Changes to the ESSSuper Investment Options, and insurance

May 09 2021

From 1 July 2017 the following changes were made to the investment options available to ESSSuper members who have an Accumulation Plan, Beneficiary Account, Working Income Stream and/or Retirement Income Stream.

 

 

Change Impact of the change
Introduction of Basic Growth and Ethically Minded Investment Options 

These options are designed to complement ESSSuper’s standard investment offering, and intended for members looking to prioritise a particular characteristic that is important to them when selecting their investment mix. 

Basic Growth - for members who are prepared to accept short term volatility in return for capital growth over the long term and are cost sensitive.

Ethically Minded - for members who want to invest in options that align with their social and environmental values.

The default draw-down order for income payments has been updated to include any investments members may make in the two new investment options.

(For members with an Working Income Stream or Retirement Income Stream) 

If the draw-down order of your income stream is based on the default order, it will be paid in order from the lowest to highest risk investment options which you have invested your income stream in. The default draw-down order is as follows, and you can change the order of the investment options from which your income stream is paid at any time by completing the Change of Investment Order for Income Stream Payments form (E149).

  • Cash 
  • Defensive
  • Conservative
  • Balanced
  • Growth
  • Basic Growth
  • Ethically Minded
  • High Growth
  • Shares Only
Change to the definition for pre-existing medical condition exclusion 

(For members with an Accumulation Plan) 

The definition for the pre-existing medical condition exclusion has changed. This only applies to members in the Accumulation Plan who have insurance cover and are still subject to the pre-existing medical condition exclusion.

The change will allow the definitions to be more practically and easily applied. For more details on the new definition please refer to the Insurance Guide (AP.2) available at esssuper.com.au/pds

Adjustments to the investment objectives of six investment options, and adjustments to the strategic asset allocations of four investment options 

Changes have been made to the strategic asset allocations and the investment objectives. The changes aim to improve the long-term investment performance with a continued focus on providing members with a smooth path of returns over time. Some asset class names have also changed to better reflect the underlying assets held within the investment option.  The changes to the investment options are detailed below:

 

Investment Objective Changes: Accumulation Plan and Beneficiary Accounts

The return objective for the Conservative, Balanced and Growth investment options were changed as follows:

Investment Option Return Objective to 30 June 2017 after fees and taxes  Return Objective from 1 July 2017 after fees and taxes 
Conservative CPI plus 2% p.a. over a 3 year period CPI plus 1.5% p.a. over a 5 year period
Balanced  CPI plus 3% p.a. over a 5 year period  CPI plus 2.5%p.a. over a 10 year period
Growth (default) CPI plus 4% p.a. over a 5 year period  CPI plus 3.5% p.a. over a 10 year period

 

Investment Objective Changes: Working Income Stream 

The return objective for the Defensive, Conservative, Balanced, Growth, High Growth and Shares Only investment options also include an adjustment to reflect the Federal Budget tax changes to account balanced transition to retirement income streams, such as the ESSSSuper Working Income Stream.

The ESSSuper Working Income Stream is now subject to tax on investment earnings and affects the Real Return Objective. The changes are listed in the following table:

Investment Option Return Objective after fees to 30 June 2017 Return Objective after fees & taxes from 1 July 2017
Conservative CPI plus 2.5% p.a. over a 3 year period.* CPI plus 1.5% p.a. over a 5 year period
Balanced CPI plus 3.5% p.a. over a 5 year period.* CPI plus 2.5% p.a. over a 10 year period 
Growth (default) CPI plus 4.5% p.a. over a 5 year period.*
CPI plus 3.5% p.a. over a 10 year period 
Defensive CPI plus 1.5% p.a. over a 5 year period.^
CPI plus 1% p.a. over a 10 year period  
High Growth CPI plus 5% p.a. over a 5 year period.^
CPI plus 4.5% p.a. over a 10 year period  
Shares Only  CPI plus 5% p.a. over a 5 year period.^
CPI plus 4.5% p.a. over a 10 year period  
 

Investment Objective Changes: Retirement Income Stream 
The return objective for the Conservative, Balanced and Growth investment options were changed as follows:

Investment Option Return Objective after fees to 30 June 2017 Return Objective after fees & taxes from 1 July 2017
Conservative CPI plus 2.5% p.a. after fees over a 3 year period.* CPI plus 2% p.a. after fees over a 5 year period
Balanced CPI plus 3.5% p.a. after fees over a 5 year period.* CPI plus 3% p.a. after fees over a 10 year period 
Growth CPI plus 4.5% p.a. after fees over a 5 year period.*
CPI plus 4% p.a. after fees over a 10 year period 
*These changes take into account both changes to our expected long term returns and also the removal of the tax exemption on earnings.
^ These changes take into account the tax removal on earnings. 

  

Minimum Investment Time Frame Changes

The minimum suggested investment time frame for 6 investment options has changed as follows:

Investment Options Minimum suggested investment time frame to 30 June 2017  Minimum suggested investment time frame from 1 July 2017
Defensive 1 2
Conservative 3 5
Balanced 5 10 
Growth  10 
High Growth  12
Shares Only  10 12

 

Strategic Asset Allocation and Range Change for the High Growth investment option
The ESSSuper Board has changed the strategic asset allocation and the asset class ranges for the High Growth investment option from 1 July 2017. At the same time some asset class names have been changed to better reflect the underlying assets held within the High Growth investment option. The strategic asset allocation and ranges for the High Growth investment option changed as follows:

   To 30 June 2017   From 1 July 2017

 Strategic % Allowable Range %    Strategic % Allowable Range %
Australian Shares  21.0  10-40 Australian Shares 26.0 10 - 40
Overseas Shares  31.5 15-45 International Shares 39.5 20 - 50
 -  -  - Private Equity 0.0 0 - 10
Property 11.0  0-20 Property 8.0 0 - 20
Fixed Interest 10.0 0-20 Credit 0 0 - 15

 

Strategic Asset Allocation Range Changes – Balance, Conservative and Growth 

The ESSSuper Board has changed the strategic asset allocation ranges of a further 3 investment options from 1 July 2017. At the same time some asset class names have been changed to better reflect the underlying assets held within the Growth, Balanced and Conservative investment options. Details of the strategic asset allocation changes applicable before and after 1 July 2017 are provided in the following tables for the Growth, Balanced and Conservative investment options: 
 
Growth
To 30 June 2017 From 1 July 2017  
Asset Class Allowable Range % Asset Class Allowable Range %
Australian Shares 5 - 25 Australian Shares  5 - 30
Overseas Shares 10 - 35 International Shares 10 - 40
- Private Equity 0 - 10
Multi-asset  Strategies 0 - 20 Multi-Asset Strategies 0 - 25
Fixed Interest 0 - 40 Credit 0 - 20
- - Sovereign Bonds 0 - 20

Balanced
To 30 June 2017 From 1 July 2017  
Asset Class SAA Range Asset Class Allowable Range %
Australian Shares 5 - 20 Australian Shares  5 - 25
Overseas Shares 5 - 25 International Shares 5 - 30
- Private Equity 0 - 10
Multi-asset  Strategies 0 - 20 Multi-Asset Strategies 0 - 25
Fixed Interest 5 - 60 Credit 0 - 20
- - Sovereign Bonds 5 - 40
Conservative
To 30 June 2017 From 1 July 2017  
Asset Class SAA Range Asset Class Allowable Range %
- Private Equity 0 - 5
Multi-asset  Strategies 0 - 10 Multi-Asset Strategies 0 - 15
Fixed Interest 10 - 40 Credit 0 - 10
- - Sovereign Bonds 10 - 30

Please note: Strategic Asset Allocation ranges of Shares Only, Defensive and Cash investment options have not changed.
Growth
To 30 June 2017 From 1 July 2017  
Asset Class Allowable Range % Asset Class Allowable Range %
Australian Shares 5-25 Australian Shares  5-30
Overseas Shares 10-35 International Shares 10-40
- Private Equity 0-10
Multi-asset  Strategies 0-20 Multi-Asset Strategies 0-25
Fixed Interest 0-40 Credit 0-20
- - Sovereign Bonds 0-20

Growth
To 30 June 2017 From 1 July 2017  
Asset Class Allowable Range % Asset Class Allowable Range %
Australian Shares 5-25 Australian Shares  5-30
Overseas Shares 10-35 International Shares 10-40
- Private Equity 0-10
Multi-asset  Strategies 0-20 Multi-Asset Strategies 0-25
Fixed Interest 0-40 Credit 0-20
- - Sovereign Bonds 0-20

Growth
To 30 June 2017 From 1 July 2017  
Asset Class Allowable Range % Asset Class Allowable Range %
Australian Shares 5-25 Australian Shares  5-30
Overseas Shares 10-35 International Shares 10-40
- Private Equity 0-10
Multi-asset  Strategies 0-20 Multi-Asset Strategies 0-25
Fixed Interest 0-40 Credit 0-20
- - Sovereign Bonds 0-20

Growth
To 30 June 2017 From 1 July 2017  
Asset Class Allowable Range % Asset Class Allowable Range %
Australian Shares 5-25 Australian Shares  5-30
Overseas Shares 10-35 International Shares 10-40
- Private Equity 0-10
Multi-asset  Strategies 0-20 Multi-Asset Strategies 0-25
Fixed Interest 0-40 Credit 0-20
- - Sovereign Bonds 0-20