Special Feature: Retirement Income Review – Superannuation Guarantee
Whilst the recently released Retirement Income Review didn’t produce any specific recommendations, it did propose and sound out future possibilities and the state of the current compulsory super scheme. Research conducted within the report demonstrates that the current Australian retirement income system is effective and sustainable. A big talking point from the review, and one which has been discussed at length is the proposed increase to super guarantee whereby under current rules, employers must pay 9.5% of their employees income into super, with legislated increases to 12% on 1 July 2025; the incremental increases can be see below.
Read the full quarterly review here September 2020
Special Feature: The Impact of the Early Release Superannuation Scheme
The long term impact to individuals superannuation accounts due to the COVID -19 pandemic will not be known for many years to come. Building a nest egg for retirement is a compulsory requirement for working Australians, foregoing money now for the future is designed to help Australians become self-sufficient in retirement. The impact of removing superannuation savings now, and potentially forgoing 5 to 7 per cent annual compound returns over the long term may have material impacts to a member’s final balance in retirement.
Recent data released comprising the early super release shows that people aged between 25 to 34 drew down the largest portion of their super balances, drawing almost 35%, followed by people aged between 35-44, drawing almost 20% of their total super balance. There are many reasons why individuals have had to dip into their super balances, ranging from insufficient support, not being eligible for Jobkeeper or not being eligible for Jobseeker. A quote from Eva Scheerlinck, chief executive of the Australian Institute of Superannuation Trustees (AIST) in the Australian Financial Review made mention to the shortfalls “The early release scheme, unfortunately, forced many people to choose between poverty now or poverty in retirement”.
Read the full quarterly review here June 2020
Special Feature: COVID – 19 Early Access to Superannuation
Due to the COVID – 19 pandemic, the Australian government earlier this year announced that Australians experiencing financial stress due to the coronavirus outbreak may be eligible to early access of their
superannuation. The temporary announcement will allow superannuation account members to access up to $10,000 of their money this financial year, and a further $10,000 after 1 July 2020 (until 30 June 2021). These funds would not be taxed after they are withdrawn.
The ATO states that to apply for early release, “you must satisfy any one or more” of the following requirements:
- Australians experiencing financial stress due to the coronavirus outbreak may soon be able to access a portion of their super
- Be unemployed
- Be 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
- On or after 1 January 2020, either:
- you were made redundant
- your working hours were reduced by 20% or more
- if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more
Since the announcement, data compiled by the ATO confirmed there has been approximately 2.12 million Australia’s who have accessed their super early, with the average withdrawal payment totalling $7,473. In total, APRA figures confirm roughly $14.8 billion has been withdrawal from the retirement scheme.
Read the full quarterly review here March 2020