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How Hostplus is responding to COVID-19

‘I want to reassure you, our members and contributing employers, that we are actively monitoring and managing these unprecedented circumstances to ensure that your hard-earned retirement savings continue to be well managed and in good hands.’  - David Elia, Chief Executive Officer

Our members are our top priority

Hostplus’ guiding principle and its highest duty is to always act in the best interests of our members.

It’s often said that superannuation is, for the majority of people, a long-term investment. And this remains the case for the majority of Hostplus’ members.

For those members that are close to or in retirement today, there is an increased need to protect capital from shocks and setbacks that are difficult to make up over a shorter period.  This is why Hostplus’ investment options are designed to cater for the different objectives, risk tolerances and timeframes of our members.

While the effects of the COVID-19 pandemic on global investment markets are particularly our focus presently, you can be assured that we have a team of dedicated professionals with the necessary skills and understanding to manage our portfolios through these uncertain times and through to the recovery of markets in time.

Until then, we’d encourage you to check in regularly here, where we will continue to keep you updated with the latest developments ensuring you have all the information you need to manage your retirement needs.

What you need to know

Our investment portfolios are designed and structured to provide appropriate resilience and to help endure the unpredictability and instability currently being experienced in world investment markets.

We constantly monitor the asset allocation of each of our options to seek to ensure we are always putting our members in the best possible position for long-term positive outcomes. And long-term performance is one of the key factors to bear in mind during these events.

While the global market may currently be experiencing a downturn and considerable volatility, our team remains mindful of opportunities to review, and as necessary adjust, our strategic approach to continue to retain our position as a market leader in long term investment performance.

Hostplus has a proud history of strong long-term investment performance. Prior to the current downturn, according to SuperRatings, our Balanced option, serving approximately 90% of our members, delivered top 4 returns over 20, 15, 10, 7, 5 and 3 years to 29 February 2020. The Balanced option also returned an impressive life-time average return of 8.95% per annum since inception.

However, we are not resting on our laurels. We know that our consistent history of exceptional performance is not a guarantee of future returns and we therefore continually strive to ensure that our strategic investment approach puts our members in a strong position for continued future growth.   

Hostplus’ broader investment strategy is designed to assist the fund weather investment market volatility by virtue of having a well-diversified asset allocation. A core component of our investment strategy is an exposure to quality unlisted assets, such as infrastructure, property, private equity and venture capital.

As was the case following the Global Financial Crisis some 10 years ago, we are confident that our continued exposure to unlisted assets will see us well positioned to take advantage of the market recovery and help our members get back on track with respect to their retirement goals once the health crisis has passed and investment markets and the broader economy rebound. 

Market fluctuations are normal parts of investing

While certainly more severe than other periods of volatility experienced in the last decade, the present conditions are not unexpected or indeed unprecedented throughout history. Recessions and market dips are a common occurrence and are fundamental to the nature of the market.  

We remain confident in the structure of our investment options and the abilities of our dedicated investment team to make informed decisions on behalf of our members in order to avoid the severest pitfalls of a ‘bear’ market – that being an investment market that has experienced a decline of 20% or more from its previous highpoint.

Hidden impact of switching

We recognise that members may feel an understandable desire to protect their retirement savings from investment losses in falling or fallen markets, by switching investments to cash or similar defensive assets during periods of uncertainty and volatility.

We would stress, however, that subject to each member’s own individual circumstances, financial objectives and needs, switching from a broadly balanced investment option, or a growth orientated one held for many years, if not decades, until retirement, to cash should be treated with caution.

Individual members who switch to cash and thereby crystallise their otherwise interim losses during times of depressed unit prices often inevitably miss out on compounding growth of a broader range of diversified assets over the years to retirement. This opportunity cost may prove to be extremely high, so we caution and encourage every member to seek individual financial advice and consider their own circumstances before making such a decision.

Due to the rapidly changing events surrounding the COVID-19 pandemic, there is a heightened risk that scammers and fraudsters will seek to take advantage of these occasions to exploit people’s vulnerabilities, confusion and anxiousness to attempt to embezzle and steal from Australians. 

At these times, and especially under circumstances when people may be considering making application to withdraw some of their superannuation under current special early release provisions, increased levels of watchfulness and scrutiny need to be applied by everyone.

Hostplus has a range of controls and measures designed to protect your super. But there are also some important steps you can take to ensure your super stays safe now and into the future.

The government has announced that its early super access scheme will not commence receiving applications via the Australian Tax Office’s (ATO) Mygov portal until 20 April 2020.  There is an increased risk in the lead-up and during this period that scammers may attempt to either assist you in an application or may pretend to be the ATO itself and seek personal details, including your bank account and superannuation fund details.  If you are so contacted, receive a suspicious email or phone call relating to this, odds are it is unlikely to be genuine and instead someone trying to steal your personal details and your super.

What to look out for:

  • Being charged for unnecessary services that you didn’t ask for or that we didn’t tell you about.
  • Suspicious calls from unknown persons claiming to be a financial adviser or investment manager trying to obtain your personal information over the phone or email.
  • Any unsolicited advice from a third party (via phone or email) that is not your super fund.
  • Being pressured into taking action over the phone.; and
  • Investment opportunities that promise a high return with little or no risk during this time.

What you can do:

  • Always log into your Hostplus account through the Hostplus website at hostplus.com.au, ensure all your details are up-to-date and reset your password if necessary.
  • Never give out your super account or bank account information, including your tax file number to any unknown caller. If you need to speak to us, call us directly.

If you think a scammer has contacted you:

  • Take their name and number, hang up and report it to us at info@hostplus.com.au
  • You should also report them to the ACCC via the report a scam page and local police 131 444.  For tax related fraud, contact the ATO (13 10 20) or the financial regulator, ASIC (1300 300 630).
If you think a scammer has your details, change your myGov details and all your passwords and PINs as soon as possible.

If you’re experiencing financial hardship as a result of loss of income caused by or related to COVID-19, there are a number of options available to you to help ease the financial burden during these challenging times.

The following are some points to think about and act on as applicable to assist you manage and hopefully alleviate your current financial circumstances:

  • Most banks have introduced measures to defer mortgage repayments for six months for homeowners who are experiencing hardship. Speak to your bank to find out if you qualify for mortgage relief.
  • Similarly, utility providers (electricity, gas, water, telephone, etc) are also likely to be able to offer short-term assistance to manage financial hardship measures that will assist their customers. You should also ask whether there is special assistance available for those impacted by COVID-19.
  • Like utility providers, many credit card providers can offer short-term assistance to people experiencing financial difficulties. Be sure to ask about any specific COVID-19 assistance measures.

You may also be eligible for financial assistance, financial counselling or access to some simple tools to help you plan for future:

  • Centrelink eligibility for certain income support payments has been temporarily widened and a new time-limited Coronavirus supplement payment introduced, with many people including students eligible for an additional $550 per fortnight. Apply at myGov today or visit Services Australia to learn more about your entitlements.  
  • The National Debt Helpline provides a wide range of information about ways to manage debt and offers a free financial counselling service.
  • Moneysmart, the government resource can help you understand and manage your finances via range of tools including easy budget trackers.

But be especially cautious of so-called ‘payday’ lenders. It pays to be aware that many of these types of loans are offered at interest rates well above those offered by more credible lenders and may include significant additional costs as well as onerous penalties for late or missed payments.

According to the Australian Securities and Investments Commission’s (ASIC) Moneysmart website, a $2,000 payday loan today could cost as much as $3,360 even if you paid it back within a year and did not incur any penalties. 

When considering whether to make an application to the ATO for an early release of superannuation under the current special arrangements, you should first carefully consider and weigh-up that action versus the longer-term implications to your retirement savings that such a withdrawal may have.

While some members will undoubtedly benefit from a financial boost today, you need to consider the real cost to your future. Independent modelling shows $10,000 withdrawn today by a 35- year-old, followed by another $10,000 withdrawal in July 2020, could see as much as a $85,000 less in their super at age 67*.

Hostplus fully supports the Federal Government’s initiative to provide an early access arrangement for those in most need to do so, however we strongly encourage you to also fully explore all the hardship-related options that might be available to you, including Government support such as Centrelink benefits and payments. You should do so bearing in mind your individual circumstances, including your long-term financial situation, objectives and needs.

*Independent Modelling as performed by SuperRatings 24 March 2020. Based on ASIC’s MoneySmart calculator using a Growth option with an assumed investment return of 5.0% before fees and taxes on earnings. Assumes the individual’s birthday is 24 March, withdraws $10,000 on 24 March and another $10,000 on 24 July 2020. For simplicity this model does not consider the starting balance or any further contributions. 

Temporary early access to superannuation

The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in the 2019-20 financial year and up to a further $10,000 in the 2020-21 financial year. 

While superannuation helps people save for retirement, the Government recognises that for those significantly financially affected by the Coronavirus, accessing some of their superannuation today may outweigh the benefits of maintaining those savings until retirement.

Eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 until 24 September 2020.

Eligibility

To apply for early release you must satisfy any one or more of the following requirements:

  • you are unemployed; or
  • you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
  • on or after 1 January 2020:
    • you were made redundant; or your working hours were reduced by 20 per cent or more; or
    • if you are a sole trader – your business was suspended or there was a reduction in your turnover of 20 per cent or more.

People accessing their superannuation will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.

Application Process

Applications will be processed by the ATO, not Hostplus

Apply directly to the ATO through the myGov website: https://my.gov.au

The ATO is managing all applications and approval processes related to early access to your super, including your bank account details.

You need to confirm your bank account details and apply for early access to your super via the MyGov website at my.gov.au.  

Once Hostplus has been notified that the ATO has approved your application your funds will be automatically transferred to your nominated account.

Separate arrangements will apply if you are a member of a self-managed superannuation fund (SMSF). Further guidance will be available on the ATO website: www.ato.gov.au.

Timing

You will be able to apply for early release of your superannuation from 20 April 2020.

Minimum drawdown rates from superannuation by retirees have been reduced by half for the 2019-20 and 2020-21 income years. The changes mean that members who do not wish to draw more than the new revised minimum annual limits — potentially requiring the sale of market-linked and other non-cash assets during this period of economic downturn — will not be required to do so.

The following reduced minimum draw-down rates will be applicable to both Account-based pension (ABP) and Transaction to Retirement (TTR) pension accounts:

Age Default minimum
draw-down rates
Reduced minimum
draw-down rates
Under 65 4% 2%
65-74 5% 2.5%
75-79 6% 3%
80-84 7% 3.5%
85-89 9% 4.5%
90-94 11% 5.5%
95+ 14% 7%

The following information applies to members who have elected to receive their Hostplus pension payments in line with the minimum government requirements.

All other pension members will continue to receive their Hostplus pension payments in line with their current instructions. If you would like to adjust your pension payment amounts, you can do so via Pension Online.

Process

Financial year 2019 -2020

To avoid the unwanted cessation of pension payments (where members have already reached the reduced minimum draw-down amounts for the year), payments for the current financial year will continue as per the minimum draw down rates as at 1 July 2019 unless otherwise requested by members. Members who wish to adjust their pension payments in-line with the new reduced draw-down rates can elect to do so via their Pension Online account.

Financial year 2020 – 2021

For the financial year commencing 1 July 2020, all members who have elected to receive their pension payments in line with the government’s minimum requirements, will automatically receive pension payments at the new reduced minimum drawdown rates.

You can instruct Hostplus to make pension payments to you at an alternate rate or amount via Pension Online.

Timing

The updated minimum drawdown rates were announced on Sunday 22 March 2020 and came into immediate effect.  

We're here for you

We are, literally, all in this together.  And we will continue to support our members, our contributing employers, our stakeholders and our community, in and through this challenging period.

We have made considerable changes to the way in which we are operating during these unprecedented times, so that we can continue to serve your needs to the high standard that you rightfully expect. Understandably, however, we are currently managing a much greater volume of member enquiries than normal and as such you may experience greater wait times for phone-based assistance.

With this in mind, we encourage you to make non-urgent enquiries via other channels, such as email to to info@hostplus.com.au. We also ask our members to consider self-service options for basic account management inquiries and actions, such as address updates, via Hostplus Member Online and Hostplus Pension Online

Be sure to check back here for regular updates as they unfold. 

The information in this update is general in nature. Consider your own objectives, financial situation and needs, which are not accounted for, before making a decision.

 


Tip: You can find your member number on your most recent member statement or electronic statement email