Published April 2020
There is a lot of uncertainty out there at the moment. Here are a few commonly asked questions. Remember, if you have more questions specific to your situation, contact your Industry SuperFund directly.
Your super and Australia's economy
Why has my super balance gone down?
As greater restrictions are placed on people’s movements, a large and immediate impact is being placed on businesses and economies across the world. This has led to entire industries being shut down and contributed to massive job losses.
At the same time, governments globally are providing unforeseen economic stimulus packages to reduce the impact on individuals, small businesses and companies, as well as trying to support healthcare systems and essential services.
This has meant there has been large positive and negative swings in the sharemarket over recent weeks, as investors attempt to navigate the multiple daily virus updates and policy announcements by re-investing money into different stocks.
If your super fund invests in shares on your behalf, you may have noticed your super balance has gone down recently as a consequence of this sharemarket turbulence. While this may seem alarming, there is no need to be concerned, particularly if your super is with an Industry SuperFund.
It is important to remember that Industry SuperFunds invest for the long-term and it is this long-term outlook that puts them in the best position to withstand market shocks. So, if you’ve noticed your account balance decrease recently, rest assured that it will grow again.
Industry SuperFunds have seen continued outperformance over retail funds – even during the Global Financial Crisis (GFC) in 2008 – due to the diverse range of assets they invest in to. So even if some of your super is invested in shares, you will find part of it is also invested in unlisted assets such as infrastructure and property, and other nation-building investments.
Find out more about diversification here.
What should I do with my super now?
When it comes to super, often the best course of action for members is no action. Your super is a long-term investment. If you switch your super to cash or other defensive assets after a downturn, you could end up crystallising losses and miss out on the rebound.
During the GFC, savers who moved their money from an average balanced industry fund into cash were $4,000 worse off after three months, $13,800 worse off after a year, $34,800 worse off after five years and after seven years would have lost a whopping $46,000 of potential retirement savings.
Retirees or those nearing retirement and planning to access their super soon should seek financial advice.
How will my super balance recover?
Investors at super funds are closely monitoring market signals every day. While it is unknown how long this period of uncertainty will last, Industry SuperFunds remain focused on positioning investment portfolios to deliver the best outcomes for their members over the long-term.
Industry SuperFunds’ investment teams are experienced in operating in volatile markets and major events, and they have tested and prepared for market shocks just like this one. They invest in a diverse range of assets to minimise risk to your super balance so that any short-term dips – just like we’re experiencing now – are counteracted with long-term growth.
Industry SuperFunds are better placed than most to ride out economic shocks and capture the benefits of market recoveries, with low fees and a member-first ethos that will see all profits flow back to members’ retirement savings, lifting returns.
What is liquidity? And why am I hearing about it?
Liquidity refers to the availability of liquid assets. Liquid assets includes cash and other investments such as listed shares and government bonds; essentially, any investment that can be quickly sold to raise cash which can be passed on to investors.
Illiquid assets are the opposite of this; they cannot be easily converted to cash. They take longer to trade or find buyers willing to transact at a given price – such as major infrastructure projects.
Currently, you may be hearing about liquidity more than you ever have before. This is due to the government’s economic stimulus package (click here to read more about it) requiring super funds to have available liquid assets to assist their members who require temporary access to their super.
Is the current economic crisis similar to the GFC?
Why are Industry SuperFunds well placed in economic times like this?
Your super and Australia's future
What sort of things is my super invested in?
Industry SuperFunds invest in a diverse range of global and Australian shares, roads, airport, seaports, train lines, solar farms and property – and more! They also hold cash investments, government bonds and fixed term deposits. It is this diverse range of assets that has seen Industry SuperFunds consistently outperform other funds for many years now and that outperformance spans all market conditions.
How will super rebuild the economy?
Why is being good for the economy good for me?
Your situation and super
I have lost my job recently. What financial assistance is available to me?
The government has announced an economic stimulus package that aims to reduce the financial hardship many are experiencing as a consequence of the impact of coronavirus on jobs and businesses. This includes Jobkeeper, Jobseeker and the temporary early release of super under compassionate grounds. You can find out more about these here.
I have been told I need to pay my rent, and that I can access my super to pay it. How do I do this?
It has been reported that some real estate agents have been advising tenants to withdraw from their super early to pay their rent. This is illegal, and ASIC have warned that agents who are found to be doing this can face hefty fines or jail time for providing unlicensed financial advice that is against tenants’ best interests.
If your real estate agent has told you to do this, you do not have to. Under the six month moratorium for evictions announced by the Federal Government, if you have no work and can’t pay your rent, you will not be evicted (please note, not all states and territories have introduced this policy yet).
The main purpose of super is meant to support your retirement, not to pay your current bills
I have been contacted by a company saying they can assist me in accessing my super. Should I get them to help me?
The short answer is no. Do not allow another company to apply for your super on your behalf – especially if they are asking for a fee to do this.
If you are facing financial hardship as a consequence of the coronavirus and are considering accessing your super early on compassionate grounds, you can do this yourself – for no charge! Simply log on to your MyGov account and follow the prompts to register your interest in accessing your super. You can find out more about the scheme and the other options available to you here.
Does my insurance policy cover me for any claims relating to COVID-19?
Your insurance through your Industry SuperFund should cover you for any relevant claims from the coronavirus.
In some cases insurers (the company your super fund takes out insurance on your behalf with) can inform a fund that it will not cover any claims made as a result of a pandemic. As COVID-19 has been declared a pandemic, you may assume that this means you will not be covered for any claims you make relating to it. However, the funds’ insurers have said they will not implement this clause and will cover all existing members.
The policies of some funds may not provide insurance cover for pandemic-related claims where a pandemic exclusion has been made by the insurer and the member has joined the super fund within the last 30 days. If the insurers don’t intend to invoke the pandemic exclusion this shouldn’t be a problem.
Some funds provide income protection insurance. This usually kicks in after an initial qualifying period and provides a percentage of your income for a period of time. Income protection insurance will continue to provide cover for you if you become ill or injured (and qualify). However, income protection insurance does not cover loss of income from reduced hours or loss of a job.
As call centres are overloaded at the moment, your first stop should be your funds’ website which will provide details on insurance cover and costs.
Should I touch my super balance?
What will happen to my insurance if I take my super out?
How do I cope with the stress and anxiety caused by the stock market?
The Government's recent announcements & your retirement
I have an income stream account. What has changed?
As part of its economic stimulus package, the Government has announced a temporary reduction on the required income stream drawdown rates. These are:
Default minimum drawdown rates (% of member balance)
Reduced rates for FY2019/20 & FY2020/21
Under 65 4 2 65-74 5 2.5 75-79 6 3 80-84 7 3.5 85-89 9 4.5 90-94 11 5.5 95 or more 14 7
What’s happening with deeming rates?
From 1 May 2020, deeming rates will drop to:
Upper deeming rate: 2.25%
Lower deeming rate: 0.25%
How do I protect my super balance?
What's your advice for people retiring soon?
Your Industry SuperFund is here to help you and your future in retirement. Find out how your fund is responding to COVID-19, or to contact them directly, click on their link below.