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6
Looking to
the future
When you make decisions regarding your
superannuation, it is important to have as
much information and knowledge as you
can. Any decision you do make can have
a significant impact on your income and
standard of living in retirement.
Super is a long-term investment. Not only are
you investing up until your retirement, but
also for the 20 to 30 years you could spend
in retirement. Average life expectancies are
increasing – they are currently 79 years for
males and 84 years for females.
News for LUCRF Super Members march 2009
Email news alerts
Super and your life stage
Actively working
Salary Sacrifice or Co-contributions can help
It is important for people to keep in mind that
superannuation is a tax-effective, long-term investment.
Two major ways to maximise your super are Salary
Sacrifice and the Government Co-Contribution. A salary
sacrifice strategy involves contributions made by you into
your super fund from your before-tax (gross) salary, by
agreement with your employer. These contributions are
only taxed at 15% (compared to your personal marginal
income tax rates, which can be as high as 46.5%).
The Government Co-contribution Scheme rewards people
who make personal after-tax contributions (from takehome pay) to their super fund prior to June 30 each
financial year. If your total income (assessable income
plus reportable fringe benefits) is $30,342 or below this
financial year and you meet the eligibility criteria, you
may receive the maximum co-contribution of $1,500
from the Government (tax-free) into your super fund
(as long as you lodge a tax return). This co-contribution
reduces on a sliding scale as your income increases,
cutting out when your income reaches $60,342 or more.
Close to retirement
A Transition Pension should be considered
If you are currently 55 years of age or over and wish to
continue working full-time, a Transition Pension should
be considered. This allows you to receive an income
stream from your super fund that is concessionally taxed
(from ages 55 to 59) or tax-free (from age 60).
By receiving the maximum Transition Pension
(10% of your LUCRF Super account balance) each year,
this will enable you to receive a lesser ‘taxed’ salary,
as you could salary sacrifice into your super account.
By doing this, you could increase your super retirement
savings and lower your income tax, but still receive the
same level of after-tax disposable income.
MySuper
Diversifying your investments means
spreading your super money over a number
and variety of assets. We offer a diversified
investment option for you – our Balanced
option. This enables you to reduce risk as the
effects of market fluctuations are smoothed
out. Therefore, you can achieve more stable
returns over time, though it is important
to accept that there will be some years of
negative returns.
Alternatively, some other considerations for those who
are approaching retirement are to consider working
part-time (instead or retiring altogether) and using a
Transition Pension to replace your reduced salary. This
will give your existing super more time to recover from
the current market downturn, while still giving you the
potential to contribute more to your super.
LUCRF Super’s email news service allows you
to hear about things as they happen and earlier
than you would by post – tens of thousands of
members received this newsletter via email a
week ago.
Visit www.lucrf.com.au and register today to
hear about things as they happen.
The global financial
crisis & your super
Improving our
member service
administration
LUCRF Super is currently making significant
improvements to the efficiency of our
administration systems and processes.
This will mean a greater level of personal
service for all members.
Investment
market update
The new system is being implemented between
the 10th and 20th of April. There may be some
delays in processing member requests during
this period. We thank you in advance for your
patience and understanding as we continue to
work hard for you.
Already retired
People in this situation have probably felt the worst
impact of the current financial crisis. Retirees
should keep in mind, however, that super retirement
pensions are a very tax-effective place to invest your
superannuation balances, as no tax is payable on
earnings in the pension fund and all income (including
lump sums) is tax-free from age 60.
?
Another option is to reduce the amount of income drawn
from your super retirement pension. This will enable you
to retain more of your super capital in the pension fund
in order to participate more in the eventual stock market
recovery. Whilst reducing your income may impact on
your lifestyle, you may find that you are eligible for a
greater Age Pension benefit due to the reduction in the
value of your pension asset (due to the current negative
returns) and super pension income.
What is happening to economies
around the world?
The world is currently experiencing a downturn on a scale
that could not be anticipated. The US and European
economies have all experienced sharp drops and many
nations have entered ‘Big R’ territory: Recession.
The other benefit of super retirement pensions is the
favourable Centrelink Age Pension income test treatment
that applies, when compared to investments outside of
super (eg. bank term deposits).
Centrelink generally only counts the difference between
the income payments from a super pension income
stream and the social security deduction amount (which
is calculated by the income stream purchase price,
divided by your life expectancy). This represents a
significant concession – one that can result in a higher
Age Pension than otherwise would be the case.
The global financial crisis began in the US, specifically in
the home loan sector. You have probably heard about the
‘sub-prime crisis’. It has since spread to a global credit
crisis. Banks throughout the world are unwilling to lend,
as they try and preserve their capital in an environment
of plunging economic activity and falling asset prices.
However, debt is the oil that lubricates the wheels of the
global economy; without it; economies stall, as we are
currently seeing.
Contact LUCRF Super
Phone 1300 130 780
Financial markets right across the world have sharply
declined. The values of companies have fallen
dramatically, with many big institutions collapsing in the
US and causing further ripples across the globe.
(&'½!'
web:
www.lucrf.com.au
email:
[email protected]
head office: 833 Bourke Street, Docklands VIC 3008
post:
PO Box 211 North Melbourne VIC 3051
fax:
(03) 9326 6907
Whilst the US and Europe have born the brunt of the
downturn, Australia has held up comparatively well so far.
Our financial markets have certainly fallen, but not to the
same degree. The Federal Government has been quick
in implementing stimulus packages to try and bolster the
economy. The Reserve Bank has also aggressively cut
interest rates. However, we are not completely immune
from the crisis.
?
The reality of the financial crisis is that most people’s
superannuation and retirement pension balances will
have fallen in value by the time you receive your annual
superannuation statements later this year. The expected
poor recent returns are the direct result of the awful
returns delivered by global share markets (including the
Australian market).
Issued by LUCRF Pty Ltd ABN 18 005 502 090 AFSL 258481 as Trustee for Labour
Union Co-operative Retirement Fund (LUCRF Super) ABN 26 382 680 883.
How does it affect superannuation?
Over the past 18 months, superannuation funds have
delivered historically low rates of return. Members
are understandably uncertain about their longer-term
retirement savings strategy. While the immediate outlook
for markets is never certain, there are growing reasons to
believe that the financial markets are well-placed to deliver
attractive returns over the medium term.
(&'½!'
This newsletter dated March 2009 is issued by LUCRF Pty Ltd ABN 18 005 502 090 AFSL 258481 as Trustee for Labour Union Co-operative Retirement Fund (LUCRF Super) ABN 26 382 680 883.
The information contained in the newsletter is general in nature only. It does not take into account your objectives, financial situation or needs, so you should look at your own financial position and
requirements before making a decision. Should you require advice that addresses your personal circumstances, it is recommended you contact a person who is authorised to provide personal financial
product advice. For more information about LUCRF Super, call 1300 130 780 or access our website www.lucrf.com.au for copies of our Product Disclosure Statements and Financial Services Guide,
which should be considered before making a decision about the Fund.
Commentary from one of LUCRF
Super’s investment managers –
Rohan Walsh from Karara Capital
Everywhere we turn, we hear, see and feel the effects of the global financial crisis. For this edition
of MySuper, we wanted to provide you with information to help understand what’s going on and the
effect it is having on your superannuation or LUCRF pension. We have also prepared some case
studies that show how people at different stages of life can make the situation work for them.
LUCRF 29328
5
> Continued page 2
2
Continued from page 1
?
3
What might happen next?
We need to remember that share markets are forwardlooking. They move up and down in anticipation of
developing economic conditions. Equity markets have
fallen over the past 18 months because they factored in
and expected the situation we are now experiencing. To
fall a lot further from here, conditions will need to turn
out a lot worse than current expectations.
While news is expected to remain bleak in the short
term and while it is possible that conditions could
further deteroriate, major developments and initiatives
are in train to heal the current conditions. Governments
and policy-makers throughout the world now recognise
the dire economic situation. Many have committed to
doing whatever it takes to fix the crisis.
the economy, the markets will already have improved and
you may have missed out on the upswing.
?
Should you be doing anything?
Given this bleak and uncertain backdrop, the natural
response from investors is to sell, to ease the fear of
further losses. However, history and logic tell us that this
is not the time to sell.
Buying low and selling high is a self-evident approach
for building long-term wealth that most people employ in
their everyday life. However, when it comes to investing
and superannuation, many people often do the opposite
– they move into conservative options once returns
have already fallen. This is because investing can be
an emotional experience, where we tend to feel more
confident and optimistic and buy after prices have risen
Given this bleak and uncertain backdrop, the natural response
from investors is to sell, to ease the fear of further losses.
However, history and logic tell us that this is not the time to sell.
Interest rates have been cut dramatically, governments
have ramped up their spending plans and a raft of
radical measures has been implemented to support
credit markets. These measures should eventually
suceed in supporting economic growth. Even so,
conditions don’t have to get dramatically better for equity
markets to rally.
Another reason for some optimism is the unprecedented
value that is now on offer in equity markets, following the
substantial falls of recent months. Over the past
60 years, the trailing dividend yield on Australian shares
has averaged just over 4%. This compares to the current
trailing dividend yield of over 7%, which is close to its
record high. In contrast, yields on alternate assets, such
as cash, have fallen to historic low levels.
Financial markets recover more quickly than the
economy does – by the time the improvement is felt in
and feel pessimistic and uncertain and sell after prices
have fallen.
4
LUCRF Super’s
performance
All superannuation funds have suffered some
losses in the current and previous financial
years. It is important however, to remember
that markets have also experienced
unprecedented volatility and falls during the
same period.
The value of the S&P ASX200 (the top 200 companies
on the Australian Stock Exchange) has dropped just over
36% so far in this financial year alone. In the past twelve
months, around $680 billion has been wiped from the
Australian stock market. This scenario is all too common
right around the world, with dramatic falls in value a
consistent feature of all stock markets.
The table below puts things into context and highlights
how severely world markets have been affected.
Its importance should not
be ignored – it supports
you in your later years and
helps make your life that
bit more comfortable.
For many people, because
of this financial crisis, this
is the first time they will
be paying attention to their
superannuation.
Until now, many people
have had the attitude of
‘I’ll worry about it when
I retire’. Who can blame
them? After all, it’s not
something that people can
really benefit from until
they reach at least 55.
Also, superannuation as
we know it has not been
around for very long,
compared to other types
of savings. LUCRF Super
Another useful comparison is to look at the long-term
investment trends of shares as opposed to cash. The
graph below illustrates the long-term growth of shares
as an investment, compared to the relatively stable, but
less considerable, growth of a cash investment.
While the two lines are converging, the current financial
situation has had a tsunami-like effect on the 10-year
performance of shares, as you can see below. History
shows that the greatest growth is driven by stock
markets.
Source: Watson Wyatt
Description
Balanced Option
LUCRF Super’s Balanced Investment Option (default)
- 18.82 %
S&P ASX 200
Index of the top 200 companies on the Australian stock exchange
- 36.05 %
AUD²
Australian dollar
- 32.44 %
Property³
Vanguard Listed Property Index
- 46.63 %
US – DOW Jones4
US stock exchange
- 37.74 %
UK – FTSE 1005
Index of the top 100 companies on the UK stock exchange
- 31.92 %
France – CAC 406
Index of the top 40 companies on the French stock exchange
- 38.73 %
Germany – DAX
Index of the top 30 companies on the Frankfurt stock exchange
- 39.89 %
Japan – Nikkei 2258
Index of the top 225 companies on the Japanese stock exchange
- 44.00 %
1
relatively well against the industry benchmarks. However,
we would like to be doing better and we will continue to
work hard to improve our position and performance.
Another important comparison to look at is how LUCRF
Super’s performance compares to corporate funds and
‘Master Trusts’, which are generally retail super funds
run by banks and insurance companies. Master Trusts
typically charge higher fees than an industry super
fund and they generally pay commissions to financial
advisers. Because of these higher fees, your super
balance would be affected.
Superannuation is a long-term investment
and as such, the results of a super fund’s
performance should be looked at over a
long period of time rather than for any one
particular year.
The industry benchmark for Australian superannuation
funds is set by the research findings of an independent
ratings agency, SuperRatings. Their fund comparisons
examine over 400 super and pension products to find the
Top 50. They then rate the Top 50 to find a benchmark –
the performance that funds typically aspire to.
The table below shows how LUCRF Super has performed
compared to the industry benchmark over the past
decade. As you can see, LUCRF Super is performing
LUCRF Super’s Balanced Investment Option, which
the vast majority of members are in, is designed to
offer both growth and protection over the long term.
This option mixes Growth Assets, such as shares and
property, with Income Assets, such as fixed interest and
cash.
The Balanced approach allows our Fund to capture
growth as the markets rise, while providing a measure of
stability when the markets are volatile or in decline.
Performance so far in
current financial year*
Investment Option
3 year average
annual return
5 year average
annual return
7 year average
annual return
10 year average
annual return
LUCRF Super’s Balanced Investment Option (default)
- 2.31 % p.a.
4.68 % p.a.
4.42 % p.a.
4.90 % p.a.
SR50 Balanced Index
(Index measuring the Top 50 Balanced investment
options with growth assets of 60–76%)
- 1.86 % p.a.
4.68 % p.a.
4.42 % p.a.
4.93 % p.a.
- 4.18 % p.a.
3.11 % p.a.
2.26 % p.a.
3.30 % p.a.
Master Trust median – Balanced option
(Index measuring the Top 50 Balanced investment
options with growth assets of 60–76%)
Source: SuperRatings Fund Crediting Rate Survey, January 2009.
Please note: the performance of the Balanced investment option is measured at 27 February 2009 in order to provide an accurate figure consistent with other financial indicators
available at the time of print.
*
From 1 July 2008 to 27 February 2009
1. Source: ASX Historical Data
5. Source: FTSE Historical Data
After the family
home, super will likely
be the largest and
most valuable asset
for many people.
Shares vs Cash
Financial indicator
7
Super – it really does matter!
As the tables show, LUCRF Super is working hard to
minimise the impact of what is happening globally on our
members’ accounts.
How LUCRF Super
compares
How LUCRF has performed compared to key financial markets
Short-term thinking rarely prospers in building longerterm wealth. To build longer-term wealth, investors
need to take a longer-term perspective and to isolate
themselves from the emotional whirlwinds that can
affect financial markets. Yes, the economic environment
is bleak and uncertain at the moment – recent
investment returns have been awful. However, markets
are now discounting the difficult outlook. Prices are
historically cheap and aggressive policy action is now in
train to improve the current conditions.
This commentary has been provided by Rohan Walsh on behalf of Karara Capital and
is general in nature only. It does not take into account your personal situation and
does not constitute advice.
This table allows us to see how LUCRF Super’s Balanced
Option has performed so far in this financial year,
compared to key financial markets.
2. Source: Reserve Bank of Australia
6. Source: CAC Historical Data
3. Source: Vanguard Index Historical Data
7. Source: DAX Historical Data
4. Source: Dow Jones Historical Data
8. Source: Nikkei 225 Historical Data
Cumulative returns for Australian Equities vs Cash over the last decade
is Australia’s first industry
super fund, created
only 30 years ago, after
everyday workers grew
tired of not having their
retirement needs looked
after.
winding down your working
life. What a lot of people
are realising is that by
taking an interest in their
super before they need
it, they may well be in a
better position later on.
300%
Super doesn’t have to
be ‘something you worry
about when you’re older’.
In fact, it’s highly likely
that by paying attention to
your super now, things will
be healthier by the time
you start thinking about
We’ve outlined a few
different things to think
about for people at various
stages of life – see page
5 for more on how you can
take action now.
100%
250%
200%
Want more information?
150%
LUCRF Super provides FREE Workplace Super Seminars, which we are happy to hold in your workplace at
a time that best suits you and your colleagues, as well as at various general locations around the country.
Our seminars are informative and very helpful to people of all walks of life.
50%
0%
Jan 99
Cash
Jan 00
Jan 01
Jan 02
Jan 03
Jan 04
Jan 05
Australian Equities
Source: S&P ASX 300 Accumulation Index is the proxy for Australian equities and the UBSA Bank Bill Index is the proxy for cash.
Jan 06
Jan 07
Jan 08
They are presented by LUCRF Super staff, who can help with your super and retirement queries.
Call today and ask for your local Business Development Manager.
2
Continued from page 1
?
3
What might happen next?
We need to remember that share markets are forwardlooking. They move up and down in anticipation of
developing economic conditions. Equity markets have
fallen over the past 18 months because they factored in
and expected the situation we are now experiencing. To
fall a lot further from here, conditions will need to turn
out a lot worse than current expectations.
While news is expected to remain bleak in the short
term and while it is possible that conditions could
further deteroriate, major developments and initiatives
are in train to heal the current conditions. Governments
and policy-makers throughout the world now recognise
the dire economic situation. Many have committed to
doing whatever it takes to fix the crisis.
the economy, the markets will already have improved and
you may have missed out on the upswing.
?
Should you be doing anything?
Given this bleak and uncertain backdrop, the natural
response from investors is to sell, to ease the fear of
further losses. However, history and logic tell us that this
is not the time to sell.
Buying low and selling high is a self-evident approach
for building long-term wealth that most people employ in
their everyday life. However, when it comes to investing
and superannuation, many people often do the opposite
– they move into conservative options once returns
have already fallen. This is because investing can be
an emotional experience, where we tend to feel more
confident and optimistic and buy after prices have risen
Given this bleak and uncertain backdrop, the natural response
from investors is to sell, to ease the fear of further losses.
However, history and logic tell us that this is not the time to sell.
Interest rates have been cut dramatically, governments
have ramped up their spending plans and a raft of
radical measures has been implemented to support
credit markets. These measures should eventually
suceed in supporting economic growth. Even so,
conditions don’t have to get dramatically better for equity
markets to rally.
Another reason for some optimism is the unprecedented
value that is now on offer in equity markets, following the
substantial falls of recent months. Over the past
60 years, the trailing dividend yield on Australian shares
has averaged just over 4%. This compares to the current
trailing dividend yield of over 7%, which is close to its
record high. In contrast, yields on alternate assets, such
as cash, have fallen to historic low levels.
Financial markets recover more quickly than the
economy does – by the time the improvement is felt in
and feel pessimistic and uncertain and sell after prices
have fallen.
4
LUCRF Super’s
performance
All superannuation funds have suffered some
losses in the current and previous financial
years. It is important however, to remember
that markets have also experienced
unprecedented volatility and falls during the
same period.
The value of the S&P ASX200 (the top 200 companies
on the Australian Stock Exchange) has dropped just over
36% so far in this financial year alone. In the past twelve
months, around $680 billion has been wiped from the
Australian stock market. This scenario is all too common
right around the world, with dramatic falls in value a
consistent feature of all stock markets.
The table below puts things into context and highlights
how severely world markets have been affected.
Its importance should not
be ignored – it supports
you in your later years and
helps make your life that
bit more comfortable.
For many people, because
of this financial crisis, this
is the first time they will
be paying attention to their
superannuation.
Until now, many people
have had the attitude of
‘I’ll worry about it when
I retire’. Who can blame
them? After all, it’s not
something that people can
really benefit from until
they reach at least 55.
Also, superannuation as
we know it has not been
around for very long,
compared to other types
of savings. LUCRF Super
Another useful comparison is to look at the long-term
investment trends of shares as opposed to cash. The
graph below illustrates the long-term growth of shares
as an investment, compared to the relatively stable, but
less considerable, growth of a cash investment.
While the two lines are converging, the current financial
situation has had a tsunami-like effect on the 10-year
performance of shares, as you can see below. History
shows that the greatest growth is driven by stock
markets.
Source: Watson Wyatt
Description
Balanced Option
LUCRF Super’s Balanced Investment Option (default)
- 18.82 %
S&P ASX 200
Index of the top 200 companies on the Australian stock exchange
- 36.05 %
AUD²
Australian dollar
- 32.44 %
Property³
Vanguard Listed Property Index
- 46.63 %
US – DOW Jones4
US stock exchange
- 37.74 %
UK – FTSE 1005
Index of the top 100 companies on the UK stock exchange
- 31.92 %
France – CAC 406
Index of the top 40 companies on the French stock exchange
- 38.73 %
Germany – DAX
Index of the top 30 companies on the Frankfurt stock exchange
- 39.89 %
Japan – Nikkei 2258
Index of the top 225 companies on the Japanese stock exchange
- 44.00 %
1
relatively well against the industry benchmarks. However,
we would like to be doing better and we will continue to
work hard to improve our position and performance.
Another important comparison to look at is how LUCRF
Super’s performance compares to corporate funds and
‘Master Trusts’, which are generally retail super funds
run by banks and insurance companies. Master Trusts
typically charge higher fees than an industry super
fund and they generally pay commissions to financial
advisers. Because of these higher fees, your super
balance would be affected.
Superannuation is a long-term investment
and as such, the results of a super fund’s
performance should be looked at over a
long period of time rather than for any one
particular year.
The industry benchmark for Australian superannuation
funds is set by the research findings of an independent
ratings agency, SuperRatings. Their fund comparisons
examine over 400 super and pension products to find the
Top 50. They then rate the Top 50 to find a benchmark –
the performance that funds typically aspire to.
The table below shows how LUCRF Super has performed
compared to the industry benchmark over the past
decade. As you can see, LUCRF Super is performing
LUCRF Super’s Balanced Investment Option, which
the vast majority of members are in, is designed to
offer both growth and protection over the long term.
This option mixes Growth Assets, such as shares and
property, with Income Assets, such as fixed interest and
cash.
The Balanced approach allows our Fund to capture
growth as the markets rise, while providing a measure of
stability when the markets are volatile or in decline.
Performance so far in
current financial year*
Investment Option
3 year average
annual return
5 year average
annual return
7 year average
annual return
10 year average
annual return
LUCRF Super’s Balanced Investment Option (default)
- 2.31 % p.a.
4.68 % p.a.
4.42 % p.a.
4.90 % p.a.
SR50 Balanced Index
(Index measuring the Top 50 Balanced investment
options with growth assets of 60–76%)
- 1.86 % p.a.
4.68 % p.a.
4.42 % p.a.
4.93 % p.a.
- 4.18 % p.a.
3.11 % p.a.
2.26 % p.a.
3.30 % p.a.
Master Trust median – Balanced option
(Index measuring the Top 50 Balanced investment
options with growth assets of 60–76%)
Source: SuperRatings Fund Crediting Rate Survey, January 2009.
Please note: the performance of the Balanced investment option is measured at 27 February 2009 in order to provide an accurate figure consistent with other financial indicators
available at the time of print.
*
From 1 July 2008 to 27 February 2009
1. Source: ASX Historical Data
5. Source: FTSE Historical Data
After the family
home, super will likely
be the largest and
most valuable asset
for many people.
Shares vs Cash
Financial indicator
7
Super – it really does matter!
As the tables show, LUCRF Super is working hard to
minimise the impact of what is happening globally on our
members’ accounts.
How LUCRF Super
compares
How LUCRF has performed compared to key financial markets
Short-term thinking rarely prospers in building longerterm wealth. To build longer-term wealth, investors
need to take a longer-term perspective and to isolate
themselves from the emotional whirlwinds that can
affect financial markets. Yes, the economic environment
is bleak and uncertain at the moment – recent
investment returns have been awful. However, markets
are now discounting the difficult outlook. Prices are
historically cheap and aggressive policy action is now in
train to improve the current conditions.
This commentary has been provided by Rohan Walsh on behalf of Karara Capital and
is general in nature only. It does not take into account your personal situation and
does not constitute advice.
This table allows us to see how LUCRF Super’s Balanced
Option has performed so far in this financial year,
compared to key financial markets.
2. Source: Reserve Bank of Australia
6. Source: CAC Historical Data
3. Source: Vanguard Index Historical Data
7. Source: DAX Historical Data
4. Source: Dow Jones Historical Data
8. Source: Nikkei 225 Historical Data
Cumulative returns for Australian Equities vs Cash over the last decade
is Australia’s first industry
super fund, created
only 30 years ago, after
everyday workers grew
tired of not having their
retirement needs looked
after.
winding down your working
life. What a lot of people
are realising is that by
taking an interest in their
super before they need
it, they may well be in a
better position later on.
300%
Super doesn’t have to
be ‘something you worry
about when you’re older’.
In fact, it’s highly likely
that by paying attention to
your super now, things will
be healthier by the time
you start thinking about
We’ve outlined a few
different things to think
about for people at various
stages of life – see page
5 for more on how you can
take action now.
100%
250%
200%
Want more information?
150%
LUCRF Super provides FREE Workplace Super Seminars, which we are happy to hold in your workplace at
a time that best suits you and your colleagues, as well as at various general locations around the country.
Our seminars are informative and very helpful to people of all walks of life.
50%
0%
Jan 99
Cash
Jan 00
Jan 01
Jan 02
Jan 03
Jan 04
Jan 05
Australian Equities
Source: S&P ASX 300 Accumulation Index is the proxy for Australian equities and the UBSA Bank Bill Index is the proxy for cash.
Jan 06
Jan 07
Jan 08
They are presented by LUCRF Super staff, who can help with your super and retirement queries.
Call today and ask for your local Business Development Manager.
2
Continued from page 1
?
3
What might happen next?
We need to remember that share markets are forwardlooking. They move up and down in anticipation of
developing economic conditions. Equity markets have
fallen over the past 18 months because they factored in
and expected the situation we are now experiencing. To
fall a lot further from here, conditions will need to turn
out a lot worse than current expectations.
While news is expected to remain bleak in the short
term and while it is possible that conditions could
further deteroriate, major developments and initiatives
are in train to heal the current conditions. Governments
and policy-makers throughout the world now recognise
the dire economic situation. Many have committed to
doing whatever it takes to fix the crisis.
the economy, the markets will already have improved and
you may have missed out on the upswing.
?
Should you be doing anything?
Given this bleak and uncertain backdrop, the natural
response from investors is to sell, to ease the fear of
further losses. However, history and logic tell us that this
is not the time to sell.
Buying low and selling high is a self-evident approach
for building long-term wealth that most people employ in
their everyday life. However, when it comes to investing
and superannuation, many people often do the opposite
– they move into conservative options once returns
have already fallen. This is because investing can be
an emotional experience, where we tend to feel more
confident and optimistic and buy after prices have risen
Given this bleak and uncertain backdrop, the natural response
from investors is to sell, to ease the fear of further losses.
However, history and logic tell us that this is not the time to sell.
Interest rates have been cut dramatically, governments
have ramped up their spending plans and a raft of
radical measures has been implemented to support
credit markets. These measures should eventually
suceed in supporting economic growth. Even so,
conditions don’t have to get dramatically better for equity
markets to rally.
Another reason for some optimism is the unprecedented
value that is now on offer in equity markets, following the
substantial falls of recent months. Over the past
60 years, the trailing dividend yield on Australian shares
has averaged just over 4%. This compares to the current
trailing dividend yield of over 7%, which is close to its
record high. In contrast, yields on alternate assets, such
as cash, have fallen to historic low levels.
Financial markets recover more quickly than the
economy does – by the time the improvement is felt in
and feel pessimistic and uncertain and sell after prices
have fallen.
4
LUCRF Super’s
performance
All superannuation funds have suffered some
losses in the current and previous financial
years. It is important however, to remember
that markets have also experienced
unprecedented volatility and falls during the
same period.
The value of the S&P ASX200 (the top 200 companies
on the Australian Stock Exchange) has dropped just over
36% so far in this financial year alone. In the past twelve
months, around $680 billion has been wiped from the
Australian stock market. This scenario is all too common
right around the world, with dramatic falls in value a
consistent feature of all stock markets.
The table below puts things into context and highlights
how severely world markets have been affected.
Its importance should not
be ignored – it supports
you in your later years and
helps make your life that
bit more comfortable.
For many people, because
of this financial crisis, this
is the first time they will
be paying attention to their
superannuation.
Until now, many people
have had the attitude of
‘I’ll worry about it when
I retire’. Who can blame
them? After all, it’s not
something that people can
really benefit from until
they reach at least 55.
Also, superannuation as
we know it has not been
around for very long,
compared to other types
of savings. LUCRF Super
Another useful comparison is to look at the long-term
investment trends of shares as opposed to cash. The
graph below illustrates the long-term growth of shares
as an investment, compared to the relatively stable, but
less considerable, growth of a cash investment.
While the two lines are converging, the current financial
situation has had a tsunami-like effect on the 10-year
performance of shares, as you can see below. History
shows that the greatest growth is driven by stock
markets.
Source: Watson Wyatt
Description
Balanced Option
LUCRF Super’s Balanced Investment Option (default)
- 18.82 %
S&P ASX 200
Index of the top 200 companies on the Australian stock exchange
- 36.05 %
AUD²
Australian dollar
- 32.44 %
Property³
Vanguard Listed Property Index
- 46.63 %
US – DOW Jones4
US stock exchange
- 37.74 %
UK – FTSE 1005
Index of the top 100 companies on the UK stock exchange
- 31.92 %
France – CAC 406
Index of the top 40 companies on the French stock exchange
- 38.73 %
Germany – DAX
Index of the top 30 companies on the Frankfurt stock exchange
- 39.89 %
Japan – Nikkei 2258
Index of the top 225 companies on the Japanese stock exchange
- 44.00 %
1
relatively well against the industry benchmarks. However,
we would like to be doing better and we will continue to
work hard to improve our position and performance.
Another important comparison to look at is how LUCRF
Super’s performance compares to corporate funds and
‘Master Trusts’, which are generally retail super funds
run by banks and insurance companies. Master Trusts
typically charge higher fees than an industry super
fund and they generally pay commissions to financial
advisers. Because of these higher fees, your super
balance would be affected.
Superannuation is a long-term investment
and as such, the results of a super fund’s
performance should be looked at over a
long period of time rather than for any one
particular year.
The industry benchmark for Australian superannuation
funds is set by the research findings of an independent
ratings agency, SuperRatings. Their fund comparisons
examine over 400 super and pension products to find the
Top 50. They then rate the Top 50 to find a benchmark –
the performance that funds typically aspire to.
The table below shows how LUCRF Super has performed
compared to the industry benchmark over the past
decade. As you can see, LUCRF Super is performing
LUCRF Super’s Balanced Investment Option, which
the vast majority of members are in, is designed to
offer both growth and protection over the long term.
This option mixes Growth Assets, such as shares and
property, with Income Assets, such as fixed interest and
cash.
The Balanced approach allows our Fund to capture
growth as the markets rise, while providing a measure of
stability when the markets are volatile or in decline.
Performance so far in
current financial year*
Investment Option
3 year average
annual return
5 year average
annual return
7 year average
annual return
10 year average
annual return
LUCRF Super’s Balanced Investment Option (default)
- 2.31 % p.a.
4.68 % p.a.
4.42 % p.a.
4.90 % p.a.
SR50 Balanced Index
(Index measuring the Top 50 Balanced investment
options with growth assets of 60–76%)
- 1.86 % p.a.
4.68 % p.a.
4.42 % p.a.
4.93 % p.a.
- 4.18 % p.a.
3.11 % p.a.
2.26 % p.a.
3.30 % p.a.
Master Trust median – Balanced option
(Index measuring the Top 50 Balanced investment
options with growth assets of 60–76%)
Source: SuperRatings Fund Crediting Rate Survey, January 2009.
Please note: the performance of the Balanced investment option is measured at 27 February 2009 in order to provide an accurate figure consistent with other financial indicators
available at the time of print.
*
From 1 July 2008 to 27 February 2009
1. Source: ASX Historical Data
5. Source: FTSE Historical Data
After the family
home, super will likely
be the largest and
most valuable asset
for many people.
Shares vs Cash
Financial indicator
7
Super – it really does matter!
As the tables show, LUCRF Super is working hard to
minimise the impact of what is happening globally on our
members’ accounts.
How LUCRF Super
compares
How LUCRF has performed compared to key financial markets
Short-term thinking rarely prospers in building longerterm wealth. To build longer-term wealth, investors
need to take a longer-term perspective and to isolate
themselves from the emotional whirlwinds that can
affect financial markets. Yes, the economic environment
is bleak and uncertain at the moment – recent
investment returns have been awful. However, markets
are now discounting the difficult outlook. Prices are
historically cheap and aggressive policy action is now in
train to improve the current conditions.
This commentary has been provided by Rohan Walsh on behalf of Karara Capital and
is general in nature only. It does not take into account your personal situation and
does not constitute advice.
This table allows us to see how LUCRF Super’s Balanced
Option has performed so far in this financial year,
compared to key financial markets.
2. Source: Reserve Bank of Australia
6. Source: CAC Historical Data
3. Source: Vanguard Index Historical Data
7. Source: DAX Historical Data
4. Source: Dow Jones Historical Data
8. Source: Nikkei 225 Historical Data
Cumulative returns for Australian Equities vs Cash over the last decade
is Australia’s first industry
super fund, created
only 30 years ago, after
everyday workers grew
tired of not having their
retirement needs looked
after.
winding down your working
life. What a lot of people
are realising is that by
taking an interest in their
super before they need
it, they may well be in a
better position later on.
300%
Super doesn’t have to
be ‘something you worry
about when you’re older’.
In fact, it’s highly likely
that by paying attention to
your super now, things will
be healthier by the time
you start thinking about
We’ve outlined a few
different things to think
about for people at various
stages of life – see page
5 for more on how you can
take action now.
100%
250%
200%
Want more information?
150%
LUCRF Super provides FREE Workplace Super Seminars, which we are happy to hold in your workplace at
a time that best suits you and your colleagues, as well as at various general locations around the country.
Our seminars are informative and very helpful to people of all walks of life.
50%
0%
Jan 99
Cash
Jan 00
Jan 01
Jan 02
Jan 03
Jan 04
Jan 05
Australian Equities
Source: S&P ASX 300 Accumulation Index is the proxy for Australian equities and the UBSA Bank Bill Index is the proxy for cash.
Jan 06
Jan 07
Jan 08
They are presented by LUCRF Super staff, who can help with your super and retirement queries.
Call today and ask for your local Business Development Manager.
6
Looking to
the future
When you make decisions regarding your
superannuation, it is important to have as
much information and knowledge as you
can. Any decision you do make can have
a significant impact on your income and
standard of living in retirement.
Super is a long-term investment. Not only are
you investing up until your retirement, but
also for the 20 to 30 years you could spend
in retirement. Average life expectancies are
increasing – they are currently 79 years for
males and 84 years for females.
News for LUCRF Super Members march 2009
Email news alerts
Super and your life stage
Actively working
Salary Sacrifice or Co-contributions can help
It is important for people to keep in mind that
superannuation is a tax-effective, long-term investment.
Two major ways to maximise your super are Salary
Sacrifice and the Government Co-Contribution. A salary
sacrifice strategy involves contributions made by you into
your super fund from your before-tax (gross) salary, by
agreement with your employer. These contributions are
only taxed at 15% (compared to your personal marginal
income tax rates, which can be as high as 46.5%).
The Government Co-contribution Scheme rewards people
who make personal after-tax contributions (from takehome pay) to their super fund prior to June 30 each
financial year. If your total income (assessable income
plus reportable fringe benefits) is $30,342 or below this
financial year and you meet the eligibility criteria, you
may receive the maximum co-contribution of $1,500
from the Government (tax-free) into your super fund
(as long as you lodge a tax return). This co-contribution
reduces on a sliding scale as your income increases,
cutting out when your income reaches $60,342 or more.
Close to retirement
A Transition Pension should be considered
If you are currently 55 years of age or over and wish to
continue working full-time, a Transition Pension should
be considered. This allows you to receive an income
stream from your super fund that is concessionally taxed
(from ages 55 to 59) or tax-free (from age 60).
By receiving the maximum Transition Pension
(10% of your LUCRF Super account balance) each year,
this will enable you to receive a lesser ‘taxed’ salary,
as you could salary sacrifice into your super account.
By doing this, you could increase your super retirement
savings and lower your income tax, but still receive the
same level of after-tax disposable income.
MySuper
Diversifying your investments means
spreading your super money over a number
and variety of assets. We offer a diversified
investment option for you – our Balanced
option. This enables you to reduce risk as the
effects of market fluctuations are smoothed
out. Therefore, you can achieve more stable
returns over time, though it is important
to accept that there will be some years of
negative returns.
Alternatively, some other considerations for those who
are approaching retirement are to consider working
part-time (instead or retiring altogether) and using a
Transition Pension to replace your reduced salary. This
will give your existing super more time to recover from
the current market downturn, while still giving you the
potential to contribute more to your super.
LUCRF Super’s email news service allows you
to hear about things as they happen and earlier
than you would by post – tens of thousands of
members received this newsletter via email a
week ago.
Visit www.lucrf.com.au and register today to
hear about things as they happen.
The global financial
crisis & your super
Improving our
member service
administration
LUCRF Super is currently making significant
improvements to the efficiency of our
administration systems and processes.
This will mean a greater level of personal
service for all members.
Investment
market update
The new system is being implemented between
the 10th and 20th of April. There may be some
delays in processing member requests during
this period. We thank you in advance for your
patience and understanding as we continue to
work hard for you.
Already retired
People in this situation have probably felt the worst
impact of the current financial crisis. Retirees
should keep in mind, however, that super retirement
pensions are a very tax-effective place to invest your
superannuation balances, as no tax is payable on
earnings in the pension fund and all income (including
lump sums) is tax-free from age 60.
?
Another option is to reduce the amount of income drawn
from your super retirement pension. This will enable you
to retain more of your super capital in the pension fund
in order to participate more in the eventual stock market
recovery. Whilst reducing your income may impact on
your lifestyle, you may find that you are eligible for a
greater Age Pension benefit due to the reduction in the
value of your pension asset (due to the current negative
returns) and super pension income.
What is happening to economies
around the world?
The world is currently experiencing a downturn on a scale
that could not be anticipated. The US and European
economies have all experienced sharp drops and many
nations have entered ‘Big R’ territory: Recession.
The other benefit of super retirement pensions is the
favourable Centrelink Age Pension income test treatment
that applies, when compared to investments outside of
super (eg. bank term deposits).
Centrelink generally only counts the difference between
the income payments from a super pension income
stream and the social security deduction amount (which
is calculated by the income stream purchase price,
divided by your life expectancy). This represents a
significant concession – one that can result in a higher
Age Pension than otherwise would be the case.
The global financial crisis began in the US, specifically in
the home loan sector. You have probably heard about the
‘sub-prime crisis’. It has since spread to a global credit
crisis. Banks throughout the world are unwilling to lend,
as they try and preserve their capital in an environment
of plunging economic activity and falling asset prices.
However, debt is the oil that lubricates the wheels of the
global economy; without it; economies stall, as we are
currently seeing.
Contact LUCRF Super
Phone 1300 130 780
Financial markets right across the world have sharply
declined. The values of companies have fallen
dramatically, with many big institutions collapsing in the
US and causing further ripples across the globe.
(&'½!'
web:
www.lucrf.com.au
email:
[email protected]
head office: 833 Bourke Street, Docklands VIC 3008
post:
PO Box 211 North Melbourne VIC 3051
fax:
(03) 9326 6907
Whilst the US and Europe have born the brunt of the
downturn, Australia has held up comparatively well so far.
Our financial markets have certainly fallen, but not to the
same degree. The Federal Government has been quick
in implementing stimulus packages to try and bolster the
economy. The Reserve Bank has also aggressively cut
interest rates. However, we are not completely immune
from the crisis.
?
The reality of the financial crisis is that most people’s
superannuation and retirement pension balances will
have fallen in value by the time you receive your annual
superannuation statements later this year. The expected
poor recent returns are the direct result of the awful
returns delivered by global share markets (including the
Australian market).
Issued by LUCRF Pty Ltd ABN 18 005 502 090 AFSL 258481 as Trustee for Labour
Union Co-operative Retirement Fund (LUCRF Super) ABN 26 382 680 883.
How does it affect superannuation?
Over the past 18 months, superannuation funds have
delivered historically low rates of return. Members
are understandably uncertain about their longer-term
retirement savings strategy. While the immediate outlook
for markets is never certain, there are growing reasons to
believe that the financial markets are well-placed to deliver
attractive returns over the medium term.
(&'½!'
This newsletter dated March 2009 is issued by LUCRF Pty Ltd ABN 18 005 502 090 AFSL 258481 as Trustee for Labour Union Co-operative Retirement Fund (LUCRF Super) ABN 26 382 680 883.
The information contained in the newsletter is general in nature only. It does not take into account your objectives, financial situation or needs, so you should look at your own financial position and
requirements before making a decision. Should you require advice that addresses your personal circumstances, it is recommended you contact a person who is authorised to provide personal financial
product advice. For more information about LUCRF Super, call 1300 130 780 or access our website www.lucrf.com.au for copies of our Product Disclosure Statements and Financial Services Guide,
which should be considered before making a decision about the Fund.
Commentary from one of LUCRF
Super’s investment managers –
Rohan Walsh from Karara Capital
Everywhere we turn, we hear, see and feel the effects of the global financial crisis. For this edition
of MySuper, we wanted to provide you with information to help understand what’s going on and the
effect it is having on your superannuation or LUCRF pension. We have also prepared some case
studies that show how people at different stages of life can make the situation work for them.
LUCRF 29328
5
> Continued page 2
6
Looking to
the future
When you make decisions regarding your
superannuation, it is important to have as
much information and knowledge as you
can. Any decision you do make can have
a significant impact on your income and
standard of living in retirement.
Super is a long-term investment. Not only are
you investing up until your retirement, but
also for the 20 to 30 years you could spend
in retirement. Average life expectancies are
increasing – they are currently 79 years for
males and 84 years for females.
News for LUCRF Super Members march 2009
Email news alerts
Super and your life stage
Actively working
Salary Sacrifice or Co-contributions can help
It is important for people to keep in mind that
superannuation is a tax-effective, long-term investment.
Two major ways to maximise your super are Salary
Sacrifice and the Government Co-Contribution. A salary
sacrifice strategy involves contributions made by you into
your super fund from your before-tax (gross) salary, by
agreement with your employer. These contributions are
only taxed at 15% (compared to your personal marginal
income tax rates, which can be as high as 46.5%).
The Government Co-contribution Scheme rewards people
who make personal after-tax contributions (from takehome pay) to their super fund prior to June 30 each
financial year. If your total income (assessable income
plus reportable fringe benefits) is $30,342 or below this
financial year and you meet the eligibility criteria, you
may receive the maximum co-contribution of $1,500
from the Government (tax-free) into your super fund
(as long as you lodge a tax return). This co-contribution
reduces on a sliding scale as your income increases,
cutting out when your income reaches $60,342 or more.
Close to retirement
A Transition Pension should be considered
If you are currently 55 years of age or over and wish to
continue working full-time, a Transition Pension should
be considered. This allows you to receive an income
stream from your super fund that is concessionally taxed
(from ages 55 to 59) or tax-free (from age 60).
By receiving the maximum Transition Pension
(10% of your LUCRF Super account balance) each year,
this will enable you to receive a lesser ‘taxed’ salary,
as you could salary sacrifice into your super account.
By doing this, you could increase your super retirement
savings and lower your income tax, but still receive the
same level of after-tax disposable income.
MySuper
Diversifying your investments means
spreading your super money over a number
and variety of assets. We offer a diversified
investment option for you – our Balanced
option. This enables you to reduce risk as the
effects of market fluctuations are smoothed
out. Therefore, you can achieve more stable
returns over time, though it is important
to accept that there will be some years of
negative returns.
Alternatively, some other considerations for those who
are approaching retirement are to consider working
part-time (instead or retiring altogether) and using a
Transition Pension to replace your reduced salary. This
will give your existing super more time to recover from
the current market downturn, while still giving you the
potential to contribute more to your super.
LUCRF Super’s email news service allows you
to hear about things as they happen and earlier
than you would by post – tens of thousands of
members received this newsletter via email a
week ago.
Visit www.lucrf.com.au and register today to
hear about things as they happen.
The global financial
crisis & your super
Improving our
member service
administration
LUCRF Super is currently making significant
improvements to the efficiency of our
administration systems and processes.
This will mean a greater level of personal
service for all members.
Investment
market update
The new system is being implemented between
the 10th and 20th of April. There may be some
delays in processing member requests during
this period. We thank you in advance for your
patience and understanding as we continue to
work hard for you.
Already retired
People in this situation have probably felt the worst
impact of the current financial crisis. Retirees
should keep in mind, however, that super retirement
pensions are a very tax-effective place to invest your
superannuation balances, as no tax is payable on
earnings in the pension fund and all income (including
lump sums) is tax-free from age 60.
?
Another option is to reduce the amount of income drawn
from your super retirement pension. This will enable you
to retain more of your super capital in the pension fund
in order to participate more in the eventual stock market
recovery. Whilst reducing your income may impact on
your lifestyle, you may find that you are eligible for a
greater Age Pension benefit due to the reduction in the
value of your pension asset (due to the current negative
returns) and super pension income.
What is happening to economies
around the world?
The world is currently experiencing a downturn on a scale
that could not be anticipated. The US and European
economies have all experienced sharp drops and many
nations have entered ‘Big R’ territory: Recession.
The other benefit of super retirement pensions is the
favourable Centrelink Age Pension income test treatment
that applies, when compared to investments outside of
super (eg. bank term deposits).
Centrelink generally only counts the difference between
the income payments from a super pension income
stream and the social security deduction amount (which
is calculated by the income stream purchase price,
divided by your life expectancy). This represents a
significant concession – one that can result in a higher
Age Pension than otherwise would be the case.
The global financial crisis began in the US, specifically in
the home loan sector. You have probably heard about the
‘sub-prime crisis’. It has since spread to a global credit
crisis. Banks throughout the world are unwilling to lend,
as they try and preserve their capital in an environment
of plunging economic activity and falling asset prices.
However, debt is the oil that lubricates the wheels of the
global economy; without it; economies stall, as we are
currently seeing.
Contact LUCRF Super
Phone 1300 130 780
Financial markets right across the world have sharply
declined. The values of companies have fallen
dramatically, with many big institutions collapsing in the
US and causing further ripples across the globe.
(&'½!'
web:
www.lucrf.com.au
email:
[email protected]
head office: 833 Bourke Street, Docklands VIC 3008
post:
PO Box 211 North Melbourne VIC 3051
fax:
(03) 9326 6907
Whilst the US and Europe have born the brunt of the
downturn, Australia has held up comparatively well so far.
Our financial markets have certainly fallen, but not to the
same degree. The Federal Government has been quick
in implementing stimulus packages to try and bolster the
economy. The Reserve Bank has also aggressively cut
interest rates. However, we are not completely immune
from the crisis.
?
The reality of the financial crisis is that most people’s
superannuation and retirement pension balances will
have fallen in value by the time you receive your annual
superannuation statements later this year. The expected
poor recent returns are the direct result of the awful
returns delivered by global share markets (including the
Australian market).
Issued by LUCRF Pty Ltd ABN 18 005 502 090 AFSL 258481 as Trustee for Labour
Union Co-operative Retirement Fund (LUCRF Super) ABN 26 382 680 883.
How does it affect superannuation?
Over the past 18 months, superannuation funds have
delivered historically low rates of return. Members
are understandably uncertain about their longer-term
retirement savings strategy. While the immediate outlook
for markets is never certain, there are growing reasons to
believe that the financial markets are well-placed to deliver
attractive returns over the medium term.
(&'½!'
This newsletter dated March 2009 is issued by LUCRF Pty Ltd ABN 18 005 502 090 AFSL 258481 as Trustee for Labour Union Co-operative Retirement Fund (LUCRF Super) ABN 26 382 680 883.
The information contained in the newsletter is general in nature only. It does not take into account your objectives, financial situation or needs, so you should look at your own financial position and
requirements before making a decision. Should you require advice that addresses your personal circumstances, it is recommended you contact a person who is authorised to provide personal financial
product advice. For more information about LUCRF Super, call 1300 130 780 or access our website www.lucrf.com.au for copies of our Product Disclosure Statements and Financial Services Guide,
which should be considered before making a decision about the Fund.
Commentary from one of LUCRF
Super’s investment managers –
Rohan Walsh from Karara Capital
Everywhere we turn, we hear, see and feel the effects of the global financial crisis. For this edition
of MySuper, we wanted to provide you with information to help understand what’s going on and the
effect it is having on your superannuation or LUCRF pension. We have also prepared some case
studies that show how people at different stages of life can make the situation work for them.
LUCRF 29328
5
> Continued page 2