got feedback, please scan that QR code and let us know how you're finding the show, as some of you seem to actually like the fact that we were saying this was our show. 



On that note, Ruth, let's wrap up with some Q&A.  I know a lot has been coming in. 



- Look, we did address Q&A throughout the session tonight so we will have a shorter Q&A this evening and we will keep it very much towards the contribution side of it given we did extensive Q&A around investments. 



That being said, I do want to very quickly address one question around investments.  It is a question from Cathy, so not David, Cathy, so we have more people than just David on the line by the looks.  Cathy says she's planning to retire in her early 60s.  She expects to be in the retirement stage of the fund for at least 30 years all going well, Cathy. 



- Wonderful. 



- She's asking is she locked into the same investment strategy or can she choose a different one.  It is a quick question to answer but it's worth asking. 



- Simple answer is, Cathy, you can change investments whenever you like, how often you would like.  All I would probably say is as you are, or as you move into and then sit in retirement phase, just remember we still want you taking advantage of those opportunities.  As you say, you may be there for 30 years, and we hope for that.  But also think that you maybe just have to be a little bit more conservative in some of your approach as you age but you can certainly make those changes whenever you like.

 

- Now, I'm not surprised to see the word "tax" pop up quite a lot.  That generally does when we talk about contributions.  There is a variety of tax questions.  The first one is very much around will I pay tax on the money that I have salary sacrificed when I take it out.  Again, the money that's in your superannuation, regardless of how it got in there or why it got in there, assuming you're accessing it after the age of 60 you will not pay tax on it. 



- That's right. 



- That being said, Josh, it leads us to plug some content for next week.  I thought it was an interesting question. 



- One caveat I would say if you withdraw that money out under the age of 60, you will pay tax on that money that you put in and paid tax on. 



- After a certain amount, yeah.



- Those pretax contributions will be taxable.  After the age of 60, as Ruth said, it is tax free.  The issue comes up if you pass away and your intention is for any super you have left to go to your kids, then, generally speaking, if your kids are over the age of 18, they will pay tax on your super through any amounts that you've put in through those pretax methods. 



So next week we talk a lot about how you can minimise tax more so if your intention is actually to leave an estate for your children.  If your intention is to spend the whole lot, good on you.  I encourage that.  That's what my parents did and they didn't apologise for it.  But if you do think that in the event that something happens to you when you've got super left you would like that to go to your kids, tax will be a consideration. 



- There is also a question from Kim.  Thank you, Kim.  It's actually a really good question that brings two points to life.  Kim is talking about the additional contributions you can make for downsizing.  She is kind of asking what do you need to downsize?  You know, would an investment property qualify to use that? 



- Oh, okay.  It has to be a principal residence.  It basically is the same criteria that is used to assess whether a property actually has capital gains tax applied to it.  So if it is your principal residence, then you will be able to downsize, put it in super.  If it is an investment property - and I'm speaking generalistic terms now - but if it is an investment property and you downsize, no, that won't qualify for the downsizer contribution into super. 



- On the back end of Cathy's question, I will quickly address.  Regardless, Cathy, whether you are using the downsizer method, because you did actually sell a principal place of residence, no, it will not be taxed on the way into superannuation and it would never be taxed on the way out.  It is already taxed money.  The same applies for that non-concessional bubble - remember the downsizer is separate, that's 300 - the non-concession is the 110 a year or the 330 a year - sorry, 330 over the three years. 



Again, any money that goes in, no it does not get taxed on the way in and it does not get taxed on the way out because it's already taxed.  It is sitting in your bank account.  So that puts to bed that question. 



- Time for one more. 



- One more before I get you to wrap up.  There was a question here - again, it's probably more suitable for next week.  The question is very much around if I'm not quite at age pension age, should I be transitioning into retirement?  This is a lovely plug into next --



- Maybe.  Maybe. 



- It is about setting the scene around what does that mean? 



- Next week what we'll talk about - and sorry to that person who asked that question, I really don't know your circumstance which makes it a bit hard to give a yes/no answer to.

 

- But I do think it is just setting the scene around what that question could mean as opposed to answering the question. 



- Thank you.  So what we'll discuss next week is how you can actually think about moving your super into retirement, and that could be through what we call a transition to retirement income, maybe it's half a step into retirement.  There is a lot of options and opportunities that you can think about, and we will be covering those off next week.  So think about next week's session as being right to your point, actually, I'm actually now actively thinking about retirement.  What are the steps that I maybe want to think about taking to get there.  We'll cover those off for you next week.  I would hope that you walk away from that going, "Okay, this is what I think might work." 



- "I understand now."

 

- Yeah. 



- That is one area, I think, transitioning into retirement, that does cause a lot of confusion.  If anyone is after the age of 60 and has heard that context, please tune in next week as we will go through it in a lot of detail. 



- Two things quickly to wrap up.  Firstly, Ruth and I have had a very long day.  We've done podcasts, we've done webcasts, we've done all sorts of things today.  Thank you for being with us.  And it has actually been a wonderful way to end the day.  Thank you for joining us.  The second thing is my 10-year-old son always gives me a word to throw in.  I didn't manage to sneak it in tonight.  So Jonah, if you are watching, fragrance.  That's the secret word he asked me to drop in.  How do you drop that into a superannuation event? 



Lastly and finally, I would like to just reiterate something I said right upfront.  I made three acknowledgements, and the most important acknowledgement was to all of you for taking the time and an active interest in your superannuation and retirement.  I really, really do thank you for that and applaud you for that. 



We hope that tonight's session has helped you and we look very much forward to seeing you in our last session next week.  In the meantime, stay happy, stay safe, look after yourself and each other and we will see you next week.