1. Generation Y Super Smart
11 November, 2018

2. Disclaimer
The information contained within this presentation is intended to provide general advice only. It has been prepared without taking into account your objectives, financial situation or personal needs. Prior to making any investment decisions, you should speak with a financial adviser to consider whether this information is appropriate for your needs, objectives and circumstances. You should obtain a copy of the relevant product disclosure statement (PDS) prior to making a decision regarding any investment in any financial product. UniSuper defined benefits (including defined benefit pensions) are not guaranteed and are subject to the risk that the pool of assets supporting them may not be sufficient to meet all of UniSuper’s defined benefit obligations. In the event of prolonged underfunding, clause 34 of UniSuper’s trust deed provides a mechanism for defined benefits to be reduced on a fair and equitable basis. A clause 34 monitoring period was recently concluded and it was resolved to reduce the defined benefit formula from 1 January 2015 by changing the way Benefit Salary is determined as it applies to service on and after 1 January This change does not affect defined benefits or pensions that become payable before 1 January There are three further clause 34 monitoring periods in place, concluding on 30 June 2015, 30 June 2016 and 30 June This information is current as at August 2015 and is based on our understanding of legislation at that date. Information relating to the 2015/16 Federal Budget is based on our understanding of the proposals. The information provided in this presentation in relation to these announcements is subject to change and certain proposals may not become effective until they are enacted by Parliament. You should not rely on this information and it should be verified prior to making any decision The information contained in this presentation is not legal, taxation or accounting advice. Professional advice should be obtained before making any decisions. Whilst care has been taken in the preparation of this information, the accuracy or completeness of the information is not guaranteed. This presentation was prepared and issued by UniSuper Management Pty Ltd ABN , AFSL No: , which is also the administrator of, and wholly owned by, the UniSuper Superannuation fund (ABN ). UniSuper Limited (ABN ) is the trustee of the fund. If you would like to contact us please do so on or alternatively send us an to Chant West has given its consent to the inclusion in this of the references to Chant West and the inclusion of the logos and ratings provided by Chant West in the form and context in which they are included. For further information about the methodology used by Chant West, see

3. What we will cover today
Gen Y – the financial challenge
Salary sacrificing to boost your super
Understanding risk
Investing inside versus outside of super
Insurance and super

4. Gen Y – the financial challenge
HECS - HELP
Where does saving for retirement fit in?
HOUSE DEPOSIT
HOLIDAY
CREDIT CARD
BUY CAR
RENT
car

5. Salary sacrificing to boost your super
Salary Sacrifice
Is a before-tax (concessional) contribution to superannuation
Example: Heather is considering salary sacrificing $10,000
Note:
Concessional contributions limits apply
HECS/HELP repayment obligations are not reduced by salary sacrificing
Superannuation
Account
If Salary Sacrificed
(taxed at 15%)
If taken as income
(fully taxable e.g. at 34.5%)
$10,000 of Salary

6. Salary sacrificing to boost your super
The earlier you start, the smaller the steps . . .
Scenario 1 – $3,000 a year from age 30 until age 65 (total contributions of $105,000)
Scenario 2 – $6,000 a year from age 45 until age 65 (total contributions of $120,000)
The benefit of compound interest
Scenario 1 ends up being more than $136,000 better off.
$342,666
(Scenario 1)
$206,133
(Scenario 2)
Chart shows that small contributions over a long period harness the effects of compounding – and super is a long term investment!
This is particularly important as the government has put in place limits on how much you can contribute in any one year – so don’t wait until you are close to retirement.
Of course, you do need to understand that you cannot access your super monies until you retire.
Age
Past performance is not an indicator of future performance. Balances do not take into consideration fees and taxes or the possibility of negative returns. Based on an investment return of 6.87% p.a., which is reinvested over 35 years for Scenario 1 and 20 years for Scenario 2. 6

7. Investment options in super have different levels of risk

8. Example of UniSuper’s investment options risk/return profiles
Low
Expected risk
High
Potential return
Australian Shares
International Shares
High Growth
Socially Responsible High Growth
The higher the potential return,
the higher the potential risk
Growth
Balanced
Socially Responsible Balanced
Global Environmental Opportunities
Australian Equity Income
Global Companies in Asia
Conservative Balanced
Listed Property
Capital Stable
Defensive assets
Growth assets
Single-asset class options
Australian Bond
Diversified Credit Income
Cash
This is a conceptual chart showing the risk/return trade offs where ‘risk’ means volatility as opposed to the risk of a negative return

9. What is your attitude to risk?
Everybody is different
Do daily share market fluctuations keep you awake at night?
Are you able to tolerate occasional market reversals and slumps for potential long-term rewards?
Do you seek investments with higher labour standards, environmental, social and ethical considerations?
The best investment options for you:
Offer the level of risk you are comfortable with
Suit your circumstances and retirement saving goals
Remember to consider . . .
Your Age
When you expect to access your funds
The first step to understanding how our investments perform is the concept of Risk & Return.
Return is comprised of income and growth.
Consider cash we have the bank, we have the potential to receive income by way of interest, but the value of the amount we invested will not change so there is no growth.
A Fixed Interest investment, has the potential for income by way of the interest we receive, and growth occurs when we sell the investment before it matures and we receive more for it then we paid.
If we think of a property, we have the potential to receive income by way of rent and growth by way of an increase in the price of the property.
If we think of a share, we have the potential to receive income by way of dividends and growth by way of an increase in the price of the share.
The more growth we have the potential to receive the more risk is that the value of the funds won’t increase but may decrease.
Risk isn’t necessarily a ‘bad guy’ – but it works hand in hand with the returns that we receive.
If we do not want to see the value of our funds move down at all in the short then we need to invest in the area where returns will be low, on the flip side if we are comfortable with some ups and downs in the value of our funds then we can move up the scale to the level that we are comfortable.
Risk includes:
the chance of loss on an investment
achieving a return that is less than expected, and
underperforming an index or benchmark.
APRA Superannuation Circular No. II.D.1

10. Your investment risk tolerance is important, but remember:
Gen Y’s have a long investment time horizon (years to retirement)
Allows you to absorb periods of market downturns and volatility
Allows a higher weighting to growth style assets (e.g. shares)
History shows that over the long term, growth assets outperform defensive assets (e.g. cash and bonds)
With regular contributions, when markets are down you are able to purchase these assets cheaply (dollar cost averaging)
Avoid focussing on short-term performance

11. Investing inside versus outside of super

12. Investing inside versus outside of super
Inside Superannuation
Outside Superannuation
Tax on earnings (Accumulation)
Maximum of 15%*
At marginal rate
(up to 47%)*
Tax on assessable capital gains
(Accumulation)
10% if asset is held for at least 12 months (15% where asset is held for under 12 months)
Tax on earnings & assessable capital gains (Pension)
Tax Free
Contribution incentives
Pre-tax contributions allowed. Government contribution incentives available
No pre-tax contributions & few (if any) Government contribution incentives
Minimum contribution
No minimum contribution to an accumulation account
Some investments have minimum investment amounts
* Further reduced by any imputation/franking credits received

13. Investing inside versus outside of super
Inside Superannuation
Outside Superannuation
Access to investments
Pooled funds allow access to investments generally inaccessible for individual investors (e.g. wholesale funds)
Limited access to wholesale funds unless part of a pooled investment fund
Estate Planning
Benefits can be directed to nominated beneficiaries without the need to go through the estate
Generally, benefits must go through the estate
Access to funds
Generally no access to funds until you reach preservation age (age 60 if born after 30 June 1964)
Generally, you can access funds at any time unless the product limits access
Contributions Caps
Strict limits on how much you can contribute each year
Generally no limits on how much you can contribute

14. Insurance and super
Super funds typically have three types of insurance for members:
Death cover (also known as life insurance) Your beneficiaries receive a benefit if you die
Total and permanent disability (TPD) cover You receive a benefit if you become seriously disabled and are unlikely to ever work again
Income protection (IP) cover You receive an income stream for a specified period if you can't work due to temporary disability or illness
Your employer's default fund must offer a minimum level of life insurance, depending on your age. You may choose to increase, decrease, or cancel your default insurance cover.

15. Review your insurance cover whenever your circumstances change
marriage or new partnership
birth of children
increase level of debt
relationship breakdown
change employment
take extended leave from work
change in salary
Life Events Option is a new feature of Optional death & disablement cover. You need to apply within 90 days of these events occurring to take advantage of the opportunity to increase your cover.

16. Any questions?

17. Appendix

18. Super v Mortgage Repayments
Considering extra payments into your super versus the mortgage?
Check out MoneySmart’s Super v Mortgage Calculator at