Dennis

Australian Unity’s 2021 Professionalism Award Winner & 2021 Rising Star Finalist!

We proud to announce that our financial advice is now award winning!

At the Australian Unity Advice Conference in September, Dennis was the recipient of Australian Unity’s 2021 Professionalism Award which recognised his:

• Advice quality
• Advice process and systems
• Compliance excellence

This award was in addition to Defined Financial Advice being a runner up for Australian Unity’s 2021 Rising Star Award.

This was an amazing achievement and could not have been done without the support of our clients, friends, and associates. It’s an honour for us to help manage wealth for you and those you care about.

We would like to thank you for being advocates of the business and contributing to us being recognised as a high-quality financial advice provider.

We look forward to continuing to help you achieve your wealth and other goals.

Dennis Souksamlane – 2021 Australian Unity Professionalism Award Winner!

Principal Adviser at Defined Financial Advice

August was another strong month for growth assets. US equities, as measured by S&P 500, posted their 7^th successive monthly gain whilst in Australia the S&P/ASX 300 posted its 11^th successive monthly gain, its longest winning streak since the index’s inception in 1980.  This was despite heightened geo-political uncertainty surrounding the US exit of Afghanistan with the Taliban easily taking control of Kabul. In addition, the COVID Delta variant accelerated its spread globally with the US and UK seeing 200,000 and 30,000 cases respectively a day which will see a full return to work and school delayed. In China, whilst cases are not high, a major port was shut down to limit spreading from a COVID infected worker. If such instances continue around the globe it pushes out economic recovery in addition to sustaining supply chain disruptions and increases the potential for sustained higher levels of inflation.

Australian unemployment fell in July to 4.6% however this was mainly due to a fall in the participation rate. The underemployment rate rose from 7.9% to 8.3% indicating that whilst people are employed, many still want to increase their hours. Anecdotally, it’s clear that with the lockdowns and service sector disruptions, the unemployment figure doesn’t truly reflect the fragility of the economic recovery, with some sectors of the economy remaining deeply impacted by lockdowns in New South Wales and Victoria.

The Australian share market was positive in August with large caps up 2.3%. Financial reporting season, which occurred largely during August, saw several major companies increase profits and return capital back to shareholders via increased dividends and share buybacks. There has also been a notable uptick over the past few months in corporate activity.

International equities rose in the month, gaining 2.7% on a currency-hedged basis. The AUD, whilst steady versus the US Dollar at US$0.7311, did weaken against other currencies resulting in a 3.1% gain for unhedged international equity investors.  Australian small caps benefitted from a good reporting season and returned 5.0% for the month, AREITS were the standout rising 6.3% in the month.

Australian Bond yields ended the month lower, a nod to the uncertainty with a large percentage of the nation in lockdown, the Australian 10-year government bond yield declined 2bps to 1.16% and the 2-year government bond fell 3bps to 0.01%. In the US the 10-year government bond rose by 9bps to close at 1.31% and the 2-year government bond yield rose by 3bps to 0.21% as the US Federal Reserve’s tone is becoming more “hawkish” implying that the US Federal Reserve may begin to curtail (taper) some of its quantitative easing measures early than investors had previously expected.

Benchmark Returns 

Important information
RESEARCH INSIGHTS IS A PUBLICATION OF AUSTRALIAN UNITY PERSONAL FINANCIAL SERVICES LIMITED ABN 26 098 725 145 (AUPFS). ANY ADVICE IN THIS ARTICLE IS GENERAL ADVICE ONLY AND DOES NOT TAKE INTO ACCOUNT THE OBJECTIVES, FINANCIAL SITUATION OR NEEDS OF ANY PARTICULAR PERSON. IT DOES NOT REPRESENT LEGAL, TAX OR PERSONAL ADVICE AND SHOULD NOT BE RELIED ON AS SUCH. YOU SHOULD OBTAIN FINANCIAL ADVICE RELEVANT TO YOUR CIRCUMSTANCES BEFORE MAKING PRODUCT DECISIONS. WHERE APPROPRIATE, SEEK PROFESSIONAL ADVICE FROM A FINANCIAL ADVISER. WHERE A PARTICULAR FINANCIAL PRODUCT IS MENTIONED, YOU SHOULD CONSIDER THE PRODUCT DISCLOSURE STATEMENT BEFORE MAKING ANY DECISIONS IN RELATION TO THE PRODUCT AND WE MAKE NO GUARANTEES REGARDING FUTURE PERFORMANCE OR IN RELATION TO ANY PARTICULAR OUTCOME. WHILST EVERY CARE HAS BEEN TAKEN IN THE PREPARATION OF THIS INFORMATION, IT MAY NOT REMAIN CURRENT AFTER THE DATE OF PUBLICATION AND AUSTRALIAN UNITY PERSONAL FINANCIAL SERVICES LTD (AUPFS) AND ITS RELATED BODIES CORPORATE MAKE NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS.

How do we measure wellbeing? 20 years of research and surveys through the Australian Unity Wellbeing Index have tracked the wellbeing of our nation and found that Australians are a pretty resilient bunch.

Developed in partnership with Deakin University, the Wellbeing Index has influenced government and business with insights across varying age and socio-economic groups.

The index uses seven domains that combine to influence peoples’ wellbeing—such as standard of living, health, relationships, personal safety, achieving in life, future security and community connectedness.

The research shows that wellbeing matters for the health of individuals, communities, and the nation. “If you have better wellbeing, you’re more likely to have better physical and mental health, and decreased risk of disease, injury and illness,” Associate Professor Delyse Hutchinson, lead researcher of the Australian Unity Wellbeing Index, says.

20 years of research has shown that Australians are resilient when facing tough times. Even in 2020, after bushfires and in the middle of the first COVID-19 lockdown, personal wellbeing was at the top of the average range, according to the Australian Unity Wellbeing Index.

Does money matter?

Conversations about wellbeing often focus on physical and/or mental health. But our finances, or standard of living, is a very important factor when it comes to wellbeing.

The standard of living domain is part of what researchers call the “golden triangle of happiness”, this represents the three domains that are dominant in helping people feel positive about everyday life.

As Associate Professor Hutchinson explains, “We have found over many years of research that, in Australia, personal relationships, standard of living and achieving in life have more of an impact on our wellbeing than the other domains. And, if you can work on those, you’ll often see a bigger increase in people’s wellbeing.”

Esther Kerr-Smith, CEO of Wealth and Capital Markets at Australian Unity, is a big advocate for what she calls the “non-sexy” financial side of wellbeing.

“For most people, it is not about the latest tech start up, options trading, or a large portfolio of investment properties—although these are interesting and valid things—it is about financial security, standard of living and overall wellbeing which are critical to achieving and maintaining Real Wellbeing,” says Esther.

Over the last two decades, satisfaction with standard of living has been slowly increasing in Australia, reflecting most people’s comfortable financial situations. Notably, the Australian Unity Wellbeing Index 20^th Anniversary Commemorative Report shows that there has been a slight increase in satisfaction among adults aged between 18 and 45*, indicating that we’re better off during our main working years than before.

Money matters to wellbeing, but it matters more to people who have less of it. The Australian Unity Wellbeing Index shows that wellbeing improves in line with household income until it reaches the $101,00 to $150,00 range—at which point the relationship between money and wellbeing weakens. However, the reverse also holds true, with the research showing that that people living on a gross household income of $60,000 or less struggle to reach a normal level of wellbeing.

In fact, our research shows that even a moderate level of financial strain can cause wellbeing to unravel.

“If you are worried about how you’re going to pay your bills, or how you’re going to fund your retirement, that is a leading indicator of future wellbeing issues in health, standard of living and care,” says Esther.

But it’s not just about how much money you earn—it’s also about how you manage it. Australian Unity Wellbeing Index research has shown that greater financial control is associated with higher wellbeing, while people with low levels of financial control have wellbeing scores below the normal range.

“Even if you’ve got financial security and a decent standard of living, if you don’t feel empowered and in control, it can still be very stressful,” says Esther.

The upshot? Money matters, but we also need to get the foundations right. “People do not need to be rich to have financial wellbeing,” says Esther. “They need a reasonable standard of living and, most importantly, they need confidence about their financial affairs being in order enough to support them in the future.”

Learn more about the Australian Unity Wellbeing Index.
Click here to read the 20^th Anniversary Commemorative Report.
* All statistics cited in this article are sourced from the Australian Unity Wellbeing Index 20^th Anniversary Commemorative Report.

How is the index measured?

The Australian Unity Wellbeing Index measures wellbeing by asking respondents how satisfied they feel in certain areas of their life on a scale from zero to 10. The answers are then converted to an overall score between zero and 100, indicating where each person’s average wellbeing falls. The index is a measure of both individual and community wellbeing and has been adapted and validated for use cross-culturally, with both adults and children, and among people with an intellectual or cognitive impairment.

Relationships: The quality of your relationships with family, friends and significant others.

Achieving in life: Having a purpose, direction or meaning in your life.

Standard of living: Having enough money or financial control to live and enjoy life.

Health: Your physical and mental state.

Community connectedness: A sense of belonging and connection to the people around you.

Personal safety: How we feel about our safety (and how this translates into our communities and our nation overall).

Future security: How we feel about our future in terms of job security, health, the environment and other factors.

Important information

This is a publication of Australian Unity Personal Financial Services Limited ABN 26 098 725 145 (AUPFS), AFSL 234459. Its contents are current to the date of publication only, and whilst all care has been taken in its preparation, AUPFS accepts no liability for errors or omissions. This report is general in nature and does not take into account the objectives or circumstances of any particular individual or entity. It cannot be relied upon as a substitute for personal financial, taxation or legal advice.

The information transmitted is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and permanently delete the material from your computer system. We cannot guarantee that this e-mail is virus-free. You should scan attachments with the latest virus scan before opening. We will not be liable for any loss, cost or damage of any kind whatsoever caused by any receipt or use of this e-mail and attachments.

July was another positive month for growth assets.  Meanwhile, fixed interest assets gained in value (yields fell), despite further rises in inflation that ordinarily would lead to rising bond yields.

Australia’s June quarter inflation figures were released during July, showing inflation running at an annual rate of 3.8%.  Big contributors to inflation include household items such as +5.5% for vegetables and +4.7% for fruit, due to supply constraints and labour shortages. Globally we continue to see central bank and government stimulation; China’s central bank has reduced trading banks’ reserve requirement ratio by 0.5% in order to add liquidity by enabling banks to retain less money as reserves and therefore have more funds to lend to borrowers.  In the USA, work is continuing to pass legislation that would see the largest infrastructure expenditure in decades.

An interesting development to note in July was the proposal for a global minimum corporate tax rate, a measure supported by 130 countries which aims to stop companies from diverting activities/earnings to low tax regimes. However, with some nations wanting to protect against themselves from potential lost tax revenue and job losses, it will take some time to work through the details.

The Australian share market was positive in July with large caps up 1.2% and the ASX continuing to reach all-time highs with Mergers and Acquisition activity increasing. International equities rose in the month, led by US equity markets, which gained 1.8% on a currency-hedged basis. The US dollar appreciated by 2% (seeing the AUD fall from US$0.7497 to US$0.7344), resulting in a 4.0% gain for unhedged international equity investors.  Australian Listed Property benefitted from falling bond yields to rise 0.3% in the month.

Bond yields ended the month lower despite inflation ticking up. Investors focused on the rapid spread of the COVID Delta variant and its potential to slow economic growth. The Australian 10-year government bond yield declined 35bps to 1.18% and the 2-year government bond fell 2bps to 0.04%. In the US the 10-year government bond fell by 25bps to close at 1.22% while the 2-year government bond yield fell 6bps to 0.18%.

Benchmark Returns 

 Important information
RESEARCH INSIGHTS IS A PUBLICATION OF AUSTRALIAN UNITY PERSONAL FINANCIAL SERVICES LIMITED ABN 26 098 725 145 (AUPFS). ANY ADVICE IN THIS ARTICLE IS GENERAL ADVICE ONLY AND DOES NOT TAKE INTO ACCOUNT THE OBJECTIVES, FINANCIAL SITUATION OR NEEDS OF ANY PARTICULAR PERSON. IT DOES NOT REPRESENT LEGAL, TAX OR PERSONAL ADVICE AND SHOULD NOT BE RELIED ON AS SUCH. YOU SHOULD OBTAIN FINANCIAL ADVICE RELEVANT TO YOUR CIRCUMSTANCES BEFORE MAKING PRODUCT DECISIONS. WHERE APPROPRIATE, SEEK PROFESSIONAL ADVICE FROM A FINANCIAL ADVISER. WHERE A PARTICULAR FINANCIAL PRODUCT IS MENTIONED, YOU SHOULD CONSIDER THE PRODUCT DISCLOSURE STATEMENT BEFORE MAKING ANY DECISIONS IN RELATION TO THE PRODUCT AND WE MAKE NO GUARANTEES REGARDING FUTURE PERFORMANCE OR IN RELATION TO ANY PARTICULAR OUTCOME. WHILST EVERY CARE HAS BEEN TAKEN IN THE PREPARATION OF THIS INFORMATION, IT MAY NOT REMAIN CURRENT AFTER THE DATE OF PUBLICATION AND AUSTRALIAN UNITY PERSONAL FINANCIAL SERVICES LTD (AUPFS) AND ITS RELATED BODIES CORPORATE MAKE NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS.

The Australian tax system provides generous tax breaks and benefits for retirees. Here’s what you need to know.

Retirement is often a phase in life when people get ready to start to wind down and do more of the things they enjoy. A round of golf, some gardening, hanging out with the grandkids and a caravan trip — this slower pace sounds like the ideal lifestyle to most of us.   Whatever you choose to do once you stop working, the dream is to retire on your own terms.   It’s why understanding the Australian retirement and tax systems—and how you could benefit from them—is important, because it allows you to maximise your income during the golden years of your life.

Retirement income is usually derived from:

• part-time or casual employment
• pensions
• annuities
• superannuation
• investments
• earnings outside Australia, such as pensions from your country of origin
• salary packaging

The good news is that in Australia retirees are supported by a generous government benefits and tax system that supports those leaving the workforce.

Benefits: The Age Pension  

Australian retirees may be eligible for the Age Pension, which is an income payment from the government, depending on their age, assets and income. Right now, the fortnightly pension rate is up to $952.70 for singles; if you’re a couple, you can receive up to $718.10 each¹. Pension payments are included as part of your taxable income.

To be eligible for the Age Pension, you need to be 66 and a half years of age or over (increase to 67 from 1 January 2023), an Australian resident at the time of your application and meet the income and asset tests.

Bear in mind that while your family home isn’t generally counted as an asset, if you decide to sell it could affect your eligibility for the Age Pension.

Benefits: concession cards and discounts  

Retirees may also be eligible for a number of concession cards, which provide discounts on health care, medicine, transport and utilities.

These include the Commonwealth Seniors Health Card, which provides cheaper health care for retirees who are 66 and a half years of age or over, meet income and residency tests, and don’t qualify for a payment from Centrelink or the Department of Veterans’ Affairs.  

The Pensioner Concession Card similarly provides discounted health care and medicine for people who receive certain payments, including the Age Pension, from Centrelink.

In addition, each state and territory has their own free Seniors Card, which provides discounts on public transport and with participating businesses for retirees aged 60 and over.

Tax: superannuation tax breaks  

You can access your super as early as age 57, but this depends on your preservation age — most people will need to wait until age 60. You can withdraw your super systematically as a regular income or take all or part of your benefit as a lump sum.

Essentially, your nest egg is taxed at three stages. When it hits your super fund (contributions), while it’s sitting in the fund (investment earnings) and when it leaves the fund (super benefits).

Just how much tax you pay at each stage depends on your personal circumstances and the size of your nest egg.

Employer and salary-sacrificed contributions are taxed at 15 percent when they’re received by your super fund. One way to pay less tax, therefore, is to top up your super during your working years with extra contributions.

For most people, an income stream from superannuation will be tax-free from 60. Taxation on lump sum withdrawals depends on a number of factors, including your age and the type of super fund.

It’s worth checking that you’ve provided your super fund with your tax file number, because this extra piece of information is rewarded with lower tax rates.

Tax: Senior Australian Pensioner Tax Offset  

The good news is that the Australian tax system is generously geared towards retirees.

An Australian resident of pension age qualifies for the Senior Australian Pensioner Tax Offset, explains Yvonne Chu, Head of Technical Services at Australian Unity.

“Once you retire, you generally can have up to $1.7 million of your super savings in an absolutely tax-free environment, which is as good as it gets,” Yvonne explains.

“There’s quite a generous pensioner tax offset, which essentially means that retirees typically don’t have to pay personal income tax. This means that if someone permanently retires on or after 60, they can convert their super into the retirement phase and draw down on their savings, and this process is entirely tax-free.”

Planning ahead to make the most of your retirement income  

While the Australian tax system supports retirees, bear in mind that any strategy designed to reduce the tax you pay could be viewed as a tax-avoidance measure by the ATO, so the best advice is to visit an accountant or financial adviser to understand your tax requirements and ensure you haven’t missed anything when preparing for your retirement.

“Preparing for retirement is a marathon, not a sprint,” Yvonne says. “To maximise super contributions, you’ve really got to do it over a number of years, so go and see your financial adviser well before you reach preservation age, so you can look at ways to bolster your retirement income.”

With your accountant or financial adviser, you can then begin to put together a plan to maximise your retirement income and, of course, make the most of your well-earned retirement.

Author: Australian Unity Limited – Advice

Important information

¹ Rates current for the period from 20 March 2021 to 19 September 2021. This rate includes the maximum basic rate, maximum pension supplement and energy supplement.

This information has been produced by Australian Unity Personal Financial Services Ltd (‘AUPFS’) ABN 26 098 725 145, AFSL 234459. Any advice in this document is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. You should obtain financial advice relevant to your circumstances before making investment decisions. AUPFS is a registered tax (financial) adviser and any reference to tax advice contained in this document is incidental to the general financial advice it may contain. You should seek specialist advice from a tax professional to confirm the impact of this advice on your overall tax position. Nothing in this document represents an offer or solicitation in relation to securities or investments in any jurisdiction. Where a particular financial product is mentioned, you should consider the Product Disclosure Statement before making any decisions in relation to the product and we make no guarantees regarding future performance or in relation to any particular outcome. Whilst every care has been taken in the preparation of this information, it may not remain current after the date of publication and AUPFS and its related bodies corporate make no representation as to its accuracy or completeness. Published: June 2021 © Copyright 2021