The broadcast is now starting. All attendees are in listen-only mode. Hello everyone, thanks for joining us for our ‘How to get the most out of our new Retirement planning calculator’ webinar. My name is Rebecca O’Neill and I’m part of our Key Account Management team here at GESB. The information contained in this presentation is of a general nature and does not constitute legal, taxation or personal financial advice. Our new Retirement planning calculator is a more comprehensive tool than our previous ‘How much will I need’ calculator. We’ll start by explaining what is new. We’ll then show you how to use the calculator and highlight some of the special features and advanced options you can use. It should be said that if you’re thinking about making changes to your account as a result of using this calculator, you may want to consider getting advice from a qualified adviser. The new calculator was introduced to assist our members in making decisions about when and how to retire. Our previous Retirement planning calculator allowed you to see your projected super balance at retirement. With our new calculator you can also see a projected annual income in retirement, the age when your super will run out, and how much more savings you may need. This means you can get a sense of whether you’re on track to enjoy the kind of retirement lifestyle you’d like and what you can do if you need to boost your savings. You may wish to have these pieces of information ready. While you can estimate the value of certain items, the more accurate the information you enter into the calculator is the more meaningful your results will be. The information you’ll need is:
the amount of your current salary before tax, the approximate value of your assets which will be split into financial assets such as shares and and bank accounts and personal assets such as boat, car, contents, details of your super account with us and any other super accounts including your current balance, your Gold State Super after-tax benefit. If you’re a Gold State member, you can start by using the Gold State Super calculator, but you will need to take the tax out before you enter your balance. You can contact GESB on 13 43 72 to get a better idea of your tax. And lastly your partner’s details for all the items listed above, if you have a partner you would like to include in your calculations. We’ll only ask you a few questions upfront before we start showing you results. We need your date of birth, as this is used to work out your retirement date, if you’re a male or female, as this will help us to estimate your general life expectancy, what your current and your salary is – that is your gross salary before tax is taken out, and, what your super account balance is. If you have more than one account, in this step you simply add the balances together. Your Gold State Super balance, if you have any Gold State, is not included here. Once you’ve entered your personal details we’ll show you a graph very similar to what you can see here. The first graph will show you your pre-retirement income after tax followed by income in retirement. In this graph you’ll see how in retirement you’ll have some income from super but also have a portion from the Age Pension. If you don’t qualify for the Age Pension for some reason you can switch this option off in step 9. You’ll also notice that as your super savings decrease generally you’ll qualify for a higher amount on your Age Pension. You’ll also notice a hyperlink below the graph. This allows you to view your super balance instead of income. This is also the view that the previous ‘How much will I have or need’ a calculator showed. And you can toggle between the two different views. The first box here tells you the target income in retirement. In step 9 you’ll be able to set your own target income. Until then, we use the Association of Super
Funds of Australia (ASFA) comfortable lifestyle standard. This will be based on a single person until you add a partner in if you choose to do so. The second box shows you what your super balance will be at the type time you retire. In step 9 you can set your retirement age. Up to that point we use 67 as a retirement age, as that is the age at which most people qualify for Age Pension. The next box shows the age at which your super will run out. As we include a Age Pension by default most people will qualify for a part Age Pension depending on the assets you own. Until you’ve entered those details, we assume you qualify for the maximum Age Pension. The last box tells you how much more you may need to save if you want to continue to receive your ‘Target Income’ until ‘Your life expectancy’ excluding any Age Pension entitlements. When you qualify for an Age Pension that amount could drop significantly. If the value shown is a negative number that means you will have saved enough to afford your target income until your life expectancy. If you have a Gold State Super account or a Deferred Gold State Super account, you simply select ‘yes’ for this next question. You’ll then notice an additional field where you can add the balance of this account at the time you retire. You’ll need to calculate how much this will be. We have a Gold State Benefit Calculator on our website, or you can get a benefit estimate by calling your Member Services Centre on 13 43 72. You will need to adjust your balance for the tax you’ll need to pay if you’re doing the calculation. This balance will then be used to buy an allocated pension for you to access in retirement. It’s important to understand that the amount you enter here, is your estimate of your Gold State Super at the retirement age you’ve used in the calculator, less any tax. If you have more than one type of account, you’ll need to tell us which account your employer pays your super into. If you have a GESB Super account and another taxed super fund, simply add the two account balances together and they’ll be treated the same way for the calculation. If you have a West State Super account, this is slightly different. You’ll need to tell us how much of your combined super balance is in your West State Super account, and how much of it is in your other account. You’ll also need to indicate which account your employer is paying your super into as each account uses different calculations. In our current example the member’s super balance was a hundred and fifty thousand combined, fifty thousand of that is in the members other super. The member currently works for the public sector so is getting their super paid into their West State Super account. Select ‘continue’ to go on to the next step. If you change the answer to this question about your contributions to ‘yes’, you’ll get options to add these contributions. For regular before or after-tax contributions, you can select the frequency with which you make extra contributions. So never, fortnightly etc to coincide with your pay cycle, fortnightly, monthly, yearly. When you enter the details here it is assumed
you’re making these contributions year on year on an ongoing basis until your selected retirement age. If you’re looking at adding money to your super, so an after-tax contribution, as you’ve got a spare amount available at a certain point in time, then you need to use the one-off contribution section below. These are for more for lump-sum contributions. Then we have a section on career breaks. if you’re planning to have a baby or taking an extended period of leave without pay to travel or look after family, you can include this in your calculation. You can enter the age at which you’ll start your career break and then the age at which your career break will finish. If you’re planning to go to work part time, for example after having a baby, you can add the hours you are working now, and the hours you’ll do after your return. You’ll notice that every time you make an update the graph and summary boxes update to the latest information. You can add up to three career breaks. If you don’t want to include a career break simply leave the answer to ‘no’ and click ‘continue’. In this next section you can add your partners details. If you have a partner you can now include them here in the calculation. Simply provide their date of birth and indicate if they are retired or not. Once you enter the answer to the ‘Is your partner retired?’ question, you’ll be presented with additional questions. If your partner is not retired, you basically need to answer the same questions for your partner as you’ve just completed for yourself. Salary, account balance, which account they have, if they have a Gold State Super balance, or if they have another account for West State Super members. Then click ‘continue’ to go to partner contributions. Next you can add your partner’s contributions and career break information in the same way. Making extra contributions works the same for you as it does for your partner. If you change the answer to this question to ‘yes’, you’ll get options to add contributions. For regular before or after-tax contributions you can select the frequency fortnightly, monthly, yearly. When you enter the details here it is assumed again that your partner will be making these contributions year-on-year on an ongoing basis until your selected retirement age for your partner. If your partner is looking at adding money to their super on a one-off basis as they’ve got a spare amount available then again you need to use that one-off contribution section. You can add up to five one of contributions to your partner’s account as well, as you can also do that for yourself. Then click ‘continue’. We also ask you questions about your assets. The only reason we do this is to estimate how much Age Pension you could qualify for. By default we assume you own your own home. If you are paying a home loan, this is still considered to be owning your own home. Only if you’re renting we need to change the answer to ‘no’ for this question. You get less Age Pension when you own your own home than when you are renting, therefore, we’ve defaulted to ‘yes’ for this answer. We also ask you about assets outside super. If you have any money in a bank account or if you own shares these are classified as financial assets and they’re included in that first box. The second field is the value of your personal assets. So, unlike your home contents insurance which is usually based on new for old value, your personal assets for Age Pension purposes is the value of your car, boat, and contents at what they are worth today. If you have a rental property this is considered to be other assets and is included in that third box. Then simply click ‘continue’ to get to the investment plans page. By default we include Age Pension. The reason is that when you qualify for an Age Pension you may not need to save as much money to live the lifestyle you want in retirement. But if for some reason you don’t qualify for Age Pension you can choose to switch the option off by selecting ‘no’ in this section here. The investment options and retirement age section deals with investment plans. If you have not changed investment plans on your account then you’ll be in the default plan. For West State Super that default plan is the My West State Super plan and for GESB Super that is the My GESB Super plan. We’ve applied these default selections in the calculator. If you are invested in a different plan, you can change it here. For each plan we also show you the investment timeframe. Generally speaking, the further away you are from retirement the more risk you can afford to take as markets generally recover after a downturn. It should always be said that performance is no indicator of future performance so you need to decide what option is right for you. If after using the calculator you are considering changing your investment plan you should also consider getting advice from a qualified adviser on what investment option is right for you. You can also change your and your partner’s retirement age too. If you’re not sure how much income you’ll need in retirement, we’ve included examples to help you. The Association of Superannuation Funds of Australia, known as ASFA, has defined what a comfortable or modest retirement looks like. And that refers to the standard of living. As a starting point we include the comfortable standard of living figure in the income in retirement field. If you want to know exactly what a comfortable lifestyle means, select the ‘Not sure how much’ hyperlink and you’ll see the ASFA the table for retirees aged around 65. You can change the income in retirement to the amount that you want to receive if you’d like to. We also offer the option to see what difference a transition to retirement or TTR strategy could make to your final super balance at retirement. If you change this option to ‘yes’ you can see the difference. It does assume that from age 60, you’ll put the super balance you’ve got available into an allocated pension. The income from your allocated pension is tax-free over the age of 60 for individual tax assessment purposes. See the specific assumptions in relation to the TTR strategy projection used in the calculator. There are differences between GESB Super and West State Super in relation to TTR. So to get a better understanding of what TTR is, you may also want to do a TTR webinar or seminar. It should also be noted that even if you have entered information for a partner only your superannuation is considered for TTR. Your partner’s superannuation and details are not used. When you switch these options from ‘yes’ to ‘no’ or vice-versa, you’ll notice the graph and summary boxes update with the new information. Depending on the values you’ve used and the assumptions applied, you’ll notice that your super will generally run out earlier if you don’t have Age Pension. In some cases while you may be retiring you may continue to do some casual work. For example a school teacher may continue to do some relief teaching at the school they’ve just retired from to help out when other staff are away. You can include an estimate of the annual income in retirement and then let us know at what age you intend for this income to cease. If you have other assets you want to use to buy an allocated pension at the time you can retire, you can include this here. For example if you have a defined benefit super account amount from a source other than GESB, you can still use this to roll into an allocated pension. Also many people plan to pay off the last of their home loan, go on a holiday, or buy a new car when they’re retiring. The calculator allows you to put an amount in for that too. All of these things are under the ‘Advanced options’ section of the calculator. At the bottom of the calculator you can expand the ‘Change underlying assumptions’ section to change things like your insurance. This is just below the ‘back’ and ‘continue’ buttons. In this section you can see some of the values that have been used for this calculator. We’ll just highlight a couple of values you might want to look at. If you have made changes to your insurance cover you can update the insurance amounts you have for Death, TPD insurance and SCI insurance. You can also change the waiting period if you selected a different waiting period and change the occupation category to the one you are in. The calculator will then apply these changes as per the GESB insurance arrangements. There are some definitions of insurance types on the GESB website if you’d like to know more about those selections. If you or your partner receive a different percentage Superannuation Guarantee, you can update the 9.5% to a different percentage. Some employers pay up to 12% Superannuation Guarantee or SG and that will affect the calculations. For members of untaxed funds such as West State Super and Gold State Super, they could have a tax-free amount included in their super balance at retirement or have a superannuation contribution surcharge debt that needs to be paid at retirement included. We also allow you to change the investment returns for the plan you’ve selected or the fees you are paying. If you are changing any of the underlying values used then you are taking responsibility for the overall calculations. Default values for relevant variables reflect long-term expectations. These values take into account current economic conditions, but are not heavily influenced by short-term market fluctuations and don’t take into account your proximity to retirement. Actual experience might be very different from these default rates. The calculator allows you to change these assumptions and give some general guidance on appropriate ranges, however, it is possible to specify sets of assumptions that are inconsistent or unreasonable, which will in turn produce unreasonable results. If your projection indicated you’ve saved enough to afford the income you’ve selected in retirement you’ll get a message to explain what’s next. You’ll also notice that in the summary box The ‘How much more you may need’ box will show a negative amount so in that blue box there. It’s important to note that even though there may be Age Pension income in the graph, the figure in the blue box does not include these Age Pension entitlements. So the how much more you may need at your retirement age, is calculated as if you want to continue to receive your target income until your life expectancy excluding any Age Pension entitlements. If you haven’t saved enough to afford the income you’ve selected in retirement, you’ll get a message which explains what you can do to close the gap. You’ll also notice that in the summary box the ‘How much more you may need’ box will show a positive amount. Again the Age Pension income is not included in the figure in the blue box. To make it easier for you, at the end of the calculator, we’ve included shortcuts to the most common changes that members make to their super to improve their balance at retirement. These are make additional contributions, change your retirement age, change your desired income in retirement or change your investment plan. Each section expands out to let you make changes. Below the graph you’ll find the option to compare yourself to others by simply selecting the compare action button. You will see your result compared to a similar group with the same account and then another group who also have a similar income. On a tablet the calculator looks very similar to the desktop version, however, on a mobile you’ll notice that we hide the chart by default. To see the chart all you need to do is select the ‘See chart’ option. And if you need help with our new calculator or have questions that weren’t answered today, please get in touch with us. If you found this webinar helpful, you might like to explore some of the other webinars we offer to help you learn more about your super or retirement income. Just visit gesb.wa.gov.au/webinars Thanks very much for joining us today and we’ll see you on another webinar.