The following is the output of transcribing from an audio recording. The transcript has been included to make the video accessible to people who are deaf or hard of hearing. Although all reasonable attempts have been made to ensure accuracy of the transcript, in some cases it may be incomplete or inaccurate due to inaudible passages or transcription errors.
JOSHUA: Good evening, everyone. Thank you for sharing your time with us tonight. We do find ourselves again in a time of a lot of unexpected uncertainty but what we want to do tonight is really focus on the long term benefits that superannuation affords you and that it can provide to you in retirement. We know there's a lot going on. We know there's a lot to discuss but we also want to focus on the opportunities that you should be thinking about in living your best retirement not just now but long into the future. But before we do get started I firstly acknowledge the traditional owners owners of this place in Brisbane where we are broadcasting to you from this evening. I especially acknowledge the Turrbal and Yuggera peoples of these lands but I also acknowledge the people from the lands from which you, joining this evening and acknowledge their traditional owners and the elders past, present and emerging. Now I have the pleasure again tonight of being joined by Ruth, good evening, Ruth, how are you?
>>: I'm really well, Josh, thank you. Now, Josh we are all feeling a bit nervous tonight. We have a record number of our members joining us life. A big welcome to you and thank you so much for joining us. Tonight we will be sharing a lot of content but it will be general in nature. Many of you have already completed a request for a call back from one of our financial planning team which is fantastic. If you haven't and during the session something rest natures and you would like to apply it to your personal circumstances. Please do so. If you have maximised your screen, just minimise it and you can do that. All information about Australian Retirement Trust can be found on our website including of course a copy of our financial services guide. Given this is the first retirement session that we bring to you as Australian Retirement Trust -- it is exciting for us both here tonight -- I did want to start by reassuring you our focus does remain wholly and soley on guiding our members to and through retirement. The profits from member fund with over 2 million members, we are committed to returning our profits back to you in the form of lower fees and better services. We are absolutely going to use our scale of over 200 billion dollars worth of money under management to be a force for good and we will continue to seek out excellent investment opportunities for you to maximise your super savings. But Josh, we're not here tonight to talk about ourselves, we're here tonight to help you mature your thinking when it comes to your retirement planning. Have you been instrumental in helping us do that. We have had over 400 questions submitted already which has given a a fantastic taste of the types of things you would like us to cover. We have a jam packed schedule. Josh, you have had the pleasure of working through the questions this week. You really did enjoy it. What Josh was able to do was actually put those questions into four different themes, if you like. This is what we're going to cover tonight. We're going to talk about helping you to visualise what your retirement might look like, a lot of questions around adequacy. We did see two questions pop-up that have always been considerations for retirement planning but they just haven't been front of mind for many people in recent years. Then of course is managing recent volatility we have seen and how you should be thinking about that right throughout retirement but also the impacts that rising inflation might have on retirement plans. Lastly, as we expected, we did have a lot of questions about opportunities that you can tap into over the next couple of years to maximise your superannuation savings and take advantage of those opportunities. Now if this is the first time that you've started thinking about retirement planning or it's the first time your head space has really entered into this phase of your lifestyle, what I would say to you is that unless you are able to answer one question in particular you're probably not going to be able to progress very far in your planning. That question is: What is the income that you're trying to achieve or united like to achieve when it comes to your retirement planning? What you really need to understand is the adequacy of your superannuation really depends very much on how you answer this question. The income that you are trying to achieve for your retirement will determine how much superannuation you actually need. You would be very surprised how difficult this question can be for people to land on. It sounds quite simple but when you start thinking about it, it's actually not as easy as you think. So just break the questions you need to ask into two sections. The first section is the financial questions. By that we are thinking, have a think about the types of things you want to do in retirement. What is day-to-day going to cost you? Think about whether or not you might be entitled to government entitlements, for example the age pension and what that will play a role. Think about whether or not you're going into retirement as a home owner? Are you going into retirement still trying to service dent or pay rent? Because that's an important consideration when thinking about the income. Think about whether you have other assets as well. That may help to fund some of that income. But then there is personal factors that you have to think about. That is things like whether or not you -- you might still have dependents entering into retirement. Are you going to retire as a couple where you are able to potentially compline assets and split costs or will you retire as a single person? When do you want to retire? That's a question that can have a huge impact on the amount of superannuation you need. And how long do you think you might need the superannuation balance to stretch? They are all the types of questions you need to ask yourself to get a feel for the income you will need to fund your time. Despite the fact that everybody's questions will be different and answers will be different and each individual should be landing on their own unique income levels with their household, despite that, we're just humans, we all want a benchmark to work off at the end of the day. What we've done at Australian Retirement Trust is given you a guide as to four particular lifestyles we break our lifestyles into to help members identify what they think might be more suitable to them. Now there are lots of different ways to come up with these benchmarks. There are lots of different rules of thumb around what is the average Australian trying to achieve. There's a simple one I like Josh and we have spoken about this before. It's the two thirds rule. Think about the income in your household at the moment, the net income, and then think about what two thirds of that would be -- for a lot of people it's a decent starting point and will give you an indication of what the lifestyle is currently costing. The one third that is missing is generally assumed that that is currently covering debts that we assume will be gone at retirement and maybe even covering savings. It's a starting point if you are struggle being that question. What we do at Australian Retirement Trust is try to get you to identify that number so that we can make sure that you are on track for achieving that. What we find with us is that the majority of our members, when they go through that exercise of asking themselves those questions, they do find that they very often want to sit in the doing well bracket which is usually just over the $60,000 a year for a comfortable retirement for our members. That's where we would love to see our members reaching. And of course if you can get to premium and beyond which many people will land on as well that's even better still. Josh, one thing we don't see and hear too often is people wanting to achieve the doing okay lifestyle, because effectively that is the pension.
>>: That's right. As Ruth said, the age pension is where we start the journey. You have had a bit of a marathon. You can take a break now. Looking at the doing okay lifestyle, those inspection there if we look at the age pension are almost exact. Ruth will talk more about this in a moment, but what you use your superannuation and other investments to do is really move you beyond that doing okay lifestyle which is based on the age pension. What we're showing here is the current age pension numbers which were updated as of last week. They increased on 20 March and 20 September every year. As well as receiving the age pension though it's important to acknowledge that you also, when you are eligible, will receive other concessions, especially around things like health care. But it's important that we do first just consider, well, what is the path to receiving the age pension? We did have a lot of people in pre-submitted questions ask around what age do I need to be and what do I need to think about? Is so let's talk about that age first. We are seeing age pension age increase gradually. It used to be the age of 60 for women, 65 for men. We saw that equalised and now both for women and men it's increased to the age of 67. There are no moves to go beyond that certainly at this point. but it's important that you consider that and where your age may fall into that. I often say and it's a joke I have said in previous broadcasts that I worry about Ruth has three young girls and I have a young son and for them age pension age will probably be 100 or so. We will at some point I would suggest in the decades to come see that age move forward. But once you attain that age it isn't the end of the story. What you then do is when you have had your birthday to reach age pension age you go to Centrelink, to my gov and have the conversation with them and they will want to assess two things. They will want to assess all of your income and all of your assets. The only asset they won't really care about is your principal residence where you're a home owner. They don't care whether you're in an expensive house or archaic. They ignore that when it comes to these means tests. Again as we showed with those previous numbers, people like having something to target. People like having some idea how this may apply to you individually. So please be aware that these numbers do change regularly throughout the year. It's important that when you're looking at the age pension, either you're on it now and reviewing it or whether you are looking at accessing it in the future, check where these numbers are at that point. if you look at the income test the government will first ask whether you are single or part of a couple. They will first apply a threshold with the threshold if you earn underneath that you will fully pass under this test and get the pension. If your earnings from all sources, this is from employment, investments, from your superannuation -- if those assets and employment create income of more than the cut-off you will receive no age pension. If you earn somewhere between the threshold and cut-off you will get what is called a part pension. The same theory applies for the assets test, the difference here though is that the government will now look at not only whether you're single or part of a couple but whether you're a home owner or not. Again if you have assets which is everything you own except your principal residence and they're under the threshold, congratulationses, you will get the full age pension. If they're over the cut-off you will get nothing. If it's an amount in between the two, you will get a part pension. I have really over simplified a very complex area of social security law and I know we have had some questions that we may try to get to a little later when we look at that. But, Ruth, when we brought up the lifestyles you said the doing okay lifestyle is the age pension. Yes, it's not a great lifestyle but there is also other things to consider here, isn't there?
>>: Yes, there is. It's important to remind everybody that the age pension will very like I will do a lot of the heavy lifting for people throughout retirement years. Let's be honest, a lot of our members will access some form of the age pension. The problem though with relying on that and mapping your retirement plan around it solely is that you don't have flexibility. It's a rigid system and you can't qualify for it until the age of 67. The wonderful role that superannuation plays here is to give you more freedom and movement around how you retire. I often use my husband as an example. My husband is a tradey, a panel beater, in a very loborousome and tiresome role. I don't for a second think he will sustain that until 67. The reality is he will probably want to retire before age 67. Having an asset like superannuation allows him the freedom to potentially retire sooner. Age pension and superannuation can have a beautiful relationship. They can work hand in hand. The super can come first and then they can work together as well beautifully. I think it's important to remember that. Josh, before we move on, as I said we have had a lot of questionsment I reminded people you can submit questions live as well. I'm watching them. We have already had quite a few come through. If you want to put a question through, please do. Before we move on, Josh, to talk about investments, there is a question around how superannuation is assessed under Centrelink for age pension, if you want to cover that quickly, that will be great.
>>: That's going to be a test. What actually happens -- I did note some questions on this earlier -- what actually happens is with your superannuation it is called a deemed investment. So any financial investment you have is deemed. What that means is Centrelink doesn't want to reassess it every day markets go up or down. They are constantly moving and fluctuating. What Centrelink will do instead is assume that the first 53,000 dollars or thereabouts of those financial investments including your super earn 0.25 per cent investment returns, which if you think about markets we have had in recent times that's incredibly conservative. What they will do, any financial investments you have above the 53,000 dollars, they will assume it earns a higher investment rate, and that's over 2 per cent. First thing to note is as I said, they're not going to re-evaluate as your balance moves around and as your income fluctuates. That's how they actually look at the income test. When it comes though to the asset test, it's basically twice a year your fund, who is providing your income stream reports through to Centrelink what your account balance is. That's what they then have there. Superannuation is assessed. The only other thing I would call out is if you have a younger spouse who is not yet on the age pension -- if we look at your case, Russ is actually receiving the age pension; you're not yet old enough -- the important thing to note is although Ruth's husband would have his superannuation assessed for age pension purposes, your superannuation balance would be ignored. There is also important considerations there if you are part of a couple, just how they may interact together and how superannuation may interact. Not sure how I went on a really quick response with that.
>>: You did well. I would point out he is only four years older than me so he will be annoyed if I keep saying he is older than me. So we have questions coming through about investments which is to be expected given the environment we're in. We will move on now to talk about investments, so just to give a heads up about what people who are nervous about investments now, in particular around rising inflation we have seen over recent months and years. People are asking: What should I do with my super, divert it into something more conservative like cash? What would the impacts of that be?
JOSHUA: I will channel our Chief Economist Brian Parker who said it's our job to stay awake at night and worry about those things; we want our members to sleep well at night. I will cover off as Ruth said some of the things we're seeing at the moment with investment returns and market volatility and inflation risk and a few other things, but I would say to you all as we go through that: If you're not sleeping well at night and if you aren't getting the comfort you need that's where you have to reach out to your superannuation fund or reach out to your own financial adviser where you have one. Let them reassure you of the strategy that's in place. I will start to do that tonight. But let them give that you reassurance so you feel more comfortable with what is happening. If I can maybe go into the content here. Can you sit back and relax a little bit, Ruth. A sight that would be familiar to many of you who have attended the session before with us is that when it comes to your superannuation, we do not unless you tell us to, put all of your eggs in the one basket. 08 per cent of our members -- 80 per cent of our members are in our diversified investments. That means we invest in tens of thousands of different assets across a range of different asset classes. That first includes things like shares. For the typical superannuation member in Australia, about half of their money if they didn't realized, about half of their money will be in share markets both internationally as well as here in Australia. We aspiration funds are aware share markets bring volatility although they give really great investment return as we have seen over the last 12 months, leading into the end of last year. We know they bring volatility. So traditionally we have also looked at more conservative income generating assets, things like cash and fixed interest. The issue we've got here and so those questions people asked about, should I invest more conservatively? Should I move to something like cash? Specially in times where we're seeing inflation start to rear its head. Moving into those means your real return is going to be very low. It may be secure, it may be more stable. But you think about your own bank account. It's probably earning very little. When you apply inflation to that you might actually see that it's not earning anything for you. So as a superannuation fund, we are very acutely aware of still needing to balance this aggressiveness that we might get through shares and volatility but also recognising those conservative assets maybe don't give you the return you actually need especially as you go into retirement. That's why we look at other asset classes as well like private capital, large companies around the world that are not listed on the share market. These are privately owned firms. But still have incredible value, but are still producing very valuable goods but they're not listed on the share market. So they're not driven by market sentiment and volatility in that regard. We also invest in real property, commercial, residential, industrial property -- not just here in Australia but around the world. Thousands of different property investments. Infrastructure investments -- both traditional infrastructure like roads, rail and airports, but also looking at new emerging technology, including renewable energy as well as data warehousing, communications, a whole range of things that we will hold for a long time into the future. Now, how this applies to you will very much depend on your stage of life and the choices that you make. As I said, 80 per cent of our members have never made an investment choice. This is where they are invested under the age of 55, in the balanced option. Half of their money is in shares. About another 20 per cent in other more aggressive investments, things like private capital. And property and certain elements of infrastructure. But you can see they also have exposure here to some of those more conservative assets. Over the age of 65 we invest you in our retirement options, same assets but you can see very different exposure here. In between the age of 55-65 you will find you're in a mix of both of those. But you also have selection -- we did have questions coming through from people who are well into retirement but are still seeing the opportunities of the long term. So we also have things like our growth diversified investment you can consider. Again, the same underlying assets but what we're seeing here is a much larger exposure that those growth assets, volatile assets are much less invested conservatively. We have had a lot of pre-submitted questions and I will tackle this straight on. We have had a lot of pre-submitted questions around: Since the merger we have seen our performance go down actually? Two things to consider. Firstly, the investments you have today with Australian Retirement Trust are exactly the investments you had prior to the merger. Nothing has changed. What you have seen happen is at the same time the merger has taken place we have seen investment markets really suffering because of what is lapping in Ukraine and in Russia -- happening in Ukraine and Russia and on top of the inflation events we have had already occurring. What we're showing here is the average return for the largest 50 super funds in Australia for the balanced, growth and retirement options. Let me show you Australian Retirement Trust's equivalent return. Although over the last three months we've seen a negative downturn, what you can see here is that the average super fund has had a significant downturn when compared to the Australian Retirement Trust. Have assurance that even in down markets that strong investment focus that we have, even in spite of you thinking that the merger may have distracted us, that it continues; that we are still outperforming our competitors. But looking at the short-term in superannuation terms is really dangerous. Superannuation is the longest term investment that you will ever have. Even in retirement you will see that your superannuation is going to be something that you have for decades potentially. What I'm showing here is again the average return in gray for the 50 largest super funds in the country but in the blue this is for our balanced option, you can see the Australian Retirement Trust outperform man's over the medium, long and also short-term and you see that consistent outperform man's and in some of those years you see that is consistently more than 1 or 2 per cent. It makes a huge difference. This is after fees and after taxes. What I'm also showing now is our growth option. You can see the significant outperform man's here again, as well as our retirement option. Yes, we have seen a recent downturn in markets and I understand that people get concerned. But it is really important to think about the fact that that downturn has actually come from a really strong growth period over the last 12 or so months as we recovered out of COVID. So let's play that out a little bit more. I'll count on you tonnage me if I start to talk to much.
>>: You love your graphs.
>>: I do. What we are showing here is what we have seen happen in the balanced option in the blue and retirement option in the red, what we have seen happen with those two options over the last year or so. We have that very steep hit that came with the COVID crisis and that real forced downturn in markets. But this incredible recovery that we've had in the 12 months or so that followed. Yes, we have had that smaller downturn in the last quarter but in this perspective you can actually see we've got through the COVID crisis really strongly. Now, people have asked that question as Ruth said about, well, should I move to cash? We're seeing markets downturn, should I move to cash? Should I move somewhere more conservative? Let's play that out. Let's assume you made that decision at the depth of the COVID downturn. What you would actually see is that -- these figures show a pensioner who is also withdrawing their minimum income. So what you can see is this person by moving to cash wasn't earning a great deal of capital return and was actually drawing down more than they were earning. So, in those retirement and balanced, if they stayed the course they would be receiving that income but you could see would actually maintain their capital over the longer term. This is over the last two years or so. Let's just extend this out even further. Let's go back to the last historical downturn prior to the COVID crisis that we can pick on, and here it is the GFC. What if a person made that decision to move amore conservative option during the GFC? Let me point out that people are usually much quicker to make that decision to move than they are to move back. If we saw a person make that decision at the depths of the GFC, again receiving income for that period you would see a significant reduction of their capital. Again they are not earning as much in return and they are introducing an income from that which is compounding that loss. Again as I said up front, it's really important, if you're not sleeping well at night, if you are finding it hard to keep this long term this perspective or maybe you're at a life stage where you really want to think differently about how you are invested, speak to us. Speak to us before you take any action or speak to your own financial adviser where it is appropriate to do so. Now, I will hand to Ruth in one moment but, before I do, the last thing I really want to tackle is thinking about inflation. I have talked about diversity. I have talked about long term performance. Now we are seeing inflation start to rear its head again for the first time in a very long time. We're obviously getting a lot of people who are concerned. Let me put it in two ways for you. Firstly, think again about that the long term performance. I'm showing here our retirement and balanced options compared to the increase of inflation over the last 20 years or so. You can see here the difference is significant. The low inflation we've had over many years has really allowed this great compound in growth and allowed that gap to be widened. So, yes, we are coming into a period where we're seeing inflation increase and we saw the government in the budget this week make forecasts on that. But just keep in mind again that long term objective. It's also important when you think about our investments, we talk about the return we will aim to achieve for you after inflation. Not including it. The last thing I would call out before I hand back to Ruth is, remember too that as a member of Australian Retirement Trust you have access to our rewards program. This isn't just a gimmick. It is designed exactly for times like these. It is a way for you through our website or through the mobile app to access rewards and discounts on every day items, to help you save more money than you would otherwise need to spend. I encourage you, jump on to Rewards and think about how that can just help you with the day-to-day. Ruth, I don't know how we're doing for time.
>>: Remarkably well, Josh, remarkably well which is why I'm going to throw a question at you before we move on if that's all right, given we are okay for time. A question that came through pre-submitted as well. It was obviously going to come up at some point, which it has: How has Australian Retirement Trust changed its way of investing in conjunction with the Ukraine conflict? How has it impacted the way Australian Retirement Trust is currently investing, not focusing on the global market impact, but our own way of investing.
JOSHUA: Obviously it hasn't changed the fundamental way we invest. So how I talked about the diversification. How we focus on those consistent returns, that is still there. But obviously we felt that what was happening in Ukraine did need some investment action. As Ruth said up front, we do want to be a force for good. And it is important that as we saw corporations doing, as we saw the government doing that there was this real focus on deinvesting from the region. So, we did absolutely and very quickly deinvest from Russia. So, it's important to note that we went out to all of our custodians, our investment managers and made sure they acted very quickly to sell down any assets that we had with Russian exposure. As I said, it was something that was very important to us. But it's also important to recognise it was a very small part of our overall portfolio. As you said, we've got over 200 billion dollars that we invest. Our exposure to those markets has been reduced significantly. But that exposure in the greater schemes was quite small. But I think it's important, more in terms of our social responsibility that we took that action, not so much in terms of investments.
RUTH: I think that draws out a really important point around the power of having scale, whereby you can asignificant amount of money in a particular market but the overall representation given the huge size of the portfolio, the impact wouldn't have been significant as people might have thought.
JOSHUA: That's right. Now it's time for me to throw you a question. I heard it said yesterday -- I was at an industry event -- one of the people speaking at that event said, "Never have I had a person come up to me saying I wish that I had invested less in super or that I put less money into super". I thought right, I'm going steal that. I fully acknowledge that, I'm an artist and a thief. We're about to talk about contributions in a moment. But, why is it important that we link contributions to investments? Even as you're coming close to retirement or in fact you might be in retirement why is this an important step for us before we move on?
RUTH: I think it's important to draw out the fact for those of you getting close to retirement that the day you decide to retire is not the day that your superannuation stops working for you. In actual fact it's probably never going to be as important to be invested properly as it is. Because that's where you probably have your highest balances, where you reach the point of retirement. Remember your superannuation, regardless of how you decide to structure that in your retirement years, will continue to be invested, will continue to earn for you. For many of us, we will actually be in retirement for 20-25-odd years. We still do really have a long investment timeframe which is why this section around investments and considering that is so important when it comes to retirement planning. What we also know about people approaching retirement is it tends to be that time in life where you might find yourself with a bit more disposable income and a bit more ability to actually contribute money into superannuation. That might be because of personal factors like kids have finally gone and left the nest. Maybe you are getting close to paying off your mortgage or there are debts that are no longer there that you are trying to sustain. Very often we find people entering into this stage of life have the ability to focus on contributing. They are trying to find the best way to get the money into superannuation.
JOSHUA: I know you are about to cover it but we have some really good opportunities coming up for older members to think about contributing when maybe that was closed off. So, maybe for those people thinking, well, actually, I'm not able to contribute anymore, now might just be the time for you to take out your pen and notepad I think.
RUTH: Absolutely. I think as well reminding people that contributing into superannuation should be one of the easiest things to do but in fact contributions and the rules around it are probably the most complicated part of superannuation. I will do my best to break it down into simple terms. Generally there are two avenues where money can come into your account. The first one is called concessionaly. We can get money into superannuation under what we call a concessional contribution. We refer to it as concessional or before tax because the tax rate that generally applies to this is up to 15 per cent. For many of us that's a far friendlier tax rate than the tax rate we're paying on our income. That's why it's called concessional. These types of contributions are generally made up of the money your employer will contribute to your superannuation, currently 10 per cent on top of your income that's being contributed. Bear in mind the contribution rate is going to increase to 12 per cent over the coming year. It's also made up of money you might decide to salary sacrifice. That's often done when you approach your payroll department and ask them to recorrect some of your income to superannuation. But also it might be money have you contributed from your bank account you would like to claim a tax deduction on. Remember, there are lots of rules associated with contributionings and there is a limit to be aware of. All three combined, be it family employer, your own salary sacrifice or anything you want to claim as a tax deduction must sit within a 27,500 limit a year. There's a caveat I will cover in a second to that rule. We have seen a couple of changes come in around the rules in particular around age based limits for getting money into superannuation. You used to have to meet a work test for example to make salary sacrifice contributions, as of 1 July. That is no longer going to be the case. But there is also a small rule that's crept up for people and it might be pertinent to this audience if you are somebody who may do the odd day of work here or there. You might be retired but pick up a day of work here or there. Often now you might not have qualified for an SG employer contribution. That is changing. That may impact or benefit some of you on the line tonight. I mentioned the limit of 27,500 is what you have to work with the concession contributions. But there is an exception to that. This is really important. This is actually where your big opportunity it come into play. Effectively what it means is that you will start each financial year with the 27,500 limit but your actual limit will depend very much on what you have been doing contextually since 2018-19 financial year. If you are listening tonight and you have not used your full limit in the previous financial years you may have a far greater ability to contribute concessionaly than you actually think. I would dare say that almost everyone on the line tonight is probably going to have a different limit they could work with. So it all relates back to the average of what you have been doing since 2018-19. That could potentially open up some lovely strategies, particularly if you are thinking about a product called transition to retirement which we will talk about in a moment. What I would say is if this is confusing, but if it's resonating and you're not quite sure, reach out, request a call back afinancial planner who can use these theories and apply it to you personally and give you insight into what opportunities might be.
JOSHUA: Probably thinking about the changes to the work test and increasing ages at which you can contribute, some people may have thought they missed these opportunities that are potentially going to come back for you. Where you think -- you may have finished that contextual journey, think again.
RUTH: It's very rare when it comes to after tax contributions. More so with the before tax contributions. So this is essentially the way you can get money into your superannuation account which has nothing to do with an employer -- it's your own personal money sitting in a bank account. That money will enter your superannuation account tax-free and under every circumstance it will come out of your superannuation account tax-free. You might do this in small bits and originally it might be to qualify for government entitlements like the co-contribution or the spouse offset for example. But very often as well when it comes to people close to retirement we do see people wanting to make larger contributions. It can be limiting because there is an annual cap here of $110,000. If you think about someone who might get an inheritance or sell an investment property and want to put that money into superannuation, that limit can be restrictive. So there, bear in mind there is an exception to that and it's called the bring forward rule whereby you can use three years worth of that $110,000 in one go. That means effectively you can get 330,000 into super in one hit and then not contribute for the next two years. Up until recently that bring forward strategy wasn't available for everybody. You actually had to be under the age of 67 to engage in that. Not too long ago you actually had to be under 65 to engage in that particular strategy. What we're now seeing is a brand-new opportunity for people who are over the age of 67 to engage in that opportunity because as of 1 July the age to be able to use that bring forward rule will increase to those under the age of 75. There may be people on the line tonight as you just said, Josh, that thought that that opportunity to get money into superannuation had passed; it may reopen for you as of 1 July when these new changes come into effect. There is another quirky exception to the rule and it's around downsizing the home. We do see this as something people consider very often as they're getting close to retirement. There is a separate ability to get another 300,000 into your superannuation in the event that you sell your principal place of residence. Bear in mind that there is eligibility here and rules around how long you need to have resided there et cetera but think about that as another opportunity as well. All of these things combined can be complicated and overwhelming which is again why I make the call out: If you're not sure, reach out, talk to the experts. You have every opportunity to talk to a financial planner. One of the greatest benefits of membership is it's something you can do at no cost.
JOSHUA: Before we move on I will highlight two things. First you said it's important to consider. Yes, with that downsizing there, there are conditions and requirements. I would actually say to you that, remember, your principal residence is ignored for age pension purposes for the assets test. The second you sell it, it becomes assessable. That pot of money you have got becomes assessable, even if you put it into your super, it's still going to be assessed. Think very carefully if you are going to go down the down size route. If you are receiving the age pension there can be an implication, especially if you're a part pensioner it may mean you actually lose it which means you will lose the concession card. That's just one word of consideration. But the other thing, Ruth, is with that down size contribution we see change occur on 1 July as well in regard to that.
RUTH: Yes, again age based. The up coming changes and opportunities -- a lot of them aren't the amount, it's more the people who can actually benefit from it. So that downsizing opportunity is reducing, down to the age of 60.
JOSHUA: Currently age 65.
RUTH: So opening up these opportunities for more and more Australians to try to consider building up their superannuation.
JOSHUA: It was only during the week I was reading an article that was talking about people who are thinking, we've got the property market at the moment and people are going okay have we reached the peak or getting close to it in places like up near Brisbane so is now the best opportunity we have to consider downsizing and moving that into super? Although we have talked about a lot of those ages extending out and giving opportunity as you get older, in the downsizing sense the age is coming down and actually allowing you to enter into it sooner in terms of your retirement plans. Ruth, a question has just come through. I know you touched on this. But maybe we call it out a bit more. There's a question: Are there any tax benefits by making any extra contributions into our superannuation?
>>: Absolutely. At the end of the day superannuation is probably the most tax effective vehicle for building wealth as you're going through your working life. Remember that concessional tax rate is sitting at 15 per cent, which is a lot lower than most of us are paying. I think Josh what I would pick up on that question more is don't forget the tax benefits don't staff after you're accumulating your superannuation. It's actually a benefit throughout. In fact, the tax benefits are never more pertinent than when you are in retirement stage, you are earning an investment return on your pension product for example and drawing out your money. That is where those tax benefits really come home.
JOSHUA: Don't steal my thunder.
RUTH: Beautiful segue. I just talked about drawing money out. There was a lot of questions from people asking: When can I get my money? At the end of the day all of this effort and strategy is about building up your superannuation with the goal of eventually spending the money. So how and when can people start to access their superannuation?
JOSHUA: Dare I say we said contributions were complicated. Putting money into super is complicated as is getting it out. So although we're talking about rules and conditions and circumstances largely based on age, also think about how these may present you with opportunities. Think about when you can actually act on these in making a decision. We've talked already a little bit. We have dropped a couple of words which is preservation age, one of the pieces of Jordan we have in -- -- jargon we have in super. So it's the age you can access super regardless of whether you are working or not. The important thing about preservation age is it used to be the age 55; it's gradually increasing to the age of 60. It makes sense as we see age pension age increase, as we see people live longer we're also seeing the access age increase and at the same time government is wanting to make sure we're all working for longer to help productivity and the economy. So you reach the preservation age, congratulations. You have access to your super. There are some things you need to consider based on whether you are working or not. The age of 60 also allows you to where you have changed employment -- you turn 60 -- we have talked about done sizing the -- downsizing the home. Maybe you decide to downsize the job as well. This is where you might leave your current employer and choose to go somewhere else. It might be part of your transition plans that you go from full time retire to. Part time retirement doing something else. That gives you the ability over the age of 60, if that is something you do to actually access all of the super you have accrued at that point and to think about pulling it out, pulling part of it out or actually converting some of it to an income. Again, something we will come to. I also just want to remind you that as Ruth covered off, this is from 1 July where the down size contribution comes in, remembering that is currently age 65 now but from 1 July that will be age 60. Talking about age 65 -- this is the next big milestone. Once you have had your 65th birthday, congratulations, the Tax Office, the government doesn't care whether you are still working or not. Well, I'm sure they care. But ... what I mean is your superannuation is now yours. You have full access to it once you have your 65th birthday regardless of your circumstances. So you can decide to keep it in your super to withdraw it, to use some of it, to convert it to an income stream. Again decisions we will cover off in one moment. We then have at age 67 -- we have already discussed earlier in the presentation, age pension age. As Ruth has said, for a lot of people -- and we have seen this in the questions coming through even now -- people just can't fathom the idea of still working until the age of 67. They physically can't imagine themselves doing it. As Ruth said, her husband, Russell, is actually four years older than her. So when Russell retires that might be the different age to Ruth and that may not be age pension age. So you have got these super opportunities that come before you get to the age pension. It's important you think them out and you actually plan them out. Lastly, is the age of 74. The reason we call this out is just to summarise that last section, Ruth went through, the last opportunity for you to really make a contribution to your super. Okay. I have already inferred some of these. You have really got, when you reach any of those ages, a number of decisions. Some of these may be guided by whether you are still working or not. But basically, you will have four options available to you. Do you leave it in your super savings? In other words, do you just leave it how it is and not do anything with it? Do you withdraw some of it? Perhaps you want to fix the house, go on a road trip, buy a new car, whatever it may be? Do you want it withdraw some of it and keep the rest in your super or in fact do you want to withdraw all of it. Although we will give you a warning to think about on that a little later. You can also use part or all of it to commence an income stream or you might do a combination of all three. You might leave some in super. You might decide to withdraw some as a lump sum or use some to commence an income stream. A bit like Ruth said up front when it comes to thinking about what income do you need in retirement you have choice. You also have choice here about how you use your super in retirement, how will it form part of your income, will it be through lump sums, regular income or do you actually not need it and just park it in super for another point?
RUTH: You touched on a good point. what you decide to do is not set in stone for life. It's quite flexible; you can change your mind. Just as you land on an income you might like to generate we understand there will be years more when you need more or less. Just how you choose to start the superannuation that might change on your journey and your circumstances. Don't feel pressured to make one decision.
JOSHUA: Just as your life changes and circumstances change while you are working we do not assume you will retire and everything goes one way. There is an important focus on flexibility. We have got those age based for you to maybe think about, well, when should you take action, but it's also important to consider tax. We did have a lot of questions coming on this.
RUTH: Nobody likes paying tax.
JOSHUA: Nobody likes paying tax. The beautiful thing with super is that perhaps you don't need to. Before I talk about how tax applies it's important I take a step back and talk to you about how your super actually looks. Because this actually determines the tax that your superannuation may fund. Let me put it in really simple terms or as simple as I can. Any concessional contribution -- they are those pre-tax contributions Ruth talked about, so contributions from your employer, contributions you put in that you claim as a tax deduction, contributions you put in as a salary sacrifice contribution, those are taxed when they hit the super fund, depending on circumstances, they are also taxed when they leave the superannuation fund. It also includes all investment earnings. Anything in your balance that is based only an investment earnings and -- these are superannuation investment earnings, not income stream investment earnings -- those investment earnings are also taxed at 15 per cent as they hit your account and if you withdraw that capital that you have earnt it is going to be taxed again. So you will all have a taxable component. Remember it's taxed on the way in. Also taxed depending on circumstance on the way out but remember it's taxed concessionaly at that rate of up to 15 per cent. So it will be far lower than any other investment or any other income you are receiving. On the other side though, you will have a tax-free component. Maybe not as large and maybe not as many of us, but this is going to be any contributions that you have received from the government throughout your working life, any contributions your spouse has made into your account as well. Any amounts that you have not claimed, that you personal I will have put into your super -- personally have put into super as well as downsizing your home. These are referred to as tax-free. They are tax-free when they enter into the super system and tax-free on the way out regardless of the circumstances in which you take them. Now, I think that's me trying to simplify tax. I'm not sure how I did. But how does the tax actually apply? Well, as I said, tax will actually apply based on circumstances. Here it is complicated further by being based not just on the circumstance but based on your age. If you are under the preservation age, remember it's increasing to the age of 60, then any income payments you take from your super will be fully assessable in your tax return as normal income. If you are between preservation age and the age of 60, they will be assessable but you will also receive a 15 per cent tax offset. You can see already as you start ageing, the government brings out the carrot on the stick, trying to encourage you not to take income too soon but starting to also provide some contexts. Once you -- concessions. Once you turn 60, if you decide to start taking income, congratulations, regardless of whether it's a taxable or tax-free component, you will get that tax-free. Lump sum withdrawals -- same theory. Circumstance drives tax as well as age. Under preservation age you will pay a higher level of tax. That then changes as you get over the age of 60, where that tax is going to be nil. So, you can see here what the government is trying to do is really trying to force you based on those age based circumstances but also based on tax, to really not take your money too soon. The age of 60 is when you see that golden age really open up. But we'll come back to what the implications of that can be shortly. Ruth, we talk about circumstances changing. We talk about tax implications. But there is also different products that help guide you through that. Isn't there?
RUTH: Yes, that's right. We did field as usual a lot of questions about transition to retirement. We're delighted you are aware of the concept of transition to retirement and the term. I want to talk you through it now. I want you to understand firstly the transition to retirement is a concept as well as a product. You might engage in a transition to retirement plan which ultimately means that you are testing the waters, turning into retirement, maybe working part time, maybe leaving your employer and contracting out when and how you wish; whatever concept that looks like for you, think of transition to retirement as a stage that you are going through. As Josh said, it's also a product. It's a product that can give some really great opportunities for people. Effectively the transition to retirement is an income stream. To give you a visualisation, it looks and feels exactly like a superannuation account. Except there are different rules attached to it. Essentially you are going to have exactly the same investment opportunities, outside of one option, the lifecycle investment strategy, you will have access to all of the exact same investment options which means you are going to continue to generate returnses on that. The difference with a transition to retirement product though is you are now eligible to start accessing the money. So once you have reached that preservation age that we talked about, you are going to be able to use a product like this if you wish, which means you can access up to 10 per cent of the balance you moved into the transition to retirement product. There are a couple of things to note here. That 10 per cent can be taken out of the lump -- as a lump sum. Can you decide to draw the 10 per cent out as a monthly income. Whatever format you want to take out the 10 per cent under is your decision. You don't have to take the full 10 per cent; you can actually take as little as 4 per cent out of the balance. The other thing to bear in mind that Josh mentioned is that there can be tax concessions attached to using this particular product. If you are over the age of 60, all of the money you are going to take out of this particular product as you said, will be tax-free. That is why 60 is like the golden age; once you reach the age of 60 whether you are using a product like this or taking it as a you are getting it all tax free which can provide you more opportunities. Some people will use the product to supplement income. They might have decided to work part time or reduce working hours but they want to maintain the same level of income into the household. Other people will use the product as an opportunity to fast-track servicing debt for example as they are lead nothing retirement and they know they can get access to 10 per cent of their superannuation. So having a think about the impact of that if you think about it from that per spec I have. However there is also -- perspective. However there are also people who use it purely as a tax effective operation. You don't have a change to your work status and you are eligible to look at this product. Think of it as moving your superannuation into another product that will look and feel exactly like a superannuation account. You do need to rollover a minimum of 60,000 dollars into the account but you can have it invested in exactly the same way as your current superannuation is invested. I mentioned if you are using a product like this from the age of 60 onwards and taking 10 per cent of it, that is purely tax-free. That is 10 per cent that you are drawing out of here and you're not paying tax on it. What that might do and does do for a lot of people, is open up an opportunity to maybe put money back into the superannuation account you have left open. The reason you have left the superannuation account open is you obviously will need to have an account for an employer to contribute to and they cannot contribute into that transition to retirement product. Now, if you cast your memory back -- aknow there is a lot of information here -- back to the rule I talked about with concessional contributions you might have a far greater window to work with because it will depend on what you have done over the last four-five years. This is where people are mapping these two things together. I have a far bigger window to work with to get concessional contributions into superannuation; I can open up a transition to retirement product, get some money out tax-free and considering getting the money back into superannuation concessionally. It can give beautiful tax benefits but it won't work for everybody.
JOSHUA: Can I park one idea we will come back to. There have been a lot of questions around estate planning and paying adult children. I don't want to steal your thunder because I know we will come back to that. Talking about this strategy here and how I talked about tax treatment, how I said you have a taxable balance within your super, although once you reach the age of 60 and withdraw that and it might be tax-free to you, if you pass away and it goes to adult children it will be taxed. So if your intention for estate planning purposes is to have some money go to adult children I won't steal the thunder yet but I will say you to to park the idea of recontributing, of taking money out and then putting back in as a non-concessional post tax contribution. You are effectively reducing the taxable component of your super and increasing the tax-free. I probably have said too much already. We will come back to it. If nothing else it will keep our listeners hanging on till the end.
RUTH: There are benefits sometimes for just continuing on with the same cash flow but just having it coming from different sources because in the long run there can be benefits in doing that. What I would say is again if this is confusing and overwhelming for you, chat to one of the financial planners, they can give you the information.
JOSHUA: It's also looking at how can this apply to me with one of our planners and they can actually assess whether the journey is the might one for you. Just because Ruth is talking about it doesn't necessarily mean it's a path every person will take.
RUTH: Eventually we all want to retire properly, right? We will get to the point where we say that's it, I'm not transitioning to retirement anymore, I'm done, I'm retired. That's when the product will turn into a retirement income account. If you haven't been using transition to retirement this is something you can be thinking about doing. The income account is very like the transition to retirement product with a couple of differences. The first thing to think about the investment earns are more favorable. There is no tax paid on earnings with this product.
JOSHUA: Don't steal my thunder.
RUTH: Secondly you get to determine how often you get paid and also how much. The difference here is you are not limited to 10 per cent. You now have full accessibility. The other difference to this product once you have actually retired is you can take out a lump sum when you want. You cannot do that with the transition to retirement. Effectively you talked about going on a road trip, buying a caravan, taking a holiday, this is what a flexible product allows you to do. Take out a lump sum but have flexible payments as well. Many members do go down this path because of ease, flexibility and tax advantages.
JOSHUA: Have you worked all your life and earnt a regular wage and income but suddenly you go to retirement and it stops. This product provides those advantages you haven't had before but still brings a level of normality, you are still receiving a regular wage, but this time it's rather than created by work it's created by all of the work you've done.
RUTH: Again, drawing out a point we came to, if you land on an amount you would like to draw out of the income it might be $25,000 a year and you might be supplementing that with a pit of age pension, that doesn't mean it's the amount you have to draw out forever. Of course it's flexible and you can move the dial. However there are minimal amounts. Much like the transition to retirement where you have to draw a minimum of 4 per cent, the income stream is a bit similar. The minimums have actually changed. They is changed originally and the government response to COVID where we knew a lot of retirees were worried about accessing superannuation on a downturn. I think there was --
JOSHUA: It was. There were only two measures that were super related in the budget this. Was one of them, which we can come to in a moment. The other one was that age pensioners will receive an additional payment of $250 in April. I have already told my mother in law not to spend it all on her grandson. Which by the way -- I will do a service announcement to my son and to your three girls: If you are still awake, we love you are watching us but it's time to go to bed. The other announcement in the budget was that this halving as you said from COVID, it was meant to stop on 1 July, the government is continuing it until 30 June 2023.
RUTH: That's something to be aware of. It also does give us some concern that people are assuming they should do that. You might have the ability to live way beyond that. Don't assume that just because it's there you should be drawing down half of what you might have been drawing down a couple of years ago.
JOSHUA: It's a very important point. this is a government determined minimum. You can take any amount above this up to your account balance. This was halved when we saw investment markets collapsing. We have seen incredible recovery. So, maybe that reason for it being here isn't so much there anymore. I do question it in some part. But the other thing I would say is as we're seeing inflation bite, know you have flexibility. If you need to increase your income, remember you have had strong investment returns over recent years. Take advantage of that. If you have seen your capital grow, take advantage of that and use that drawing down option to actually combat inflation a little further.
RUTH: Excellent. Look, I think the last word from me, Josh, before I give it to you to bring everything back together to close up, but the last word from me would be, again going back with the flexibility of these products, don't over think or over panic about making decisions, because everything is going -- in some respects reversible or movable. It's not always about making that final decision right now. We will work with you to make sure that we can adapt to that as you change through the retirement.
JOSHUA: It's not a set and forget.
RUTH: Back to your favorite topic, tax.
JOSHUA: Meanwhile I will leave you to look at the questions that have been piling in. Let me finish off on one area of tax. A lot of the questions were around how does tax apply as I move into retirement dependenting -- depending on the product I choose. Ruth said there will be differences here in how tax applies to income you withdraw or withdrawals that you take. But tax will also differ on your investment earnings depending on the type of product you have. If you keep your money in super savings, just in your regular accumulation account you will have your investment earnings taxed at up to 15 per cent. So you are receiving a net return. If you actually though start a retirement income account -- this is a full retirement income account not a TTR. If you actually start a retirement income account then your investment earnings become tax free. Let's put it together. For argument's sake you are offer the age of 60. Tax free income, tax free lump sums and tax free investment earnings. You might be thinking, well, okay is that important? Let's actually call it out. What I'm showing here is the investment performance that I brought up earlier but I'm not showing here the average return, I'm just showing here our balanced options return for the Australian Retirement Trust. In the dark blue is the investment returns for the retirement income account; in the lighter blue is the investment returns for the TTR and super savings account, the difference between the two is tax. So although it doesn't have a huge difference here as you can see, it's getting close to 1 per cent really across each one of those periods. That obviously will grow based on the return. That is an important consideration. There is an advantage in not just keeping your money parked in super and moving it into retirement phase. A lot of people ask: If I don't need the income should just leave it in my super account? Here is probably the main consideration for you to weigh it up against. If I can maybe go to the key things you need to weigh all of this up on -- and we are aware we have gone through a lot of information, we will have the video out to you in a couple of days so you can rewatch any of this. But if we really wanted to call out the key considerations in those decisions -- is firstly if you start a retirement income stream remember the tax advantage that you get particularly over the age of 60. Remember that it is providing you with a regular income. And remember that also if you have retired permanently it's giving you access to lump sum withdrawals. Remember to you are earning investment income tax-free. Instead you might make the decision just to leave it in super. That's fine. It is your choice. But again remember, it will give you access to lump sums if you are retired so you can basically determine your own income in essence rather than being driven by those minimums. But you are also going to face the fact you do not get that tax advantage on investment earnings. The last and this is something I really want to call out -- Ruth said that any decision you take is not reversible. Well, there is one that absolutely cannot be reversed. Okay? I worded that right, didn't I?
RUTH: You are basically saying I was wrong?
JOSHUA: Very carefully! If you withdraw your money from super, it is very hard to put it back. Okay? Now, the reason I called this out is remember that while your money is in super or a retirement income, you are getting tax advantage that you don't get outside of super. We have had people who wrote to us and said, should I take my out of super and put it into a cash account? I question why you would want to. If you are really concerned about the product -- think about how you would invest it in super instead. Think about the fact that while your money is in super you are taking advantage of those tax opportunities. Once you withdrawing it, you lose those. It will be taxed like any other investment. It will be taxed like any other income. As I said, once you make that choice, very difficult to put it back in. If that's what you are thinking about, and not saying it's the wrong choice for you but absolutely saying make sure that before you do it, seek out some guidance and speak us to. So four questions -- these the questions we always leave you with. There are different degrees of importance to them. Each time we present this. Six months ago we presented this we were in a very high-performing market. We were thinking the world was looking much better for 2022. A lot of people are saying that 2022 is not yet shaping up to what they want. The four questions I would encourage you to ask are these. Do you know what your income needs are in retirement really? People say how much retirement income I do need? As Ruth said, we don't know the answer to that until we talk to you about it. If you don't know the answer then talk to us. Secondly, do you have sufficient super savings to fund it. Do you have any other income to help fund it? Once you know how much income you need then we can talk to you about how much savings you need to produce it. Thirdly, are you sleeping well at night regarding your investments? As I said, Brian Parker our Chief Economist always says this. If you are losing any sleep it means you need to reach out to us. Let us talk to you about how you are invested, talk to you about how you feel you should be invested and where your investment concerns are and see if we can actually make it easier for you to sleep well at night. Fourthly and lastly, do you know how the best to access your super? As we talked about, a lot of rules about putting money into super; a lot of rules about taking it out. A lot of choice but choice actually in some sense brings inertia, people don't know which direction to go in. It will be different for everyone. It will be different for Ruth than it is for me. It will be absolutely different potentially for Ruth's husband as it will be for her. I would hope you actually talk about it before he takes any action.
RUTH: I might share with him!
JOSHUA: Do reach out us to. Know your choices, know what your most appropriate course of action is. In that regard, at Australian Retirement Trust we offer a really wide offering in terms of advice that you can access. And it really is dependent on how deep the advice journey is that you need, how deep your requirements are and the conversation is. You can reach out to us at Australian Retirement Trust and get access to general advice or limited advice, generally at no cost to you. Let me call it out very clearly: We believe in advice so fundamentally as part of your retirement planning we acknowledge its importance so deeply that you as a member of Australian Retirement Trust should have access to it at no additional cost. Anything we've discussed tonight, you can call us on 131184 and start that discussion. If though your matters are relevant beyond your superannuation, maybe you are thinking about investment properties, maybe you are thinking about share investments, maybe you're thinking about your "all of" financial needs, not just your superannuation, then we can help you there too but just be aware that that advice, which is called comprehensive advice will usually come at some cost. It's not provided by Australian Retirement Trust. But we do ourselves have an independent panel of advisers we can refer you to. If you have your own financial adviser, we also encourage you to reach out to them. Now, Ruth, questions? I think we've done okay on time, have we not?
RUTH: We absolutely have. We have a couple of minutes. We actually have effectively 12 minutes left for Q&A. Those of you who have stayed online thank you for staying with us. It's heavy content. Well done. Tomorrow is Friday. You will be able to wind down after that. So there was a question just after we went live around fees and costs. One thing I want to clarify before I send Vanessa's question over to you is we talked about products, transition to retirement, income stream products if you are fully retired -- one thing I said is even though they look and feel similar to your superannuation, so too are the costs. Don't forget that entering into these products -- we don't charge you extra for the particular product. So just bear in mind there are no extra costs as you move through your journey from transitions to fully retired. The question was more around the recent merger and do we expect costs to increase because of the merger?
JOSHUA: Actually we're going to see the opposite. One of the key considerations of the merger between SunSuper and Q Super to become Australian Retirement Trust -- I know we haven't talked about it a lot tonight but we wanted the focus to be all about you -- one of the key benefits of the merger weigh wanted to assure -- we wanted to assure before we took the final steps was the two large funds coming together would bring a cost-benefit. That it allows us to invest in ways that will see costs reduce. We have actually made an announcement that it is to be ratified by the board -- but it is our intention we are able to actually see costs reduce from 1 July. Certainly in terms of some of the administration expenses. But I would say that that's something we will see come to fruition not just from 1 July but in the years to come as we make investment decisions as we have that benefit of being a larger scale fund. It gives us purchasing power. It absolutely gives us purchasing power. We are now clearly the second largest superannuation fund in the country. We are a significant investor in the country. That is going to bring benefits for our members. It is at the core or very central to the core as to why we made the decision to merge in the first place. Absolutely, that will be a benefit you will see not just very soon but well into the future; that will continue.
RUTH: Thank you. I don't want to end tonight on a morbid note so I will ask the question now. But it's an important question, from Anna and in the pre-submitted questions. It's essentially a conversation we could sit here and have for an hour. But the question is alluding -- if the kids are in bed when I get home we could talk for another hour. So taxation is a complicated topic but the challenge is can you give us a high-level insight of what happens to superannuation whether it's in lump sum form or an income stream and taxation in the event of your passing.
JOSHUA: This is about the third time you have thrown me one of these tonight. Let me put it in really simple terms. The first thing I would say to every person, whether you are in a retirement income stream account or a super savings account make sure your provider has an instruction as to what to do with your super in the event of your passing. That's the first thing, make sure we know what to do with your money. Secondly, consider that you are gone. So the tax implications won't be something for you to worry about. It will be for those you leave behind. The second consideration is who you want the benefits to go to. So if it goes aspouse or de facto of the same or opposite tax, they will receive any death benefit tax free. Basically you are going to see that they have that more concessional tax treatment. If it goes to an adult child, though, sorry, let me go back one step. If it goes achild who is not -- to a child who is not yet an adult they will also see some of the tax-free concession come in. If it's an adult child, generally a person over the age of 18, which for many retirees that would be the case, tax would very likely be applicable. If you intend to have your superannuation savings paid to an adult child if you pass away -- that's why I talked about the recontribution strategy, taking money out of the TTR in that case and recontributing it as a post tax contribution, it reduces your taxable component, increases the tax-free component. That tax-free component, whoever it's paid to regardless of who it's paid to is tax-free. It's that taxable component that has the bite to it. Again, reach out to us. Think about your circumstances. You don't -- if you're in a relationship, if you're in a marriage you have to think about well, will your assets pass on to a spouse and then potentially pass on to children? It's not just something you are thinking about yourself. It is very complicated but incredibly important. Again I call out the first point, if you haven't told us who the money is to go to in the event of your passing, please do so. It can really save a lot of pain and anguish.
RUTH: We will leave that particular topic there because it is so complicated. Not totally unrelated there's a question from Millie, and she is asking about the importance of insurance later in life. I'm going to paraphrase Millie, thank you for your question: Would it be better to not have insurance premiums being debited from your account given how expensive it can get? We have seen cases of people paying thousands of dollars out in insurance premiums. The benefit itself may not even be worth it.
JOSHUA: Absolutely, Millie, really great question. What I would say is that insurance in super ceases around age pension age. Generally your super fund will cease it around the age of 65-67. The reason is obviously if an insurable event occurs after the age pension age you will probably be able to access the age pension in it self. The other intent is your superannuation balance has grown appoint and hopefully you have seen dents removed outside of super and you can actually start drawing down on your super and using that instead of insurance. The point you make though is really valid, that as you age, insurance becomes almost prohibitive in cost. What you will see some super funds do to try to offset that is reduce the amount of insurance cover you have as you get older. There is going to be a point absolutely there is going to be a point, particularly when you are over the age of 60 and access to your super becomes easier that you think about, well, do I need that insurance or in the event do I keep paying for that insurance or in the event something occurred to me do I actually have access to my super? And can I just take out my super to otherwise do what the insurance would? I really hate to keep generalising to this point, but it is going to be very much case by case. Millie, I think it's a really valid and very important question. I would again say that that is something if it's keeping you awake at night, don't let it, call us and talk to us about your insurance needs. It might mean we can give you the comfort to say turn off your insurance or reduce it or apply it a different way.
RUTH: I have one more for you. I will speak in a quick answer about pensions. Jack asked do you have to leave a superannuation account open to contribute to a pension account? The answer is no. Those pension or income accounts they have one restriction; you cannot contribute money in to them. That's why you often see people leaving superannuation accounts open on the side. Because the opportunities to maybe contribute money in from an inheritance or the sale of another asset, it will have to go asuperannuation account. You can always open a superannuation account later but you cannot contribute to an income stream account.
JOSHUA: Again you would have to speak to us beforehand because of the implications but you can stop your income stream, add in more money and then recommence it but it can have implications around things like social security.
RUTH: Everything is reversible, so the pension can be reversed back to super.
JOSHUA: Just to clarify, approved that they're not always reversible.
RUTH: I think we will go out on this question. Gordon asked how do I compare super funds? Should the points that I compare them on differ when I'm at retirement stage? Big question.
JOSHUA: It is a very big question. I would say firstly as it how do you compare super funds? There are a lot of sites out there that allow you to do that including some linked to from our website. I know you often talk about this, that there are two things to compare. I think this applies regardless of whether you are in saving phase or pension phase. First compare the numbers. Compare investment performance. Compare investment opportunity. And also compare things like fees and costs. Investment performance is great but what are you saying for it. We charge the same fee throughout your journey whether it's the accumulation or drawdown. We provide that consistency for you. Others may not. So compare that. That's the first point. the second point is then to also compare the non-number elements or the non---
JOSHUA: So services. Thinking about do you have the online access you need? Do you have the access to financial advice at no cost that you want? Do you have access to things like discounts and rewards that we provide? That's what you need to compare. Does that change throughout your life? I wouldn't say they change but maybe some become more important than others, okay? But on that note --
RUTH: I think we'll let you off the hook. You have done a very good job at answering questions. I won't throw anymore at you.
JOSHUA: Again I thank you all for joining. We have had incredible interest in this event. The hundreds of questions you pre-submitted were wonderful. We encourage you to take the journey further, reach out to us, seek the advice and guidance where it's applicable. Let us help you give you that peaceful sleep at night. Ruth, thank you very much for your time. Thank you all for your time. We hope you have enjoyed this and we look forward to seeing you again in the very near future. Have a great end to the week everyone.