Alex

We acknowledge that we are recording this podcast from the lands of the Gadigal people of the Eora nation. We pay our respects to Elders past, present and emerging and celebrate the diversity of Aboriginal and Torres Strait Islander peoples and their ongoing connection to land and waters throughout Australia

Ange

Welcome to super simple chats, Rest’s very first podcast. I’m Ange..

Alex

And I’m Alex

Ange

And we will be speaking to industry experts about all things super.

Matt

Wait, what the hell is contributions as well?

Ange

I didn’t realise until recently, that super is invested, I thought it was like a savings account

Sarah

I’m not sure it’s helpful to talk about specific numbers, but it’s a lot less than a million dollars.

Person

This is actually really important to talk about, because I don’t want to miss out on those things

Ange

Trying to make it understandable and relatable for every day Aussies.

Alex

After all, it’s one of the biggest assets you’ll ever have.

Ange

Now this wouldn’t be a financial podcast, if we didn’t start by mentioning that the information discussed is general only and doesn't take into account your own financial situation, needs or objectives. This information and the relevant products are issued by Retail Employees Superannuation Pty Ltd. Before deciding to join or stay, consider the relevant Product Disclosure Statement and Target Market Determination at rest.com.au/pds and whether it is appropriate for you. While we have endeavoured to ensure the accuracy and reliability of the information provided, there may be inadvertent errors or omissions. Before acting on any advice, we recommend you speak with a financial adviser.

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Alex

So for me personally as a finance writer, this was not something that I grew up knowing a lot about: superannuation or personal finance, and I took it upon myself to learn as much as I could. And with that, I realised how little people know, just like me, and how important it is for everyone to know this very simple information.

Ange

You know, I agree with you 100%, Alex. I mean, I've been working in super for about, I'd say close to four years now. And truthfully, I had I had pretty much zero to no knowledge about super other than the fact that I had it until I started working at Rest.

And then I realised just how important it actually is.

Alex

Oh yeah.

Ange

So for me doing this podcast, I'm just hoping that everyday Aussies like us can really get into the nitty gritty of super and understand just how important it actually is for them in their future.

So on that note, we're excited to kick off our very first episode, which, surprise, surprise is super 101. And joining us today is Matt from Rest.

Matt

G’day, thanks for having me.

Ange

Yeh we’re stoked to have you hear, Matt. And Matt is going to be demystifying just what's super is and why it actually matters.

First question, as we were just saying, super feels like a really foreign concept for most people. In fact, most people just assume it is glorified savings account for later.

But we know it's actually a lot more than that. So my first question is, if you were to explain superannuation to someone who is completely new to the idea, how would you explain it?

Matt

Yeah, it's a good question. I think most people it's it is a foreign concept as well. You guys are not alone in not knowing too much. It's not generally a topic taught at school or university TAFE things like that. So I think the message for me to every Australian is you're not alone in not knowing much about super, because it's pretty, it's pretty common. So what is super? I think he sort of did touch on it.

In short, it is savings for retirement. Saying that it's not like a savings account where you can just dip into and sort of, you know, if you're going on a weekend away and sort of take some money out here and there. In a way it is that those for savings for your retirement, and it is important because it's going to be a nest egg come retirement. Right? You know, you've worked hard for 20, 30, 40, 50 years. You want to have that little nest egg tucked away for, for when you do retire.

I think for me as well, a lot of people sort of in a way assume it's not real, it's not their money, which, you know, is, is interesting because, you know, you've been working so hard for this. It is your money. You know, I think people think it's not real is because you can't, you can't touch it. You can't smell it, you can't feel it.

And that probably just comes down to the lack of engagement with super. And it's pretty common across most Australians that they're pretty disengaged with their super, which is a shame, but pretty consistent with most Australians.

So in short, that's a really long winded answer. Sorry you've got me on today. I do talk a lot. A lot. Some of it's nonsense.

Ange

That's actually why we have you here.

Matt

But look, yet at savings for retirement. That's it, in short, the way you're going to achieve this, this retirement balance is through employer contributions. Your employer will make contributions throughout the lifetime of your career. Obviously, there's some certain criteria you need to meet as well. But, I'm sure we'll talk a little bit more about that today in terms of employer contributions and the power of those too.

Ange

Yeah, awesome.

Alex

I think disengagement is a really like the perfect word to describe how a lot of people feel about super, especially young people. Like it's very much seen as a set. And forget one day in the future, I'll think about this concept. So with that in mind, why should young people actually even care about their super?

Matt

Yeah, I look it's I mean, the amount of times I've gone into a workplace, I do a lot of, sort of super education in the workplace. The amount of times I sort of go in there and talk about exactly what we're talking about today. So super 101. Whenever I have these conversations with people, you sort of have those light bulb moments ago. Oh, okay. That's why I should do it. And I think, in short, the earlier you can look at it, there's this thing called compound interest.

And what compound interest is, is basically interest upon interest. So, you know, as contributions go in there earning interest. And over the lifetime of your, you know, your work life, that's just going to compound to hopefully a nice juicier balance. So there's some small things you can do earlier, which we'll touch on at a bit more detail like, you know, potentially adding additional contributions to your super, watching that compound over the lifetime of your work career, looking at different investment options, having a look at your insurances and whether you need them, whether you want to dial them up or increase them, or what have you.

There's this there's plenty of things you can do at an earlier stage in your career, which will be so much more beneficial, you know, by the time you retire, the amount of times is, well, we've I've been into a workplace and I'll be chatting to somebody in their 40s, 50s or 60s and they often say, oh, I wish I'd done this earlier. And you know, you know, ideally you've got somebody a little bit younger.

Ange

It's like super FOMO, right? It's realising it too late.

Matt

Totally. What I will say, if you are in your 40s and 50s is never too late. It's, you know, it's never too late. You know, there's always something you can do there to help you balance. But obviously, you know, I work at Rest and a lot of our members are actually sort of 18, 19, 20.

So I got that really fantastic opportunity to sort of chat with them and help them out, some really, really basic things. That you can do, you know, just to sort of help yourself out that, you know, you know, to get engaged with you, with you super. Which I can't stress enough is really important.

Ange

So what I'm hearing from that is it's never too late. But the earlier you start, the better it could be for your outcome.

Alex

I like the way that you described it as a light bulb moment. So this idea that something like compound interest, someone had that. Oh yes. Now I should..

Ange

Cha-ching!

Alex

Are there any other light bulb moments that you've seen register with people?

Matt

The there's plenty. I mean, I think for me, one of the biggest things is how do people, you know, engage with their super and, you know, most funds I will say have an app.

Ange

Is that a shameless plug there Matt? I think it is.

Matt

A little bit. Look, I'm obviously slightly biased working at Rest. But you know we have an app and I've worked with other funds in the past and now you'll have apps as well. But, I didn't know there was an app. I didn't know I could see my balance. I didn't know I can see my contributions. There's so many things. It's like one thing will lead to another because, you know, once you get on a bit of a roll and these words start making sense, things you might have heard on TV or, you know, your parents or a mate at a barbecue that knows everything, you know, it starts to resonate a bit more and then naturally, you're more engaged. So I think for me, those light bulb moments are very rewarding for me. And I know most, you know, my team that that works in the same space as well. So

Ange

That was really great to know. So we've actually gone and spoken to everyday Aussies about this topic.

------

Sinem

What do you know about super?

Person 1

I don't know anything at all.

Person 2

A 401K for Australians.

Person 3

It's for the retirement

Person 4

They told me that I will get super

Person 5

Something that you contribute to so that you have something to retire on

Person 6

It's mandatory in Australia.

Person 7

I believe it is a very good thing for everybody in Australia,

Person 8

Investments are made on my behalf

Person 9

And it's for later. You can't have it now.

Sinem

Do you check it often?

Person 2

I tried looking at it once,

Person 5

Yeah, I do, I do.

Person 4

Yeah. Every now and then

Person 7

Not often, as I should.

Person 6

I do keep a tab on the how much I've got.

Person 8

Probably not as often as I should,

Person 9

Sometimes I do, and I get really excited because I'm like, I can't wait to grow old

Sinem

Back to you Ange

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Ange

So you did mention employer contribution. Now I've heard this used interchangeably with the term super guarantee. For those of us at home who are listening and have no idea what super guarantee is they might have seen on a pay slip or something, and gone, what is this 11.5% thing that they're taking out every week? Can you explain to us what super guarantees?

Matt

Yeah, it's basically just the contributions that your employer has to make on your behalf. So this is the money you've earned, and it goes into your, you know, designated super fund. Now at the moment, you're right. It's 11.5%. When I first started working in super, it was around about 9%.

Ange

Is that telling us about how long you've been working in super?

Matt

It’s been a little while now, it was even less a lot, you know, before I started working in super. But, yeah, at the moment, 24/25 financial year, it's 11.5% is actually increasing the 12%, next financial year. Which is great. Obviously that's more money going into your little nest egg. That savings for retirement.

Ange

So I'm going to take us back a little bit, back to when I was 16 years old.

So a bit of a reminiscence, thinking about my very first job was actually younger. I was like almost 15, I think I was 14 to 9 months, like, my parents just straight. Didn't love that. So I worked in retail. That was my first job. And when I first started, they hand me a bunch of paperwork, filled it out, handed it back a few weeks later, got a letter in the mail, and it was from a company called Rest. Never heard of them. No one told me what it was going to be.

Matt

Great fund.

Ange

There was a number on it, and they said I was a member. So I was like, oh, well, this is probably important. And I was one of those teenagers that was really organised. So I had a life admin folder.  

Alex

Can’t relate

Matt

That’s so weird. That was not me.

Ange

I don't know how many 15 year olds have a life admin folder. I mean, I put it in there and then just by some magic, okay, it was huge fluke, but I just somehow knew that I had to take it with me every time I start a new job and just fill it in.

Matt

You, you are a miracle.

Ange

Yeah. Miracle, right? And it's really lucky because to this day, I'm still with Rest for that exact reason. But my understanding is most people don't do this yet. So yeah. Which I will probably touch on, but we'll touch on that next. Alex. But can you tell listeners what is it that they need to know about super when they do start their first job and then when they start moving from job to job?

Matt

So you're definitely a freak of nature, keeping that admin in file.  That's unbelievable. Yeah, for me, I think back to my first job was working at Hungry Jacks, and I would have been probably around sort of 16, maybe a bit older, I think, as well. And yes, same thing I  on-boarded with them and got a piece of paper that said super. And, you know, I had no idea what that meant, and I certainly didn't keep that in my admin folder. That's, that's for sure. But what that bit of paper was, was something that's referred to the Standard Choice Form. So when you start with, with any workplace, you have the option of say it is your first job, you have the option of, of either joining the employer's default fund to default funds is the fund that they've selected to give to new employees.

Ange

So that's how I ended up in Rest.

Matt

Totally. So that's how you would have come to Rest initially. But, you know, in this day and age, employees have choice. So if you, you know, if you're somebody that you know, has done your research and you wanted to come to this workplace, with your own super fund, you know, there's a lot of comparison tools out there available these  days.

Some via the ATO. In fact, you can actually bring your own fund to, to that workplace and say, hey, I want you to pay contributions to this. But if you don't, a lot of people don't. A lot of people would just go, yep I'm just going to tick this box because it's easy. I don't want to, upset my employer, which is weird.  You know, you won't be upsetting your employer by, you know, selecting your own super fund. You know, you can. It's your choice.

Ange

Do you reckon it’s because they think that they're going to be like the odd one out, like everyone's default fund, and so I'm going to be the weird one out.

Matt

100% Think about any job that you've ever started your first day. You know, it's chaotic. It's mayhem in terms of your mind just rattling around and all these, you know, forms. You got to fill out a thousand OH&S forms that you've got to fill out in this day and age as well, I think you got some of this is super as well. So yeah, I think mostly people would probably just tick that, that default box, which is fine.

So yeah, they, you sort of you sort of options in terms of when you, when you start and the form.

But I think it is really, really important when you do move, from job to job to, to keep track of all of your super details. Technology is our best friend now, you know, it's so much easier now to keep track of your super funds. I mentioned before about apps probably the easiest way.

Ange

So you don't need a life admin folder, where you carry a piece of paper for 20 years because I only threw it out like a few weeks ago.

Matt

Yes, I know we've printed off a few bits and pieces here today, but realistically, I can't remember the last time I've used a printer myself, you know, so everything's online these days. If your fund doesn't have an app, I'm sure that will have an online portal. You know, like your online banking type thing so you can keep track of it. There. And it's just a matter of when you move from one employer to another. Keep a lot of those details and certain details you'll need to share with them and including the form. In saying that if you don't actually know what super fund you were with before by some chance, maybe you, when you're onboarded with them, you use an email address, you don't have access to. And if also any statements or any, you know, information that's, that's gone to an inbox you have no access to.

In this day and age, employers actually have to do what's called a stapled search. They actually have to go out and try and find any existing super funds that you already have out in the super multiverse. I mean, using the multiverse language at the moment, because I'm a bit of a Marvel nerd. But, you know, there's tools that the employer can use to locate any existing super funds that you have out there as well.

Ange

I just have this image of like someone stapling your super fund to your shirt. You're just like taking it around with you.

Matt

Yeah, well that’s it. These were, these were only introduced these laws in in 2020.

So I think 2020.. I'm pretty sure it is.

Ange

Someone fact check the man.

Alex

Like put the right stat here (motions to a space beside her).

Alex

It was actually 2021.

Matt

It was a good change because you know working in super for yeah I think 12 or 13 years now I have seen so many people accumulate so many different super funds because of that. I think just that mindset of you join an employer, you just sign up to their default fund and then before you know it, you got 4 or 5 …

Alex

Guilty.

Matt

Is that you? But you know, look, and we can talk about this in a bit more detail later, but so easy to consolidate them these days. There's so many digital tools available to you as well to be able to sort of help you through that process. Yeah.

Ange

I want to know why Alex is guilty.

Alex

Just for this or for all the crimes? Just for super today? It's just so, like, my first job was a waitress. I was maybe about 16 or 17. I wasn't very good, but I gave it a crack. And one of the first things they did was that same process of nominating a super fund and being 16 and not really caring. I just went with the default fund and then completely forgot about it. Few years pass, I eventually get, you know, a big girl job and then I go, okay, super that thing, default fund. And then carried on and it wasn't until, yeah, I was a lot older that I realised that I had multiple funds open. So Matt, if you are like me and you find out that you have multiple super funds, how can you find your lost super?

Matt

Yeah. This day and age it's, it's easier than ever in a sense that you can actually just do this via your MyGov. So where you log in and do your tax every year or if you've got, you know, somebody that helps you do that every year. There's actually a little superannuation portal in there which you can actually locate any lost or other super funds out in that, that super multiverse that we're talking about. So, yeah, really easy to locate them. And you can consolidate them within there if you want to.

The other way you can do it as well is actually just engaging with your, your own super fund. So most super funds will have some sort of online portal or even via an app you might be able to consolidate via there as well. So it's yeah, it's technology's your best friend when it comes to consolidation. You know, all the tools are available at your disposal and yeah, no paper based stuff is required these days, which is even better.

Alex

If it was your own fund and you like, fund A and you want to stay with fund A and you have B and C over, you would go to fund A's website and have them do the hard work of consolidating for you.

Matt

So you if you've got your sort of I suppose your core fund, you'd probably go with that fund and then get them to bring over the other to type thing. So

Alex

Easy peasy.

Matt

It's super, super easy, right.

Ange

But consolidating isn’t right for everyone, so it’s best to seek financial advice, right?

Matt

Yes that's right

Ange

Oh, this is really great to know. Honestly, I wish younger Ange knew a whole lot more about this. So thank you so much for joining us today, Matt. It was really great to have you on our first episode.

Matt

Oh, you're very welcome.

Alex

Yes. Thanks for being our very first guest.

Ange

And I'm sure we'll bring you back in for a few more episodes if you're open to it.

Matt

Sounds good. Any time.

Ange

Fantastic.

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Ange

So please make sure to like, follow and subscribe

Alex

For any more information on the things we spoke about today there’ll be some links in the description below.

Ange

And that is..

Ange&Alex

Super Simple!

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Ange (VO)

Before combining your super, consider which fund is right for you. Check out the fees and costs of your funds plus any benefits that would be lost, such as insurance cover. Make sure your other fund(s) knows about any contributions you intend to claim a tax deduction for, before combining your super. If you have any questions, speak to a licensed financial adviser or visit the ASIC MoneySmart website for more information.

Alex

We acknowledge that we are recording this podcast from the lands of the Gadigal people of the Eora nation. We pay our respects to Elders past, present and emerging and celebrate the diversity of Aboriginal and Torres Strait Islander peoples and their ongoing connection to land and waters throughout Australia

Ange

Welcome to super simple chats, Rest’s very first podcast. I’m Ange..

Alex

And I’m Alex

Ange

And we will be speaking to industry experts about all things super.

Matt

Wait, what the hell is contributions as well?

Ange

I didn’t realise until recently, that super is invested, I thought it was like a savings account

Sarah

I’m not sure it’s helpful to talk about specific numbers, but it’s a lot less than a million dollars.

Person

This is actually really important to talk about, because I don’t want to miss out on those things

Ange

Trying to make it understandable and relatable for every day Aussies.

Alex

After all, it’s one of the biggest assets you’ll ever have.

Ange

Now this wouldn’t be a financial podcast, if we didn’t start by mentioning that the information discussed is general only and doesn't take into account your own financial situation, needs or objectives. This information and the relevant products are issued by Retail Employees Superannuation Pty Ltd. Before deciding to join or stay, consider the relevant Product Disclosure Statement and Target Market Determination at rest.com.au/pds and whether it is appropriate for you. While we have endeavoured to ensure the accuracy and reliability of the information provided, there may be inadvertent errors or omissions. Before acting on any advice, we recommend you speak with a financial adviser.

Ange

It can be really challenging to know just how much super you need to retire. So joining us today are Matt and Sarah from Rest who are going to be talking to us about planning for retirement and whether it really is true that you need $1 million to retire. So, Matt, Sarah, thank you for joining us.

Matt+Sarah

Thanks for having us

Ange

We're really excited to get knee deep in that figure and whether it actually is $1 million.

Alex

Yeah. So $1 million. That is quite an intimidating figure if we're, you know, living a bit more in reality maybe. What is an actual number that people should think about saving?

Matt

Yeah, I think yeah, I think that million dollars is, is something people like to talk about because it's a nice sort of claim number, a big number. But, realistically, it, it probably won't be that amount. It probably won't be $1 million. So, for me, when I was, you know, had this conversation with people, it, it really comes down to I suppose individual needs and wants in retirement. So, I think for me is sort of have a think about what you would like to do in retirement and how you're going to help yourself achieve this.

So, there's some, some friendly calculators available online that you know, with, with most super funds that you can access, and they'll probably give you a good guidance. And, look, if you're if you're not getting the answer out of those retirement calculators that you want, and it's not going to get you to Greece on that holiday that you want to do every year, then maybe have a chat with a financial advisor there to say it's, you know, to help you get along to that, to that retirement balance.

Ange

And I guess to Alex's point, if it's not $1 million, then is there something is there a ballpark figure that we should sort of be aiming for or recommended number.

Sarah

Yeah. So there's a, there's an association ASFA is the Association of Superannuation Funds of Australia. And every year since 2004, they've actually put together an estimate of what they call a retirement standard. And the way that they do that is they look at what's your expected spending or what's your anticipated spending work out therefore what your annual income is kind of likely to need to be.

Ange

So is that like considering cost of living in that period of time.

Sarah

So it looks at increase costs over time. It looks at what's the what's the most common expenses of people in in retirement because there are some that go away when you stop working. And so it looks at that and it sort of then extrapolates out to, well, about what's the income you need and therefore about how much super do you need to cover that.

And I'm not sure it's helpful to talk about specific numbers, but it's a lot less than $1 million. It does make some assumptions around that. You'll also probably get at least a part pension, in retirement as well, depending on your circumstances. And it does make an assumption about house ownership, but I think we might chat about that a bit later.

Ange

And I mean, look, I would love to retire with $1 million so that I can go and retire on the Greek islands. I just stole your retirement plan Matt, I know you want to retire in the Greek islands too. But how realistic is it that Aussies do retire with $1 million? And where does that number come from?

Matt

Yeah, this is a funny one. And I've had this conversation with so many people, out in the workplace. And I think the million dollar myth probably just comes around because it's a nice round, juicy number. I think $1 million is something that, for a number of years, financial advisors have suggested is that that goal, it's a nice goal to work towards.

But as Sarah just mentioned. Realistically, it's actually not that big of a number that you would need to retire with. But at the same time, there are other assumptions around, you know, you know, owning a house outright and not having mortgage repayments. And, you know, if you are a renter as well, obviously it makes it difficult as well.

So I think for, for me, I can't reiterate enough. It really will come down to your individual circumstances. And you know, what you want to do is if you want to go overseas a lot, you know, make those, those international trips, you probably need a little bit more money. You know, the conversion rate for, for most Aussies is not great right now.

Ange

It’s not great right now is it

Matt

Going to Europe or America or any place like that. Right. So yeah probably have a have a bit of a think earlier is probably best. I mean look if you, if you're looking at it closer to retirement that that's fine as well. But with anything to do with super, the earlier you can look at you know, your balance, some things that may, you know, incline that to a nice juicy balance come retirement, you know, it's going to be beneficial for you.

Sarah

And I think it's important to remember that… the value of superannuation is actually really high, even at those lower amounts, you know, the ability to hit retirement and actually do things like potentially pay off all you debt is, is a real win, even if it doesn't set you up to be able to go to Greece every year.

Alex

Sarah, you touched on this briefly before, and I'd love to deep dive a little more into this idea that a lot of superannuation models are based on owning property, but if we're being realistic, the dream of owning property does feel more and more out of reach for a lot of young Aussies like myself. And personally, my parents didn't actually buy their first properties until they were, my dad was retired for the first part and my mum was 60 something (age redacted, Sorry mum), but of older than that median age and not the typical situation. So I guess my question would be what does this mean for people who don't own property? Do they need a bigger balance to compensate for not paying a mortgage in that, you know, retirement income?

Matt

Yeah, I think it's it is really it's a really tricky, subject to tackle. To be honest, I don't think there's, a silver bullet answer to this either, if I've got to be honest. You know, I reflect on my own personal circumstances. I only bought my first ever property, a couple of years ago, and I've been working full time for a long time. Same with my wife. So, and, you know, living in Sydney, it's pretty tricky as well. So we were able to get an entry level property, but even still, then I've, you know, I've got another 30 odd years of potentially paying down that mortgage and all the rest of it. So I consider myself fortunate to be even getting into the market.

So for people that that are renting, you know, when it gets to retirement age, you may have to be, to be honest, more reliant on the government age pension along with your super balance as well. So there's a combination there… more super in there obviously, it's going to be beneficial for you to be able to do the fun things that you'd like to, but there is a bit of a fall back in the government age pension as well.

So, I don't think it is all doom and gloom, you know, type of thing. If you are, you know, retiring without, you know, a paid off house and you know, a small mortgage and things like that. There are other options. But, at the same time, as I said, if you are concerned about that, that you will be renting come retirement time, as I said, have a look at your super as early as possible. Seek financial advice… having a chat with them would probably one of the best things you can do to give you a little bit more peace of mind, sort of, as you get a bit older.

Ange

I just want to take us one step back. So, Sarah, you did mention that the ASFA models do have some considerations built into them. And that to Alex's point, one of them is property. Can you build on that a little bit.

Sarah

Yeah. So the retirement standard that ASFA put together do does assume that you own your own house and if and outright so you don't have mortgage payments.

Ange

Do you think that's going to change given the current climate that we're in with housing.

Sarah

Yes and no. It's definitely the case that fewer people hitting retirement own their home outright. It's that it's that's the trend. But it's off a pretty high level, over time, you know, even if people don't feel that they can access the property market as early as we used to be able to. There are still people buying their first homes over the course of their life.

Ange

Alex’s parents

Sarah

Yeah. That's right. So, so it's not it's not like homeownership has fallen off a cliff. But the demographics are changing around with, when people reach retirement, some don't own their own home, some still have a mortgage. And, and I think that actually talks to the value of superannuation to be able to actually contribute to that period of your life as well.

Ange

I might get cancelled for saying this, but at least millennials can breathe easy at night now, knowing that they don't have to own their home. They can have all the avocado.

Matt

It's always so much pressure. Millennials.

Ange

Yeah, just okay. So I'm going to speak to a similar point. And Sarah, this is more for you I guess. And this is probably going to get covered in another episode as well around women and super. But we're talking about people owning their own homes. And typically we're finding that, you know, older women are the ones that are either more homeless or they don't have their own homes. How is this impacting that particular cohort of individuals?

Sarah

Yeah, yeah. I mean, you’re right about those statistics in terms of, single women over 55 of the largest, are the fastest growing number of homeless people in Australia, which is devastating. But, I think there are there are ways in which to sort of produces manage, you know, this over time. So that risk is lower. And that's not to say that, you know, it's anybody's fault that they end up in those, those circumstances… and so consideration of a woman's superannuation balance is just as important as her spouse's, and, and so, there are options around to actually look at what you can do to, to even up the superannuation balance over your working life as well.

Ange

Personal anecdote is I was looking at my parents situation and mum took out quite a bit of time to look after us kids, when we were growing up. And now I look at the balance between mum and dad, and it's like the disparity is huge. And their wages weren't that different, both working class. But you kind of do the comparison of, what, 6 or 7 years out of the workforce can do to that final amount… And I guess lucky for mum, they did sell the house so they were able like, you know, a mum put herself in a good financial situation, but that's not the case I don't think, for every Australian.

So if you don't own your own home and you are in this situation, what are some of the things that you might be able to do?

Sarah

Yeah, look, leaning on your super to actually do some of this does actually help, because if you haven't got access to that, at least superannuation gives you an asset. So the, you know, you've got circumstances around things like co contributions or splitting contributions where you can build up that, that balance.

And also looking at, you know, where you've got broken work patterns during your working life. What can you be looking at to top up your super during those times as well?

Alex

Yeah, I mean, on the flip side of that, my mum was very much a corporate power woman of the 90s and took the least amount of time off, which I love and respect her for.

It was a great model for me, but her super balance, she will say, is a lot higher than those of like any friend that she has. And it just goes to show, like the situation's out of your control, that you can't really help you take time off before supers even compulsory, maybe two. Yeah, it can be a bit challenging for every different Australian. Everyone has a different story,

Ange

We actually took it out and spoke to everyday Aussies about this topic to see what they thought about it.

Sinem

Have you thought about your retirement and what that might look like?

Person 4

No.

Person 5

Think I'm just not worried about it yet.

Person 3

Not too young for that.

Person 4

No. Not really.

Person 5

Yes

Person 6

If I'm working in a job that I really love, then I wouldn't want to retire.

Sinem

How much do you think you need to retire?

Person 4

I have no idea.

Person 6

I do have a number that I'd be comfortable with.

Person 2

I never plan, like, you know how much I need by the time I retire.

Person 1

Probably like a $1 million.

Person 9

Realistically, I don't think that it will be millions. I think it will probably be a lot less,

Sinem

Are you at all worried about what your retirement might look like and whether you might run out?

Person 6

I'm not really worried about that now.

Person 7

Yes. This is exactly what I'm worried about.

Person 8

At this point, I try not to think about it.

Person 9

I am worried. So yeah a plan would be good.

Sinem

Back to you Ange.

Ange

So Sarah, this next one's for you. I want to ask what is driving the disparity between men and women in retirement at the moment?

Sarah

Yeah. It's an interesting problem, isn't it? And there's a whole range of causes around, you know, what we call the gender super gap and the causes that lead to that. Definitely. Career gaps is a big one where you've got rights to, to work. And, and the higher part time and casual work usually following, having a baby.

You also got women take on a higher proportion of generally unpaid work and caring responsibilities. And you've got on top of all of that, you've got a generalised pay gap across, the whole economy. And all of that leads to what's currently about a 28% difference in men's retirement balances compared to women's. So there are changes that are happening around this.

We've seen recently the removal of the threshold at which you get paid super by an employer. So it used to be that you didn't have to get super on your, on your salary until you hit a $450 threshold a month. That's gone. Awesome news

Ange

Is that $450 combined or from one employer?

Sarah

That was from one employer. So if you were earning a lot more across a number of employers, you weren't getting super.

Ange

Okay. So if you had like 3 or 4 casual jobs and you were working them all and none of them were quite hitting that threshold, then you might not be getting super on any of those.

Sarah

Absolutely. So that that's being fixed, which is fabulous… So, I think we'll start seeing some real differences to women's super balances as a result of that.

Ange

What else could women do?

Sarah

Well, the other thing is, from a government perspective is would we've also in Parliament now, is superannuation going to be paid on the Commonwealth scheme paid Parental Leave Which is awesome as well. But there are other options that you can do yourself in terms of just thinking about your super before you have those breaks and what you know, what can you do to top it up.

There are also options around, contribution splitting where you can actually as a couple, you can divide your superannuation contributions between both of you, and, and possibly get access to the government co-contribution scheme where you actually get government contributions for, the go on top of, of your, your personal ones. So that sort of range of things and I think a lot of it is actually just keeping it in mind.

Ange

Yeah. Great.

Alex

So we've established that that $1 million figure is a bit of a myth, and it's probably more about what you want your retirement to look like with a little a sprinkle of a caveat of it could be, you know, you might have a lower balance if you are a woman on average. So that being said, what are some practical steps you could actually take today? So you're in your 20s to potentially boost your balance if it's not where you think it could be?

Matt

Yeah, I mean, there's quite a few things, but I think what I would suggest to anybody when I, you know, speak to them about super for the first time is, engage with your super fund. And what do I mean by that? It's super easy in this day and age to engage with the super, in a sense that most… funds will have an app. So that is the first thing I've always said. Everybody download the app of your respective super fund. I know most people have a smartphone. So, you know, most people are familiar with apps as well.

So if you download the app of your respective super fund, you know, you can see your balance, you can see your contributions from your employer. Make sure that they're paying the super, which is obviously important to, and then you can see your balance grow as well. So I think when you do that, it makes it a little bit more real, a little bit more tangible.

When I first started working in super, I used to work in a call center, and people used to have to call through to the call center to say, hey, Matt, can you give me my balance as of today? And I would write out a script, and I would read out their balance, and I would write it down, and then they'd read it back to me and I said, no, no, no, that's wrong.

And then we read it out again. And then they would go off on, on, on their day and I would have probably five, six, seven, eight, nine, ten of those calls a day. So, you know, engaging with these super is probably the best thing you can do. And as I said, downloading the app of a respected fund is the probably the first point of call.

The other thing to consider, and I think for me, it's certainly it's a, it's a tricky topic in the current climate because cost of living, is not going anywhere in Australia. It's a global issue at the moment. But one thing we generally like to say from, from people, if they can afford it, is contributing extra to their super, and you can do that through various means, one called salary sacrifice. Where you can sort of, you can sit down with your employer and ask them to forgo some of your salary and put it into your super, either a percentage of your salary, or a figure amount. But once again, you know, this is only one thing to consider, if you can afford.

I'm very mindful of, how much two bags and shopping still costs. I think for me, I went to (won’t name the grocery store), but I went to one just last night and got two bags in shopping and it was $90.

Ange

We’re all feeling that pain Matt, don’t worry.

Matt

That that that pain is real at the moment. So very conscious of that. But, you know, figures will show and the calculators will show that such a small difference now will make such a big difference over time. And you'll have this friend of ours called Compound interest working away in the background.

Ange

That sounds like a friend, I'd like to have.

Matt

Oh, yeah. It's a great friend. And, you know, five, $10 a week, over 30, 40 years. You know, can make such a big difference in your retirement. And, you know, if you, if you're going to start to look to contribute more, you super once again, take advantage of the advice that's available to you via your super fund advisors are more than happy to run through what an extra 5 or $10 a week will make in retirement. Because I know at the end, based off their calculations, it'll be a lot more than if you didn't. So I think for me, they're probably the two key things. You know, really basic fundamental things engage with the super via ideally their app. If they don't have an app, have a look online. Most super funds have an online portal where you can check it just like your bank account. And then the second thing would be, if you can afford it, additional contributions and then the benefits of that too.

Ange

One thing I'd like to speak to, I guess ask the question around, is, I guess, the differences in what retirement looks like for everybody. So my understanding is that there is an age at which you can retire, but there are different ways with how you can retire. Can you explain this to me a little bit more detail?

Sarah

Yeah. So the official what we call the preservation age for super… that’s a government mandated age looking at, when you can access your superannuation… but what we're seeing now is that people's retirement all looks incredibly different. So the old, the old idea of retiring at 60 or 65 and working full time until you stop is actually really going out the window, is a is a general trend. So you people drop down to part time. They look at, they look at different jobs. One of the biggest, employers of old people in Australia is Bunnings. And these are frequently professionals who retire from their corporate life and go and work at Bunning two days, Bunnings two days a week. It's an incredible trend.

Alex

I love it. I think my Dad would like to do that as well.

Sarah

So yeah. So it all looks different

Matt

I think as well. It's a good point as well. You know come retirement you know often unfortunately you don't retire with the amount that you, that you'd like to and you do have to work. But I think, in retirement I've got some ex-colleagues that have now retired. And I think for me, they've always said to me, they've got to find that sense of community in retirement, which is, which is really important as well, because I think if you're just doing, what's referred to as a three G’s, which is gardening, grandkids and golf, which sounds amazing.

Ange

I mean, that sounds amazing, right? Where do I sign up?

Matt

That sounds amazing, but I think for me, you know, it's often finding, you know, what else? What else can I do? So if you do have to go back into the workforce and get a two day job, you know, a week at Bunnings, I think a lot of people enjoy it. You know, it's not like, you know that you have to be in the office five days a week or, you know, digging holes five days a week type thing. You're able to work in a workplace which is fun, vibrant. You've got, you know, some new colleagues and, you know, with that becomes more of a social network too.

So there are obviously some, some, some upsides to, you know, going back, it's I wouldn't say it's the worst thing having to go back and work a couple of days a week.

Ange

So actually just before this episode, Sarah, we were talking about your mum and how retirement looks a little bit different for her as well. Can you tell us a bit more about mum's story?

Sarah

Yeah, absolutely. My mum was an academic, and a nurse before that and then an academic in, in nursing. And, and she continued working well after 70, but it, it staged down. So she went from teaching a lot of a lot of classes, to, you know, working with the university on research to and then dropping, down again to just supervising a couple of students. And really, she only fully retired, I think, when she was 72.

So it's, it's absolutely, available in lots of different workplaces that there is this pattern of not fully letting go over the course of, of the end of your career.

Alex

I feel like we've established then not only have we busted the myth of a perfect round figure, but the idea of a perfect retirement plan that everyone's looks different.

Matt

Yeah, everyone certainly is different. So I think, hopefully that gives people listening to this some somewhat peace of mind in terms of, you know, not having to reach that big, juicy million dollars or even more. I think a lot of people might think you might need a more than $1 million, but it's, you know, certainly not the case. And it'll come down to the individual. Right.

Alex

And also the idea that if you can't afford right now to contribute to your super, because that tends to be the one silver bullet answer that it's okay that we're all feeling a bit of the crunch at the moment, and maybe instead just start from step one, which is engaging with your super.

Matt

Yeah, correct. There's plenty of things you can look at with your super and most super funds will have. So, you know, so many tools and calculators and things available for you at your disposal. So, look, I know it's probably not the first thing people think of when they get home from work is to jump online and have a look.

Ange

No, really?

Matt

I mean, that's what I do, right? Okay. But look at, as I said, if you want to help yourself, you know, I'd certainly have a play around with it and speak with your super fund. If you don't want to speak to somebody on the phone, you don't have to do this so many ways. You can do it digitally now as well. There's even things like digital advice services available these days. So, you know, please take advantage of it.

Ange

Thank you again to both of you for coming and joining today's episode.

Matt

You're welcome. It's been awesome.

Ange

Thank you. And, Sarah, I'd love to dive in a little bit deeper into that. Women and super topics. That'd be great to have your back. Oh, yeah. For another episode.

Sarah

Okay, let's do it.

Ange

Amazing. Lock that in, guys. You heard it here first.

Ange

So please make sure to like, follow and subscribe

Alex

For any more information on the things we spoke about today there’ll be some links in the description below.

Ange

And that is..

Ange&Alex

Super Simple!

Alex

We acknowledge that we are recording this podcast from the lands of the Gadigal people of the Eora nation. We pay our respects to Elders past, present and emerging and celebrate the diversity of Aboriginal and Torres Strait Islander peoples and their ongoing connection to land and waters throughout Australia

Ange

Welcome to super simple chats, Rest’s very first podcast. I’m Ange..

Alex

And I’m Alex

Ange

And we will be speaking to industry experts about all things super.

Matt

Wait, what the hell is contributions as well?

Ange

I didn’t realise until recently, that super is invested, I thought it was like a savings account

Sarah

I’m not sure it’s helpful to talk about specific numbers, but it’s a lot less than a million dollars.

Person

This is actually really important to talk about, because I don’t want to miss out on those things

Ange

Trying to make it understandable and relatable for every day Aussies.

Alex

After all, it’s one of the biggest assets you’ll ever have.

Ange

Now this wouldn’t be a financial podcast, if we didn’t start by mentioning that the information discussed is general only and doesn't take into account your own financial situation, needs or objectives. This information and the relevant products are issued by Retail Employees Superannuation Pty Ltd. Before deciding to join or stay, consider the relevant Product Disclosure Statement and Target Market Determination at rest.com.au/pds and whether it is appropriate for you. While we have endeavoured to ensure the accuracy and reliability of the information provided, there may be inadvertent errors or omissions. Before acting on any advice, we recommend you speak with a financial adviser.

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Ange

Most people associate the five love languages with their relationships. But who says that you can't actually give your super a little bit of love. So joining us today is Matt from Rest, and he's going to be talking to us about how you can give you super love and how that might help you grow your support for later. So thank you for joining us today

Matt

G’day and thanks for having me. I didn't realise I was a love expert.

Ange

Today it’s love and super.

Alex

They go hand in hand. Everyone knows this.

Ange

We are going to be throwing this at you. So firstly, do you know what the five love languages are? And if you don't, that's okay because we're going to be rapid fire questioning you.

Matt

Semi, semi familiar. But if you want to fire them at me and I'll see how they relate to super, I'll, I'll give it a crack.

Ange

Amazing. Let's give it a crack Alex okay?

So if your love language is quality time, how could you show that by loving your super.

Matt

Quality time, okay. I think for me, you know, super’s a long term investment is something you're going to have for 30 to 40 years in some cases. So just get to know it a little bit more. So engage with you super as much as you can over that time. And it's probably going to make a big difference come retirement.

Alex

Okay. What about acts of service?

Matt

Yeah. I think simply just probably just keeping on top of your super. Maybe just checking that your employer is paying, that their contributions might be something that relates there.

Ange

Amazing. What about for those who it's physical touch?

Matt

Physical touch. Oh, this is probably one that's close to me and close to my heart. And I think it would be, potentially downloading the app of your respective fund. Most super funds have an app. I’m a little biased working at Rest. We have a great app.

On the whole, most funds do have an app, and it's the easiest way that you can stay on top of your super, check all your balances, contributions, everything. So that would be probably that physical touch. I know it's more the eye-thing scanner these days, but some have still got the touch button to open up the phone

Ange

Well it is super at your fingertips, right?

Matt

That's it. That's what they say. So yeah I think downloading the app of your respective fund that would be the best thing there.

Ange

Amazing.

Alex

Okay, from now for my love language: words of affirmation.

Matt

Words of affirmation okay, so we're getting into detail now. I think, what I would think of here is probably around opening any comms you get from your super fund. So I'm sure there's, there's emails that people receive from their super fund and they may go to spam, they may not get opened. But there's one really important comm that comes once a year, and that's your annual statement. So I think probably just opening that statement, having a look at it, seeing what's going on with your account and your respective fund, probably that would be the best thing to do there.

Ange

Amazing. And one of my favourites, don't tell my husband, gifts!

Matt

Yeah, geez, who doesn't like gifts. And I think for me, gifts probably just relate to.. probably the biggest thing to do with super, and that's contributions going into your account. Whether that's, your employer contributions or contributions that you're putting in yourself. So, they're the greatest gift of all going into your super. So certainly something I can relate there with the love languages is, you know, gifts and contributions for sure.

Ange

Who said you can't love your super? There are five ways you can love your super.

I guess super is one of the biggest assets that most people have in their life lifetime. And it's one that actually, to your point for quality time, grows over your working life.

And I guess going back to the gifts question, what are some ways that people could contribute to that superannuation?

Matt

Yeah you’re so right about being one of the biggest assets. I think most people, super will be their biggest asset outside of the family home when they come retirement. So yeah, the contributions going in are very important and there's probably to two core ways. There are a few other ways, but there's two core ways that you can receive contributions. The first one being what's referred to as SG or super guarantee. Now these are the contributions that, your employer pays into your account. So, your employers, you know, mandated to, to by law to pay these contributions. And at the moment it's a rate of 11.5%.

And when I first started working in super was 9%, and before that it was even smaller. But it's come a long way. So much so it's actually going to 12%, next financial year as well. So, you know, all these additional amounts going into your super compounding of the lifetime of you working will make a big impact on your account.

The other way would be, you know, what's referred to as salary sacrifice. Now, these are additional contributions that you're basically asking your employer to redirect from your salary or your pay into your super.

Now, there's a few ways you can do this. You can say to your employer, hey, instead of, you know, putting, this extra $100 a fortnight into my bank account, can you redirect it into my super or you can say, hey, look, can you redirect 5% or 2% of 1% of my salary every week, fortnight, month into my super, and obviously for me, you know, this is a great way to, to build your balance.

But at the same time, I'm very mindful of salary sacrificing in the current climate that we're living in. I mean, I'm sure you guys would be fully across the cost of living crisis that we're in at the moment. I'm sure when you go shopping, you notice those, the shopping bags don't fill up as much as they used to as well.

Ange

That’s the truth.

Matt

So yeah, look, I'm certainly mindful of, you know, you know, encouraging, you know, completely encouraging people to, to go ahead and, you know, put as much money as I can into super because, I know every, every cent counts at the moment, but at the same time, you know, it is a great way, if you can afford it, to obviously build up that, that nest egg come retirement.

Alex

Now, Matt, can you myth bust a belief I know that a lot of people have, have. And I've heard this a few times, and that's the idea that if super comes out before you get paid, does that mean you're actually missing out on more pay?

Matt

Yeah. Look, I understand why people would potentially think that. And I think it probably comes back to, you know, if you start in a workplace and you saw a job, add on like Seek and you know, that said that job ad said a $100,000 package. You know, for me, I would probably assume that that meant, package inclusive of super, not 100 grand plus super, but some, some people might think, well, it's 100 grand plus my super, which is 11.5% at the moment.

So I think I think that's where people potentially think, oh, my employee is taking money.

Ange

They trip over the term ‘package’

Matt

Yeah, people are thinking, oh jeez my employers, you know, they've said this, they’re only paying this. And then, you know, this super’s just been taken out of my, you know, my bank account. And it's certainly not the case.

I think for me, it's, you know, obviously it's easier said than done. But when you do start with, with an employer, or even ideally before you start with an employer, is just clarify your, your salary package and just understand what it means to be inclusive of super or not inclusive of super. They do have to pay super, but it's just whether the package specifies it. So certainly something to be mindful of. And then obviously when you do start, have a quick read through that contract, which I'm sure you all do.

Ange

Yes, yes we all do that very much, end to end.

Matt

At the end of the day, it's, you know, it's like it's your money, you know, the money that's going in your bank account is your money, obviously. And the money going into your super account is your money as well. It may not seem real now, but it certainly is real. And you'll be able to access it later down the line.

Ange

we've actually gone out and spoken to everyday Aussies about this exact topic.

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Sinem

Have you ever thought about whether making any additional contributions is the right fit for you?

Man 1

No. Not really.

Woman 1

I have at the moment making additional contributions isn't feasible for me,

Woman 2

I was thinking, but I haven't done anything about it.

Man 2

I did make extra contributions when I was younger. I don't feel I need to do that now.

Woman 3

I did do it like a little calculator thing once, and I was like, oh, I probably need to start adding.

-------

Ange

So I'm a comms person, so maths is not my strong suit, and I don't like numbers as much as I like words. But for those of us who really want to understand how much super they should be getting paid, how do you figure that out?

Matt

Yeah, I mean, there's some there's some old school ways you can just add 11.5% on top of your how much you're earning. But if you want to do it the easy way, there's so many calculators online. So if you have a look on, the ATO has an Estimate MySuper tool, that you can access, I'm sure if you just jump in to Google and type in super calculators, they'll pop up quite a few as well, so you don't have to do it the old school way. You don't have to get out of pen and paper or even your phone, and put in the calculations.

Ange

That’s music to my ears

Matt

Yeah, I mean, I'd use, you know, the technology these days, you know, within super financial services is amazing. So much better than when I first started working in super and, you know, use it as your friend, it's your helper. And if you're, I'm sure there's some sort of AI out there as well, these days that could help.

Ange

Let's test it right after this episode.

Alex

Let's invent it and live off the money (laughing).

Okay, that's enough talk about calculators and maths for this podcast. You mentioned there were other ways to contribute to your super besides the super guarantee contributions. What are they?

Matt

Yeah so, this yeah, the traditional employer contributions that they have to pay into your account. The other two main ones would be yes, salary sacrificing and first one being salary sacrificing, sorry. And that one is there's basically an arrangement with your employer. You'd ask them to, you know, put in an additional amount into your super every, every pay run. And you can nominate the amount that that is whether it's $5 or $10 a week, which, you know, over the long, you know, over 30, 40 years will hopefully compound into something nice and juicy.

Or you can ask them to, to put a percentage of your salary into your super as well. So that's salary sacrifices, arrange it with your employer.

The other thing you can do as well is just add additional contributions, post-tax contributions. That is. I will actually, sorry, I will just clarify with the sal-sacrifice contribution, there are tax advantages to that in a sense that it's only taxed at 15% as opposed to your marginal tax rate.

Ange

Great, cos that was going to be my next question

Matt

So your marginal tax rate obviously it depends on how much you're earning. 15% tax compared to a lot of marginal tax rates is, is a lot less. So it can be tax advantageous, trying to get that word out. So certainly something to consider.

The other one is member contributions, or voluntary contributions. Now, these are post-tax contributions. This is money that's already in your bank account.

Alex

Okay.

Matt

And if you wanted to start making contributions to your super directly, there's a whole range of ways you can do this. Once again, I talked about an app, the apps before generally within apps, there's B-pay account details or various payment methods, you can pay directly into your super fund. Please note that there are caps on how much you can put into your super, as part of voluntary and sal-sac contributions. Those are available online as well. But, as much as I'd like to say put in as much as you want, there are there, are limits to how much you can put in.

But those are the two, there’s some various other ones. But I think, I think probably for the purpose of today just probably touch on those too, just to give you a bit of an intro into super, there.

Ange

What I'm getting from this is there, there's a before-tax way of doing it in an after-tax way of doing it. So before tax was salary sacrifice, after tax was voluntary contributions.

So if we were to weigh the two, what I guess the pros and cons for each one of those.

Matt

Yeah. There are pros and cons. And I think once again, it does come down to the individual, how much you're earning, you know, how much is going into your super at the moment as well. So I think if you are going to start to look to, to make additional contributions to your super, I would certainly take advantage of any financial advice services your fund offers, because they can run through, these, these sort of contribution calculators with you and talk to you about the pros and cons of each.

I think, I'm sort of mindful of, of sort of giving broader pros and cons because it will affect people in different ways. But there are some really great upsides. But obviously there's a few risks involved as well. And I think as well, you just you need to be mindful that super, once you put money in super, you can't take it out until you retire.

I mean there's obviously ways that that you have been able to, you know, access super early. We saw that during Covid. But they're very special circumstances. So you do need to be mindful that once you put it in there, it's tucked away for, for your retirement.

Ange

And just one thing. So you mentioned earlier that there are tax benefits to that before-tax, or the salary sacrifice, cos it’s 15%. If you were to put money in afterwards. Yeah. What's the tax situation, because you've already paid tax on that.

Matt

Yeah I mean in theory if you've if you've got money in your, in your bank account, you probably pay tax on it at some point. So the beauty about voluntary contributions is there is no tax on them. So when it goes into your account, zero tax, which is, which is fantastic. And obviously another incentive to put it in there. And look, if you're putting money into super like as I mentioned, it's a really good way to save, because you won't be able to take it out for some time as well, as opposed to putting it in a savings account and potentially dipping into it when you want to.

Ange

So I've heard through the grapevine that there are a few ways that the government tries to encourage us to engage with our super. Could you tell us a little bit about these?

Matt

Yeah. There's something, a great initiative called the Government Co Contribution Scheme, and it's aimed to, to help low to middle income earners. And the basically the way it works is, if you contribute a certain amount of money, of your post-tax money into your super, the government will actually add a certain amount as well, depending on how much money you earn as well.

Ange

Is this is free money?

Matt

Well, look, I wouldn't say free money. You have to contribute. You have to contribute some of your own money first. But the government will match it by up to half in some instances. So I think for me, the numbers can get a little bit complicated in terms of how much you need to put in, how much you can get back, but there certainly is an opportunity to get some money from the ATO. So what I would highly suggest is that, if you're listening to this, go check it out online. It's called the Government Co-contribution scheme. And you can have a look at, you know, your eligibility depending on your salary bracket and how much you could potentially get back from the ATO into your super. The best thing about this as well is you don't actually have to apply for it.

When you lodge your tax at the end of financial year, the government will match up any additional contributions you put in yourself and then your salary. And if you're eligible, they'll just make that additional contribution into your account. Assuming we have your tax file number or your tax file number is on the on file at your respective super fund.

Ange

So you don’t have to do anything, it just magically appears.

Alex

Easy peasy

Matt

It just magically appears.

Ange

So it's magic money, magic money. Maybe not guys, maybe not magic money. But that's really great.

Matt

I think for me, it's, you know, it's a really good way, you know, if you, if you're not earning, you know, a significant amount of money, then obviously there's not a huge amount of super going in every year.

So I think it's a really good way to encourage people to, to make additional contributions if you can afford it. And then, you know, getting a little something back from the ATO is always a big, big win, right?

Ange

You know what this reminds me of when I was a kid and like my mum would say, if you put a dollar in the savings jar, I'll match the dollar.

Alex

Such a nice mother.

Ange

Reminds me of that a little bit, but obviously not the same.

Matt

And look, there was, there was a time actually where the government would match it one for one as well. So now you put in a thousand, you potentially…

Ange

Bring it back! (laughing)

Matt

But yeah, but now that the most you can get from them is $500

Alex

That's still pretty good.

Matt

It’s $500, right, that’s something. And look, if you start doing this early, we talk about it a lot in the super podcast. The power of compound interest. Start doing this year on year. It's going to compound into hopefully a nice juicy balance come retirement.

Alex

Okay Matt, well that sounds pretty good. But are there any other ways the government might try and get us to love our super?

Matt

Totally. There's another way, that can assist low-income to middle-income earners as well is something called the LISTO, which is the low income super tax offset. And basically, what this initiative does, it allows you, depending on how much you earn, to potentially get a refund of some of the tax that you've paid on your super up to $500.

But be worthwhile once again jumping online to see if you eligible for this.

And you know, there's plenty of details available on, you know, via the ATO or your super fund as well as search LISTO. And you should be able to pull up some details on that as well.

Ange

And do you have to apply for this? Or is that like the other government contribution, it just appears.

Matt

Yeah. Once again. Similar. Similar to the government co-contribution scheme. As long as you've got your tax file number on file, with the super fund, when it comes to tax time lodging your tax return, the government will match up your, your salary. And then if you're eligible for that, that offset at the end financially automatically like magic in your super fund again

Ange

So we've spoken a lot today about making contributions, but not everyone at the moment is in a position to make contributions to the super, as we kind of spoke about at the beginning with the cost of living crisis and stuff like that.

So if you can't make contributions, what are some of the ways you can show your super some love?

Matt

There's a really easy way you can show you super a lot of love. And that would be potentially downloading the app of your respective super fund. Think for me, I'm obviously slightly biased working at Rest, but we have a great app and I know a lot of other super funds have great apps too.

Within an app, you can check your balance, your contributions from your employer, any additional contributions that you've been putting in as well, insurances and you know, your investments too. So, you know, it's the easiest way to be engaged with your super, you don't need to call, a call center or wait for that annual statement. It's at your fingertips.

So the easiest way you can show your super bit of love is downloading the app of your respective fund and having a look at it every once in a while.

Ange

And just engaging with it?

Matt

Engage with it. That's it. And look, if you if you can afford to make a few changes, look, I would highly suggest speaking with an advisor before making any changes.

But, you know, super now is very much at your fingertips. And I know, you know, working in industry for some time, I'd love more and more Australians to be engaged with their super. It will make such a big impact come retirement.

Ange

Thank you so much for joining us today, Matt. I thought that was a really great episode.

Matt

You’re welcome. Thanks for having me.

Ange

You'll be thinking about love languages all the way home now.

Matt

Of course I will. Of course I will.

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Ange

So please make sure to like, follow and subscribe

Alex

For any more information on the things we spoke about today there’ll be some links in the description below.

Ange

And that is..

Ange&Alex

Super Simple!

Ange

Keep in mind that tax rules can be tricky and are always changing. The information provided here is for general informational purposes and should not be considered as tax advice. For advice that fits your own situation, it's best to chat with a licensed tax professional.

Alex

We acknowledge that we are recording this podcast from the lands of the Gadigal people of the Eora nation. We pay our respects to Elders past, present and emerging and celebrate the diversity of Aboriginal and Torres Strait Islander peoples and their ongoing connection to land and waters throughout Australia

Ange

Welcome to super simple chats, Rest’s very first podcast. I’m Ange..

Alex

And I’m Alex

Ange

And we will be speaking to industry experts about all things super.

Matt

Wait, what the hell is contributions as well?

Ange

I didn’t realise until recently, that super is invested, I thought it was like a savings account

Sarah

I’m not sure it’s helpful to talk about specific numbers, but it’s a lot less than a million dollars.

Person

This is actually really important to talk about, because I don’t want to miss out on those things

Ange

Trying to make it understandable and relatable for every day Aussies.

Alex

After all, it’s one of the biggest assets you’ll ever have.

Ange

Now this wouldn’t be a financial podcast, if we didn’t start by mentioning that the information discussed is general only and doesn't take into account your own financial situation, needs or objectives. This information and the relevant products are issued by Retail Employees Superannuation Pty Ltd. Before deciding to join or stay, consider the relevant Product Disclosure Statement and Target Market Determination at rest.com.au/pds and whether it is appropriate for you. While we have endeavoured to ensure the accuracy and reliability of the information provided, there may be inadvertent errors or omissions. Before acting on any advice, we recommend you speak with a financial adviser.

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Ange

So most people think of super as a savings account, and what they don't realise is that there's actually a lot more to it. So, for example, many Aussies don't realise that they can access insurance through super.

So, joining us today is Bart from Rest. He's going to be giving us a bit of a 101 on insurance through super. So thank you for joining us today.

Bart

No problem. Thanks for having me. Hello, Ange, hello, Alex.

Alex

Hey, how you going?

Now, when I think about insurance, I typically think of, you know, health insurance. Car insurance. Super doesn't really come to mind. So if we can start from the very beginning, what insurances are available through your super.

Bart

Yeah. Of course. So I think many people know different types of insurances and they have different types in their life. And a few that you just mentioned then: car insurance, home and contents insurance. So with that type of insurance what you're doing is you're insuring a thing.

Whereas the insurance inside superannuation, and there's a couple of types of will go through, is about ensuring a human being. So really important. So if you want to go through the three that you can get inside.

Alex

Oh yes please go.

Bart

So the first one's really easy and probably the most well known. That's life insurance. And in life where either alive or we're not.

And if you are not alive, the purpose of life insurance that is there to provide, a lump sum payment to people that you may be leaving behind. And the purpose of that is to cover things like debt that you may be leaving behind in your life. And then also looking to offset perhaps a loss of income that you would have had, had that circumstance not taken place at.

The second type of insurance is called TPD. So TPD stands for total and permanent disability. So this is worst case scenario. So this is when you are disabled to a point where you will no longer be part of the workforce. So really terrible situations. And again it's a lump sum payment designed to cover things like debt that you might have in your life, as well as if you think of someone being disabled to a point where they may need to make modifications around the home.

So be that having to be in a wheelchair or needing other assistance than that that capital that TPD insurance provides can help fund some of that. And then lastly, the third type is called income protection. Now sometimes it's referred to as salary continuance insurance. They're interchangeable that the exact same thing. And with income protection what you're doing is you're protecting your income.

So you are insuring yourself or your ability to be able to earn an income. Now, income protection will cover you for any injury or illness that stops you from working, and it's designed to replace that income while you're not working. And there's a few technical aspects to it, which I'm sure we’ll break down in this chat.

Ange

Just on that, because I've heard of people taking out workers comp, for example, if they can't go to work. What's the difference between something like IP or income protection versus worker's compensation? And is there like, can you use one and not the other, or can you claim both or what's the kind of go with that.

Bart

Yeah. So they can be some interplay between the two. So work cover is a type of cover that an employer would take out to cover their workforce while they're on site. So while they're in the workplace now, if an individual was to hurt themselves in the workplace, their work cover would typically cover that. And it'll look to provide a financial benefit to the individual to help out with costs and other things that might be associated with that injury.

Ange

Yeah. Got it.

Bart

Now, the difference between that and income protection is income protection is taken out by the individual. And income protection will cover you for not only while you're at work, but all other times in your life as well. With work cover, you're only covering for injuries. With income protection, you're covered for injury or illness. So it could be as simple as falling over and breaking your leg and not being able to work as a result of that.

Or it might be if you were to say, get cancer or have a heart attack and be unable to work because of that, that illness, then that's when income protection can, can cover the individual.

Ange

I was actually reading an interesting member story the other day about a nurse who was in a situation where she injured herself outside of work. She broke her leg, and she wasn't able to work, given the nature of having to be on her feet in her, in her type of work. And she didn't know she had income protection, and she was a little bit financially stressed at the time. And someone asked her there, like, oh, have you checked with your super fund to see if you've got income protection? And she's like, what's that? So, she called up Rest. And lucky for her, she did have income protection and she was covered and put in the claim, got the claim paid out. Essentially. And that let her essentially recover and have that financial stability. And I guess what we don't realise is, you know, a lot of Aussies don't know that they've got this cover.

So I want to I was hoping that maybe you could explain what the purpose of insurance is, and some of the practical reasons why someone might take out insurance through super.

Bart

Yeah. Of course. So the example that you just provided about the lady not knowing she had insurance and finding out after the fact, that's a story well told.

And the wonderful thing about superannuation is it does have the ability to provide insurance to the individuals. Now, anyone listening to this would want to double check with their super fund, whether they're with Rest or someone else, because it doesn't come automatically with your account from day one. Now we can sort of talk through this, but there has been a change in legislation called putting member's interest first, or PMIF as we call it, in the industry.

And one of the components was to look at, I guess the reason for having insurance inside superannuation and to try and set some boundaries around, naturally the insurance comes at a cost and that costs can erode someone's retirement savings, particularly for younger people, which is what the legislation was looking to address. So what the regulator didn't want happening and what was happening in some instances is that a young 18 year old was getting a superannuation account, all very exciting. They might get a contribution from their employer for $20, which is fantastic, but then they'd lose half of that to pay an insurance premium. And so it wasn't giving them the best start to their retirement journey. So the rules that are in place now is that insurance is not automatically included. You have to jump two hurdles before the super fund will provide it if they provide it.

The first is that you have to be over the age of 25 years old, and the second is that you have to have a balance larger than $6,000.

Ange

So quick, quick one on that. So you said that you have to be over 25. Can someone under 25 choose to take out insurance? But it just doesn't automatically kick in.

Bart

Absolutely. It just doesn't automatically kick in. And I don't know too many 20 year olds that walk around thinking about life insurance in super are desperate to line up and put it into…

Ange

Really? They don't really?

Bart

They should. And this is kind of the purpose of our chat because when you like, you asked me before the purpose of insurance, why would someone take out insurance with any type of insurance, whether it's car insurance, home contents insurance, or life insurance?

Really what you're doing is you adjust your hedging risk. So you're saying to the insurer, I have a risk with this thing or with myself, and I'm concerned about it. And rather than self insuring and having to absorb that risk, can I give you some money and you'll take on some of that risk for me. So the example of a young person now, someone might have recently bought a home or they might have taken out debt to buy another asset.

They may have recently, started a family, got married. So they're starting to think about a time in their life when it's not just about them. Because I could argue that insurance isn't really about you, it's about other people. So life insurance is not for the individual who has the life insurance. It's about and it's about providing financial support to those that you may be leaving behind.

Now, a young person, and we touched on before the legislation about a young person, perhaps 20 year olds that think about it. I mean, I could easily put forward that when you're 20 years old, you have more long term risk in your life than, say, a 50 year old. Because if you think of the timeline of your earning potential, it's all ahead of you.

If you think of maybe your debt might be at a level where you can't service it. So there's many factors why a young person would look at insurance, but I think what I've noticed is that it's not really an age when people look at insurance. It's more a moment in their life, and it's a moment in their life where they reflect and they think about others and they do. You know, life starts to get a little bit real. And so that's typically the moment they'll start thinking about, life insurance or TPD or income protection.

Ange

I think it's really interesting that you sort of mentioned that, like normally when we think about insurance and risk, particularly around health, we sort of instantly go to the older audience. The older you get, the more likely that you might have some health problems, etcetera. But actually, to your point, when you're younger and your mortgage might be bigger and you've got young children that you're supporting, that's actually the time in your life where you probably would need to be protected by the sounds of it.

Bart

Yeah, that's exactly right. And the way insurance works inside, well, all life insurance works, whether it's inside or outside of superannuation, is, as you mentioned, the older we get, we all get one step closer to the grave and the chance of things going wrong, becomes more likely.

So when you're young and healthy, statistically, the insurance is cheaper because you are less risk to the insurer because it is less likely, statistically, that you would claim.

Alex

Now, does the type of work you do or could do affect your insurance? So say, if I'm writing on a laptop all day and I suddenly can't use my wrists, would that play into it?

Or is it that you can't work any occupation at all.

Bart

For TPD insurance, you mean?

Alex

Yes, or income protection

Bart

Yes so both of those type of covers are disability covers. So they're looking at injuries or illnesses. Yes. You're right. So your occupation does play a part. Now inside of superannuation, it's probably less prevalent than what it is outside of superannuation.

And the reason I say that is that typically insurance inside superannuation is what we call group insurance. What that means is that you're not typically underwritten if you're just taking insurance that the super fund gives you. So you're given this insurance and you haven't been underwritten. So they haven't asked what do you do for work. You know, do you do risky activities on the weekend? What's your health history like? Do you smoke? You're not getting asked questions. So you're just going into a plan. You're in the swim with everyone else. So it's a group policy. Now, if you were to consider the same type of insurance outside of, superannuation, typically you would go through an underwriting process.

And what they're trying to do there is measure your risk as an individual. So what we do for work plays a big part. Now I work in an office. The chances of me hurting myself at the office, I don't know, a paper cut, light falls out of the ceiling, hits me on the head. Not really likely. So I’m less risk.

Ange

You don’t get wrist cramps every time you write?

Bart

Actually, I do, so I'm less risk to an insurer’s eyes from a work aspect. Whereas, you know, if you think if I was working on a construction site, working high rise, risks are more prevalent chances of me hurting myself are more likely, so potentially I'd have to pay more to place that risk with the insurer.

Ange

So we went out and spoke to some Aussies about this.

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Sinem

Do you ever get worried about potentially being injured and not being able to work?

Woman 1

I haven't really thought about it too much. I have a desk job, so at the moment I don't really think about that too much. But yeah, I guess it is probably something I should think about.

Woman 2

I have never worried about that.

Sinem

Do you know whether you have insurance in your super so that you don't have to worry about that?

Man 1

I know that I've got it. And it covers me for, death, disability…

Man 2

…for any loss of life, and I think there is some insurance for the medical emergencies.

Woman 1

I know a little bit about it, but probably not as much as I should.

Sinem

Do you know whether you're covered?

Woman 3

I don't actually. I don't know. You have opened up a new world for me.

Sinem

Back to you Ange.

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Ange

So slightly aligned to what we were talking about. But I read somewhere that about 4 million Aussies have multiple super accounts. In fact, it was the ATO that said this 4 million Aussies have multiple super accounts. What happens if someone wants to close one of their super accounts and can this affect their insurance coverage?

Bart

Yes. Doing my role, I'm often out, so I work closely with employers who contribute to Rest. And so I'll often go out in the workplace and I'll talk to members, Rest members.

And one of the first things I'll ask him is, are you sure you only have one account? Is it just Rest? Are there others because you can. On the Rest app you can find out really easily. Or you can do it through myGov quite simply as well. And the, the most I've seen is 13 accounts.

Ange + Alex

Ooh. Unlucky number.

Bart

I had one of them in front of me pull it up. They had 13 different accounts. Now, the reason why you may not want more than one superannuation fund, and there can be reasons why you might want more than one, but one reason would be you're doubling up on fees, and you could probably put insurance premiums under the banner of fees in that regard as well.

So naturally, if I've got two superannuation funds, accounts, I might be paying two sets of administration fees, which is really inefficient because you could do it with one. Same with your investment costs. You're doubling up on that and then like you mentioned Ange, insurance premiums. Now again, you would have to double check. Not every super fund provides insurance. So it doesn't mean you automatically have insurance if you have, a superannuation account. But you need to double check that. Now, if you've got a double up of insurances because you've got more than one account, there's a double up in cost in the insurance premiums that you're paying. And where this is really important is for income protection insurance.

So for income protection insurance typically, and there's a little bit of movement between insurers and different policies. But typically you're allowed to insure up to 75% of your income. So if you earn 100,000 bucks a year. You can insure up to $75,000 a year typically. Now if you have two policies you can't double dip, so you can't, you wouldn't be able to claim on two policies if the total of their benefit payments were to be more than what your pre-disability, or 75% of your pre disability income is.

So effectively you would be paying for something that you wouldn't be able to use.

Ange

You could only essentially use one, and really, you'd be picking the one that's going to pay you the most.

Bart

Perhaps. Yeah perhaps.

Ange

What about on the flip side? So I have actually spoken to someone who has chosen to create two super accounts simply because one of their accounts was for their insurance and the other one had better fees. So why would someone do that? Like, I'm just trying to wrap my head around why some would want to have two super accounts to keep an insurance open.

Bart

Yeah. That's right. So we mentioned before underwriting. So, if you were to take out a policy outside of superannuation, typically you have to go through underwriting and they're going to ask you all about your health and your lifestyle and assess you as an individual and how risky you are to them. And then that will be commensurate to how much you have to pay for your insurance. So if I was if I started out and I had a Rest account and that came with insurance as part of it, and I didn't go through underwriting, so I didn't have to disclose any pre disability illnesses or injuries that I may have.

And then life goes on and I've put on weight and I maybe, you know, drink too many beers on the weekend and I stop exercising and you know I might have sort of more of a prevalence to some, some illnesses. So if I were to go through underwriting at that point, the insurer might say, one, you're going to have to pay a lot of money here for us to take you on is a risk, but they also might exclude things. So they might. If I walked in there and I'd broken my back previously, they might say, well, we're going to put a back exclusion on your policy so you can claim on if you were to hurt your back again. Whereas the insurance that I hold inside superannuation, I haven't gone through that process. So it may be that I would keep an account open for the purpose of holding that insurance.

Ange

That makes that makes sense now.

Alex

It's so interesting because before this episode, I was looking at the ASIC money smart, was it the life insurance claims comparison tool? And it actually showed at the time of recording that, your payout likelihood can be better if you go with insurance through super.

Bart

I don't know about that.

Ange

Ooh controversial

Bart

But I will say this, I will say this. So prior to working at Rest, I worked as a financial advisor and, I would spend a lot of my days, helping people protect themselves or protect their assets through life insurance and business owners. And in my experience, the insurers really approach claim payouts with the right intention that that's all I've ever experienced. So I know insurance, you know, I can come with connotations that they're trying to rip people off or, you know, take their money and then not pay it at claim time. But in my experience, all the claims that I've seen have always been assessed fairly, whether that is inside of superannuation or outside of superannuation. Often they're the same insurers.

Often you can get, you know, the same insurer through, superannuation. And if you were to take it outside, it might be that you're going through the same insurer as well.

Alex

Look, I'm not brave enough to argue with ASIC, so I'm glad someone is (laughter)

Ange

What I'd like to know is why do super funds offer insurance? What's in it for them?

Bart

From a financial point of view, there's nothing in it for them. So we partner with, one of Australia's largest insurers to provide insurance to our members because we believe in it, there is no financial incentive for us. We are an industry fund, we’re a profit to member fund. We don't make a profit. So we certainly do to look to financially benefit from having insurance or doing a deal in the background doesn't happen. So there's no financial benefit for us, but we truly believe in it.

And one of the great things about our income protection policy that we offer through super is that it comes with a five year benefit period, whereas often there can be a benefit period less than that. So two years or less number super funds don't offer insurance at all. And also casuals and part time workers can take out income protection policy with Rest as well. Now the history of that is our history is steeped in retail. So read the retail industry and typically retail workers are a more casualised workforce and a typical retail worker who is working part time or casually find it really hard to get income protection outside of superannuation.

Ange

Why is that?

Bart

Well, it's a tough job. You're on your feet all day, you're bending, you're bending up and down to pick up things. You know, if you think of. So some of the hardware stores that you go into, people up and down ladders, it's a demanding job. And so, so in addition to that, it would be pretty tough for them to get an income protection policy with a five year benefit period as well.

So that's a that's sort of a wonderful thing that we provide to all our members, if that, you know, they do want to have insurance.

Ange

That's great. That's really good to hear.

Alex

Now jumping to something slightly different, we've talked a lot today about your physical health as it relates to insurance through super. But what about mental health like can super through insurance support you if you were dealing with a mental health crisis as opposed to a physical health crisis?

Bart

Absolutely. So with income protection and with TPD insurance, what we like mentioned before, it will cover you for any injury or illness that stops you from working.

Alex

Okay, okay.

Bart

Now the prevalence of mental health claims has gone up, quite a lot over the last number of years. So it's a common claim. Now I might be making this up, but I think about 1 in 4 income protection claims are for mental health reasons, which often surprises people.

The fact that they can even claim on it that mental health Is an illness. And if that illness stops you from working, then income protection can cover you for that.

Alex

Amazing. Well, thank you for sharing that because I think that's one that would actually affect of a lot of Aussies. But you don't often connect mental health physical health and through insurance.

Bart

Yeah, absolutely.

Ange

And I guess going to the point before we said, you know, older the audiences are more likely to take out the health claims. But that younger audience, you know, that's where maybe they would see the benefit younger in their lives earlier on in their lives, like, oh, okay. Well, mental health might be a space that I should be thinking about insuring myself on.

Bart

So yeah, that's and it gives you peace of mind. Right. And that's what insurance does. Insurance is just a plan B, you know, like life happens. No one no one wants to or plans to become ill or injured. But it happens sometimes. And, you know, if you think about, I guess, having the, the, the financial support to help you through those times is huge.

Because, you know, if you were to injure yourself seriously not only have to go through all that, then not have money to support yourself and not have an income coming through to support yourself, that would be terrible. So insurance can play a really important part in, you know, getting people back to work.

Alex

Well, that's great to know, but are there any disadvantages to having insurance through super.

Bart

Yeah, there can be, and I guess so we spoke before about group insurance. So once you cross those two hurdles, being over 25, balance over $6,000 insurance then kicks in. But we haven't asked anyone about their situation, their personal situation. So we've got 2 million members, about a third of those or close to 40% have insurance. We haven't asked those almost 1 million people, can you tell me about how much debt you have in your life? Are you married? How much do you earn, there's so many things, so many factors that go into determining the right level of cover.

So if you've got the default amount of cover, you might be under-insured, you might be over insured, you might not need insurance, but you don't know.

Ange

And how do you check.

Bart

You can check, at Rest you can check on your app. That'll tell you how much insurance you've got. But we've also got two other wonderful tools that people could take advantage of versus financial advice. Speaking to a human being. So Rest is pretty unique where we have financial advisors, they're all based here in Sydney. They're all wonderful people, I know them personally, they sit on our floor, and the purpose of their role is to help Rest members. Now that could be through picking the right investment, that could be having the right contribution strategy, that could be planning for retirement.

But insurance plays a part there as well. So they can run through a questionnaire with a Rest member, and that will help them determine the levels of cover that they should have based on things like debt and other assets that they have in their life. And then the individual can go and either take out more insurance or reduce it down to, a lower level or just, you know, do some tweaks to make it more individual for them.

Now that comes at, that service of insurance advice for Rest members comes at no additional cost to the member. Now, if you didn't want to speak to a human being…

Ange

I was just about to ask. For those of us who are from the generation who do like to pick up the phone…

Bart

Digital advice. So Rest is incredible at digital advice, so you can go through the same process, but rather than being on the phone talking to a human being, you’re prompted questions through our digital advice, process, and it's going to ask you questions like about your situation. Are you married? What is the value of your assets? How much debt do you have? How much income would you like to provide for someone, or allow for if you were to pass away? So at the end of that process, you get a suggested level of cover that you should have as well. And then you can go and put that in force and go through the process.

Ange

Great.

Bart

And look, if nothing else, a Rest member could use it just for peace of mind. They could go through that process just for peace of mind. Maybe the level of cover that they've got now. It's really good. They go through that process and find out. So I really encourage everyone just to consider it.

Ange

Give it a go.

Alex

So and if you aren't a Rest member, how can you find out about your, superannuation insurance?

Bart

So I would say get in contact with your superannuation fund directly, whether that's digitally through an app that they might provide or pick up the phone and give them a call. That's the best way to ask. Some people think that, you can see your level of cover through myGov, your insurance. So if you go into myGov, it'll tell you what superannuation funds you have. And it can also tell you if you have insurance. Yes or no?

Alex/Ange

Oh I didn't know that.

Bart

But it won't tell you how much insurance you've got or what type of insurance you've got. So always best just to speak to your super fund directly, right.

Alex

Well, thank you so much for joining us today, Bart. I know this wasn't the easiest topic, and it's one that I mean, I personally didn't know that much about until I even turned 25 and would consider it. So I really appreciate you breaking it down for us.

Bart

Thanks so much. It was lovely chatting to you both. Thanks for having me.

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Ange

So please make sure to like, follow and subscribe

Alex

For any more information on the things we spoke about today there’ll be some links in the description below.

Ange

And that is..

Ange&Alex

Super Simple!

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Ange

Before combining your super, consider which fund is right for you. Check out the fees and costs of your funds plus any benefits that would be lost, such as insurance cover. Make sure your other fund(s) knows about any contributions you intend to claim a tax deduction for, before combining your super. If you have any questions, speak to a licensed financial adviser or visit the ASIC MoneySmart website for more information.

Keep in mind that tax rules can be tricky and are always changing. The information provided here is for general informational purposes and should not be considered as tax advice. For advice that fits your own situation, it's best to chat with a licensed tax professional.

Alex

We acknowledge that we are recording this podcast from the lands of the Gadigal people of the Eora nation. We pay our respects to Elders past, present and emerging and celebrate the diversity of Aboriginal and Torres Strait Islander peoples and their ongoing connection to land and waters throughout Australia.

Ange

Welcome to super simple chats, Rest’s very first podcast. I’m Ange..

Alex

And I’m Alex

Ange

And we will be speaking to industry experts about all things super.

Matt

Wait, what the hell is contributions as well?

Ange

I didn’t realise until recently, that super is invested, I thought it was like a savings account.

Sarah

I’m not sure it’s helpful to talk about specific numbers, but it’s a lot less than a million dollars.

Person

This is actually really important to talk about, because I don’t want to miss out on those things.

Ange

Trying to make it understandable and relatable for every day Aussies.

Alex

After all, it’s one of the biggest assets you’ll ever have.

Ange

Now this wouldn’t be a financial podcast, if we didn’t start by mentioning that the information discussed is general only and doesn't take into account your own financial situation, needs or objectives. This information and the relevant products are issued by Retail Employees Superannuation Pty Ltd. Before deciding to join or stay, consider the relevant Product Disclosure Statement and Target Market Determination at rest.com.au/pds and whether it is appropriate for you. While we have endeavoured to ensure the accuracy and reliability of the information provided, there may be inadvertent errors or omissions. Before acting on any advice, we recommend you speak with a financial adviser.

Ange

Having a baby is meant to be one of the most exciting moments of your life. However, most people don't really want to sit there and think about their finances.

But taking time out of work can really take a significant toll on your super. Joining us today is Sarah from Rest, who's going to talk to us about all things women and super.

Sarah

Hi. Thanks for having me.

Ange

We hear a lot about the gender pay gap. And, you know, we hear about it in the media all the time. But one thing that I've noticed that we never really hear about is the gender super gap. Can you give us a little bit more information about what exactly that is?

Sarah

Yeah, thanks Ange.

It's this knotty problem, isn't it, that because superannuation is so highly connected to pay and work that not only do we have a gender pay gap, but that flows through to a gender super gap.

So you've got a difference fundamentally of about 28% between what women retire with and what men retire. That's a big difference. You're talking a lot of potential income in retirement in in a difference in between men and women.

Now the drivers of those, a whole range of things, including taking parental leave when you have a baby, but also the things that follow on from that. You've got general family caretaking, you've got a greater amount of unpaid work at home, generally by women. Once you have a baby. So those life changes have a flow on effect after that time as well. Greater amount of part time and casual work done by women, which generally, lower paid and more broken. So we've got an assumption that superannuation is built on that is that you work for 40 years full time, and for women that is just not the case.

Alex

Absolutely. Now this is a topic that's very near and dear to my heart. I'll do the baby reveal. Phil, if you want to throw in some sparkle emojis a little picture of Harry styles, like, could he be the father? Create some mystery.

Ange

Are you saying something?

Alex

Please start that rumour. When it comes to my situation and many peoples’ situation.

Because I work for a super fund. One of the first things I thought about when I got pregnant was how will this affect my super. And that's probably not everyone's first instinct, but we are pretty lucky that our super is paid on parental leave, and this is becoming more common, I'm pretty sure. So is that fear quite common with soon to be parents?

Sarah

Yeah, I think it's a really common feeling that as, particularly women approaching having a baby, they've had careers frequently or at least had work for a period of time, and that feeling of now you're about to enter a period of no or limited income is actually quite scary.

It's a shift, isn't it, from thinking of yourself as a working person to now it's much more about what is your household? What does it look like? Where is the money coming from? Who is doing what around all of those caring responsibilities and managing money. It's a really big step, not just becoming a parent, but actually thinking about your financial life in a different way.

Ange

And do you also find that that there's a shift, even after you sort of come back from parental leave and you go back into the workforce? Do you find that a lot of women see a bit of a difference in the trajectory of careers or sort of their everyday kind of managing of life and how that impacts them long term as well?

Sarah

Yeah, absolutely. So it's really interesting. This and research out there by Right Lane Consulting, they have a report called Forces at Work.

They last year looked at what is women's experience of superannuation.

And over a lifetime, what does that look like. At the at the age that sort of 25 to 34 is only a 4% difference in super. So that's manageable, you know, you would think that it would sort of project this same over your lifetime, it doesn't because of these patterns that stopped coming around broken work patterns, but also after parental leave, which is predominantly taken by women.

And I will say here, it doesn't have to be. Parental leave is actually available to both parents. And they just one of the decisions that people should be looking at is what are your options around sharing that leave availability?

But then even once you come back from parental leave, it's not uncommon for women to go back part time or even look at other jobs that make it easier for them to be around home, which often might be casual or lower paid.

And you've also potentially got just lower contact with your workforce and less opportunity for networking, less opportunities to talk promotion. It's this shift in how you are at work that often plays out.

Alex

And you touched a little bit on both parents being able to take time out.

Now, I know personally my husband's dream, and I hope he doesn't mind me saying this would be to be a stay at home dad.

But there's a lot of stigma in the workplace around feeling like as a man, you can take parental leave or the full leave, not just say two weeks and then come back.

Sarah

It's important to remember that parental leave is available to both and can be just divided up amongst that whole 12 month period can be taken by either parent.

You can't take it generally at the same time, although some employment arrangements do allow for some of it to be taken at the same time, there is a real workplace feeling that it's not okay for men to do that at that younger age actually, the pay gap generally is lower, so it's not as simple as it used to be about, well, the husband gets paid more, so of course he should keep working. It's not necessarily the case anymore at that age. And so it's a different decision making process. And it does often involve that sort of cultural impact of are men taking this leave? I think it's actually really important for senior men in workplaces to take it to actually, set that example.

Alex

That's such a good point. So it flows on from the head, more people will take it from below. Yeah.

Ange

So this next question is a little closer to home for me, literally my home. So thinking about my own parents when I was growing up, my mum probably took about, I say 6 or 7 years off to have both me and my brother and pretty much raise us right up until the point of school, and then entered the workforce.

And I was having a conversation with my parents recently and found out that Mum’s Super is significant, lower than Dads. Now, working class family. They were both on pretty similar wages when they were working, but just taking that 6 to 7 year gap had a pretty significant impact on mum’s super.

My question is that when you're taking time off work, what are the long term implications for Aussies who are unpaid carers like my mum?

Sarah

Look, it's a sticky policy government kind of problem really, and I think we need to look at that whole experience not as an individual's problem to solve necessarily, but have we got the settings right across the board? When we look at the fact that there are significant numbers of people in our workforce who don't work the whole way through.

So I'm involved in an organisation called Women in Super. One of the remits that we have is to look at government policy and what are we what are we doing as a whole economy to make sure that the settings are right for women’s’ experiences in the workforce, and of superannuation.

You know, there's a number of things potentially within super, but it's a bigger problem than that, It's about the balance of unpaid work as a whole. And are we acknowledging that as an economy, carer's payments, even if you even if you do get a carer's allowance from the government, there's no superannuation paid on that. So it's still, as far as super is concerned, a gap. The fact is, superannuation is not your only income when you get to retirement. And this is why we have the age pension. The value of superannuation is still really significant when used against other available income.

You've got even the concessions and the benefits that you get from even having a part age pension are really financially important. You know, things like travel concessions and rebates on you, energy and water and all of those kinds of things.

There is actually retirement income system out there that is there to support balancing out what you need when you get to retirement.

Ange

We went and asked everyday Aussies what they thought about this.

Sinem

if you were to go on parental leave, would you split your super with your partner?

Woman 1

Probably. Probably.

Woman 2

No.

Sinem

You've never thought about it? You'd never do that?

Woman 2

No, no. He’s got his own super so I don't think we should split.

Man 1

Really? I don't know all these options.

Woman 3

So I've already actually finished having kids. But at the time, no, I didn't split the contributions.

Sinem

Do you worry about the gender super gap or the differences in men and women's super balances at retirement?

Woman 4

I know there is a difference. Well, that's my problem as well. I minded my children now I’m minding my grandchild. So yes, it shows in your in your balance.

Woman 3

Well, I know that my ex-husband has significantly more super than me. So I imagine that at retirement, it would be very similar circumstances. Yeah.

Woman 5

I would be devastated to know. Don't tell me, to know if the if my partner. I haven't actually even asked him if he earns, if he pockets more in his super.

Sinem

Back to you Ange.

Ange

I'd actually read somewhere that women over 55 of the largest growing cohort of homeless people in Australia. So can you kind of give us a little bit of insight into how this super gap and is actually starting to impact women later on in life, and some of the kind of more negative impacts that we're seeing, such as this statistic around homelessness.

Sarah

It's really concerning. And it's predominantly single women over 55 who have either widowed or more frequently divorced, later in life, has taken a lot of time out of the workforce to raise children or to look after elderly parents or other family members, and they get to that later in life period. They don't own a home. They have very little superannuation because of broken work patterns and caring responsibilities, and that puts them in a really vulnerable spot.

Some of the work that we're doing in Women in Super is looking at, let's actually do work to make sure that women retire into safety, and that includes housing.

And the availability of social and affordable housing in Australia is just so significant that we you know, I cannot overstate how much that is something that needs to be addressed, because that is as important to retirement as all of the other factors as well.

You need somewhere safe to live.

Alex

Well, the super scheme didn't actually start in Australia till, what, 1992? Please correct me if I'm wrong, which means there is an entire generation of women who never had that, if they did work, as a compulsory part of their pay.

Sarah

So yeah, absolutely. Yeah. As a compulsory scheme 1992. So there are a lot of women who only had it available for part of their lives. Now we're not even seeing people who are retiring now, we've only had it for a small portion. We're not going to see people retiring that have had super for their whole lives for at least another ten years.

Alex

As a soon to be parent, a lot to take in, and I want to lessen the fears that myself and many may have.

So what actual steps can I take today, or could my partner take that might lessen that impact on my super? When I take time off?

Sarah

Look, there are several things that you can look at individually. It's just been, put into a bill that's in Parliament right now that will give superannuation to be paid on the Commonwealth paid parental leave scheme.

Massive when lots of lots of work has gone into advocating really strongly for that. So that's a really good bit of news coming up. And the dollar value of that over a lifetime is significant because of the power of compounding interest. And you're looking at money going into super at a relatively young age. And the power of that building up over the rest of your life up until retirement is, is significant. It's not marginal. It's actually a really significant difference.

Other options, I mentioned before this need to look at now your household more than you were before because of that balance of income. So involve your partner.

There are options around splitting contributions. So if somebody is still working full time, you can actually split according. You know, you need to seek advice to see whether that is going to work for you. Look at the potential of using if you've, you know, had the ability to build up a bit of savings in advance, could some of that go into super to sort of fill that gap.

Ange

So, Sarah you just touched on the Commonwealth pay parental leave finally adding super. Now I'm really intrigued to understand what is the actual impact of this long term. Like what are the tangible things that we're going to see for women by having super on paid parental leave?

Sarah

This is a really sort of firm dollar impact, because money paid early in super has a compounding effect over your working life. The modelling that we've got says that for a Rest member, a mother of two who gets paid superannuation on the Commonwealth Scheme for both children at retirement, will be better off by 14,500 dollars.

Alex + Ange

Wow. That's incredible. It's amazing.

Sarah

I'm going to plug a couple of, I'm going to plug a couple of books around this because this is this is a topic very close to my heart.

Ange

Please do!

Sarah

There is a book out there. It's a bit old now that's called the Post Baby Conversation.

It is still available as an e-book, so I highly recommend that one. The other one that I have is this Fair Play.

This is an amazing resource to work through. How does your household work? Who does what and why? There is a card activity, card game that comes with it where you can, as a couple, look at how we’re dividing this work, is done in the right way, so highly recommend.

Ange

I need to get one of those, not saying anything about my husband.

Sarah

But it’s often when babies come we revert to gender roles. It's so multi-generational. That's where we end up frequently. And so unless you actually consciously challenge it, it's potentially not going to happen.

Ange

So what I'm really hearing from you is it's not so much about just solving the problem for women, but it's equally solving the problem for men and how we start to elevate them in the experience and really pushing them into some of those non-traditional roles as well.

Sarah

Yeah. Yeah, absolutely. The other things are around flexible workplace arrangements.

Ange

Oh that's a big one, especially these days.

Sarah

It really is. It's so front of mind now. It's almost not thought about like, you know, there is an expectation that where possible you have work from home arrangements, noting that we have in Rest membership really significant numbers of people for whom it is not an option.

So working from home for a retail worker is frequently, if you're on front desk, you can't do that. There are quite large numbers for working from home’s not an option, but things like working around pick up and drop off times and making shifts available to women when they don't have direct, caring responsibilities and being able to plan in advance.

One of the problems that casual workers often have in working around their responsibilities as parents is they only find out a few days in advance when they're going to be working and organising childcare. In that time, it's really hard. If it's not regular, I think there's some workplace change still to happen around that. And accessible and affordable childcare.

It so often comes back to can you get childcare and is it affordable? The big decisions it's a big cost. But also are you happy with the childcare? Is it in the right place? It does it work in with your work.

Ange

I'm about to take this conversation in a completely different direction, but I recently read somewhere that there's a bit of a bias towards “blue” jobs versus “pink” jobs. Have you ever heard about this? So it's like the government is more likely to go and fund male dominated industries as opposed to female dominated industries, and that also has a big impact on the pay gap. And then subsequently the super gap. What do you think that we need to start advocating for outside of just super to really kind of shift the social dynamic?

Sarah

Australia has one of the highest gender divided workforces in the world, and it is true that frequently male dominated jobs are higher paid and female dominated jobs are lower paid. Look at caring, nursing, childcare, aged care, teaching…

Ange

…versus construction.

Sarah

Exactly. For some reason, we've ended up in Australia with the divide between that pink and blue divide being more significant than anywhere else. It's astonishing. And that does sort of have this compounding effect on the pay gap, which leads to the super gap.

Availability of education for women into the industries that get higher paid. The argument is often made that, you know, all women aren't in those areas because they don't want to be. It's often also not encouraged, and they are workplaces that often aren't family friendly.

It's built in that there will be a difference. So I think there is a need to look at, you know, what are our government schemes around education and training funding and where does that go?

That said, there is a huge demand for at the moment for construction. One of our housing problems is that houses aren't being built, fast enough to keep up with the demand.

So yes, there does need to be education and training leading into those industries that are in high demand. But is that being done in a way that encourages women to be involved as well and access those opportunities?

Ange

I'd also read somewhere that if more money was spent in the caring industries, so childcare, aged care, etc., that does also then allow women to go back to work full time, which frees up a whole kind of sector of individuals who are able to then do the work, and then that boosts the economy. So it actually can become quite a cyclical thing. And really like it's as simple as just putting some money where we need it, guys.

Sarah

Absolutely. There is a really strong compounding effect of investment in childcare and early education generally, not just childcare that frees up women's time, but actually invest in early education for young children as well has a compounding effect in the economy.

Alex

I feel like this is a lot of information, but I'm feeling a bit more positive about everything. Like there is a lot of scary statistics, but there's a lot of good in here and actions you can tangibly take. Is there anything else you would want parents to be like me to know?

Sarah

I think just reflecting back on some of the things, have the conversation with your partner.

It's so easy to just step in. We get lots of talk about prenatal classes and having a baby, and what it's like to have a baby, and we don't actually extend that out too, well, what does what does our life look like with this new person involved in it? How will those responsibilities work? I think there is, you know, some work around workplaces, being friendly to young families and actually encouraging women back to work.

We should have workplaces that are breastfed friendly. There is actually accreditation that you can get to be a breastfeeding friendly workplace. There's all of those sort of supports that are available. I think we just need to sort of pull it all together a bit.

Ange

Probably just normalise it a little bit more. I think that it's a systemic issue, but we need to normalise that as well in our every day.

Sarah

Yeah, yeah. And the other thing I would say is, you know, we have we have this vision of, of working mothers being able to do and have it all. And I don't think that's fair as a pressure on particularly young women. But you can have bits of it, but it takes a team.

And I think that's probably the biggest sort of message out of this is to look at this as a team.

Alex

Absolutely. And even if you don't have a partner with you, maybe that team is family. Maybe that's an amazing network of friends, but trying to not go it as an island, if you can.

Sarah

Absolutely.

Ange

And I probably say just one more thing, is that consideration of super when you are looking at your finances and budgeting, when you are having a family.

And so I think that's one thing that always gets overlooked, right? You don't think about your super, you sort of go, oh, what are the immediate spending things I need to think about? And you kind of go, oh, what about the long term? What's the long term impact? And kind of having that front of mind when you're doing that, going through that process as well I think is important.

Sarah

Absolutely.

Alex

Nappies, crib, superannuation.

Oh well thank you so much for joining us today Sarah.

Sarah

That's my pleasure. It was really good fun, thanks.

Alex

Yeah. No problem. I really hope that this helped. Not just me, but some other parents-to-be out there.

Ange

So please make sure to like, follow and subscribe

Alex

For any more information on the things we spoke about today there’ll be some links in the description below.

Ange

And that is..

Ange&Alex

Super Simple!