Investment choice gives flexibility

By Cpl Jonathan Garland

Members of the MSBS superannuation scheme will have greater control over how their funds are invested from July 1 with the introduction of Member Investment Choice.

Investment Choice is a scheme offering five choices in the way the member benefit portion of your superannuation fund is invested.

BRIG Bob Brown, a trustee on the MSBS Board, said what separated the five investment strategies was the degree of risk and expected returns over time.

“Shares and property are considered to be higher risk with greater volatility in the short term - in the long term, however, they are expected to provide higher returns compared to inflation,” he said.

“Bonds and cash are considered lower risk investments. They are more stable, but are expected to provide moderate returns.”

“Investment Choice gives members the flexibility to decide how to invest their benefit - it gives them more control of where and how their money is invested,” he said.

“This is a feature more and more superannuation funds are adopting and we feel it is consistent with best practice in the marketplace.”

Members of the MSBS scheme can choose one of five investment strategies for their member benefit, from high risk/high return to low risk/low return.

There is also the option to select a combination of strategies for your existing and future benefits.

The High Growth strategy is the most aggressive, investing mainly in shares with some property and no cash or fixed interest investment.

The Growth strategy has a more diversified portfolio, mainly invested in shares and property, with some in cash and fixed interest.

The Balanced strategy invests equally in shares and property and in cash and fixed interest.

The Conservative strategy invests in a conservative mix of assets, mostly fixed interest and cash, with some investment in shares and property.

The Cash strategy invests only in secure cash investments such as bank deposits and bonds, aiming to avoid any negative returns.

BRIG Brown said it was important to remember only the member benefit comes under the Investment Choice scheme, not the Government-funded employer benefit.

“The member benefit for most people is only about 20 per cent of their overall superannuation benefit.”

“The employer benefit is a guaranteed, defined benefit and is not affected by Investment Choice.”

Members can elect a strategy now, which will take effect on July 1, or make their choice at any time thereafter.

If the member takes no action, his member contributions will remain invested in the MSBS fund’s default strategy - the Growth strategy.

“The investment strategy the board has taken reflects the unique nature of our membership - more than 60 per cent of our contributing members are under 30 years of age.”

“So we have their money invested for long periods of time and the investment strategy focuses on a long-term approach. However, longer serving members close to retirement may be more comfortable moving their money into less risky investments.”

A choice can be changed at any time, although the MSBS board advises against frequent changes and advocates seeking professional financial planning advice before doing so.

Regardless of their choice, members continue to enjoy the benefits of the military scheme, including a significant employer benefit, excellent invalidity and dependant’s benefits, an attractive pension option and no fees or charges.

MSBS has embarked on a comprehensive information campaign and all members will be mailed a booklet explaining the Investment Choice strategies open to them. Further information is available from the web site at www.militarysuper.gov.au or from the information line on 13 23 66 for the cost of a local call.

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