AUGUST 2014

1

Judy and John QSuper members

since 1988 and 1991

Pension fund of the year

2013 and 2014

What’s the scoop?

All the latest industry news.

Page 14

Confidence that lasts a lifetimeInvesting to suit your lifestage.

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Understandingtransition to retirementTips to give your super a boost.

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CEO comment

At QSuper we believe our members deserve the best, so I’m delighted that this

commitment to providing high quality products and services has again been recognised, with our Income account named Pension Fund of the Year for the second year in a row.1

The best keeps getting betterWhether you’re already retired or are thinking about making the transition from working life, our Income account offers a flexible, convenient way to manage your super in retirement. We also listen to our members to understand what it is they want from our products, so even after winning the Pension Fund of the Year award last year, we continued to make further improvements.

Another innovation I’m excited to share with you is our initiative to segregate the assets held for our Income account members from those held for Accumulation accounts. This

industry-leading move, which was completed in March 2014, will allow us to better tailor the investment strategies of both accounts to cater for differing tax treatments, with the aim of better outcomes for all members.

Super to suit youThis new tax initiative is just another example of how we are looking to enhance our products and services in recognition of the fact our members all have very different circumstances and needs. A further example is the enhancements to our default investment option, QSuper Lifetime, which has recently evolved from three groups to eight. This will ensure the investment strategies are better tailored to your

individual circumstances. To find out more about Lifetime, see the article on page 6.

We also understand that some members want to take a more hands on approach to investing their super, which is why we’re launching our new option, QSuper Self Invest. A direct investment option, Self Invest lets you invest your super directly in

Australian shares, exchange traded funds and term deposits. More information about Self Invest can be found enclosed with this issue of Super Scoop.

So whatever your attitude to your super, you can feel confident we have the information and investment strategies to meet your needs.

Rosemary Vilgan Chief Executive Officer, QSuper

I’m delighted to announce our Income account has been named Pension Fund of the Year for the second year in a row.

Welcome

1 Chant West Conexus Financial Super Awards 2014.

Rosemary VilganCEO, QSuper

MORE THAN100,000

Used and trusted by

QSuper members

Make the most of Member OnlineThe new and improved Member Online makes it even easier for you to securely manage your QSuper account at a time and place that suits you.

4 Check your account balance4 Review your investments and make switches4 View and update your insurances

Register or log in today at qsuper.qld.gov.au

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Asset profile

Diversifi cation is important when it comes to managing risk which is why QSuper invests in a range of Australian and international infrastructure

and property assets, some of which are only available to institutional investors. QSuper’s portfolio is made up of a variety of assets including airports, utility companies, and even iconic retail properties such as Chelsea Market in New York.

A must-see destinationChelsea Market is the offi ce anchor of New York’s technology and media corridor as well as home to the country’s most renowned culinary indoor food hall. It is located at 75 Ninth Avenue in an area of Manhattan known as the Meatpacking District. Chelsea Market is considered one of the greatest indoor food halls in the world. Attracting six million visitors

annually, it is one of the most traffi cked destinations of any kind in New York City with more than 35 vendors off ering a variety of food and dining experiences.

Listed on the National Registry of Historic Places, Chelsea Market is housed in the former National Biscuit Company building (where the Oreo cookie was developed) which dates back to 1890. The complex is home to tenants including media and broadcasting companies such as Google and its subsidiary YouTube, the Food Network and Major League Baseball Advanced Media.

A long term investment When selecting investments, our investment managers always focus on the potential for solid long term returns for members. As a mixed use offi ce and retail outlet with approximately 1.2 million square feet of rentable space, Chelsea Market off ers good future prospects. The demand for offi ce space remains strong, with occupancy at around 98.8 per cent, and in 2013 management secured a rezoning approval for an additional 286,000 square feet of offi ce space.

Asset insightAsset name: Chelsea Market, New York

Date of investment: December 2011

Options with current exposure:

Moderate Lifetime Aspire

Balanced Lifetime Sustain 1

Aggressive Lifetime Sustain 2

In addition to Chelsea Market, some of our other assets include Robina Town Centre on the Gold Coast, One Times Square New York, Heathrow Airport and Ports Botany and Kembla. Read more at qsuper.qld.gov.au/assetprofiles

Find out more

New York icon a recipe for success

Image: littleny / Shutterstock.com

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Transition to retirement

Understanding transition to retirementEveryone’s needs in the lead up to retirement are

different. Some people are focused on whether they have enough money to retire. Others are worried

about how they’ll cope with such a sudden change in lifestyle. And although these are very different issues, there is one single strategy that can help with both – it’s called transition to retirement.

Put simply, transition to retirement is where you transfer money from your Accumulation account to an Income account, and then draw an income from that to supplement your wage.

Cut your hours, not your payThe most obvious way you could benefit from this strategy would be to cut back on your work hours, then ‘top up’ your income to its usual level with payments from your QSuper Income account. This allows you to literally ‘transition into retirement’ by easing out of the workforce on your own terms.

Of course it’s important to consider that you are dipping into your retirement savings before you actually retire, so you want to make sure you aren’t doing this to the detriment of your future retirement lifestyle. On the other hand, you may find that tipping the work-life balance more favourably towards life means you stay in the workforce longer than you originally planned, so those savings won’t need to last as long.

Give your super a boostIf you’re worried about not having enough for retirement, a transition to retirement strategy can be a tax-effective way to boost your super. Essentially, you salary sacrifice some of your salary into your Accumulation account, then make up the shortfall in your take-home pay through payments from your Income account.

You then get the double advantage of both saving income tax through salary sacrifice and the tax concessions available on the income you draw from your Income account. This means you should end up with significantly more going into your super account than you have coming out, as the diagram below shows:

And once you turn 60, it’s an even better story, as payments from your Income account are tax-free. The case study on the opposite page illustrates how this strategy may work.

Can I transition to retirement?If you can answer ‘yes’ to the statements below, you’re eligible.

4 I am over 55 and under 65 years of age

4 I have not met a preservation cashing condition (generally retiring or turning 65)

4 I want to stay in full or part-time work

4 I have at least $30,000 in a superannuation account.

1800 643 893

qinvest.com.au

Get adviceImplementing a transition to retirement strategy can have big benefits, but to make sure you aren’t doing more harm than good to your financial position – and to ensure you fully understand the rules surrounding transition to retirement strategies – we recommend you speak to a financial adviser before making any decisions.1 As a QSuper member you have access to financial advice from QInvest – call 1800 643 893 to make an appointment today.

Without transition to retirement

With transition to retirement

Net into super Tax

Tax Take-home payNet into super

Take-home pay

1 Advice fees apply. QInvest will advise you of the fee before providing you with advice.

This diagram is provided for illustrative purposes only.

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Case study

Helen’s storyHelen, a high school biology teacher, is looking to retire in around five years’ time, but is concerned her super won’t be enough to support her comfortably in retirement. She went to a QSuper seminar and heard how transition to retirement (TTR) can be a tax-efficient way to grow your super, so decided to go to a financial adviser to find out if it would work for her.

What are Helen’s options?Helen is currently making the standard 5% contribution to her super made by many Queensland Government employees, so the adviser calculated that after her

employer contributions are taken into account, she could make additional salary sacrifice payments of $20,000 a year from her salary and still be within the annual concessional contributions cap of $35,000.

As Helen is 60, any payments from her Income account are tax-free, so the adviser told her that by taking an annual income of around $13,500 from this account she would be able to maintain her current take-home pay. Because the amount Helen would salary sacrifice into her super is much greater than the amount she would withdraw from her Income account, Helen would have more than $4,000 extra per year going into her super. And all without decreasing her annual income!

Before AfterGross remuneration $76,000 $76,000

Income account withdrawal $0 $13,556

Assessable income Income tax paid $17,387 $10,143

Net into super 1 $3,400 $7,524 Annual income $58,613 $58,613

That’s $4,124 more a year going into her super!

What are Helen’s results?The adviser then projected what this could mean for Helen’s position in five years’ time. As this graph shows, following this strategy could give Helen an additional $36,400 in her super when she retires.

60 61 62 63 64 650k

100k

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500k

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Valu

e ($

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TTR strategy Current strategy

Projection of retirement wealth2

How can a transition to retirement strategy boost my super?Name: Helen Age: 60 Accumulation account balance: $300,000

The individuals are not real and the hypothetical case study is provided for illustrative purposes only and should not be relied on as personal, legal or taxation advice, nor does it take the place of such advice. Assumptions: These calculations are based on the assumptions that the member has a conservative investment strategy with an ongoing 6.5% return on investment and pays 1% in fees. Figures calculated using 2013/2014 tax rates, including Medicare levy of 1.5%. 1 15% contributions tax has been applied. Does not include employer contributions. 2 Past performance is not a reliable indicator of future performance.

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QSuper Lifetime

As our new default investment option, Lifetime allows members to let QSuper take care of things for them. It’s an intuitive and flexible option designed

to provide members with confidence that their super is working as hard as possible throughout their life.

Aligned with your life stageThe philosophy behind Lifetime is simple: your situation and priorities change over the years, so surely it makes sense for your investment strategies to adapt and change with you. In other words, Lifetime offers you a more tailored investment solution that better suits the stage of life you’re in, with the ultimate aim of helping you reach your retirement goals.

To meet the range of investment needs throughout your varying stages of life, Lifetime has eight groups with different investment objectives, asset allocation ranges and levels of risk.

Determining which group you’re placed into is based on a combination of your age and Lifetime balance. Currently, everyone between the ages of 50 and 57 who chooses to keep some or all of their funds in the default investment option has automatically been placed into one of three groups:

4 Focus 1 (for those with a balance of less than $100,000)

4 Focus 2 (for those with a balance of between $100,000 and $250,000)

4 Focus 3 (for those with a balance of $250,000 or more).

If you’re 50 – 57FocusWith retirement approaching it makes sense to focus on stability.

If you’re 58 or overSustainSustain your hard earned super as long as possible.

While everyone would like a comfortable retirement, not everyone knows how to organise their super to make this happen. That’s exactly why QSuper Lifetime has been created.

Confidence that lasts a lifetime

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Find out more

If you’d like to find out which Lifetime group you are invested in, log in to Member Online. More general information about Lifetime can be found at qsuper.qld.gov.au/lifetime

strategies, other factors such as changes to the cost of living and the Age Pension may also dictate how the Lifetime investment strategies are updated in the future.

Constantly evolvingWhen initially launched in December 2013, Lifetime consisted of three groups. In May 2014, Lifetime evolved further, when we split the groups into the eight that currently exist.

Over the coming years we’ll be looking to further personalise the Lifetime groups to meet members’ differing needs. In the meantime, twice a year – in May and November – we’ll review the Lifetime group you are in. If we find that, due to your age or Lifetime balance, you need to be moved to a different group, this will be done automatically.

With this new tailored, highly member-focused approach to investment, QSuper really is leading the way. So you can be confident that your super is working as hard as possible to help you reach your retirement goals.

Everyone aged 58 and over has been placed into one of two groups:

4 Sustain 1 (for those with a balance of less than $300,000)

4 Sustain 2 (for those with a balance of $300,000 or more).

Tailored investingThe investment strategies behind Focus 1, Focus 2 and Focus 3 have been specially developed with medium-term investors in mind, and therefore aim for more stability while still maintaining some growth assets.

While each of these group’s investment approaches has a focus on seeking high returns, they’re also designed to withstand some losses throughout the years. Essentially, they make the most of the fact that retirement is probably still a few years away.

The thinking behind Sustain 1 and Sustain 2’s investment approaches recognises that members are either in retirement or planning for it. So typically, these groups will have a more conservative investment strategy, designed to sustain funds in retirement.

The thing that makes QSuper Lifetime so innovative and dynamic is the way we look at the investment strategies across the different groups – particularly for members who are in or approaching retirement. While your age and Lifetime balance are the key figures that help guide the

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Because they tend to invest heavily in shares, the default options of many funds are at the mercy of the market. In good years, returns can be strong. And in bad years, they will often be negative.

At QSuper, we invest in different ways, to minimise this market volatility. While each of our eight Lifetime groups has a different investment strategy, none is heavily reliant on the performance of shares. Instead, we look for alternative investment choices. For example, bonds are generally seen as a defensive option, though in many of our Lifetime groups we invest in capital-seeking bonds to provide greater diversification.

This means that in a ‘bad year’ for shares, our returns can be much better than most other funds. It also means that in a ‘good year’ for shares, our returns mightn’t be quite as good when compared to funds with a heavier weighting to shares. What’s really important is the long-term return.

Overall, the goal of our investment strategy is to avoid the peaks and troughs; to provide our members with consistent and reliable returns, and more certainty around where their super is headed.

Avoiding the ups and downs

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Retirement income

A popular question when it comes to retirement planning is: “how much is enough?”. Most people look at how much super they’ve accrued over their

working life and focus on their account balance. But what does it mean? A balance of $250,000 might seem like a fortune now, but could it actually support you for 25 years?

That’s why you should really be looking at what income you’re on track to receive.

How much is enough?But first things first – before you can work out whether you’re heading for the retirement of your dreams, you need to know what income you’re going to need. There are some guidelines available – for example the Association

of Superannuation Funds of Australia (ASFA) Retirement Standard1 recommends that to maintain a comfortable lifestyle in retirement, a couple will need an income after tax of $57,817 and a single person an income of $42,254. Alternatively you could look at the two thirds rule, which assumes you’ll need around two thirds of your pre-retirement income in retirement to maintain the same lifestyle.

However lifestyle is a very personal thing. What one person might consider as a modest existence could be a luxury lifestyle for someone else, so it’s more important to decide what lifestyle will suit you and set an annual budget based on the type of retirement experience you want to create for yourself.

When it comes to retirement the crucial figure isn’t your super balance; it’s your projected annual income.

What’s your number?

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Numbers not adding up?There’s three simple steps that could improve your super situation.

Crunch your numbersIf you’re unsure what annual budget you’ll need for your retirement, get estimating. Firstly, list all of your current expenses then remove any expenses that may no longer apply during retirement such as mortgage repayments, public transport to and from work each day or uniform costs. You should then add any new expenses you’re likely to incur such as increases in health insurance premiums or purchases such as a new car or renovations to your home.

Now is also when you want to really think about the type of retirement lifestyle you want. Will it involve eating out more or less, or going on holidays overseas or travelling interstate? You might also want to calculate the costs of taking up a new hobby or joining a sports team. After crunching the numbers, the total figure you arrive at is a good guide for how much income you’ll need each year.

Why not use our online Budget Planner to work through your budget by inputting costs for your household bills and personal expenses to see how much you spend and get a clearer idea of your budgeting needs?

How will you receive an income in retirement?Working out what income you need is one thing; how you’ll receive that income is another decision altogether. QSuper offers you access to two different account options for retirement (and of course you could choose both). These are our award-winning Income account and a Guaranteed Term Annuity issued by Challenger. 2

Our award-winning Income account is a flexible way to fund your retirement and offers:

3 regular income in retirement

3 choice of fortnightly, monthly, quarterly, half-yearly or annual income payments

3 tax-free investment returns

3 the freedom to choose how much income you withdraw

3 unlimited lump sum withdrawals from as little as $1,000

3 eight investment options and the ability to switch when you want to

3 the choice to automatically increase payments with inflation.

The Guaranteed Term Annuity provides a guaranteed income over a fixed period of time, and features include:

3 the ability to choose the amount you want to invest, starting from as little as $10,000

3 investment terms from 1 to 50 years

3 having your income payments made monthly, quarterly, half-yearly or annually and indexed for inflation

3 your annuity earnings rate is set when you purchase the annuity

3 you can choose to have all, a portion, or none of your original capital investment returned to you at the end of the term of the annuity.

Are you on track?Use our Retirement Income Calculator to estimate the income your super could provide in retirement and to work out whether you’re on track to live the lifestyle you want. The calculator shows if you’ll have an income gap or a surplus and how adjusting your investment mix or increasing your contributions can boost your super ahead of retirement. Visit qsuper.qld.gov.au/calculators and use the calculator to find out what position your super is in.

Make additional contributions

1 Assess your investment options

2 Attend a QSuper seminar

3

qsuper.qld.gov.au 1300 360 750

1 The ASFA Retirement Standard is a commonly used measure and takes into account usual expenses for a retiree who owns their own home. Visit superannuation.asn.au for more information. The figures quoted are from March 2014. 2 This product is issued by Challenger Life Company Limited (ABN 44 072 486 938) (AFSL 234670) (“Challenger”). Consider the appropriateness of this product and read the PDS, available from challenger.com.au/guaranteedtermannuity, before deciding whether to acquire. The QSuper Board and QSuper Limited are not licensed to provide financial product advice about this product. You should consider obtaining financial advice before making a decision about this product.

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Are you retirement ready? Retirement is an exciting new phase and can offer some

of the best and happiest years of your life. Making the transition from the daily grind of full-time work to

spending your time as you please can be a welcome relief, but without proper planning it can feel overwhelming. Preparing for retirement before it happens will help make the transition easier.

Before you think about retirement, ask yourself the following questions:

Q Are your finances in place?

Q What lifestyle will you lead?

Q How will you spend your time?Doing this should give you a clearer picture about what your retirement will look like. Once you know how much super you will have and the type of lifestyle it will support, you can focus on how you’ll get there. Give some thought to the type of retirement you want. Will it involve lots of travel, taking on a new hobby or staying close to home with family and friends? Having an idea of the way you’ll spend your time will help you get ready for it.

Making a gradual move to retirementSome people choose to gradually ease into retirement by taking advantage of a transition to retirement (TTR) strategy when they reach their preservation age.1 While many people use a TTR as a tax strategy to boost their super in the lead up to retirement, it also serves a more literal purpose of reducing work hours while boosting income with a pension. Read more about TTR strategy on page 4.

Will you manage the change? Regardless of whether your retirement is 10 to 15 years away or in the next few months, retirement is a big adjustment and entering this phase of your life is made easier with a plan in place. The first step is to figure out what it is you enjoy and work out how you’ll do it. Without work to keep you occupied you’ll find yourself with plenty of free time which can in fact become a burden if you’re not ready for it. Many options include becoming a volunteer, joining a social club or taking up a new sport. All of these options will give you something to look forward to and a purpose if you find your work-free life suddenly lacks one.

Retirement planning

It may seem like a silly question, but the transition can be anything but smooth if you’re not prepared.

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Goals for your next life stageHow will you want to use your energy and time to balance the different aspects of your life? One idea is to list ten goals now that you would really like to achieve during your first five years of retirement. That way, as you inch closer to retirement you can look forward to crossing those goals off your list. An example is sharing your knowledge by becoming a tutor. Alternatively, why not become a student and learn more about a topic that you’ve always been interested in? If time spent outside of the classroom is more your style, learn a skill or take up a new hobby. You might

uncover a hidden talent you never knew you had. A lot of retirees turn to volunteering for the social aspect it offers, as well as the sense of pride they gain from helping others.

Put your health firstMost importantly, with retirement in your future it is important to prioritise your health. Staying fit and active during retirement is not only good for your physical health, but also your mental health. The type of exercise you do doesn’t have to be strenuous and if you’re not already exercising, easing into a fitness routine now will pay off in the long run.

Plan Make your financial plans in advance.It’s good to know your finances are in order before you retire.

CheckCheck your super investment strategy. Will it meet your retirement lifestyle needs?

ThinkThink about how you will spend your retirement.Consider taking up a new hobby or reacquainting yourself with an old one.

DoGet active now in preparation for retirement. People who cope best with retirement are those who stay active and involved.

CHECkLIST What to do before you retire

1 For more information about preservation age, visit qsuper.qld.gov.au/preservationage.

to prepare for a better retirement

To feel better prepared for your future, attend our Retirement Preparation seminar.

This comprehensive two-day seminar covers a wide range of topics from financial management and legal matters, to the health and social aspects of retirement.

To find out more or to book your place visit qsuper.qld.gov.au/seminars

This seminar is presented by the fund administrator QSuper Limited (ABN 50 125 248 286 AFSL 334546), which is ultimately owned by the QSuper Board (ABN 32 125 059 006) as trustee for the QSuper Fund (ABN 60 905 115 063). Unless stated otherwise, all products are issued by the QSuper Board as trustee for the QSuper Fund. © QSuper Board of Trustees 2014.

Let the buyer bewareSetting up a self-managed super fund (SMSF) with the

intention of investing in property has been gaining popularity over recent years. For some people, it can

be a good move – particularly those who buy the premises from which they run their business. But for some investors it can be financially disastrous, which is why it’s so important to take a diverse approach to your super.

Risky businessThis diversity can be a real risk for people who choose to invest purely in property. However there has been a lot of press coverage recently highlighting that the scams and unscrupulous practices of some property developers and advisers can have a far more detrimental effect.

The reports highlight that in these instances, investors are being charged exorbitant fees by advisers to set up their SMSF. They’re then being lured into property by spruikers using misleading and deceptive marketing. These can promise huge returns and tax avoidance opportunities if the investor leverages the funds within their SMSF to take out a limited recourse loan to purchase property.

It appears that in many cases these spruikers are working in partnership with property developers, and are quite likely pushing buyers towards properties that are completely inappropriate for them.

For example, rather than being guided towards property in an area with proven strong capital growth and good rental returns, some investors are being convinced to buy yet-to-be-zoned vacant land or off-the-plan apartments. Or worse still, properties in distressed overseas markets, such as America.

And in a worst case scenario, the property purchase contract collapses, leaving the investor with a huge loan to pay off, no property to their name and the spruiker nowhere to be found.

Cracking downUnfortunately, while completely unethical, this is not an

illegal practice as the trustee of the SMSF has sole financial responsibility for their fund and their investment choices. However these schemes and scams have become such an issue that the ATO and the Australian Securities and Investments Commission are now working together to crack down on the unscrupulous practices.

The key is to not be seduced by the promise of huge returns, and to take a balanced view to investing. Also, always ensure you’re getting quality advice from an adviser you can trust. As a QSuper member, you have exclusive access to personal financial advice from QInvest.1 A QInvest adviser can help you work out if an SMSF is the right option for you, and then refer you to a reputable planner who’ll be able to help you set up and run your fund. For more information on QInvest, including applicable fees, see qinvest.com.au

SMSFs

Borrow with caution Borrowing against your SMSF to purchase property must be done under very strict conditions, called a limited recourse borrowing arrangement, the risks of which can include:

Higher costs – SMSF property loans tend to be more costly than other property loans.

Constant cash flow – repayments must be made from your SMSF which means your fund must always have sufficient cash flow.

Hard to cancel – if the loan contract is not set up correctly, unwinding the arrangement may not be possible meaning you may need to sell the property, potentially causing substantial losses.

Possible tax losses – any tax losses from the property cannot be offset against your taxable income outside the fund.

Cannot borrow to improve – borrowed funds can be used to maintain a property but not improve it.

Property through QSuperWhen included as part of a diversified portfolio, property can offer some great advantages. If you’d like some exposure to listed property, from September you’ll be able to do so through the new QSuper Self Invest option. Some of our other investment options also include property assets such as shopping centres, ports and airports. Visit qsuper.qld.gov.au/investments to find out more.

1 Advice fees apply. QInvest will advise you of the fee before providing you with advice. For more information or to make an appointment with a financial adviser, visit qinvest.com.au or call 1800 643 893.

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Investments

Benefits of ETFsDiversification – Unlike investing in shares, an ETF provides built-in diversification because by its very nature it is investing in more than one asset. By investing across a range of shares or asset types, you can reduce risk and limit your exposure if one particular investment experiences losses.

Professional expertise – ETFs are constructed and administered by investment professionals, reducing the amount of work you have to do to gain access to a specific index or market sector. While you’re still in the driving seat by making your own investment decisions, the hard work of accessing a range of holdings is done for you.

Cost-effective – Although an ETF is similar in many ways to a managed fund, it does have some tax efficiencies. The capital gains tax treatment of ETFs means that exposure to this tax is limited, and generally lower than managed funds. Additionally, the overall costs of an ETF are much less than those of a managed fund.

QSuper and ETFsThe introduction of QSuper’s direct investment option, Self Invest, means that you will generally have the option to use your super to invest in ETFs.2

Through Self Invest you’ll have access to a range of quality share investments, but also to other asset classes such as bonds and property. This means you can use an ETF to gain exposure to the property market, but without the hassle and paperwork that can come with real estate investment.

With the growth of direct investment options, exchange traded funds1 (ETFs) are becoming more and more accessible to individual investors.

And with QSuper Self Invest you’ll be able to use your QSuper account to buy and sell them directly. So what exactly are they, and how could they benefit your super?

Put simply, an ETF is a pre-mixed bundle of investments, selected by investment experts. Each ETF is made up of similar types of assets or investments. For example you could choose a fund that is exposed entirely to the resources sector or to high yield stocks. What makes an ETF different from many other types of investments is that you trade them like shares on the Australian Securities Exchange.

Careful constructionWhen an ETF is put together, it is designed to represent a specific index. An ETF constructed to mirror the financial sector, for example, would generally contain shares in the top financial institutions in the ASX 200. It would have very similar stocks and weighting to the index it was constructed to mirror, so it can closely replicate its performance.

The price of an ETF will be updated throughout the day, but it will always be aligned to the net asset value of the stocks it is comprised of. Because of its trading nature you are able to easily keep track of daily changes in value as you would shares, and buy and sell exactly when it suits you.

Trading up with ETFsHow exchange traded funds can help you control your super

Find out moreFor more information about the ETFs offered through QSuper Self Invest, see qsuper.qld.gov.au/selfinvest

1 Visit moneysmart.gov.au/investing/managed-funds/exchange-traded-funds-etfs for more information on exchange traded funds.

2 A minimum account balance of $50,000 is required to be eligible to invest in Self Invest.

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Super news

Changes to how income support payments are calculatedFrom 1 January 2015, Centrelink and the Department of Veterans’ Affairs will change the way they calculate income support payments following the introduction of new legislation by the Federal Government. This change will affect the way account-based income streams are assessed so that it will be considered the same way as other financial assets.

If you have a superannuation income stream account such as QSuper’s Income account, and receive an income support payment as at 1 January 2015, you will continue to be assessed under current rules. If you are planning on opening an Income account and will be receiving an income support payment, visit qsuper.qld.gov.au/pensionchanges to find out more about the changes.

A new approach to bondsBonds (also known as fixed interest) are traditionally thought of as a defensive asset, designed primarily to target capital preservation. However QSuper is increasingly structuring its bond portfolios within many of the Ready Made

options and Lifetime groups to target yield enhancement. Investing in these types of bonds allows for a greater level of diversification – protecting your investment from the excessive volatility that can be experienced with a high level of exposure to shares – while still providing opportunity for growth.

It’s important to note that unlike the Ready Made options, the single asset Diversified Bonds option seeks to protect capital while still targeting return enhancement (although does still have the potential for negative returns). This difference in approach means that the returns for the bonds asset class may differ between the investment options.

Changes to concessional contributions capBefore 1 July 2014, concessional contributions (the amount of before tax contributions you can make to super without incurring a penalty tax) were capped at $25,000 a year, with a higher cap of $35,000 for people aged 59 and over. On 1 July 2014 this higher limit of $35,000 was extended to people aged 49 or over on 30 June 2014. See qsuper.qld.gov.au/contributionscap for more information.

2014 Federal Budget updateThe Federal Budget handed down in May 2014 contained very few proposed changes to the superannuation system. Some announcements that may be of interest include a proposed freeze on the timing of the superannuation guarantee increase, the ability to withdraw excess non-concessional contributions, and the inclusion of tax-free superannuation income in the eligibility test for the Seniors Health Card. These are proposals only at this stage and have yet to be passed into legislation – more information on the proposals can be found at qsuper.qld.gov.au/budget

Here’s the latest round-up of what’s new at QSuper, and for the super industry.

What’s the scoop?

Important information from the QSuper Board

Currently, any application to make an investment switch must be received by 5.00pm on a Brisbane working day to be considered as received on that working day. From 1 September 2014 this will change to 3.00pm.

This means that any application received at or before 3.00pm on a Brisbane working day, whether via Member Online or by receipt of a Switch Investments in an Accumulation Account or Switch Investments in an Income Account form, will be considered as being received that day. Any request received after 3.00pm on a Brisbane working day, or on a weekend or Brisbane public holiday,

will be considered as being received on the next Brisbane working day.

Since March 2014, you have had the opportunity to withdraw a switch application, providing we receive your instruction before the cut-off time on the Brisbane working day we received your original request. You can withdraw your switch application by logging into your account on Member Online, or for an application submitted by form, by calling us on 1300 360 750.

Change to QSuper’s Investment Switch policy

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Investments

Risk Outlook Australian Shares

QSuper has a range of investment options, each with diff erent strategies, objectives and risk profi les. In this edition, we take a closer look at the Australian

Shares investment option.

Rate of return The objective of the Australian Shares investment option is to match the return on the S&P/ASX 200 Accumulation Index after fees and taxes are paid. While this option off ers a more diversifi ed approach over investing in a small number of individual shares, it is not without risks. Forecasters typically estimate relatively high long-term returns of around 9% gross of fees and taxes,1 although we also estimate greater than six negative annual returns in every 20 years. The performance of these shares is infl uenced by the future earnings prospects of the companies listed and changes in market expectations about whether these earnings will be realised.

Before investing in this option you should consider:

4 How it fi ts into your overall portfolio (including assets outside super) – we generally see this option as a building block to form part of a diversifi ed portfolio.

4 How the Australian economy will perform in the shorter term – forecasts are for below-trend economic growth over the next year and outcomes stronger or weaker than this could move the market accordingly.

4 If investing in this index exposes a portfolio to excessive concentration risk – the index is characterised by relatively high exposure to the banking sector2 (around 46%) which exposes it to trends in domestic credit growth, property prices and interest rates.

4 Changes in forecasts for the Australian dollar and China’s growth – the performance of this option is likely to relate to China’s economic performance due to the impact on commodity prices. While a lower Australian dollar generally supports export earnings and boosts exporters’ competitiveness, it can also raise import costs.

This investment option also has exposure to swings in global market sentiment, making it prone to bouts of heightened geopolitical risk and other concerns that markets focus on.

1 Rice Warner report: Long term investing – do we have the right structure? August 2013. 2 When compared with many other off shore equity indices. ASX Image credit: Passion Images / Shutterstock.com

For an expanded version,updated quarterly, head to qsuper.qld.gov.au/riskoutlook

Find out more

Changes to risk ratingsAll QSuper investment options are categorised by a Standard Risk Measure (SRM) rating. The rating is designed to give members the ability to compare our investment options within and across funds, so they can make an informed investment choice. QSuper reviews these ratings annually to ensure each option reflects the appropriate risk category. As part of our recent review we are adjusting the risk band of three options as outlined in the table below.

In each case, the change to these risk bands reflects the QSuper Board’s approval of changes in asset allocations for the above investment options. The new risk bands will apply from 1 September 2014.

For more information about SRMs and how they are calculated, please see qsuper.qld.gov.au/srm. It is important to remember a standard risk measure is only one consideration when making an investment choice and you can speak to a QInvest financial adviser for financial advice tailored to your personal situation.

Investmentoption

Currentrisk band

New risk band

Current estimated number of negative annual returns (every 20 years)

New estimated number of negative annual returns (every 20 years)

Moderate 3 (low to medium)

2 (low) Between one and two times Less than once

Lifetime - Focus 1

5 (medium to high)

4 (medium) Between three and four times Between two and three times

Lifetime - Sustain 1

1 (very low) 2 (low) Less than 0.5 times Less than once

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Investment returnsQSuper Accumulation account

QSuper investment options 1 year% p.a.

3 year% p.a.

5 year% p.a.

10 year% p.a.

Ready Made options

Moderate 8.55% 6.95% 7.16% 5.89%

Balanced 13.41% 9.90% 9.94% 7.32%

Socially Responsible 13.36% 9.78% 9.03% n/a

Aggressive 17.81% 11.79% 11.49% 7.33%

Your Choice options

Cash 2.06% 2.78% 3.26% 3.88%

Diversifi ed Bonds 7.37% 6.70% 8.60% n/a

International Shares 22.04% 14.26% 14.09% n/a

Australian Shares 19.17% 11.37% 11.64% n/a

As at 30 June 2014

Helping us help youQSuper undertakes research to better understand our members’ needs.We only work with professional research fi rms that operate to strict privacy standards. You won’t be identifi ed in the results, but if you prefer not to be contacted by our researchers, simply call us on 1300 360 750. You can also request a copy of our Privacy factsheet if you wish.

Report Card

QSuper feesQSuper is committed to keeping the fees for our investment options among the lowest in Australia. For information on the fees for all our investment options, see qsuper.qld.gov.au/fees

Past performance is not a reliable indicator of future performance. Returns may vary considerably over time. Each of the options has a different objective, risk profile and asset allocation. Visit the Investment options page on the website for more detailed information. Changes to inflation, fees, asset allocations, option objectives and risk play a significant part in the return of any investment option.

Chant West has given its consent to the inclusion in this edition of Super Scoop of the references to Chant West and the inclusion of the logos and ratings or awards provided by Chant West in the form and context in which they are included. The Chant West ratings logo is a trademark of Chant West Pty Limited and used under licence. It is only current at the date awarded by Chant West. The rating and associated material is only intended for use by Australian residents within the jurisdiction of Australia and is not permitted to be considered or used by a party outside of Australia.

SuperRatings does not issue, sell, guarantee or underwrite this product.

Important information This information is provided by the fund administrator, QSuper Limited (ABN 50 125 248 286 AFSL 334546) which is ultimately owned by the QSuper Board (ABN 32 125 059 006) as trustee for the QSuper Fund (ABN 60 905 115 063). This information has been prepared for general purposes only without taking into account your objectives, fi nancial situation, or needs and should not be relied on as legal or taxation advice, nor does it take the place of such advice. Any statements of law or proposals are based on our interpretation of the law or proposals as at the time of printing. As a result, you should consider the appropriateness of the information for your circumstances and read the product disclosure statement (PDS) before deciding whether to acquire, or continue to hold, a product. You can obtain a PDS at qsuper.qld.gov.au or by calling us on 1300 360 750. Unless stated otherwise, all products are issued by the QSuper Board as trustee for the QSuper Fund. Where the term ‘QSuper’ is used in this document, it represents the QSuper Board, the QSuper Fund and QSuper Limited, unless expressly indicated otherwise. If you do not wish to be contacted except when required by legislation, please call us. QInvest Limited (ABN 35 063 511 580, AFSL and Australian Credit Licence number 238274) (QInvest) is ultimately owned by the QSuper Board (ABN 32 125 059 006) as trustee for the QSuper Fund (ABN 60 905 115 063), and is a separate legal entity which is responsible for the fi nancial services and credit services it provides.

Contacting QSuperContact Centres70 Eagle Street Brisbane63 George Street BrisbanePh 1300 360 750+617 3239 1004 (international) Fax 1300 241 602+617 3239 1111 (international)Monday to Friday 8.30am to 5.00pm AESTGPO Box 200 Brisbane Qld 4001qsuper.qld.gov.au

Find us on:facebook.com/qsuperfundtwitter.com/qsuperfundyoutube.com/qsuperfund

Get the latest investment news

Get up-to-date news on the markets every Monday with the online Weekly Finance Report. You can also get in-depth commentary straight to your inbox every quarter with our Investment Update email.

Subscribe nowqsuper.qld.gov.au/qusignup

More information about QSuper’s performance can be found in our Annual Report, which can be downloaded at qsuper.qld.gov.au/annualreport from October 2014. If you would like a printed copy just call us.

2014Annual Report

Where are the returns for QSuper Lifetime?The Lifetime investment option has only been available to members since 16 December 2013, which means we don’t have one year returns available. However you can fi nd year-to-date returns for all eight groups in Lifetime in your enclosed benefi t statement. We also update returns for all our options daily on our website at qsuper.qld.gov.au/returns

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