Managing your pension in a high inflation, volatile-return environment 

With inflation currently sitting at 5.1%, Australians, including retirees, are likely to be seeing significant price increases for everyday items such as food, petrol, and healthcare costs. Whether you are a Christian Super member or have your super elsewhere, returns from investment markets are also expected to be lower than recent historical averages this year, potentially leaving self-funded retirees with less funds to address rising prices.

To help you navigate this environment, we’ve put together some useful tips which may help you.

 

1. Make a budget

Creating a budget can be an effective way to save. Tracking your spending can help you to understand your spending habits and whether you are sticking to your budget. MoneySmart’s Budget Calculator can help you identify where you are spending your money and create a budget.

 

2. Review your expenses

Once you have identified your spending habits and created a budget, you can determine which expenses you can comfortably live without. For example, if the money you have been spending on takeout food is higher than expected, you can commit to planning your meals and limiting grocery shopping in order to avoid making impulse purchases.

Another possible way to save is reviewing memberships, subscription plans, or other similar items. Are there any services that you do not use anymore? Are there better deals out there? You can consider pausing, cancelling, or changing providers to save a little extra each month.

 

3. Review your pension drawdown rate

On 25 May 2022, the Australian government announced that the reduced annual minimum pension payment amounts will be extended for the 2022/23 financial year. This is due to the negative effect COVID-19 has had on account balances of pension members across  super funds.

Decreasing your pension drawdown rate could help your pension last longer. The reduced minimum pension drawdown rates can be found below:

Age Reduced minimum drawdown rates for
2019/20, 2020/21, 2021/22 and 2022/23 financial years
Minimum drawdown rate
assumed after 2022/23
Under 65 2% 4%
65 to 74 2.5% 5%
75 to 79 3% 6%
80 to 84 3.5% 7%
85 to 89 4.5% 9%
90 to 94 5.5% 11%
95 or more 7% 14%

You can change your pension drawdown rate at any time by completing our Pension Payment Election Form.

 

4. Review your investment options

Did you know that you can select multiple investment options, and choose where your future pension payments, fees and charges are deducted from?

For example: If you have 80% of your balance invested in Ethical Balanced Growth, and 20% of your balance invested in Ethical Cash, you may choose to have all your pension payments, fees and charges deducted from just one option.

Our Pension Guide and Pension Target Market Determinations has more information on the types of investment options we offer, suitable time horizons and risk appetite. If you are a Christian Super member, we can also refer you to a phone-based financial advisor service that can help you select the right investment option(s) at no additional cost. You can arrange an appointment by contacting us.

 

How does Christian Super’s pension performance compare to other funds?

While current performance is not an indication of future performance, SuperRatings has listed most of Christian Super’s pension investment options among the top 5 performing options for the 1 year ending on 30 April 2022.

Investment Option Christian Super’s 1 Year Return Median Fund Return* Rank**
Pension Ethical Index Shares 5.5% n/a n/a
Pension Ethical High Growth 8.0% 4.5% 4th out of 37
Pension Ethical Growth Plus 9.8% 4.9% 3rd out of 56
Pension Ethical Balanced Growth 8.5% 3.8% 5th out of 103
Pension Ethical Conservative Balanced 6.3% 2.6% 2nd out of 65
Pension Ethical Stable 4.2% 0.6% 3rd out of 78
Pension Ethical Cash 0.1% 0.1% 26th out of 56

 

* Source: SuperRatings. The median is the midpoint of similar pension investment options offered by other super funds.
** Source: SuperRatings. Ranked against similar pension investment options offered by other super funds.

 

At Christian Super, we are committed to delivering strong returns for our members, including during times of market volatility. If you have any further questions, our Member Care Team are here to help. Click here to contact us.

Disclaimer: The content of this article includes advice that is general in nature and does not consider your personal situation. Christian Super encourages all people considering their options in retirement planning to seek out qualified professionals who can provide specific personal advice.