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

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

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

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

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

Merger Overview 1 st April 2010 National Catholic Superannuation Fund Similar values and governance standards Pension Interruption What happens next? Pension Help Line 1300 730 327

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

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

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

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

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

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

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

Australian Shares: % BHP Billiton Limited 7.9 National Australian Bank Ltd 5.3 ANZ Banking Group 5.1 Commonwealth Bank of Aust 4.5 Westpac Banking Corporation 4.5 Rio Tinto Limited 3.2 Woolworths Limited 2.6 CSL Limited 2.0 Telstra Limited 1.6 Coca Cola Amatil Limited 1.5 Amcor Ltd 1.4 QBE Insurance Group 1.3 Insurance Australia Group 1.2 Asciano Group 1.2 Oil Search Limited 1.2 Total weighting44.5 What are the 15 Major Share Investments within the Fund, both in Australia and Overseas? Source CSF Website @ 09/02/2010; listing current @ 30/09/2009 Guide Only Overseas Shares: % Microsoft Corporation 1.1 Nestle’ SA 1.0 Samsung Electronics Limited 0.9 Roche Holdings 0.7 Johnson & Johnson 0.7 Vodaphone Group 0.6 Intel Corporation 0.6 SBI Holdings 0.6 Heineken 0.6 Cisco Systems Inc. 0.6 T & D Holdings 0.5 Wellpoint Inc 0.5 CVS Caremark Corporation 0.5 Vivendi S.A 0.5 Linde Ag 0.5 Total weighting 9.9

Managed Choice*FYTD %1 Year % 3 Years (pa) % 5 Years (pa) % Aggressive19.0929.86-0.676.85 Moderately Aggressive16.1924.00-0.136.52 Balanced12.5116.970.106.34 Moderately Conservative10.5014.921.285.76 Conservative7.058.982.925.72 Catholic Super Returns Build Your Own*FYTD %1 Year % 3 Years (pa) % 5 Years (pa) % Australian Shares27.5947.441.5210.08 Overseas Shares13.9123.67-4.342.95 Property9.337.272.186.65 Fixed Interest3.775.503.624.07 Cash2.253.004.764.92 *FYTD 31/03/2010 Catholic Super website

Managed Choice 2008-2009 % 2007-2008 % 2006-2007 % 2006-2005 % 2004-2005 % 2003-2004 % Aggressive-12.1-12.225.017.716.316.1 Moderately Aggressive-10.7-9.422.615.915.013.8 Balanced-9.9-6.421.015.314.311.8 Moderately Conservative-6.0-3.916.411.311.010.2 Conservative-3.32.312.28.89.35.9 Catholic Super Returns - Financial Years Build Your Own 2008-2009 % 2007-2008 % 2006-2007 % 2006-2005 % 2004-2005 % 2003-2004 % Australian Shares-12.2-13.030.722.626.322.0 Overseas Shares-10.0-19.120.012.98.314.3 Property-12.17.016.212.413.410.8 Fixed Interest6.20.34.43.07.73.3 Cash4.95.95.44.75.25.9 As at 30 June 2009

Managed Choice*FYTD %1 Year % 3 Years (pa) % 5 Years (pa) % Aggressive14.7429.64-1.165.94 Moderately Aggressive12.7924.17-0.435.81 Balanced10.1017.29-0.015.81 Moderately Conservative8.8515.661.285.44 Conservative6.269.853.045.58 Catholic Super Returns Build Your Own*FYTD %1 Year % 3 Years (pa) % 5 Years (pa) % Australian Shares21.3551.370.858.77 Overseas Shares9.9519.33-4.862.06 Property7.735.182.336.57 Fixed Interest3.546.353.514.04 Cash1.902.894.804.89 *FYTD 28/02/2010 Catholic Super website

Managed Choice*FYTD %1 Year % 3 Years (pa) % 5 Years (pa) % Aggressive13.9223.35-1.266.12 Moderately Aggressive12.0419.34-0.495.95 Balanced9.3913.700.005.92 Moderately Conservative8.2312.841.335.48 Conservative5.808.193.165.61 Catholic Super Returns Build Your Own*FYTD %1 Year % 3 Years (pa) % 5 Years (pa) % Australian Shares19.7644.570.878.91 Overseas Shares9.9211.25-5.152.41 Property6.223.091.976.30 Fixed Interest3.605.893.854.04 Cash1.612.794.854.90 *FYTD 31/01/2010 Catholic Super website

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

Make extra contributions - Either regular or a lump sum - Before tax (Salary Sacrifice) or after Choose how your super is invested – Member Investment Choice Maximise your returns How do I increase my super?

Income Tax Rates - 2009/10 Medicare Levy is also payable at the rate of 1.5 to 2.5 % of taxable income Taxable IncomeTax PayableTax Rate on Excess $ 6,000NIL15% $ 35,000$4,35030% $ 80,000$17,85038% $ 180,000$55,85045%

Compare super to other investments Outside SuperSuper (Salary Sacrifice) Salary $ 10,000 Less tax $ 3,150 @ 31.5% Net to invest @ 4% cash $ 6,850 After Tax $ 188 @ 31.5% Value after Yr 1 $ 7,038

Compare super to other investments Outside SuperSuper (Salary Sacrifice) Salary $ 10,000 Less tax $ 3,150 @ 31.5% $ 1,500 cont. tax @ 15% Net to invest @ 4% cash $ 6,850 $ 8,500 @ 4% cash option After Tax $ 188 @ 31.5% $ 289 earnings tax @15% Value after Yr 1 $ 7,038 $ 8,789 24.8% +

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

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

Minimum income as a % of account balance Minimum income as a % of account balance (2009-2010 only) Maximum income as a % of account balance Age Under 654%2.0%100% 65 – 745%2.5%100% 75 – 796%3.0%100% 80 – 847%3.5%100% 85 – 899%4.5%100% 90 – 9411%5.5%100% 95 +14%7.0%100% Pensions – Yearly Income Payments

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

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

Without pre-retirement super pension Salary (ex Sal Sac) $ 71,683 Pension (tax free) $ - Less tax - $ 16,430 Net to spend $ 55,253 Net Superannuation $ 12,863 Overall benefit $ 68,116 Brenda’s current situation is therefore … 2009/10 tax scales – includes medicare levy, lower income tax offset and mature age workers tax offset (if applicable). $79,648 x 90% (10% salary sacrifice) = $71,683

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

Without pre-retirement super pension With pre-retirement super pension Salary (ex Sal Sac) $ 71,683 $ 40,702 Pension (tax free) $ - $ 19,800 Less tax - $ 16,430- $ 5,249 Net to spend $ 55,253 Net Superannuation $ 12,863 $ 19,397 Overall benefit $ 68,116 $ 74,650 What does this mean for Brenda? $6,534 extra 2009/10 tax scales – includes medicare levy, lower income tax offset and mature age workers tax offset (if applicable). $50,000 Transitional Concessional Cap effective 01/07/09 (Brenda uses $46,114 of this cap) SGC (9%) on $79,648 is $7,168 less 15% tax = $6,093

Aged 60 will retire at age 65 Gross Salary $80,000 Currently salary sacrifices $9,600 Pre tax salary is therefore $70,400 Super balance is $350,000 Needs $50,000 after tax income Case Study - Anne How can the rules help Anne?

Without pre-retirement super pension Salary (ex Sal Sac) $ 70,400 Pension (tax free) $ - Less tax $ 16,026 Net to spend $ 54,374 Net Superannuation $ 14,280 Overall benefit $ 68,654 Anne’s current situation is therefore … Using 2009/10 tax scales$80,000 x 88% (12% salary sacrifice) = $70.400

Post 01/07/2009 Transitional Concessional Cap of $50,000 Under the super rules Anne: Draws a $17,336 tax free pre–retirement super pension Salary sacrifices $42,800 to increase her super Reduces her pre tax salary to $37,200 Pays only 15% tax on her super contributions compared to 31.5% Is not entitled to the $1,000 Government Co - contribution

Without pre-retirement super pension With pre-retirement super pension Salary (ex Sal Sac) $ 70,400$ 37,200 Pension (tax free) $ -$ 17,336 Less tax $ 16,026$ 4,536 Net to spend $ 54,374$ 50,000 Net Superannuation $ 14,280$ 25,164 Overall benefit $ 68,654$ 75,164 What does this mean for Anne? $6,510 extra 2009/10 tax scales + $50,000 Transitional Concessional Cap effective 01/07/09 SGC (9%) on $80,000 is $7,200 less 15% tax = $6,120

Transition to Retirement – extra savings! Assumptions: - Starting Balance of $350,000 - Person is aged 60 and retires at 65 - Earns $80,000pa. Currently salary sacrifices 15%. - Requires $50,000pa now until retirement. - Balanced Investor (return 7.6%) - Wages growth is 2.5% - Inflation is 3% With TTR Strategy Without TTR Strategy $554,132 $512,700

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

Assessable IncomeCo-contribution $ 31,920 or less$ 1,000 $ 35,000$ 897 $ 45,000$ 564 $ 55,000$ 231 $ 61,920 or more$ 0 Government Co-contribution Scheme Temporary Reduction to Scheme * Member must be an eligible employee & make a personal after tax contribution. Assumes member contribution of $1,000. Changes apply for 2009/10 to 2011/12 then increasing back to $1500 by 2014/15 ** Plus reportable fringe benefits. Beware salary sacrifice rule change - assessable income 1st July 2009.

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

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

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

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

Death & TPD Cover Basic cover of 2 units provided upon joining the Fund up to age 65 Death cover only is provided to age 70; if required Age Next Birthday <3536 - 4041- 4546 - 5051 - 5758 – 6061 - 6364 - 6566 - 70 Cover Amount (2 units) $201,000$172,200$129,200$86,200$57,400$43,000$28,800$14,400$11,200 Aged Based Example:

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

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

Westpac-ASFA Retirement living Standard Research September 2008 To be used as a guide only How much Income do I need? Single personCouple Lifestyle Modest$19,617 per year$27,454 per year Comfortable$37,829 per year$50,561 per year Victoria Melbourne homeowners. Modest – better than just surviving on age pension but still only being able to afford fairly basic activities. Comfortable – broad range of leisure and recreational activities and a good standard of living. Able to purchase household goods, private health insurance, reasonable car, good clothes, electronic equipment and domestic & occasional int’l travel.

How much do I need to Retire? Years to provide for you $25,000$30,000$40,000$50,000$60,000 10$201,148$240,405$319,540$398,675$476,811 15$268,483$319,980$426,636$534,232$641,745 20$321,741$386,329$514,445$641,905$769,241 25$364,086$436,552$580,719$725,512$870,224 30$397,265$475,884$633,881$791,946$949,609 For a couple, comfortable lifestyle in retirement $50,561 per year Approx 6.31% pa CPI 2.31% pa

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

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

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

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

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

Questions? Contact Us Member Services 1300 655 002 Email info@csf.com.au Website www.csf.com.au

Thank you Catholic Super

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

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

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Presentation on theme: "Make the Most of Your Super Presented by John Frogley, DFP Manager – Employer Services, Catholic Super February – June 2010."— Presentation transcript:

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