MLC Market Watch

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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In the last year, investment markets around the world have experienced a significant downturn. And because super is invested in the world’s investment markets, the performance of almost every fund – and almost everyone’s super balance – has been affected.

While seeing a negative return for the year is upsetting, it’s important to remember that it’s normal for markets to move up and down. All long-term investments will experience poor or negative returns at some stage.

To achieve capital growth over the long term, fund managers need to take on a level of risk to realise returns. If they didn’t do this, they would fail to generate adequate returns after tax and inflation to make their investors money.

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