Chief Executive update

Contribution caps

Consolidation of your superannuation from other super funds

Seminars

Government reform

Co-contribution scheme

Tax deductions for self-employed members

Member research update

Chief Executive update

Investments
In late 2010 some refinements were made to the benchmark asset allocation of legalsuper's diversified investment options - the Conservative, Balanced, Growth, Assertive and Aggressive options.

These refinements made modest increases in the allocations to equities - both Australian and overseas - and reduced allocations to defensive assets such as fixed interest securities. These changes were made with the expectation that over the long term, legalsuper's investment performance would strengthen.

The Growth option (where more than 60% of assets are invested) returned 9.42% in the current financial year to 30 April 2011.

The following chart shows you the new and previous benchmark asset allocation of the Growth investment option. As you can see from the chart, 61% of the Growth option is invested in Australian and overseas shares.

Return (10 months to 30 April 2011)
The highest return (15.2%) was generated by legalsuper’s Australian share option which is invested 100% in Australian shares. The lowest return (3.3%) was generated by legalsuper’s Cash option which is invested 100% in Cash. The range in returns across the options shows how important it is to make sure that you are invested in the investment option that best suits your own risk and return preferences.

Each of legalsuper’s investment options has different asset allocations that drive their performance. You can see there may be considerable difference in the performance of the different investment options.

Your investment choice
Super is now the second largest financial asset of Australians, so it makes sense as your expectations change, to periodically review how your super is invested. If you want help working out which investment option(s) are most appropriate for you, our Investment Choice Calculator is accessible on our website at www.legalsuper.com.au/riskcalculator can help.

Inflows
Inflows to legalsuper have continued to grow at levels above the overall growth across the super industry. legalsuper’s aggregate inflows in the current financial year to 30 April 2011 were $3.1m higher than the same period in 2010.

Quality ratings for legalsuper
Four of the leading Australian rating agencies have all awarded legalsuper their top rating which is independent testament of the competitiveness of legalsuper’s products and services.

Direct share investment
legalsuper’s ASX200 Australian shares option will be of interest to those who want to have more direct control over how their super is invested without the hassle of the administration. With legalsuper’s ASX 200 investment option, you can choose the individual shares in which your super is invested and any dividends paid on your shares are added to your legalsuper account.

Pensions with legalsuper
Another feature of legalsuper membership that is growing in popularity are our pension options. Indeed, in the year ended 30 June 2010, pension assets grew more than 60%. With a pension you draw down a regular income stream from your accumulated super.

The key advantage of a superannuation pension is that there is no tax on the investment earnings once your super is invested as a pension. Once you reach age 60, it gets even better, as there is no tax on the pension you draw down.

For further information about the ASX200 investment option or pension options, please call us on 1800 060 312. Alternatively, full information is available in legalsuper’s superannuation and pension Product Disclosure Statements which are accessible here.

A range of other publications, calculators and brochures are available from our website. We also periodically issue on our website fact sheets on topics of interest or developments in super.
 

Don't exceed the contribution caps

Caps apply to the amount of superannuation contributions you can pay in a financial year. Any super paid over a cap amount is subject to extra penalty tax. The applicable cap amount and how much extra tax you pay once you exceed the cap depends on whether the contributions are:

• concessional – generally paid to a super fund for or by you in a financial year and are included in the assessable income of the super fund (e.g. super guarantee contributions, salary sacrificed contributions and any amount you are allowed as a personal super deduction in your income tax return).
• non-concessional – generally made to a super fund by or for you in a financial year and are not included in the super fund’s assessable income (e.g. personal contributions you make from your after-tax income).

You can find more information about contributions caps and all tax matters related to superannuation at www.ato.gov.au/super. Below is a summary of some of the key aspects:

Win 1 of 5 $500 Red Balloon Vouchers by consolidating your super
into legalsuper

Statistics from APRA (the regulator of the super industry) show that on average each working Australian has three super fund accounts and are paying up to three sets of fees and charges – some are paying even more.

If you have multiple super fund accounts and want to consolidate some or all of these into your legalsuper account please click here and complete the transfer form. Each rollover received by 30th June 2011 will go into a draw with a chance to win one of five $500 Red Balloon vouchers.

The process is simple. Complete the following 3 easy steps and we will make it happen.

Step 1: Complete the transfer of superannuation form

Step 2: Certify identification (Important: You must provide an original certified copy of your driver’s licence or passport and one original certified copy for each super account you want to consolidate).

Step 3: Post the completed form(s) and certified identification to legalsuper - Locked Bag 5081, Parramatta NSW 2124 and we will liaise with your other super fund(s).

If you have any questions about this process, please contact Dusan Petrovic directly on (03) 9602 0110 or dpetrovic@legalsuper.com.au . You may have noticed legalsuper has been promoting this initiative to members over recent months.
 

Seminars

One of the easiest and quickest ways to find out more about legalsuper and super in general is to book a workplace seminar. There is no fee for such seminars and they can be tailored to address any particular topics of interest to you and your work colleagues.

Some typical seminar topics include how salary sacrifice works, the advantages of pension options and how to determine the most appropriate investment option for your super.

To book a workplace seminar please contact David Eastwood at deastwood@legalsuper.com.au or 03 9602 0107.
 

Government reform update

There has been ongoing media coverage about proposed changes to Australia’s super system following a review commissioned by the Federal Government.

It is important to keep in mind that many of these proposed changes are yet to pass through the parliamentary process and as such are not law.

legalsuper will continue to monitor developments and keep you informed of any changes that impact your super.

Full details of the Federal Government’s response to proposed changes can be found at - www.strongersuper.treasury.gov.au
 

Co-contribution scheme

The Australian Taxation Office outlines at www.ato.gov.au/super the superannuation (super) co-contribution scheme which was established by the Federal Government to help eligible individuals boost their super savings for the future.

Subject to your income being within the thresholds outlined below, you may be able to take advantage of the super co-contribution payment by making eligible personal super contributions to your super fund or retirement savings account. The Federal Government will then match up to $1,000 of your personal super contributions.

You don’t need to apply. If you are eligible, all you need to do is pay personal super contributions to your super fund or retirement savings account and lodge an income tax return. Personal super contributions are in addition to the regular payments made by your employer.

The amount of super co-contribution payable is determined having regard to the income year in which you made your eligible personal super contributions and whether your total income is within the super co-contribution income thresholds for that year.
 

Tax deductions for self-employed members

As the end of the financial year approaches it is timely to consider the tax deduction available for personal super contributions paid by self-employed practitioners.

Federal Government tax laws mean self-employed practitioners can claim a tax deduction for personal super contributions, subject to a cap on the total contributions made (above which a penalty applies). To be eligible for a tax deduction for personal super contributions:

• any amount you earn as an employee must be less than 10% of your combined assessable income and reportable fringe benefits for the income year;
• you are less than age 75;
• personal contributions must be paid prior to 1 July in the financial year you wish to claim a tax deduction;
• contributions must be paid to obtain super benefits for yourself;
• you must have submitted a ‘notice of intent’ to claim a tax deduction for these contributions; and
• the super fund to which you pay your contributions has acknowledged your ‘notice of intent’ and the amount you intend to claim as a tax deduction.
  

Concessional contributions include personal contribution claimed as a tax deduction by a self-employed person or employer contributions which are paid under a salary sacrifice arrangement. These are both taxed at 15% on receipt by a super fund.

Can I also make non tax-deductible contributions?
Yes, non tax-deductible (also known as non-concessional) contributions are those you make for which no tax deduction is claimed. They are also referred to as un-deducted or ‘after-tax’ contributions.

For the 2010/2011 financial year, a $150,000 limit applies for non-concessional contributions. Amounts paid in excess of the limit will be subject to additional tax.

Please note that if you are less than age 65, you are able to bring forward two years of non-concessional contributions which means you can pay more non-concessional contributions in a particular year. However, if you do you will not be able to pay further non-concessional contributions for the next two years.

Member education and financial advice research update

Earlier this year legalsuper undertook research to confirm our members’ views of the types of member education and financial advice support that legalsuper should offer its members.

Pleasingly a significant number of members participated in the research study which was facilitated by a leading research company Sweeney Research.

We have recently received the final results of this research. The results show that legalsuper members are quite satisfied with our existing member education and financial advice arrangements. A number of areas were identified by members where there was seen to be scope for the existing offer to be refined.