Wealth for Women from ANZ Financial Planning

Superannuation Pearls of Wisdom

*ANZ Financial Planning “What Women Want” research project conducted by TNS, 2007

Women’s wealth

Women are extraordinary.

For the past few decades women have been able to earn increasingly higher salaries, start and run more companies as well as influence more buying decisions than ever before.

But while nearly 100% of women are confident about managing their day to day finances, many don’t feel confident in investing or protecting their income or assets.*

At ANZ, we are committed to educating and helping women of all ages achieve their financial goals. We understand when you’re busy it can be difficult to find the time to learn how to grow your wealth. We also understand many women wish there was someone they could speak to who could help share the load, someone who can explain things in a way that is interesting and relevant.

This is where an ANZ Financial Planner can add value. They can help make sense of wealth management and investing because they understand more than finance.

To help you along, ANZ Financial Planning has developed this ‘Pearls of Wisdom’ brochure information series just for you called Wealth for Women. This brochure on superannuation is just one in the series – take a look at the others on investing, insurance, retirement and estate planning too.

You can also check out our Wealth for Women site on anz.com to see and hear from others who have seen an ANZ Financial Planner. Take the time now to be better off.

Always have a plan, and believe in it. Nothing happens by accident. Chuck Knox

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Superannuation is something many people don’t think about enough. Since you can’t access it until you retire many people tend not to focus on it.

However, did you know 38% of women have no superannuation at all and a further 19% have a balance of less than $5,000? 1 And nearly 80% of women do not know how much superannuation they have accumulated.2 Your superannuation is your most important source of retirement income, so even though your retirement might seem a long way off, retiring with no cash flow is not a position you want to be in.

The average superannuation account balance in 2006 was $69,050 for men, but only $35,520 for women 3 – a huge 48.5% difference!

Another survey found women spend an average 20 years in the workforce compared to 38 years for men.2 When you consider the fact many women take time out of the

workforce to raise a family and some only return on a part-time basis or not at all, superannuation savings can be greatly affected by those years out of work.

On top of this, women’s salaries are usually lower than their male counterparts and they tend to contribute more of it towards the household and their children. Having a lower superannuation balance may prove problematic as women have a longer life expectancy – 83 years for women and 77 years for men,3 so a larger retirement income may be necessary.

And with the effects of inflation on the cost of living in the future, chances are you may need more money to live on when you finally retire. In order to plan a comfortable lifestyle in your later years, it is important to take control of your superannuation.

Following on is an overview of superannuation as well as some suggested strategies to help boost your superannuation savings.

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Superannuation

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1Superwoman Financial Planning 2The Heat Group study 2007 3Association of Superannuation Funds of Australia 2002

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Investing in super for a comfortable retirement

Most Australians fund their retirement from their superannuation. It is an extremely tax effective vehicle to build wealth, so it may be worthwhile to invest as much as you can to your super fund. Most superannuation funds offer a range of different investment options under one, or a combination of these asset classes (shares, property, fixed interest and cash).

The overall tax paid on your superannuation investment is generally a lot less than other traditional forms of investing, such as personally held assets. And since 1 July 2007, accessing superannuation in retirement has become more tax friendly, and for some, even tax free – a benefit that is hard to surpass!

Choose a fund that is right for you

Choice of superannuation fund legislation came into effect on 1 July 2005. This means you may have a choice of where to put your superannuation, instead of going with the default superannuation fund of your employer.

Before you choose a superannuation fund that will work best for you, investigate what your superannuation is invested in (shares, property, fixed interest, cash) and what your attitude to risk is (conservative, balanced or high growth).

Also consider the fund’s investment performance, investment choice and insurance – these elements affect the growth of your superannuation. When you are switching superannuation funds, check the

insurance cover available in the new fund and ensure you will qualify for the required level of cover. An ANZ Financial Planner can provide you with the best information to make a decision that is right for you.

Consolidating your superannuation (rolling over)

If you have held different jobs over the years, you may have multiple superannuation accounts. This could cost you money if you’re being charged multiple fees, so it may be a good idea to consolidate all your superannuation accounts into one account.

Simply visit www.ato.gov.au/super to search for lost superannuation for free. Select ‘Online Service’ then ‘SuperSeeker’

Consolidating your superannuation means your money works harder to increase your retirement savings. When your superannuation is in one place, you can keep better track of it. It also means you are only paying one set of fees and charges.

Before rolling over money from other funds, check you are comfortable with the exit fees and other charges that may apply. Also check if any benefits, such as insurance, will be lost if you leave that fund. When you are ready to rollover your superannuation to one account, contact your main superannuation fund and they should instruct you on how to complete the necessary transfer forms.

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How much superannuation will be enough?

Generally, Australian employers are required to contribute at least 9% of their salary to superannuation, but will this be enough for you to live comfortably in retirement? The amount of superannuation you will need depends on your personal circumstances such as your age and income and your desired retirement age, income and superannuation balance.

Some things to consider when deciding how much superannuation you will need are:

• how much time you have to accumulate your superannuation, especially if you plan to take time out of the workforce

• the cost of living and effects of inflation in the future

• the increase in life expectancies meaning a longer retirement period and the need for more retirement income

• your attitude to risk and return

• how much you have already saved for your retirement

• if you have dependants to consider

• how inflation will affect your investment

• any other investments you may have

• the type of lifestyle you wish to have in retirement

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Pearls of Wisdom

Good advice adds up

The importance of obtaining good financial advice can’t be overlooked. From helping you formulate realistic goals and objectives to effective tax planning, it is a valuable part of creating wealth. A financial planner is one of the key sources of financial advice. They offer personal advice based on what you want out of life and help you implement strategies to make it happen.

Superannuation boosting strategies

Salary sacrifice

Salary sacrificing is a good way to grow your superannuation balance. When you salary sacrifice, you are contributing part of your pre-tax income into your superannuation fund. There are benefits to this strategy as it may reduce the income tax you pay and keeping your money in superannuation may increase the level of your retirement savings. Working out whether salary sacrifice is right for you will depend on how much you earn and your personal circumstances.

If you do decide this might be the right strategy for you, then make the necessary arrangements with your employer on the percentage you want to sacrifice. It is important to act as soon as possible as you cannot salary sacrifice any salary already received.

Salary sacrifice is an important strategy to consider regardless of whether you are having a family or taking a career break.

Case study

Meet Lisa

Lisa is 35 years of age and is a marketing executive earning $75,000 p.a. In addition, her employer contributes $6,750 into Lisa’s superannuation (9% of $75,000) irrespective of her salary sacrifice amount. Lisa is considering making a $10,000 salary sacrifice contribution to her superannuation in the 2008/09 financial year.

The below table shows Lisa’s $10,000 salary sacrifice superannuation contribution has only reduced her take-home salary by $6,850 and increased her superannuation balance by $8,500:

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Taking $10,000 as salary Salary sacrificing $10,000 to superannuation

Salary before income tax $75,000 $65,000

Income tax payable (including

Medicare levy)

$17,625 $14,475

Lisa’s take home salary (after income

tax is taken out)

$57,375 $50,525

Total employer contributions

(including salary sacrifice)

$6,750 (subject to 15%

superannuation contributions tax)

$16,750 (subject to 15%

superannuation contributions tax)

Lisa’s $10,00 salary sacrifice superannuation contribution has only reduced her take-home salary by $6,850 and

increased her superannuation balance by $8,500.

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Government superannuation co-contribution scheme

Government co-contributions are another way to boost your superannuation balance. Under the scheme, if you earn a total income of $28,000 or less, the Government will contribute $1.50 for each after-tax dollar you contribute up to a maximum co-contribution of $1,500. The Government co-contribution amount reduces if you earn more than $28,000 and cuts off for those earning a total income of $58,980 or more. This is a great

incentive for you to put extra money towards your superannuation and if you are just starting out in the workforce or working part-time and may be earning a low income, this scheme is especially advantageous for you to boost your superannuation balance.

The co-contribution amount depends on how much you contribute and your total income for the financial year ending. This table shows the co-contribution amounts payable over a range of incomes:

Pearls Of Wisdom

Case study

Meet Tracey

Tracey is 24 years of age and is an administration assistant earning $34,342 p.a. She understands given her total income, by making a personal after-tax superannuation contribution of $867, Tracey will receive her maximum Government co-contribution of $1,300 - a real superannuation booster!

Total income Minimum contribution required

Maximum co-contribution received

$30,342 or less $1,000 $1,500

$32,342 $933 $1,400

$34,342 $867 $1,300

$38,342 $733 $1,100

$42,342 $600 $900

$52,342 $237 $400

$60,342 or more N/A Nil

Table relates to figures for 2007/08

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Pearls of Wisdom

Would you like more information?

To find out more about how you can boost your superannuation balance to calculate how much superannuation you will need for your future, speak to an ANZ Financial Planner. They can tailor solutions for your individual needs and circumstances.

Spouse contributions

Any spouse can make contributions into the other spouse’s account, regardless of income. The tax deduction kicks in at $10,800. When a spouse makes contributions into your superannuation account, they may be eligible for a tax offset of up to $540 (18%). This tax offset reduces and cuts off once the income reaches $13,800.

Spouse contributions are suitable for those who are low income earners but have a higher income spouse. If you plan to take time out of work, you can still build a superannuation nest egg with the help of your spouse making contributions into your superannuation account.

Contributions splitting

From 1 January 2007, couples who are eligible for superannuation splitting may be able to split their superannuation contributions. This means couples can transfer contributions from one spouse’s account to the other’s account.

Superannuation splitting may be used to increase the superannuation savings of one member of a couple – or to even up the distribution of superannuation savings between each member of a couple.

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Why you should see an ANZ Financial Planner

We have financial planners to suit you

At ANZ, we have over 400 professionally qualified male and female financial planners ranging from 28 to 55 years.

So we can find the right planner for you. Someone you can relate to and build a long term, trusting relationship with.

It’s easy to get started

It’s never too early to start planning your financial future. Your first appointment with an ANZ Financial Planner is no obligation.

In your first meeting, your planner will talk to you about YOU. Your current lifestyle, your goals and the life you want to live. From here your planner can arrange a step by step plan to get you there – and you decide how quickly or not you want to start implementing.

You know you can trust an ANZ Financial Planner

There are many benefits of seeing a professional financial planner from one of Australia’s most established banks.

All ANZ Financial Planners are strictly regulated by the Australian Securities Investment Commission (ASIC), and what’s more ANZ Financial Planning are principal members of the Australian Financial Planning Association (FPA).

For more information on the comprehensive code of ethics and legislation which our planners have to abide by, see the Head of the FPA Joanne Bloch’s presentation on www.anzdigitaltv.com

At ANZ, all our planners are salaried employees of the bank

At ANZ, you can choose the way ANZ Financial Planning is remunerated. It can either be a fee for advice or a commission based structure. The choice is yours.

ING Joint Venture

The partnership between ANZ and ING brings together the complementary strengths of both companies for the benefit of ANZ customers.

ING Australia Limited is a joint venture between the ING Group, which owns 51% and ANZ, which owns 49%:

• ING Australia is one of Australia’s largest fund managers and life insurers.

• ING Australia manages assets exceeding $48 billion.

• ING Group manages more than ¤635 billion.

Through ANZ Financial Planners, you can access a range of products provided by a world-class wealth manager.

ANZ Financial Planners are representatives of Australia and New Zealand Banking Group Limited ABN 11 005 357 522, the holder of an Australian Financial Services Licence.

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Be better offTo see how ANZ Financial Planning changed the lives of ANZ customers, go to www.anzdigitaltv.com and watch some real life stories.

To find out how an ANZ Financial Planner can help you be better off, come into your local ANZ branch, call 1800 641 593 or visit www.anz.com/wealth-for-women to make an appointment today.

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This material does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you. ANZ recommends you read the Product Disclosure Statement before deciding to acquire or hold the product. ANZ Financial Planners are representatives of Australia and New Zealand Banking Group Limited ABN 11 005 357 522, the holder of an Australian Financial Services Licence.