LOOKING AT SUPERANNUATION…
When superannuation was reformed by Paul Keating back in 1992 it seemed quite simple; employers made compulsory contributions to super which could be augmented by further contributions. If a person had insufficient funds in their super, they would be means-tested and could probably receive a government funded age pension.
Nowadays, the subject is complex and the advents of “Simpler Super” have instead further complicated matters. The purpose is still the same; to get Australians to fund their own retirement. However, there are traps and penalties for doing it too well!
According to the Association of Superannuation Funds of Australia (ASFA), superannuation assets as at September 2016 totalled $2,146 billion, with the lion’s share being invested via Industry Funds.
ASFA noted that assets in My Super products rose 13.6% year-on-year, whilst accrued default amounts, mainly to the retail funds fell from $51.9bn to $39.6bn or about 24%. Notably contributions to funds with “more than four members” were $103 bn and very similar to the previous year’s tally of $104.6bn. It seems, from the ASFA data, that most contributions are employer based, comprising Superannuation Guarantee or salary sacrifice. Personal Contributions are falling and this is a key concern. Many people do not want to contribute more than absolutely necessary because of the constantly shifting regulatory goal posts. If Australians are to provide for themselves in retirement, there must be a sense of guarantee or certainty in this area.
The following changes are part of the latest regulatory shift that takes effect from 1 July 2017.