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.

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 FSG, PDS and TMD at rest.com.au/pds.

Ange

So when we think about super, we usually think about one thing which is retirement. But super plays a pretty important, although sometimes hidden role in relationships, especially when we're talking about things like marriage, shared finances, caring for family and, you know, if things go a little bit pear shaped, divorce.

So joining me today is Sinem, who's going to be asking all the hard questions about super and relationships to our expert Lisa from Rest. Lisa, thank you also for joining us today.

Lisa

Thank you so much for having me today, super excited to be here.

Sinem

Lisa, let's dive in. So there's already so many things to think about when you're a couple, but how exactly does super work when you're in a relationship or in a de facto?

Lisa

So in a relationship, you might start saving together. So we have an account. You might want to buy a house together, raise a family, and that's all an asset that you're building together. And nobody thinks about their super on the side. So like you said, it's... it's important and it's there. But nobody thinks about it.

Ange

So how do we start to get people to think about, you know, talking super when they're dating or when they're in a relationship? Like, how can we spice up super

Sinem

And when to bring it up? It's such an awkward conversation to have.

Ange

I can't say that I ever brought it up with any of my prospective partners.

Sinem

I mean, I have, but I work in super, so it's kind of like...

Ange

We will unpack this a bit later on. So, Lisa, if you know, if you're a couple and you talk to couples all the time, does anyone actually really think about super when they're talking about budgets? And how do we get them thinking about it?

Lisa

So first of all, I got to think about it as in money and nobody does. If I ask you what you earn, you're going to tell me what you earn, but you earn , your income plus super. And then you say, oh yeah, plus super. What is that super? We need to start putting a dollar figure on it and it's your dollar.

you know, we have no problem looking at a savings account, looking at a mortgage and getting the most of it. Yet, we've got these assets sitting here that's part of that income going into. And it's just left. And it's just as important as this mortgage you're going to pay down to live in. Well, you've got a house to live in. What are you going to do to actually make your living costs at retirement? You've had this account that's sitting there and you can grow it. So I think if, if I said to you today, what if I put that super account into your savings account, all of a sudden you'll go, wow, what can I do with this? How can I make this work with me? But because you've got this mindset that it's over there, it's no good.

Ange

Yeah. You know, that's actually a really good point because like, when you're dating and you're finally having the money conversation, you might be looking at things like, oh, well, what's in your bank account versus what's in mine. But actually if someone turned around, it's like, well, I have $100,000 in my super account, well, that's actually kind of sexy. Like that could be quite attractive in a partner.

Sinem

Yeah, that makes it hard though, because super isn't really the first thing that you would bring up. Unless you're like us, who works in the industry, then you kind of bring those conversations up.

Can you give our listeners some conversation starters on how they could maybe approach that?

Lisa

(laughing) Maybe on your first date you can say, "What excites you about super?"

Sinem

What's your job? what's your super balance? What's your risk profile?

Ange

Can you imagine if that was like on (censored) ?

Sinem

As a prompt?

Ange

As one of the prompts? (laughing)

Lisa

I guess the main thing is that first of all, you've got to see it as an asset. And you've got to want to, I guess, grow it. So we have no, no issue knowing it takes us 30 years to pay down a mortgage. Right. You go. Okay. It's going to take 30 years. You're going to pay down this mortgage. And that's great. Soon as you say, you can't touch this super for 30 years, we have this mindset where we ignore it.

So I guess to bring it into people's foresight, you need to first of all, like I said, it's got to be part of your money. So you got to get this is my money.

Sinem

You don't overlook it.

Lisa

And and what can I do with it.

Ange

Now I've got another question for you. So we're sort of moving more into marriage territory now, less so into like dating. And how do you bring it up and how do you make it part of the conversation upfront. But let's say you're in a situation like mine. So I am married, I am about to have my first child. Yes, I... we're going to do the reveal. (stands up to show baby bump) I am pregnant, and my husband and I have very different super balances.

The reason being, even though we both started work at the same age or roughly the same age, I actually took about three years out of the Australian work market to live overseas. So when I came back, my super balance was smashed. It was like nothing left. While he kept working and growing, his super balance. So now we're in a position where we're about to have a family and his balance is much higher than mine I'm the one taking the time off to be with the baby. What do we do about this? Like what is the kind of conversation I should be having with my husband? Cos I'm sure there are other women or men, you're in this situation like I am.

Lisa

So I guess the first thing you need to know, the super in a relationship is an asset. So like everything else, you're accumulating together, super accumulated from the time you together as a as an asset. So it is a joint asset even though it's held separately. If you were to look at it, it's something that's accrued in the time you're together.

, and it's going to vary for everyone. Some are concerned with the balance difference because at the end of the day it's an asset that both of you are going to use. But for couples that are concerned and they do like to keep everything the same, then there are options you can have. Like you said, when you're off work, if one couple earns less than the other, if one's working part time, there are some options you can take to start to balance those differences in the, balances that you have to make it more equal if that's something that's important to you.

Ange

Which, yeah, like I'd like to say it is for me, like, what are some of those options. What does that look like.

Lisa

Yeah. So it's going to be different for everybody. So there are a few different options. You can look at government co-contribution. So that's one way to build your super. Another way is a spouse contribution. And the third one is probably super splitting.

Ange

Whoa. Let's dive into that a little bit more.

Sinem

What is that?

Ange

Yeah. What is super splitting?

Lisa

Nobody seems to know about super splitting. So, super splitting means that you can split any, and I'm going to use some technical terms unfortunately, but I will explain them. Any concessional contribution that goes into your super.

Ange

Is that the before tax, or after tax?

Lisa

It's the before tax.

Ange

Before tax, yep.

Lisa

So the easiest way to explain it is, you know that SG portion, that super guarantee that your employer puts in that nobody seems to know about or care about?

Ange

Yep. The one we all forget about until we see our balance

Lisa

That is a concessional contribution, that a salary sacrifice. And any personal deductible. So when you're thinking about super splitting. Yep. Or even making a spouse contribution or a government co-contribution, it's really important to get advice because there are income caps on the tax effectiveness of each of those contributions. So it's going to differ in your relationship and your income.

Ange

Right, okay.

Lisa

So there's all these options... which is the right one for you? That's when you want to start looking at advice to make sure that, when you make this contribution it's tax effective.

Ange

Okay. And so you mentioned there's a difference between spouse contributions and super splitting. Technically, what is that difference?

Lisa

So the main difference in spouse contributions and the government co-contribution is you actually have to put money into super to get the benefit.

Ange

Okay.

Lisa

So you've got to come from your savings account and put money in for a spouse contribution for your spouse to get a tax offset or for the government co-contribution, you've got to put money in to get the government co-con.

Ange

Okay

Lisa

Now they have income caps to see whether it is actually for you. With spouse splitting, you don't have to put money into super. The money's already gone in from your employer.

Ange

Does that come from my spouse's.. who's paying that, is it my spouse's super?

Lisa

However you want, however you want to split it. So say if.. and I'll just use round figures. So say for example, your partner gets $10,000 worth of his SG payments. It gets taxed because it's a concessional contribution. So 85% of that, you can decide to move to your spouse's super.

Ange

Ross, I hope you heard that. Ross is my husband. (laughing)

Lisa

And it might not be 85% you want to split. You know, you may want to do that. And and you just have to be because you're having a baby. It could just because it's an income different. It could because you want to build together and have the equality.

Sinem

So you could do that at any point, not just when you're on mat leave.

Lisa

Exactly. You can do it whenever you want. And the other contributions you can do whenever you want as well. But they do have income caps. So you got to make sure that those contributions at that stage are relevant to your situation.

Ange

Well I hope my husband is listening in on this one. Because for those of you at home who are listening, you might not know this, but we had a bit of an incident in episode two.

Sinem

What happened?

Ange

You're going to have to listen and find out.

Lisa

There could be other reasons why you want a super split as well, because super is invested. So it's invested in line with your attitude to risk. So you could be someone who likes risk and your partner doesn't. So you might want that, some of that money in an environment where you want to have control of how it's invested, and it could be the other way around where they might like a lot of risk. So there's a few different reasons why you may want to even up the super as well.

Ange

That makes sense, actually.

Sinem

That was a lot of information. I think we'll put some links in the show notes down below.

Ange

Yeah, good idea. For anyone listening at home that wants more info, just pop down there and click the link.

Sinem

So I was really curious to hear from, members about whether they would talk about super with their partners. So we actually went out and asked some everyday Aussies questions to see what they would say.

=======

Sinem

Are you comfortable bringing up finances with your partner?

Person 1

Definitely.

Person 2

Not really.

Sinem

Not really?

Person 2

It's kind of ugly to talk about money.

Person 3

Once you have a partner, you have that shared focus. You need to think about, it's not just you, but with you and your partner.

Person 4

People need to know where they fit into the jigsaw puzzle.

Sinem

How far into your relationship did that topic come up in?

Person 5

I think early stages, actually.

Person 6

When issues started arising I would probably say. You know, and like, so maybe one to two years.

========

Sinem

So let's say you do make it to retirement with your partner. How do you get on the same page with your retirement goals.

Lisa

Your retirement goals... that could be a whole podcast in itself.

Ange

It already is. (laughs) Tune in to episode four. Shameless plug. Maybe it was three. I can't remember now. It doesn't matter. But we have an episode on this so.

Lisa

So I guess it all comes back to what you're saying. The conversation. So what generally happens these days where where we're at and where we are, we super is people are 2 to 3 years out of retirement and they're like, oh, what was that thing people talked about? Super? And then all of a sudden these people in their 60s are starting have a conversation amongst themselves about we're looking at retirement. What do we need to know? What do we need to do?

So then I look at this super balance that they've got and they're like, oh, what can we do? How do we make this work for us, etc..

Super's like everything else that should have been cared for along the way. So when we take out a mortgage, we make sure we're getting the right interest rate. We look at how do we pay it down faster? Do we put $20 or $30 in more? We've got a savings account. How can we make that work for us? Super's the same. It's a product and then it's how you use that. How do you attach your strategies. So along the way, if you add a little bit of money, or you check you're invested correctly, or you be tax savvy along the way as well, which you can, you can use your super to be tax effective and save tax depending on your income along the way as well.

Ange

Well my ears just perked up. We do love a good tax strategy.

Lisa

So you know if we pay 15 cents in the dollar inside super. And then you tax, your marginal tax rate depending on what you earn. I don't want to get into details because it's going to come back again to personal advice.

Ange

That's another episode

Lisa

That's personal advice again. However these are all considerations as you're growing it. We're considering our mortgage every day. What's the bank charging us? What are we doing? How do we get it down. But we've got this asset that, when you hit retirement you can't eat your house. What are you going to eat?

Sinem

Scary

Lisa

So this is what it is. It's about growing these so that your retirement looks exactly the same as what your life is now.

Sinem

So don't leave it until you're about to retire. Start talking about it early on. Get on the same page. So if they want like a countryside retirement, you want a beachside and then adjust.

Lisa

Well, you need to be on the same page. Otherwise I think the next stage, Ange is going into is where you may end up.

So you got to make sure like everything when you're growing in a relationship and you've got children, you're raising them. You've got to grow together. So your goals have to align and you've got to be growing towards them. So I guess if you can have these conversations and like you said, they're not a usual conversation and they're not something we were raised listening to our parents talk about.

But I'm noticing a massive change today in today's society about especially with cost of living, we're careful about what we're doing. We're mindful that not everything may be easy because everything was looking easy. And all of a sudden go to generation that owning a house isn't as easy.

Sinem

That's so different from what you saw your parents being able to do it.

Ange

Absolutely. And retirement is going to look different for our generation compared to our parents generation.

Sinem

I feel like I've got a whole list of questions that I'm going to ask on dates. What are you doing in 30 years?

Lisa

Exactly. And we're living longer. We're living longer. We're taking better care of our health.

Sinem

You've got to stretch it out.

Lisa

So you want to make sure that you can actually do the things you want to do while you can, because I guess 75 these days doesn't look like 75 used to. People are still working, they're still active. So you still got living costs that you want to meet.

Ange

And you're right, like even within the phases of retirement, like when you think about it, if you're retired for like 20 odd 30 odd years, what you're going to be doing in your 60s and 70s is going to look very different to what you're going to be doing in your 80s or 90s. So thinking about even like with your spouse, what those chunks of life look like, is probably another juicy date night conversation. Add that to the list.

Lisa

Exactly, and you don't even know what it costs you to live. If I ask you what it cost you to live, you probably couldn't answer me.

Ange

I do love spreadsheets. I'm not the person to ask...

Lisa

You're the wrong person... because most people are going to their bank and you say, what do you... what do you live on? About 30,000. You know, your net income in your household is about 120,000.

Sinem

Yeah. When you get that from?

Lisa

No, what have we been doing with that? Where did it go. So these are like I guess conscious decisions. And it's not about budgeting and not spending and not enjoying yourself. It's about, you're making conscious decisions about all these other financial goals in your life. Yet you got this bucket here which you could your employees pay into. So it's going in there. So you need to nurture it and make it work for you as well. Yeah.

Ange

So we did touch on this and we're now going to dive a little bit deeper into when things go pear shaped. What does happen when things don't end as well, is really that the question I'm coming to. And I'll give you a little bit of a backstory. My parents have been divorced for, I’d probably say about close to, ten to, somewhere between 10 and 15 years now. I was in my very early 20s, so that's showing my age. And at the time, neither lawyer during the conversations back then, even brought up super in the divorce split conversation. So hindsight, beautiful thing. My mother has now come to a realisation that actually my father had a really healthy super account because he was working for many years, but my mum took about, I think it was close to 6 or 7 years out of the workforce to raise children. So she didn't get super in that time. So they had very different balances.

For people who are in like my mother's situation, hindsight, of course, ten, 15 years ago, what is the right approach and how do we look at super when it does come to divorce and splitting?

Lisa

So I think your mom does fall into that generational gap where super wasn't talked about. Super wasn't for everybody, so it was more so government workers, union workers, police. Then years later, I think it was the 80s or 90s. Super became more mandatory. It came into retail. So there was a whole generation of women out there that had spouses who are gaining super, and they didn't work and they didn't have super. And back when they did get divorced, it wasn't an asset on the table.

Ange

That's interesting. So it has become since?

Lisa

It's changed. It has changed. So now when you get divorced and this is going to be different for everybody because everybody's agreements and their situation's different, but generally assets and your liabilities go on the table and then the solicitor or your mediator will work out what agreement, based on your situation, your children, is an agreement of who gets this and who gets that.

And super will go on the table, and it will also be split.

Sinem

I had no idea.

Ange

Yeah. Look, it's really good to know that, especially if you are in this phase of life where things aren't, you know, as as peachy. It's good to know what your options are, especially if you have been in a situation where maybe you have taken time out of work to do unpaid, caring work. I think it's definitely something you should be raising with your solicitor. If you are in that situation.

Lisa

And it's an asset, and if say your partner's been salary sacrificing and you've been using your money to meet living costs, well there's going to be a different imbalance there. But it's still both your money's worth going towards both goals. So it needs to be sorted out when the split happens. And it stays under the super law. So if they decide, I'm just going to use a round number that, you know, 50,000 of their super now comes to you. It doesn't come to your savings account. It'll go from their super to your super account and it stays within the environment. And then the rules of when you can access it with preservation etc. they all stay the same. So it all happens in the background.

But don't stop there. You've gotten divorced. You've sorted your money out. Let's go back then. Who's your beneficiary?

So you’re at the solicitors you're doing your divorce, you want to get your estate planning lined up as well. So you want to make sure you get your beneficiary in line with who you want to receive this money now.

If you've got minor children, you need to make sure of estate planning too. Because if you've got a 10 and a 12 year old and they're your beneficiary, they receive the money.

Ange

Who's looking after them?

Lisa

Exactly. So it is a little bit of a minefield, as in let's split the assets. But also let's be mindful. And it's probably a whole different podcast on estate planning, which would probably lead into second marriages with super, because that because that's another minefield. But yeah. So it's like you got to look at the estate planning. Speak to a solicitor. It's not something we would guide you on because we're not solicitors, but it's definitely should be there in the back of your mind that, okay, I've got that sorted, now what's my best option, to making sure that my person I want to receive this money does. And I still got control if I pass, on what would happen to that until they are adults.

Sinem

Yeah, wow.

Lisa

But the objective of getting married is not to get divorced. But obviously it does happen. And unfortunately, you know, at the end of the day, we need to make sure we've got our estate planning and everything in line just in case.

Ange

Well, that's some good... GENERAL advice.

Lisa

Exactly.

Ange

So throughout the episode, we have mentioned the word advice a couple of times. And, I guess my question to you is how would you go about booking an advice call, especially if you do have a spouse, like would your partner join you? Like, you know, if I needed to speak to you, would my husband join the call as well? Like what does that look like?

Lisa

So your first option would be go into your Rest account, log in and then there is an advice tab there. And you can book an appointment with an adviser. So probably the first call probably have on your own so you can have a chat, meet the adviser, have a discussion. What are your objectives. What do you want to know about? And then from there we can sort of decide, you know, do we need to speak to your partner as well? Can we do what you want? You know, your needs there, are there other needs that you want? So it's there. There's no additional cost to log on, have an appointment with an adviser and have that first discussion about where you need to go.

Sinem

So if we had that first discussion and then you had to do another call with your partner, do you get charged for each call or is it based on the topics that you're speaking to the advisers about? Are there additional fees to each one?

Lisa

So at Rest we try to be super simple. So we try to make our advice exactly that super simple. So we'll actually scope a lot of our advice needs down to topics to make it easier. Because the average person doesn't know super. It would be like me trying to do your job. You know, I can't do that. So we break it down. A lot of the advice we offer is at no additional cost. If there is going to be an additional cost, we always let you know, upfront and it's not per call, it's not per hour we spend with you. It's per advice need.

So if there was an additional cost for that advice need, however many calls, however many conversations, that would all be encompassed in that one fee. But like I said, a lot of the advice that we offer is that no additional cost. It's part of being a Rest member.

Sinem

So if there is a fee how, do you work out who gets charged that or what the amount might be?

Lisa

Okay, so we have what was is called intra-fund advice. So any advice that's basically contributions or basic contributions, investment choice, insurance, there's no additional cost. Because as a Rest member inside your administration fee we've already taken that into consideration in the fund.

Now the only advice we charge for is, transition to retirement, retirement advice and then couple's contribution, especially if they're not a Rest member. Because that's the advice we deem all members won't need to access. So to make it fair and equitable as a Rest member, we pick up a portion of the fee, and then if, if there has to be an additional fee, the member will pick it up and we invoice you. We invoice you after the advice. It's not, you know, you need to pay us before we speak to you. But like I said, we're very approachable team. We're super simple, we're people too. So we want to, you know, reach out and speak to our members. And if we can assist with advice, taking control of your finances, first of all, makes you feel more powerful.

And secondly, if you learn 1 or 2 things just from that conversation, you're already financially more apt than you were prior. And you don't know what you don't know.

Ange

And so just to clarify, as a team, you guys don't work on a commission structure, is that correct?

Lisa

Exactly. So we're salary based, not commission based. So whether I have 97 conversations and do no advice documents, which is very rare, because most people have a need. To be honest, the majority of the advice we do is at no additional cost because most, nearly everybody you need investment choice advice. Contributions, insurance you know and and we're getting off topic I guess from, from what the podcast is about...

Ange

We can tell you're passionate Lisa

Lisa

But yeah, you know, speak to us. It's like, yeah..

Ange

It's just common sense, guys, speak to an adviser.

Lisa

Well it's not common sense, it's, we're everyday person as well. Now we go to a mortgage broker to get our mortgage right. The same as everyone else. You go to a specialist for something. This is something we know. We want to make our members feel more in control of their finances, understand what they've got, and be able to work together to build their goals with this money that they've got.

Ange

I need to book a call with Lisa, like ASAP.

Sinem

Lisa being an adviser, you must hear from a lot of different people about a lot of different things. What's something that comes up the most for you on your advice calls?

Lisa

So, my team would probably be, oh my gosh this is the most thing. Once you go through and you give advice to somebody and then you tell them the benefits of your recommendation. The first thing they say is, oh my God, I wish I knew this sooner.

Sinem

We've had that come up in the vox pops, actually. People being like, nobody told me that this wasn't something that I need to even think about. So it's so interesting that you get that as well.

Lisa

Yeah. And that's at any age group because your need is constantly changing. But there's always a need and there's probably sometimes a way we can assist with growing your super, saving tax, doing things. So at every stage of your life or members, that's the one thing they say.

Ange

Thank you so much for joining us today, Lisa. I think it's been one of the most fascinating conversations we've had so far on the show, and I cannot wait to take it home and talk to hubby about it now.

Lisa

No, thank you so much for having me. As you can see, I'm quite passionate about super and just, I just want people to embrace not not super, it's their financial asset and you know, just make the most of it. So no, I've really enjoyed being here.

Ange

If you enjoyed today's episode, please make sure to like, follow and subscribe.

Sinem

For any more information, check out the links in the show notes down below.

Ange

And that is…

Ange and Sinem

Super simple.