Ange

Welcome to Super Simple Chats. Rest's very own podcast. We will be speaking to industry experts about all things super. Trying to make it understandable and relatable for everyday Aussies. After all, it's one of the biggest assets you'll ever have.

Ange (V/O)

We're recording this podcast on Gadigal land. We pay our respects to Elders past and present.

Any advice you hear on this podcast is general in nature and doesn't take into account your financial situation, needs or objectives. Issued by Retail Employees Superannuation PTY LTD. Before deciding to join or stay, consider the relevant PDS and TMD at rest.com.au/pds.

Ange

Hi guys, I'm Ange and I'm here today with my co-host Andy. Now, there has been an elephant in the room that I think we need to address today. So there are a few myths that need busting, and I think we need to go through some of the big ones and break them down. So joining us today is Sam from Rest.

Sam

Hi, guys. Thanks for having me.

Ange

So first myth that we are looking to bust. Now, I've recently heard on some social platforms (cough) TikTok, that people tend to leave comments that super sounds a little bit scammy. Now, for our listeners at home, can you tell us why it's not

Sam

Okay, nice big juicy one to start us off.

So super at its heart is a savings plan for retirement. I can understand how the, ordinary demographic that would be listening to (cough) TikTok, would be in that sort of younger cohort that is, sort of looking at the superannuation system and thinking, I can’t touch this money for many, many, many years. So I kind of understand how they might think that it's a bit scammy, but…

Ange

Like, do they even realize they can touch the money in many, many, many years?

Sam

Well, that's the point though. It's like forced savings for retirement.

Andy

Yeah. I can imagine it’d kind of feel like when I was, when I was 12 I had my own little lawn mowing business. And we go around little, little houses in Bega, and we mow the lawn and we get paid maybe 50 bucks a lawn between me and my business partner at the time, right.

Ange

Did you pay tax?

Andy

But my… my mum took that money and I remember her keeping it from me. And I was like, “This is a scam!” That's… but I can imagine, it would feel a bit like that when you're, you know, 20, 25 and you're like, oh, this money is being put aside for my future. I got that money, but…

Ange

I was just about to ask, so was she putting it aside for your future?

Andy

Yeah, she was trying to encourage me to save, trying to teach me how to save.

Ange

So your mum’s like a glorified super account, really.

Andy

Yeah. Well, in this situation, kind of. There's a lot of nuances to get into. But at one level, yeah definitely.

Ange

Mum, if you’re listening at home.

Andy

Yeah. Yeah, yeah. And yeah she's… she's great. I think that's the thing, right. When I felt this sense of outrage I was like, this is an injustice, I earnt my money, that's my money, I worked for this. But, you know, at the same time, it's there, and it I was always getting that. And that was the point she was trying to make, right?

Sam

Yeah. Just not available straight away. Yeah.

Andy

So I kind of feel like wherever there's, like, a misunderstanding, right? There's a space. And in that space, we like to fill it with assumptions and guesses about what things are. So, just to clear it up for our listeners, where does your super come from?

Sam

So it'll come from your employer. So, if you are over the age of 18, or under the age of 18 and work more than 30 hours in a week, you are eligible for what we call the superannuation guarantee. And that is paid by your employer, which is a minimum of 12% of your eligible salary or wages paid into your superannuation account. So if you have a look at your payslip, you will see that there will be a little section where it will show you that you've been paid superannuation.

Ange

So let's say you're on a salary. My understanding is then they'll look at your salary and they'll go oh, okay. It's 12% of that. Or a minimum of a minimum of that. And then they'll do the math, and that's what goes into your super account.

Sam

Correct. Yeah.

Ange

Got it.

Andy

So what you're telling me, is that if I looked at my payslip, I should be able to say the word superannuation with the figure next to it.

Sam

Yep, absolutely. So it might say SG, for super guarantee but it, it should always be on there. It's a requirement of law for an Australian payslip to have payments, deductions and your superannuation.

Ange

And is it ever any other acronyms or is it always just...

Sam

It might say SGC so superannuation guarantee contribution.

Ange

Yeah so I thought I’d seen something like that in the past, and I was like what does the C stand for.

Sam

Yeah. So contribution.

Ange

Yeah. Got it. Okay. And can you explain to our listeners at home, what actually happens when that money hits your super account?

Sam

So you know how rich people will often talk about having a investment portfolio?

Ange

I don't know that many rich people to know what kind of conversations they have.

Sam

I just like at the movies. So if you've got a superannuation account is kind of like an investment portfolio. It's just in a superannuation environment where you can't access it until you retire. So Rest will receive your contribution from your employer. And we invest it as per your investment option choice. You can check that by jumping into the app as well. So you can, log in to your app. It'll show you what your investment option is and you can see your balance in there as well. And, you know, where, how it's going in the market.

Ange

Beautiful.

Andy

Right. So having a superannuation account is like people working there in the background, putting money aside for me and investing it for me. I've kind of got like my people on it, you know, like

Ange

(laughing) Your people!

Andy

That’s so cool. Is there any way that I can see the outcomes of this? Like where… where can I go see my balance?

Sam

Yep, so that's in the Rest app. So if you just jump in to the Rest app, you can pretty much see everything related to your account within the app, including your balance, including what your investment option is.

Ange

Alrighty. Well, that's myth number one done. So, myth number two?

Super is just another business where if you get more members and you get more people on, you get more money, right? Now we've heard some comparisons of other types of businesses that operate in this way. Can you please explain the difference to us and why a super fund actually benefits from getting more members?

Sam

So the two main types of superannuation, are retail super and industry super.

Sam

So Rest super is an industry fund, which means that profits go back to our members. With the retail funds, their profits go to their shareholders. So that's the difference between the two different types of super funds.

Now with, our profit to member fund, the reason that we would, welcome more members is because then we've got the scale there where we're able to, you know, put the profits back to the members and, you know, reduce things like fees, reduce things like insurance premiums, because we've got that scale there that we can sort of pull those costs back for each of our members.

Andy

Right. One of my favourite quotes is by an investor and he said, “Show me the incentive and I'll show you the outcome.” Right. And what I love about the fact that our business model, the profits go back to members, is that the incentive for our business isn't to help shareholders, it's to really make sure that what we're doing is in our members’ best interests, and making sure that the outcomes of our actions, like getting more members, sees, some kind of benefit to them.

Ange

Well, that is really wholesome, Andy.

Andy

What can I say? I love super, yeah…

Ange

I knew we could convert you. Not scammy at all.

Andy

Yeah, I mean, I don't know, I feel like, like there's a bigger point to be said here, which is I feel really lucky to work for superannuation. I've worked in lots of different financial businesses, and I've sold lots of different products in my time as a copywriter and a content writer, and I think it's really easy to forget that the product we sell ultimately is there to support people in their retirement, and there's so few products that are like that. There are so few products where you're not just trying to take people's money, you're trying to give them something back.

Sam

Absolutely.

Andy

Sorry, that's very emotional.

Ange

Anybody got a tissue box?

Andy

We know that's not the case, but what can we actually tell them so that they feel reassured?

Sam

So, superannuation falls under the financial services industry in Australia which is heavily, heavily regulated. So, the government has put a lot of rules in place to make sure that super remains, its sole purpose to help people in retirement. So that's why you can't access it until retirement.

So if you turn, 60, which is our preservation age, and you retire, you're able to get access to your superannuation funds, as soon as you hit age 65, regardless of whether you're retired or not, you also have access to those funds.

Ange

Okay, so it's not that the super funds are taking our money, it's that the government has put this process in place in order to help people have a better retirement.

Sam

Absolutely.

Ange

Yeah, that makes sense to me.

Andy

Yeah, yeah. Me too.

Sam

So there are other conditions, that you are able to access your funds, ahead of retirement. One being, transition to retirement.

Now, transition to retirement is a great initiative. Might not be great for everyone, but I would strongly recommend chatting to a financial adviser around that, see if it works for your circumstances.

Ange

Is that if you’re coming up into retirement but you’re not quite ready yet?

Sam

Correct. And then financial hardship. That's a really strict one. But it is there in place for people that are, you know, in severe financial hardship. So again, I'd probably chat to an adviser around those couple.

Andy

Yeah, we actually have some articles on our website about severe financial hardship. And I can tell you now it's really not easy to get money, access to that money, but we will post links to those articles in the show notes so that if you are in those conditions, you’ll understand.

Ange

Have some support, yeah.

So there is another term that I've heard floating around that could possibly sound a little bit suspicious if you don't know what it means. And that's profit to member. Can you just explain to our listeners at home what that term actually means?

Sam

Yep, so profit to member means that our profit goes to the members. We don't have any shareholders, as a profit to member fund. So, any profits, you know, in an ordinary business will sort of filter through to your shareholders.

Ange

And there is the magic word: Fees.

So I think there's a little bit of misconception and possibly a bit of angst when someone here's the word fees and they don't actually know what those fees are and how they're being spent. It just sounds a bit like, oh, you're taking my money. What are you doing with that? So can you break down for us what, the different type of fees are?

Sam

Yep. So you'll see administration fees…

Sarah (V/O)

Hey, it’s Sarah from Rest’s product team, just jumping in to do a couple of quick clarifications. The first one is that there are also administration costs which are known as costs met from reserves. Which as the name suggests are paid from the fund’s reserves and not from your account.

Also, just wanted to clarify that each time you hear Sam say ‘investment fees’, she actually means ‘investment fees and costs’. Now, back to the pod!

Sam

…That covers things like, us collecting your money from your employer. It includes things like any correspondence that we need to reach out to you for. And it also includes things like keeping the lights on and making sure the call centre is still working.

Ange

Like business overheads, like any business, salaries and all that sort of stuff.

Sam

Correct, so that's your administration fees. Then we've got investment fees (and costs). So that is the fees (and costs) that are incurred in terms of investing your funds.

Ange

Okay, so that's slightly different.

Sam

Correct. So the investment fees (and costs) are a little bit different. And then the third one is transaction costs. So, they include things like buying and selling investments.

Andy

Okay, sure.

Ange

There are also buy / sell spreads, that are incurred every time you transact, like make a contribution, or make a withdrawal. Now we're getting into a little bit of complex territory. So I'm thinking let's just put some links in the show notes. And if you're really interested in understanding the breakdown of fees, feel free to just pop down there, click on the link and learn more.

Andy

If you're a nerd like me, it's surprisingly fascinating. If you're not like me, and not many people are…

Ange

I'm just like, take my money and just make sure it works.

Andy

But yeah, it is. It's interesting to know that like, yeah, those fees are going to different things and they are, yeah, that makes sense, right?

Ange

As with any business you got to keep the lights on.

Andy

When are these fees collected then. Like, let's say I imagine that they have to come from somewhere. Where do they come from and when do they go.

Phil

Sam, I’ll take this one. Producer Phil here.

I'm going to tell our listeners how find their fees and costs on their annual statement in around a minute.

So if we look at an annual statement, you’ll find a standard table called the ‘fees and costs summary’. It’ll be there no matter which fund you’re with. This gives you the breakdown of all the fees and costs you’re paying.

You’ll see both the fees and insurance premiums that have been deducted directly from your account. If you’re extra curious, you can find these ones in the Rest App too.

There’s also a spot for ‘fees and costs deducted from your investment.’ Here you can see the estimate of the fees and costs that have been deducted from the fund’s reserves, or that you have paid via the unit price of the investment option you’re invested in. In short, Unit Prices are important because they’re used to calculate your account balance. But more on this another day.

Most importantly, we have the ‘total fees and cost you paid’. This is a sum of the 2 sections above.

You can find your annual statement in the Rest App.

Simple.

Now back to the pod.

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Ange

Shameless plug for the app, if you don’t have it already.

Andy

Get that app!

I think yeah, that it makes sense. I feel like looking at the apps, kind of like looking at your bank account where you get to see the withdrawals and deposits, right. And so you can actually just fully see all those details if you look at your annual statement…

Ange

I mean, like banks have their fees too, it all works. Yeah. Got it.

We’ve discussed some really interesting myths today. And I'd really like to go and hear from everyday Aussies about what they think about them.

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Sinem

Do you know anything about how fees work then your super?

Person 1

In my super? No.

Person 2

Well, I know there are fees. Like, when you work with brokers and all that, you have to pay fees.

Person 3

No.

Sinem

No? Okay.

Person 4

I don't know in detail. I do know I don't like it.

Sinem

What do you think your fees pay for, or are used for?

Person 5

I think it's like for the maintaining, for the maintaining of my super.

Person 1

I don't know. I really haven't thought about that.

Person 6

It is what it is. Maybe that's a bit like a daisy, but slight is.

Sinem

That's fine. You know, a lot more than a lot of people we’ve asked today as well.

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Andy

So I feel like we've gone through and we kind of… now we understand and we've answered the question about these myths. Right? So we know that super is definitely real. There's a way that you can go and see it and where you can kind of make it a little bit more tangible for yourself and get a good understanding of it. We know why super funds like Rest want more members, right? And why we actually ask to grow our customer base and why that's a good thing. And I feel like we've also got a pretty good understanding around fees. And we get like what they're going to and what they're for. I feel like we've answered a lot of really good basic questions.

Ange

That sounds like three myths that have been busted, Andy.

Andy

Consider them dead!

Ange

Well, thank you so much for your time today, Sam. We really appreciate you coming in and answering all these questions for us and hopefully for our listeners at home. You're a little bit at ease knowing that super is not a scam, and that we’re not trying to take your money, and actually it is for you and for your retirement. Of course, if you have any questions about your super or if you've got any other myths that you'd like us to look into in subsequent episodes, be sure to leave some notes in the comments below.

Otherwise, click on the link, subscribe and make sure that you check out our Shownotes for any links.

That is…

Andy & Ange

Super simple.