Earlier this week, the Assistant Treasurer Bill Shorten announced some important reforms to the way we build our superannuation. CHOICE has made several submissions to Cooper Review and many of our recommendations were considered in the reforms, which will begin to take effect in July 2013. This includes the possibility of a Superannuation Consumer Representative Organisation, which could provide individualised advice to consumers about their super.
The Stronger Super reforms should also go a long way to reducing fees and making it easier to find and consolidate lost super. Considering there are around three super accounts for every worker in Australia, this should have a big impact on our retirement savings.
Once the reforms take effect, employers will deposit super into a default MySuper account unless told otherwise. The account will feature low fees and a diversified investment strategy to help secure retirement savings. Backroom fees will also be thrown out the backdoor, and you will be able to opt out of any unnecessary insurance products provided by funds, such as life insurance. There will still be a default level of insurance cover for those that want it.
It will be easier to track superannuation payments, so you can check for employer errors, the process to consolidate super will be streamlined due to some clever use of our Tax File Numbers and ATO facilities. It basically allows the system to take initiative in an area that lots of people don’t worry about until it’s too late, costing us thousand in additional fees and charges.
Today, one in seven Australians have reached retirement age. However, by 2050 that number is set to grow to one in four. Not only this, but our expenses and expectations are also on the rise, and we’re all living longer. More money for retirement is good news for all of us.
Have you thought about how much you will need when you retire? Find out how Stronger Super reforms are planning to cater for an ageing population.
Tip: There are a multitude of calculators online to help you calculate what your retirements savings may look like, and whether this will be enough to live comfortable. Check out the AMP’s Super Simulator or some of the calculators at MoneySmart.gov.au.