Case Study: CSS
Investment options, switches and investment earnings
Laila's story
Laila is 53 years old and a contributing member of CSS. Her super is invested in the Default Investment Option.
Laila works as a meteorologist in an inner-city office. Lately there’s been a lot of talk over coffee about super being affected by the recent ups and downs of the stock market. With topics like switching investments and trying to keep up with fund performance being debated, it seems everyone has an opinion on super! For Laila, super isn’t something she’s really thought about.
She knows the benefits it provides but she never thought it was important to know how her super is invested or how to keep track of investment earnings. Now she’s not so sure. She’s contacted an adviser to find out what she can do to make sure her super is best set up to provide the income support she’ll need when she retires.
Laila meets with her adviser
Laila’s adviser talks to her about investment options, switches and their cut-off dates, and investment earnings. She assures Laila that being familiar with these will help her get the best from her super—particularly if she needs to navigate financial changes in her life, or understand the impact on her super of things outside her control, like market movements.
This is what Laila is looking for—a way to ‘own’ her super so that she has the best possible chance of being able to live comfortably without worrying about money when she finally gives up work.
- How her super is invested and the investment options available.
- The rules about switching between investment options if she chooses to change from the Cash to the Default option, including costs, timings and how many switches she can make in a year.
- Investment earning rates and how they affect her super.
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“Retirement is fast approaching. I just want to make sure I’ll be okay financially when I’m ready to stop work.” —Laila |
How Laila’s super is invested
Laila’s current investment: Default Investment Option
Laila’s super is currently invested in the Default Investment Option, which she selected when she first joined CSS more than 30 years ago. All member and productivity contributions into this option are invested across a diverse group of assets: cash, fixed interest, equities, property, infrastructure and alternatives.
This option aims to provide a balance between higher-growth opportunities and capital-preserving assets.
It has a high-risk rating (Band 6 under the Standard Risk Measure), with a recommended minimum investment timeframe of 10 years. This makes it a suitable option for members who are prepared to accept a higher level of risk in exchange for potentially higher returns over the medium-to-long term.
For more information, including details on the Standard Risk Measure, see the CSS PDS Booklet - Investment options and risk.
Alternative investment option: Cash Fund
The other investment option available to Laila is the Cash Fund. All member and productivity contributions into this option are invested in cash assets.
It has a low-risk rating (Band 1 under the Standard Risk Measure), with a recommended minimum investment timeframe of 1 year. This makes it a suitable option for members who prefer a low-risk investment and are comfortable with lower returns, and/or want to minimise fluctuations in the value of their super.
How will this help Laila make informed decisions about her super?
Laila now knows where her money is invested and the nature of the returns she can expect from her investment option, compared to the other investment option available to her.
As Laila is fast approaching retirement, she can consider switching to the Cash Fund with the aim of protecting her existing benefit from market fluctuations.
She’ll need to be aware of switching rules, and also that certain fees and costs may be different for each investment option.