MLC Market Watch

Given what’s been happening in financial markets recently, most people with superannuation or pension investments would have seen their account balance fall in value.

If this has happened to you, we understand you may be quite worried at the moment. So here are some things people at different life stages could consider:

People who are ten or more years away from retirement

It’s important to keep in mind that super is a very tax-effective place to invest.

This is because:

• investment earnings are taxed at a maximum rate of 15%, not your marginal rate which can be up to 46.5% (includes a Medicare levy of 1.5%), and
• you can receive a tax-free income at age 60 or over.

You also need to remember that super is a long-term investment. This is because you are investing not only for the ten or more years until you retire, but the 20 to 30 years you could spend in retirement.

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On Thursday 4 December, MLC hosted an online discussion for people in or approaching retirement. Here, MLC’s Head of Technical Services, Andrew Lawless, tackles the super and pension questions the panel didin’t manage to get to in the webcast.

A number of commentators suggest people previously considering retiring shortly should remain working now for a number of years – does this make sense when taking into account how long most people will be retired for, and how share markets should perform over the long term?

If the sharemarket performs exceptionally well, then any reduction in your account balance could be restored without needing to stay in the workforce and save more. However, no one can predict when the sharemarket will rebound and how strong its performance will be. If, therefore, you have the opportunity to continue working and save more from your income, this could be a prudent strategy. This could be reviewed depending on future market performance.

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On Thursday 4 December, MLC hosted a live investor webcast focused on super and pensions.

The format for the 45-minute online discussion was 15 minutes of presentations, followed by 30 minutes of live Q&A.

The presenters were:

• MLC Investment Strategist Brian Parker who provided a market update and talked through the issues of the day, and
• Paul Maddock, General Manager Investment Products & Services who detailed the options and choices people in or approaching retirement have.

A panel of experts then took live questions from viewers.

A recording of the webcast is now available. Tune in for what was a lively and insightful discussion.

You can hear what other people are asking the panel, and navigate the webcast to just listen to the bits that really interest you.

Watch MLC’s online discussion now.

Andrew Lawless is Head of Technical Services at MLC. Here he answers the super and pension questions the panel didn’t manage to get to in MLC’s online panel discussion, held on Wednesday 12 November. Watch this space for more Q&A.

Is salary sacrifice a good idea in these times as I want to retire in a year?

Regardless of market conditions, salary sacrifice is a tax effective way to save for retirement. This is because your super contribution is taxed at a maximum rate of 15%, instead of your marginal income tax rate which could be up to 46.5%*.

There could also be advantages to investing in super when markets are down. This is because share values are cheaper, so you can buy more with your contribution and capitalise on this when the market recovers.

You should see a financial adviser to work out whether salary sacrifice is the best way for you to boost your retirement savings. If it is, they will also be able to advise on what investments you choose to generate sufficient income for your retirement.

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Colonial First State freezes assets of Colonial First State Wholesale Income Fund.

With effect from 3pm Friday 24 October 2008, Colonial First State has frozen the assets of their Colonial First State Wholesale Income Fund.

This decision impacts investors in some MLC products because the Colonial First State Wholesale Income Fund is an investment option on the MLC MasterKey platform.

In simple terms, Colonial’s decision to freeze transactions means investors with balances in the Colonial First State Wholesale Income Fund on the MLC MasterKey platform will not be able to invest, withdraw or switch into or from the fund. Importantly, MLC will continue to make Pension and Regular Withdrawal Facility payments as scheduled.

For more information about Colonial First State’s decision to freeze the fund, please contact Colonial directly.

No MLC funds have been frozen for redemptions and all are operating as normal.

Read the full notice…