The outbreak of coronavirus (COVID-19) was something that no one could have predicted.
Due to the uncertainties brought about by the spread of the virus, investors across the world continue to react, resulting in wild swings in share markets globally.
The market volatility has impacted the retirement savings of many Australians, including our members. Below are responses to questions our members have asked.
Please note that any advice contained in the responses below are general in nature only and does not take into account your personal objectives, financial situation or needs. If you need personalised advice, please speak to your financial adviser or get in touch with our financial advice team.
Your questions answered
Why is the decline in my super different from my partner’s, friends’ and family members’?
Each individual has their own personal objectives, financial requirements, beliefs and risk appetite. These factors play a role in the organisation that you choose to invest your super with and the type of investments that you select for your super.
Additionally, each super fund has their own investment objectives and the way they operate also differs. For example, super funds such as ours focus on returning profits to members while others distribute their returns to shareholders.
Each super fund also differs in the type of assets (for instance, shares, property, infrastructure etc) in which they invest their members’ money and the proportion of investments in each asset type also varies between funds. Simply looking at the returns on investment options with similar names (for example, Balanced) between super funds may not result in a like-for-like comparison.
Consequently, the way your super performs will be different from another person’s.
I want to withdraw all my super to prevent further losses. How can I do this?
We understand that you are worried about your money particularly during times of market volatility such as this. If some of your super is invested in options that contain growth assets such as shares or property, withdrawing your money at this time is likely to result in selling them at a low value and locking in any losses. If you take a longer term view, it is likely that the value of your super will rise again when the market recovers.
Additionally, the Australian Tax Office (ATO) has listed some conditions around when an individual can withdraw their super. You can find these conditions on the ATO website.
If you are eligible for early withdrawal of up to $20,000 of your super ($10,000 each financial year), please apply directly via the ATO from 20 April 2020. If your application is approved, we will contact you to finalise the withdrawal. You may also find this article useful when deciding whether to withdraw your super early.
If you are eligible to access your super due to other reasons such as compassionate grounds, financial hardship or a terminal medical condition, please contact us so we can assist you with the process.
I want to switch my investments to cash to prevent further losses. How can I do this?
If some of your super is invested in options that contain growth assets such as shares and property, switching your investments to the cash option is likely to result in selling them at a low value and locking in any losses. If you take a longer term view, it is likely that the value of your super will rise again when the market recovers.
We encourage you to speak to a financial adviser before you make any decisions to switch your investments. If you would still like to switch your investment options after speaking to a financial adviser, you can do so by logging into your account via our Member Portal.
What has the Fund been doing to reduce my losses?
Our investment team closely monitors your investments to ensure we cover a range of asset classes and alternative investments that aim to outperform during periods of market volatility.
Market turmoils, such as the current one, gives us the opportunity to buy assets like shares at lower prices, which will allow these assets to increase in value when investment markets recover.
Additionally, given the travel ban and temporary closure of retailers, we’ve been gradually shifting the focus of our long term strategy from airports and commercial property to less risky investments in the current uncertain climate. These investments include logistics centres, renewable energy and consumer staples such as Coles and Woolworths.
Since 2019 and prior to the COVID-19 outbreak, we have also invested in Australian companies that have since been involved in developing COVID-19 test kits: Genetic Signatures and Atomo Diagnostics. Molecular diagnostics company Genetic Signatures has received European regulatory approval for a new COVID-19 test that is already in use in Australia. Currently, medical devices company Atomo Diagnostics is working on developing rapid self-tests for the virus.
If you are in our LifetImeOne default option, we help you manage your risk depending on which age group you fall under. For younger members there will be a greater exposure to growth assets such as shares and property. Once members reach 40 years of age, the asset allocation will change gradually, moving from a growth focused asset mix to a more conservative one as a member moves closer to retirement age.
I’m close to retiring/I have retired. Unlike the younger generation, I don’t have a long time frame to recoup my losses. What should I do?
We understand you may be anxious that time is not on your side to make up for market downturns.
If you have a long-term investment strategy which includes diversifying your money across growth assets (such as shares and property) and defensive assets (such as cash and bonds), this could have softened the impact of the market downturns in the past couple of months. Our RetireSmart account-based pension does just that, helping our members take advantage of upswings and insulating your pension payments during market volatility.
And if you are in our LifetimeOne default option, we help you manage your risk depending on which age group you fall under. Once members reach 40 years of age, the asset allocation will change gradually, moving from a growth focused asset mix to a more conservative one as a member moves closer to retirement age.
You may have also heard about the temporary reduction in drawdown requirements for account-based pensions. You can find out more via the Government’s Providing Support for Retirees factsheet.
If you are deciding whether to take more or less out of your pension, you may find this article useful.
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