Dear Members and Employers,
We hope you and your loved ones are continuing to keep safe in these unprecedented times.
The once in a century COVID-19 pandemic has been difficult for all Australians, including our members in the real estate sector. The health crisis has required the introduction and maintenance of social distancing measures which have impacted our sector, the economy and our way of life.
We would like to update you on how REI Super has been managing your retirement savings since our last update in March.
As the Federal and State Governments continue to ease restrictions and consider opening borders, the impacts on the economy are becoming more and more evident as are the wide-ranging employment related impacts. However, the situation in Melbourne is particularly challenging as stage four restrictions are introduced for six weeks and the real estate industry reverts to online only open for inspections and online auctions1. Australia’s unemployment rate jumped to 7.42% in June, the highest level since October 2001.
REI Super has more than 26,000 members and we know that a number of our members will be among those who have had their employment affected, including having their hours and income reduced. We also know, our members will have family and friends who are affected.
At REI Super our attention has been focused on being the most effective manager of your retirement savings. Whilst these are challenging and uncertain times, we want to reassure you that the REI Super team is working extremely hard to carefully manage your super, offer guidance and support where we can, and provide access to your super in this time of need.
Financial markets continue to be very volatile, fluctuating up and down within any given trading day. Gains from one day have generally been lost the following day. While it is easy for our members to react to alarming headlines and to panic when events such as this pandemic occur, we believe that a more measured approach is key. While this pandemic is impacting the assets in which we invest, it is important to separate permanent damage, which will impact what a company is worth over the long-term, versus a temporary correction which will be put behind us as the market recovers.
In May we saw the Balanced option return 2.15% net for the month as equity markets continued to re-bound from the lows reached in March. The investment performance of the Balanced option for the year to end of May was negative 2.4% net. Over the last past 10 years to 31 May 2020, the Balanced option has returned a net average of 7.03% p.a. reflecting the benefits of the Balanced options diversification across many asset classes. Over the same period, the All Ordinaries has returned an average of 3.88% p.a. and the ASX200 has returned an average of 3.71% p.a.
Changing investment strategies during a downturn can prove risky. The challenges of trying to time the market have been outlined in ASIC's recent report, Retail investor trading during COVID-19 volatility3. If you are considering changing your investment strategy, make sure you speak to a licensed or appropriately authorised financial advisor before you act.
REI Super members have access to professional and cost-effective advice as part of their membership, so call the Member Helpline on 1300 13 44 33 if you need to discuss the investment strategies that are appropriate for you.
Support, help and guidance
Over 3,500 REI Super members have withdrawn some of their super through the Government’s early access to super scheme in the period to 30 June 2020. We have been able to process approximately 92% of claims within five business days after being notified by the ATO. The remainder required additional identification checks to ATO exceptions and member requests to change their bank account details. It is important that we continue to perform the necessary checking to ensure that your retirement savings are not lost through fraud. Learn more about the early of super scheme and what happens after you apply.
However, accessing superannuation early should be approached with extreme caution and only as a last resort. Industry Super Australia analysis shows a 25-year-old who accesses the full $20,000 available under the scheme could lose $95,6964 from their retirement balance. A 30-year-old who accesses $20,000 from super now could lose $79,3934 when they retire, and a 40-year-old could lose $54,6474.
Also, if you access your super early and if, as a result, your super balance falls below $6,000, you could lose your insurance cover. Members who have insurance with us will keep any cover they have unless: their account is closed as a result of a withdrawal – their cover will cease on the date the account was closed; or, after their withdrawal there are insufficient monies in their account to pay the insurance premium; or, if not contributions or rollovers are made into the account for 16 consecutive months unless members previously notified us to keep their insurance cover even if this happens.
Ongoing uncertainty continues to prompt record numbers of members to contact us by phone, email and social media. Enquiries into our call centre in March and April were up 46% and 22% on the same months last year. The volume of member calls in March resulted in a substantial increase in waiting times, however waiting times significantly reduced in April and May to more normal levels. We understand that delays are very frustrating, and we apologise if we were not able to deliver the service we normally do. Lately our waiting times have reduced to an average of under one minute. We are doing everything we can to continue to cut down your waiting time.
In addition, we are continuing to update our website, in particular our COVID-19 Information Hub
that hosts a wide range of articles, videos, webinars and tools.
We have also recently upgraded the security of our member login and transformed your online experience to better inform, educate and support you as well as allowing you to change your member details, project your retirement savings, adjust your insurance cover, change your nominated beneficiaries, switch your investments, find and combine your super accounts. Login
to find out more.
Whilst the immediate future remains uncertain, rest assured that the REI Super team remain focused on ensuring that your retirement savings are well managed now and for the long term.
Claire Higgins Jarrod Coysh
1 Department of Health and Human Services Victoria
2 Australian Bureau of Statistics
3 Australian Securities & Investment Commission
4 Source: Industry SuperFunds. Scenarios modelled by ISA Pty Ltd on 04/05/2020. See assumptions. Figures are in today’s dollars.
This information has been prepared and published by REI Superannuation Fund Pty Ltd ABN 68 056 044 770 RSE L0000314 AFSL 240569. REI Super ABN 76 641 658 449 and RSE R1000412 MySuper unique identifier 76641658449129 for the general information of members of REI Super. It does not take into account any member’s individual financial objectives, financial situation or needs. We recommend that you seek help from a licensed financial adviser before acting on any information contained in this newsletter. Future investment performance can vary from past performance, and you should not base your decision to invest in REI Super simply on past performance. Past earning rates are not an indicator of future earning rates. The investment returns of REI Super are not guaranteed, and the value of the investment may rise or fall. REI Super does not give any warranty to the accuracy, completeness or currency of the information provided. Although REI Super makes every reasonable effort to maintain current and accurate information, you should be aware that there is still the possibility of inadvertent errors and technical inaccuracies. The REI Super Helpline and the REI Super website are provided by Mercer Outsourcing (Australia) Pty Ltd ABN 83 068 908 912 and Mercer Financial Advice (Australia) Pty Ltd (MFA) ABN 76 153 168 293, Australian Financial Services Licence (AFSL) #411766.