Making smart choices case study page 5 What’s new at QSuper page 6 A solid performance 2010/2011 report card page 11 Natalie Clarke, member since 1989 AUGUST 2011 FOR MEMBERS AGED 36 TO 49 Juggling Juggling debt & super page 2 Super Scoop
Making smart choicescase study
page 5
What’s new at QSuperpage 6
A solid performance2010/2011 report card
page 11
Natalie Clarke, member since 1989
AUGUST 2011 FOR MEMBERS AGED 36 TO 49
JugglingJugglingdebt&superpage 2
SuperScoop
Debt vs superFor many people, their thirties and forties can feel like a
financial balancing act. Mortgage, school fees, credit cards,
car loans… the demands on your wallet are seemingly never
ending. And nagging at the back of your mind is the knowledge
that you really should be adding more to your super.
The commonly held theory is that it’s better to pay off your non-deductible debts,
such as mortgages and credit cards, before you start investing in super. However,
with super being such a tax-effective vehicle, the decision to choose paying off debt
over building super is not simple, and is dependent on a number of factors including
your age, your income level and tax bracket, interest rates and super returns.1
FOR MEMBERS AGED 36 TO 49
Conquering debtThe biggest advantage of
channelling any extra money into
debt repayments is that the sooner
you pay off debt, the less interest
you pay.
For example, paying just $2 per day, or $60 extra
a month, off a $300,000 mortgage can reduce
the total amount you pay by around $19,500.2
Additionally, investing extra money into your
mortgage effectively gives you an after-tax
investment return equivalent to your mortgage rate.
There’s also the security that comes with having
no debt. Reducing your debt means your monthly
expenses decrease, which would provide greater
peace of mind in the event that you lost your job or
couldn’t work due to illness or injury. Most people
would probably agree that not having to find $2,000
a month to pay the mortgage could certainly take
the pressure off! On a similar note, many mortgages
nowadays have a redraw facility, so should you have
a cash flow crisis you can access the extra funds you
have invested.
Contacting QSuperContact Centres70 Eagle Street Brisbane63 George Street Brisbane
Ph 1300 360 750+617 3239 1004 (international) Fax 1300 240 602+617 3239 1111 (international)
Monday to Friday 8.30am to 5.00pm AEST
GPO Box 200Brisbane Qld 4001
qsuper.qld.gov.au
SuperRatings Platinum awards 2011, QSuper
Accumulation and QSuper Pension accounts,
www.superratings.com.au.
Super Scoop August 2011
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ISO14001 company
promoting sustainable
forest management.
Important information This document is issued
by the Fund Administrator, QSuper Limited
(ABN 50 125 248 286, AFSL 334 546), on
behalf of the QSuper Board of Trustees
(ABN 32 125 059 006). The QSuper Board of Trustees
is the issuer of interests in the QSuper Fund
(ABN 60 905 115 063). Where the term ‘QSuper’ is
used in this document, it represents the QSuper
Board of Trustees, the QSuper Fund, and QSuper
Limited, unless expressly indicated otherwise. The
content of this document is aimed at providing
general background information on a range of
subjects. The information has been prepared for
general purposes only, without taking into account
your financial objectives, situation, or needs, so it
may not be appropriate for your circumstances. You
should read the product disclosure statement (PDS)
and consider your circumstances before you make
an investment decision. You can download a PDS
from our website at qsuper.qld.gov.au, or call us
on 1300 360 750 and we’ll send you a copy. Before
acting on any of the information, you may wish to
consider obtaining personal financial advice.
a cash flow crisis you
have invested.
Visit our website from September 2011 to download the other versions.
Did you know there are four different versions of Super Scoop tailored to different member audiences?
2 QSuper Super Scoop August 2011
conquer the balancing act
1. Any contributions you make to your super cannot be accessed until after you reach your preservation age or meet another condition of release, and caps apply on how much can be contributed to super. For more information download the Accumulation account product disclosure statement or call us and we’ll send you a copy.
2. Assumes interest rate of 8% p.a. and a 20 year repayment period. Previously, minimum repayments were being made.
3. Q Invest Limited (Q Invest) ABN 35 063 511 580, AFS licence 238274. Q Invest is wholly owned by the QSuper Board of Trustees, and is a separate legal entity which takes full responsibility for the financial services and products it provides.
Having it allSo which one do you choose?
Paying off debt or investing more into your super?
The good news is that when it comes to debt and super, there doesn’t have to be a
choice – you can do both. It can pay at this stage in your life to consistently chip
away at your debt while simultaneously growing your super. And this can all be
done without stretching the budget too much! Everyone’s situation is different, and
what will work for one person may not be right for you, but the following basic tips
are a good starting point:
Reducing debt
Pay off debts with the highest interest rate first.
Pick the card or loan with the highest interest rate, focus your repayments on that,
then move on to the next one. In the long term this will reduce the interest you pay.
Make fortnightly payments.
If your mortgage is say $2,000 a month and you are making monthly repayments, try
changing this to paying $1,000 a fortnight instead, because this means that over a year
you will be paying $26,000 off your debt rather than $24,000. Every little bit helps!
Consider consolidating. If you have multiple debts, you may find that consolidating into one lower-interest
loan could help you pay it off faster and ultimately pay less in interest and fees.
Boosting super
Salary sacrifice. If you make personal contributions into your super, you may
find that making them before tax, instead of after tax, could create a tax saving that
increases your take home pay. You could then contribute this tax saving into your
super account, and boost your super without reducing your take home pay.1
Co-contribution. If you earn less than $61,920 and make an after-tax
contribution, the Commonwealth Government may make an additional
contribution to your super on your behalf. See qsuper.qld.gov.au/growsuper to
see if you could benefit from the co-contribution.
Make extra contributions.
Due to the principle of
compounding, even an additional
$20 a week could make a real
difference to your end benefit,
and if you take it out of your
next pay rise, it’s money you’re less
likely to miss.
Saving into superFor some people, concentrating
on super rather than debt can
result in having more money
in retirement.
In essence, the idea is that whereas most
debt repayments come from your income
after you have already paid tax, super
contributions can be made from your
pre-tax income through salary sacrifice. This
means you only pay 15% tax on your super
contributions (rather than your marginal
rate) and therefore, depending on your
marginal tax rate, may have extra income
available which you could use to make
additional contributions into your super.1
Then after retiring at age 60 or later, you
can choose to pay off your remaining debt
by drawing on tax-free funds from your
super. In some cases this could mean you
end up with a lump sum greater than you
would have had if you’d used your surplus
income to pay off your debt while you
were still working.
Another plus for super is the fact investment
earnings on your contributions are taxed
concessionally at a maximum of 15%. So,
as you can see, in some cases there can be
great tax benefits when investing in super.
The next step Use the Super vs mortgage calculator on the Commonwealth Government’s
MoneySmart website at moneysmart.gov.au to see if you could be better off
putting spare money into your super or your mortgage.
Get financial advice. QSuper members have access to subsidised financial
advice from Q Invest3 about their QSuper benefit — call 1800 643 893 to
make an appointment.
n the Commonwealth Governmenttttt’’’’s’s’s’s
ff
Check out the mortgage vs super case study on page 5 to see how the numbers added up for one couple.
y
super account, and bo
Co-contributioncontribution, the Com
contribution to your s
see if you could benef
Make extra con
3QSuper Super Scoop August 2011
We know from talking to members that
two of the most important questions
people have about their super and
retirement are:
How much you are on track to receive is
the easier question to answer - naming
the actual dollar amount you’ll need
to live on can be more difficult, and
the answer will vary considerably from
person to person. However, having
enough to live comfortably and to at
least maintain their current lifestyle is the
common theme that runs through many
members’ responses.
To help you answer these important
questions more accurately, QSuper
has launched a new online Retirement
Income Calculator. The new calculator
will help you answer these questions,
and also let you explore the effects of
taking a career break, making additional
contributions, or entering your partner’s
details to estimate a combined
retirement income.
If there is a gap between the result you
wanted and the result you are on track
for, you can use this tool to explore
various options and see the effects of
making some changes.
Visit the QSuper website today at
qsuper.qld.gov.au/retirementincome
to see how the new calculator can
help you!
QS
UP
ER
ON
LIN
E
Easy steps to use the Retirement Income Calculator
Step 1.Go to
qsuper.qld.gov.au/
retirementincome
Step 2.Enter your
details.
Step 3.Select the annual
income you think you’ll
need to fund the lifestyle
you want in retirement
(our online tool can help
with this).
Step 4.Click ‘Show results’
to receive your
retirement income
estimate.
How much income am I on track to receive?
What income will I need to fund the lifestyle I want in retirement?
What else is new?
The QSuper website
has had a facelift!
To improve your online experience,
and to make it easier for you to get
the info you want, we’ve given our
website a new look and feel.
Check it out today!
QSuper Super Scoop August 20114
MORTGAGE VS SUPERANNUATIONMORTGAGE VS SUPERANNUATION
SituationQSuper members Grant and Simone would
like to retire when Grant turns 64, and are
hoping for a comfortable standard of living
in retirement that will allow them to travel.
They think it is unlikely the Age Pension will
be available to them, and they recognise
that they will need to fund their own
retirement. Grant and Simone have reviewed
their budget and feel they have surplus
income they can save. They estimate they
can save $100 per week ($5,200 per annum)
and decide to see a Q Invest Adviser to see if
it would be best to invest this money in their
super or use it to pay off their mortgage.
The Q Invest Adviser shows them that by
doing nothing their loan will take 21 years
to repay and they will pay approximately
$327,000 in interest. At their current rate of
contribution their super will provide them
with an annual retirement income of around
$60,400 in today’s money.
See what $100 a week in savings can do
for their super or mortgage!
OptionsOption 1 Invest $5,200 into super via
salary sacrifice
Grant and Simone will still repay their mortgage over 21
years, therefore saving no interest on the loan. The extra
contribution to their super will boost their estimated
annual retirement income substantially to approximately
$70,500. However they will not be able to access any
money they contribute to their super until they reach
preservation age.
Option 2 Invest half into super via salary sacrifice and half to extra mortgage repayments
By investing $2,600 into extra repayments and salary
sacrificing the remaining half to super, Grant and Simone
will repay their mortgage over approximately 17 years
and save an estimated $70,000 in interest. After repaying
their mortgage, Grant and Simone will direct $5,200 into
their superannuation account. At retirement this strategy
will provide them with an estimated minimum annual
retirement income of around $66,300.
Option 3 Invest all of the $5,200 into the mortgage
Grant and Simone repay their mortgage over 14 years and
save $114,000 in interest. After repaying their mortgage,
they then direct the $5,200 into their super, which will
provide them with an estimated minimum annual
retirement income of approximately $61,500.
Their DecisionGrant and Simone consider these
options with their Q Invest Adviser
and decide Option 2 would be
the best for them. This option
would give them a good income
in retirement, will mean they are
paying less in interest on their
mortgage and, because they would
be salary sacrificing their super
contributions, will reduce the
amount of income tax they pay. The
Q Invest Adviser also recommends
Grant and Simone redirect their
loan repayment money into their
super once their mortgage has
been paid off to boost their super
and provide them with an even
better income in retirement.
Take control and get the right advice today.
Call Q Invest on 1800 643 893 to
find out how a Q Invest Adviser can
help you get your super moving.
Grant and Simone’s StoryGrant: aged 40 Salary: $75,000 p.a. Accumulation account balance: $134,000 Personal super contributions: 5% salary sacrificeMortgage: $300,000Monthly repayments: $2,450
Grant and Simone hope to have a lifestyle where they are able to travel and eat out occasionally in retirement.
Simone: aged 38 Salary: $60,000 p.a.Accumulation account balance: $98,000
Sit
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Assumptions for the case study: • Interest rate (mortgage) 8.5%, an offset account is in use • Gross earnings rate 7.99% • CPI 2.5% • AWOTE 3.8% • Standard contributions (super) 5% •
Employer contributions (super) 12.75% • Extra contributions to superannuation and mortgage repayments are a fixed amount for the term of the loan • Marginal tax rate for 2010/2011
year • Medicare included in calculations • Insurance has not been considered • Superannuation account balances at retirement are net of any excess contributions tax • Present values are
used for superannuation income amounts • Interest payable on mortgage is not discounted by CPI • The flood levy has not been considered in the calculation for this case study.
This article is brought to you by Q Invest Limited (ABN 35 063 511 580, AFSL 238274) and is for general information only. It does not take into account individual goals, financial situation,
or needs. You should consider these before you make any investment decision based on this information. Q Invest is wholly owned by the QSuper Board of Trustees, and is a separate
legal entity which takes full responsibility for the financial services and products it provides.
Brought to you by
5QSuper Super Scoop August 2011
The year in reviewAs you’ll see in “The year at a glance”
summary, we’re continuing to deliver on
our commitment to provide you with
great value and service, solid returns, and
the information you need to understand
your options.
While QSuper received industry recognition
in the form of a platinum rating from
SuperRatings for the fifth year running,
I believe the real test is how well we’re
meeting the needs of our members.
That’s why we’ve been working on how
we can improve the products and services
we offer you.
A new way of thinkingAs you would have seen when you
opened this newsletter, QSuper has a
new logo and fresh look and feel to its
communications. But the changes we’re
undergoing are far deeper than a new
look; we’re rethinking the way in which we
help members accumulate enough super
to live their desired lifestyle in retirement.
It’s an unfortunate fact that many older
Australians retire with insufficient funds to
live comfortably. Increased life expectancy
also means that some people have to face
the additional worry of their money
running out too soon.
Everyone has different needs These factors have led the QSuper Board
of Trustees to consider whether we need
to change the way we look at super, and
how we can better meet the needs of
members. Events such as the global
financial crisis (GFC) have certainly
highlighted that the environment can shift
unexpectedly, and there is not a ‘one size
fits all’ approach to saving for retirement.
Everyone has a different view on what
constitutes a comfortable retirement, as
the quotes on the right from our members
by Rosemary Vilgan, Chief Executive Officer
Making super work for you
illustrate, and it is this individuality in
situation and outlook that makes it
all the more important for QSuper to
keep improving.
Growing your super together While every member’s superannuation
journey is different, QSuper is committed
to being your partner on this journey. To
help improve this partnership with our
members, QSuper is proactively looking
at all aspects of the Fund to see what we
can do to better support you and help you
reach your retirement goals.
Over the next few years we are looking
to make our communications even
more relevant to ensure you are always
receiving information that’s better
targeted to your situation so you can
make better decisions about your super.
So what’s new?We also recognise that to achieve your
‘retirement lifestyle goal’ you first need
to understand how much you will need
to fund that lifestyle, then work out how
much you are likely to have accumulated
by the time you stop working. This is
why we have created our new online
Retirement Income Calculator. This exciting
new tool will help you answer these
questions, as well as provide you with the
information and help you need if you’re
currently falling short.
This is just the first of many services that
will be rolled out over the next eighteen
months, so keep an eye out in future
editions of Super Scoop for more details.
This has been a year of growth
and development for QSuper as
we continue to deliver on our
commitment to helping members
achieve better retirement
outcomes. It has also been a year
of challenges, as the floods that
devastated much of Queensland
earlier this year also forced the
temporary closure of our Brisbane
CBD office. However, I’m pleased
to say we continued to provide the
quality service you have come to
expect from us over this period.
Rosemary V i l ganmember s ince 1982
The year at a glance
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1 Awarded by SuperRatings. SuperRatings is an independent superannuation ratings agency.
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enennhahahancnccededd ttto o o bebebbeetttttterre mmmeeeeet t tththee e neneeedededss s
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6 QSuper Super Scoop August 2011
Gemma Riversmember s ince 2005
The way forwardLike any organisation, QSuper needs to evolve to ensure we continue to
deliver good value and are meeting the changing expectations of our
members. Going forward this means we will be placing a greater focus
on your individual needs, so we can help you make better decisions
about your financial future.
As always, any changes we make will be carefully considered and
focused on helping you achieve your retirement goals. In practical terms
this may mean creating new products, rethinking investment strategies
or improving the way we communicate with you. We are currently
developing our next strategic plan and I look forward to sharing it with
you in the near future.
Bob Scheuber,
Chairman of the QSuper Board of Trustees
Read the complete Chairman’s report in the Annual Report to Members
on the QSuper website at qsuper.qld.gov.au/annualreport
Bob Scheubermember s ince 1974
“To continue to live the way we have lived and not have to rely on the Age Pension.”
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“Retirement to me isn’t about just trying to stay alive, it’s about learning how to live more.”
“Retirement to me means being able to live comfortably and go on holidays and do what I want to do without worrying if I can afford it.”
Jean Dwyermember s ince 199 1
Pab l o Fernandezmember s ince 2006
Mart in Kr ippe lmember s ince 2009
Nata l i e C larkemember s ince 1989
ererrreee 1919191999199999999919911999191191991991991911919911911919191919919919999999999999999999999999999999999999999999999999999999999
Duncan McKe l lar
member s ince 1989
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Gemma Riversmember s ince 2005
e le le le le lll alalll alalllllllllllllllllllllllllllllllllllllllllllllllllcKcKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKele le lee le le lllceeeeeeeeeeeeeeeininnccccececececccccecccccccccccccccccccc
Sarah-Jayne Lofthouse member s ince 2008
Nata l i e C larkemember s ince 19889
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Garry Dwyer
member s ince 1983
7QSuper Super Scoop August 2011
The investment priority of the QSuper Board of
Trustees is to achieve the long-term targets for
our investment options with the least
amount of investment risk. That’s
why the last few years have
seen us diversify into
infrastructure
assets.
What are infrastructure assets?In simple terms, infrastructure can be defined as the
fundamental facilities and networks serving a community.
Infrastructure assets can include toll roads, ports, and
water distribution networks. The revenue from these assets
comes from the people using these facilities. Alternatively,
infrastructure investments can involve the provision of just
the physical asset, while a third party provides the services.
Due to our size and ability to meet the capital outlay often
necessary when investing in infrastructure, QSuper has
access to investments that in many cases are not available
to individual investors. For example, in 2006 an interest in
established British company Thames Water was acquired on
our behalf by QIC, who are one of our investment managers
(see right for more information).
Why does QSuper invest in infrastructure assets?The recent global financial crisis highlighted the importance
of diversification as a way to reduce the impact of a period of
volatility on investment returns. Infrastructure is particularly
attractive to QSuper because of the steady, long-term nature
of its revenue stream.1
QSuper first started investing in infrastructure in 2006 as
part of a careful strategy to smooth out the volatility in our
multi-asset class Ready Made investment options. Over the
past few years a slow and measured approach has been
taken to build QSuper’s infrastructure portfolio as suitable
investments have become available.
The nuts and bolts of by Brad Holzberger, Chief Investment Officer.
The benefits of investing in infrastructure
BENEFIT 1 :
A reliable, steady income streamas many utilities have a monopoly status and are
regulated by government bodies, and other infrastructure
assets such as privatised airports have natural limitations
on competition. This means customer demand can
be predicted with relative certainty for assets that are
already operating.
BENEFIT 2 :
More predictable cash flowsmeans the capital risk of investing in mature infrastructure
is typically low compared to investments in shares.
BENEFIT 3 :
Creates diversification in an
investment portfolio because there is less sensitivity to the cyclical swings that
can create volatility in sharemarkets. For example, people
continue to use essential services like clean water through
a recession.
BENEFIT 4 :
New infrastructure developmentsmay offer attractive long-term capital growth. In general,
projects can be expected to increase in value as they move
from the planning and construction stage to becoming
fully functional and revenue earning.
8 QSuper Super Scoop August 2011
infrastructureINVESTMENTS
What do we look for in infrastructure investments?The most important factor when making any
investment is whether it is likely to increase the
chances of an investment option achieving its
return objective. When it comes to infrastructure
investments, the key is to invest in the right assets at
the right time for the right price. QSuper’s investment
managers analyse many opportunities, but only a
handful of these assets are ultimately acquired.
There are certain characteristics that are viewed
more favourably. Established assets are generally
less risky than investing in a project from scratch, as
usage and income data is factual and historic rather
than projected. Additionally, investing in an existing
asset that has previously been undermanaged offers
the possibility of higher returns through growth and
improved efficiencies.
As with all investments, it comes down to striking the
right balance and choosing assets that complement
each other and the other asset classes in the portfolio.
To minimise risk and optimise returns, a balanced
approach is taken. For example, it is not ideal to
have too many assets in one industry in a particular
country, as risk exposure would increase if that sector
underwent a demand downturn.
The majority of QSuper’s infrastructure investments
are unlisted equity investments, which means we
have part ownership of an infrastructure company
that is not listed on the stock exchange. This
normally requires a larger capital outlay than listed
infrastructure investments, and we are able to do
this due to our scale as an institutional investor.
This approach is likely to deliver investment
opportunities not available in listed investments
and the ability to directly control assets, both of
which can benefit members.
Where are the future opportunities?
Looking ahead, our investment experts will
continue to source quality infrastructure investment
opportunities. We anticipate that some of these
opportunities may come from overseas, as
international governments with high levels of debt
may decide to privatise infrastructure to release much
needed funds.
As always, we will consider each opportunity on its
own merits and choose only those we believe will
offer the best results for members.
Asset Profile Thames WaterIn 2006 QSuper’s infrastructure manager, QIC, acquired an interest in Thames Water, providing QSuper members with an equity stake in the largest water and wastewater services company in the United Kingdom.
Thames Water provides services to millions of users across London and the Thames Valley, and employs almost 5,000 people. Its revenues are regulated, which provides comparatively stable and predictable cash flows set on a five-yearly cycle. Its asset base continues to grow, and it is this asset base which provides the company with its returns.
With its transparent regulation, predictable cash flows and position as a stable, monopoly business providing essential services, Thames Water is a particularly attractive infrastructure investment. It is one that we expect will continue to provide stable returns for the longer-term benefit of QSuper members.1
1. Past performance is not a reliable indicator of future performance. 9QSuper Super Scoop August 2011
be a permanent measure, any member
will only be able to access this refund
option the fi rst time they exceed the cap.
Co-contribution thresholds remain frozenUnder the superannuation
contribution scheme the Government
matches the after-tax contributions
made by eligible members, up to a
maximum of $1,000 a year. Last year
the Government announced that for
the 2011/2012 financial year the lower
income limit (the amount up to which
you are eligible for the full super
co-contribution) and the upper limit
(the amount at which entitlement to
the co-contribution stops) would be
frozen at the 2010/2011 thresholds of
$31,920 and $61,920 respectively. The
Government has now proposed that
these thresholds remain frozen for the
2012/2013 financial year.
Still committed to super reformMany of the proposals made last year
following reviews of the taxation and
superannuation systems have yet
to be legislated. However after this
year’s Budget was handed down, the
Treasurer reaffi rmed the Government’s
commitment to measures such as the
$500 contribution for low income
earners and, the centerpiece of last year’s
proposed reforms, the gradual increase
of the superannuation guarantee rate
from 9% to 12%.
The Commonwealth Government’s 2011 Budget contained a few superannuation related announcements that may aff ect some members.
Concessional contributions capThe 2011 Budget saw a couple of
proposals in relation to the concessional
contributions cap, which is a cap on
the amount of employer and before
tax (salary sacrifi ce) contributions that
can go into your super. At the moment
the general cap is $25,000 a year, with a
transitional cap of $50,000 for members
aged 50 or over that was due to end on
30 June 2012. The Government has now
proposed that for eligible members aged
50 or over with total account balances
under $500,000, the concessional
contributions cap should be permanently
set at $25,000 higher than the general
cap, eff ective 1 July 2012.
Currently, if your concessional
contributions exceed the cap, these
contributions are taxed at a higher
rate. However, in recognition of the
fact that some people exceed this cap
unintentionally, the Government is
proposing that from the 2011/2012
fi nancial year members will have the
option to have excess contributions up
to $10,000 refunded and taxed at their
marginal tax rate. Although proposed to
The fl ood levy and your super
The Temporary Flood and Cyclone
Reconstruction levy was not released
in the Budget, but it has already been
legislated for eff ect from 1 July 2011,
and will remain in eff ect until 30 June
2012. The levy applies to all taxable
income, including income streams and
lump sum payments, although how
much, if any, levy you pay does depend
on your taxable income. If you are aged
60 or over, any payments from super are
tax free, and so the levy will not apply.
You will also not need to pay the levy
if you were a recipient of the Australian
Government Disaster Relief Payment, or
fall into another exemption category, and
have completed the appropriate form.
You can fi nd more details on these
and other Budget proposals,
including the phasing out of
drawdown relief for pensioners,
in the Annual Report to Members at
qsuper.qld.gov.au/annualreport.
What’s the scoop?
INDUSTRY NEWS
It’s important to remember!Measures announced in the Budget are only proposals, and are dependent on legislation being passed through Parliament. We’ll keep you updated on current and future proposals via our website and in future editions of Super Scoop.10 QSuper Super Scoop August 2011
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Report Card 2010/2011
You can read the full report on our investment
options for the year ending 30 June 2011 in
the QSuper Annual Report to Members, which
can be found on our website at
qsuper.qld.gov.au/annualreport.
NOTE:
• Past performance is not a reliable indicator of future performance. Returns may vary considerably over time.
• Each of our options has a different objective, risk profile, and asset allocation. Visit the Investment options page on our 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.
• On 1 July 2006 alternative investments (such as infrastructure, private equity, managed funds, and commodities) were introduced into the QSuper Balanced (Default), QSuper Moderate and QSuper Aggressive options.
• On 19 August 2010 QSuper renamed six of its nine investment options.
faredfaredsuper
How your
QSuper Annual report to members 1
A N N UA L R E P O R T TO M E M B E R S 2011
QSuper investment options
Management fees for 2010/2011% p.a.
1 year% p.a.
3 year% p.a.
5 year% p.a.
7 year% p.a.
DEFAULT OPTION
QSuper Balanced (Default)
0.66% 7.81% 2.14% 3.24% 6.24%
READY MADE OPTIONS
QSuper Moderate 0.47% 5.87% 3.32% 3.92% 5.44%
QSuper Socially Responsible 0.89% 5.89% 1.45% 2.12% n/a
QSuper Indexed Mix 0.39% 9.19% 3.14% n/a n/a
QSuper Aggressive 0.79% 9.99% -0.32% 1.70% 5.47%
YOUR CHOICE OPTIONS
Cash 0.26% 4.05% 3.90% 4.19% 4.36%
Diversifi ed Bonds 0.40% 5.33% 9.63% 7.35% n/a
International Shares 0.28% 17.18% -1.62% 0.17% n/a
Australian Shares 0.26% 7.09% 0.40% 2.81% n/a
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Investment returns
11QSuper Super Scoop August 2011
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It has been an eventful
six months for the world
economy and fi nancial
markets. After encouraging
gains over most of 2010,
global stock markets
(including Australia’s)
advanced more slowly over
the fi rst six months of the
2011 calendar year, with
Australia’s market giving
back some of the gains made
over the previous six months.
As devastating natural disasters struck
parts of Australia, the south island of
New Zealand and the east coast of Japan,
fi nancial market volatility increased and
investors retreated to less risky assets such
as government bonds and cash.
The uncertainty around the likely economic
impact of these disasters subsided
somewhat over the period to mid May
2011. Since then however, investor doubts
have resurfaced as economic data in
advanced economies has been weaker than
expected, and as the ongoing European
sovereign debt crisis further stretches
investors’ patience.
Concerns over the level of debt in the
United States economy have risen over the
past six months as its politicians struggle to
maintain fi nancial obligations to which they
have committed. Meanwhile, the second
installment of the US Federal Reserve’s
quantitative easing (government bond
buying) program, initiated in November
2010, concluded at the end of June 2011.
Since its inception, this program has been
helpful in supporting global share markets.
However global investors are becoming
more cautious about the future due to
the winding down of this program, along
with mounting concerns regarding the
sustainability of the US economic recovery.
Brad Holzberger, Chief Investment Offi cer, shares his opinion on the fi nancial markets and investment performance for the period January to June 2011.
Looking ahead
We expect the global economic recovery to
remain broadly intact in the period ahead.
However as global policymakers withdraw
previously generous stimulus measures,
and as authorities are less able to inject
additional monetary and fi scal support to
off set ailing economic activity and high
unemployment, we advocate a conservative
approach with respect to fi nancial market
risk taking.
Overall, navigating global markets and
the associated economic cycle has been
diffi cult over the past six months. We have
positioned the QSuper portfolio to refl ect
our cautious view of what the future holds.
This is so we can better balance the risks
we see on the horizon with the returns
expected from our investments.
Australia’s economy and fi nancial markets
have not been immune to the increased
uncertainty about global markets. Although
the Reserve Bank of Australia (RBA) has left
interest rates unchanged since the end
of 2010, rising infl ation, weakening house
prices and falling consumer confi dence
levels have off set a buoyant resources
sector, which is still benefi ting from high
commodity prices.
How has this aff ected QSuper’s investment options?
The QSuper Moderate, Diversifi ed Bonds
and Cash investment options achieved
stronger returns over the past six months,
consistent with the retreat to less risky
assets by global investors during this time.
However the returns for those QSuper
options with greater exposure to equities
– QSuper Balanced (Default), QSuper
Indexed Mix, QSuper Aggressive, QSuper
Socially Responsible, Australian Shares and
International Shares – have generally been
more modest. Despite the challenges of
the past six months, strong returns were
recorded across all nine QSuper investment
options for the 2010/2011 year.
QSuper regularly undertakes member market research to ensure we are off ering the products and services you need.
QSuper has established relationships with professional
research fi rms, and formal agreements require these fi rms to
comply with the strict privacy standards set by QSuper and
state and national privacy legislation. The personal data
supplied to researchers is generally limited to your name and
contact details, and the results QSuper receives never identify you.
Your participation in any research is voluntary. If you have
any questions about any QSuper research, would like a
copy of our privacy policy, or if you would prefer not
to be contacted by our market researchers, call our
Contact Centre on 1300 360 750.
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About Brad Holzberger
As QSuper’s Chief Investment Officer,
Brad’s role is to oversee and implement
the investment policy of the Fund.
Before his appointment at QSuper in
February 2009, Brad spent 15 years at QIC
as an executive in asset management.
Brad is a Senior Fellow of the Financial
Services Institute of Australasia (FINSIA),
and is also a member of The Association
of Superannuation Funds of Australia
(ASFA) Investment Policy Committee.