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  Latest Financial Planning News
ATO issues update on cryptocurrency compliance traps
How likely is a global trade war?
Gig economy spike prompts calls for super policy changes
Australia's vital statistics
What your age should say about your super
Downsizing requires holistic tax planning
Millions of multiple super accounts erode savings
Why your retirement intentions are critical
Plans for study into elder abuse
Our website is really our digital office.
Dissecting the downsizer contribution
The Goldilocks effect - Economic and market update 4Q 17
Rates, inflation and yield - five graphs to help make sense of it all
Australia. All you need to know to be the expert.
Potential pension minefields
Confusion lingers over post-death insurance
Non-lodgement numbers slashed, 30,000 funds still in ATO’s sights
Business confidence hits 5-month high: NAB
New Year resolutions, New Year strategies
How will downsizer contributions work for SMSFs?
Where Australia is at. Our leading indicators.
‘Read the tea leaves,’ brace for cryptocurrency regulation, advisers told
Power of retiree super dollars
Beyond share prices
Financial advice is the leading trigger to review insurance inside Super
Opinion – 2018 to be the year of the machine
Rising risks to the status quo
UPDATE: Australia's vital statistics
As share prices rise, the risk-return trade-off gets tricky
Technical expert flags top 3 traps with CGT relief
Become a better investor through your holiday reading
Australia's vital statistics
Made in Albania? How globalisation is creating challenges for Chinese policymakers
Our Advent calendar for 2017
For the young it a question of engagement
Address Under-insurance at Personal Finance Level - Global study
Realism vs reality - working part-time as retirees
SMSFs warned on ‘ticking time bomb’ with outdated deeds
Statutory wills are underutilised in estate planning
Resources on our site to help you, your family and your friends.
Calls to Review ASIC's Definition of Lapse Insurance
Paperwork bungles lead to $38k in payments
Self-employed? Don't miss out on super
Australian Dietary Guidelines and healthy eating chart (PDF)
Big concessions looking likely for transfer balance limit: ATO
Raft of superannuation measures enter Parliament
US Fed policy: Normalisation begins
What the gig economy may mean for your super
Powerful Budgeting, cash flow and Super Tools available on our site.
Australia's leading causes of death - ABS
Government introduces first home scheme laws
Are young investors wasting their youth?
ATO granted super enforcement powers
The great Australian (retiree) dream
ATO to release further guidance on reserves
A real-world benchmark for SMSF performance
How is your super going, ready for retirement?
Our 'hardest' SMSF tasks
Lack of literacy promotes unrealistic goals
Young investors: Time is on your side
Is your SMSF retirement-ready?
Key Economic Indicators, 2017 - updated
Investors acting their age
ATO locks in details, addresses panic on real-time reporting
Government ‘undermines’ tax system in new moves on property expenses
Multiple super accounts in a 'gig' society
Why Australian retirees aren't happy and what we can do about it
Doing a budget is a good idea but ....
Technical expert flags estate planning strategies for 2017-18
Government to shut down salary sacrifice loophole
Items that heat up your depreciation deductions
‘Tens of thousands’ of SMSFs at risk with ECPI
Do’s and don’ts of estate planning
LISTO to help boost women’s super
Smart ways to stretch retirement money
Low economic growth likely for years
Recorded Crime - Offenders, 2015-16
Adequacy of savings still a concern among Australians
‘Bank-like heists’ make way for new wave of cyber crime
Give your children a saving and investing edge - for life
Women still in the dark about finances
Lessons learnt - often the hard way
Australian population figures
ATO poised to ramp up focus on key compliance area
Benefit payments rise dramatically ahead of July 1 super changes
There's no magic pudding when it comes to super
ATO guidance provides clarity on death benefit confusion
Beyond super: Our other personal investment market
The three core pillars of this year's budget
Federal Budget - 2017-18 - Overview
Federal Budget - 2017-18 - Budget documents
Global economy synchronised and thriving
Life's financial turning points: good and not-so-good
2011 Census - what was the make up of your area?
ATO set to release guidance targeted for SMSF clients
More withdrawals from 'the bank of mum and dad'
Tax headache relief: Here’s more help with pension assets changes
Most Aussies shun super advice
Australia in a nutshell
ATO finalises guidance on transfer balance cap
Fit for purpose? The super story so far...
SMSFs urged to review segregation clauses in trust deed
Big insto addresses CGT misconceptions
Dollar-cost averaging for millennial investors
Calls for calm over pending CGT amendments
Almost the world's best for retirees
ATO reports on top contravention areas for SMSFs
What recent retirees can teach pre-retirees
Deloitte points to ‘red flag’ SMSF patterns
Save early, save often
Government pushes forward with multinational tax measures
Jump-start your retirement savings
Government urged to rectify ‘legislative shortcoming’ with CGT relief
Some financial terms explained
Areas of key focus for SMSFs in 2017.
Powerful Superannuation modelling tools available on our site.
Your New Year reading: beyond John Grisham
What a long-term view of the market can teach investors
CGT confusion seeing unnecessary sell-offs
‘Devastating’ property investments hitting SMSFs
Asset valuation crackdown imminent for SMSFs
New Year (investment) resolutions
Trump stimulus to boost global markets
Female advice customers on the rise
Retirement costs outpace rise in CPI
ATO set to scrutinise CGT relief claims
Investor habits: The good, the bad and the ugly
Keeping finances in the family
The inter-generational financial squeeze
Merry Christmas for 2016, a Happy New Year and a prosperous 2017.
ATO set to clamp down on range of super issues
SME retirement plans in jeopardy, research finds
SMSFs show restraint in hot residential market
Investment's building blocks - always worth reinforcing
Warnings issued on traps with CGT transitional rules
Meet SMSFs' early and late arrivals
Beware, the ATO is on the hunt for lifestyle assets
'Brexit means Brexit' means what?
SMSFs tipped to be hardest hit by pension changes
SMSF assets hit record, but funds still hoarding cash
Markets caution advised as economic bubbles loom
Stretching retirement income
Some financial terms explained
Market Update – September 2016
Checking in on our 2016 economic outlook - and looking ahead
Making a fairer and more sustainable Superannuation System
Going undercover
‘Winners and Losers’ from new super proposals
The gymnastics of keeping your portfolio balanced
Market Update – August 2016
Stop!! Don't do a paper Budget, use our online budgeting tools instead.
Advisers the key to retirement stability, research shows
The toughest tasks for self-managed super
Lawyer warns on ‘adverse’ death taxes with insurance
Don't get distracted by super changes
A savings mirage?
Market Update - July 2016
The three biggest economic issues likely to affect markets in 2016
SMSFs warned on looming property ‘tough times’
Diversification counts when uncertainty beckons
Strong economic data stablises markets
Starting a super pension in 2016-17?
Market Update - June 2016
ATO extends looming SuperStream deadline
ATO's deadline for review non-arm's length LRBAs extended
A paradoxical relationship: The self-employed and super
Fresh SMSF documentation warnings surface
Making investing a family affair
Super and divorce: a personal finance issue
Market Update - May 2016
ASIC flags SMSF investors in scam risk
Older, greyer and still working
Working and contributing to super past 65
The pitfalls of part-year pensions
Replenishing SMSF memberships
Budget will hit 15% of SMSFs
The insidious side of low interest rates
Market Update - April 2016
Budget 2016-17
Do investment principles stand test of time?
Estate Planning - early inheritance
US economy will bend, not break
A detailed look at the ATO’s new LRBA guidance
Defying life's blueprint
ATO continuing lodgement crackdown
Another twist on the gender savings gap
Market Update – March 2016
Going solo
Use our online budgeting tools to help plan your future.
Age Pension means-test prevents rational decision-making
Changing times for super collectables
Preservation Age Rule
Why investing for retirement isn't just about super
Possible tax benefits through early inheritance
Market Update - 29th February 2016
Mortgages, personal debt and retirement
Cost of retirement continues to climb
Personal finance goes 'viral'
ATO warns on poor asset records causing SMSF breaches
When is an unallocated contribution account a reserve?
Market Update – 31st January 2016
Australians still need better retirement planning
What to expect from investment markets in 2016 and beyond
‘Irrational fear’ impacting SMSF longevity risk: CSIRO
Tax scam reaps hundreds of thousands
Morrison signals direction of super tax changes
Market Update – 31st December 2015
Should we expect stormy skies or sunshine in 2016?
Merry Christmas and Happy New Year 2015
There's no one-size-fits-all retirement income
Market Update – 30th November 2015
Diversifying and cutting costs with ETFs
Why the ATO’s new powers make SMSF compliance more important than ever
'Unretiring' retirees
The detrimental impact of poor SMSF record-keeping
Counting the cost of 'grey' divorce
Combining total-return investing with realistic investment expectations
Market Update – 31st October 2015
Another telling reminder for SMSF trustees
The demand for global infrastructure
Death in paradise – or your SMSF
Elderly exploited for assets
Intergenerational challenges for retirement saving
Help achieve your investment goals with dynamic asset allocation
Death benefits – navigating the minefield
The Power of Budgeting
Strategy over structure
Market Update – 3oth September 2015
Jump retirement hurdles with a coach
Preparing for the time of your life
SMSF and limited resource borrowing – a warning
External partnerships and the in-house asset rules
Take a closer look at SMSF age demographics
Avoiding tax consequences with the related-party rules
Focusing on after-tax returns
Market Update – 31st August 2015
The gender gap in retirement
Why popularity of ETFs is surging among SMSFs
Clearing up confusion about accessing super.
Good (investor) behaviour
Five reasons the RBA will likely cut rates again
Market Update – 31st July 2015
What the ATO is keeping an eye on
Through life and death
Why astute investors are a little like astute kayakers.
Your first SMSF portfolio
Market Update - June 2015
Money-smart ageing
A new (financial) year’s resolution for your SMSF
What’s ahead for US interest rates?
Super: Looking to June 30 and beyond
End of year tips for SMSFs
Reminders and Tax Strategies for SMSFs pre-year end
Market Update – May 2015
A Super Loan for all reasons
SMSF trustee penalties going up
Contraventions rife among non-advised SMSF trustees
Dealing with investor uncertainty
Reserve bank gives the economy a lift
Retirement planning: the gap between intention and reality
Market Update – April 2015
Making a smooth transition
Australian Government - Budget 2015
Budget 2015 - some professional opinions
Australian Government - Budget 2015
Budget 2015 - some professional opinions
What does the ATO want from you?
Making sense of the new excess contribution rules
Achieving a comfortable retirement
Greying, working and contributing
Simple-yet-smart investment housekeeping
Market Update – March 2015
Is off-the-plan on the money?
Should I take my super as a lump sum or not?
Do you have a key person in your business?
Tips for success in a competitive job market
All you need to know about buying at auction
To sell or not to sell?
Saving in a material world
Fit for purpose? The super story so far...

We’ve come a long way since the mandatory superannuation guarantee was introduced in the early 1990s. 



       


 


Australia’s super system is now the world’s fourth largest private pension industry, with $2.1trn under management at June 2016.


But the super system is still immature. It took 20 years for SG to reach 9.5%, and will take until 2025 to get to 12%, assuming policy continuity. So it will be well into the 2030s before Australians have spent their full working lives with SG coverage of at least 9% of their salaries.


This means that for most of today’s retirees, the age pension continues to be the main source of retirement income, with approximately 80% coverage. But future retirees will be much more dependent on their own super savings, with social security falling back to more of a ‘safety net’ function over time. 


And this profound change in the dynamics of the super system is happening faster than many people expected.


From wealth accumulators to income generators


Until now, the primary focus for wealth providers has been maximising net investment returns through the accumulation phase. But things are changing, driven by the wave of baby boomers entering retirement.


Some stark numbers from the Government’s most recent Inter-Generational Report highlight the issues:


  • Longevity continues to increase, with male life expectancy at birth now 91.5 and female 93.6, with this projected to rise to 95.1 and 96.6 by 2055.
  • The ratio of workers to retirees continues to decrease, from 7.3 to 1 in 1975 to 4.5 to 1 in 2015 and a projected 2.7 to 1 in 2055.

These changes are leading to a greater focus on fiscal sustainability of the super system, exemplified by a number of recent policy changes.


  • Increased preservation age (from 55 to 60) and age pension eligibility (from 65 to 67).
  • Tightening of age pension means tests.
  • Various measures to rein in super tax concessions in the 2016 Federal Budget.
  • Promotion of longer workforce participation.

So as the super system matures and the population ages, the Government is looking to shift the industry’s focus from accumulating capital to generating income, from maximising returns to managing liabilities and from building wealth to drawing down.


Key changes emanating from the Financial System (Murray) Inquiry and other policy reviews are now poised to produce policy outcomes that will transform the retirement product landscape in Australia.


ABPs dominate the current scene


Currently, retirement product selection is almost entirely driven by the tax-free status of eligible retirement income streams from age 60.


However, there is only a very limited range of products that qualify, with the vast majority of these (around 95%) being account-based pensions (ABPs). While these offer great flexibility, investment choice, access to capital and bequest benefits, they expose investors to investment, longevity and sequencing risks. 


Some recent research also suggests that ABPs often lead to unnecessarily frugal drawdown behaviours, with retirees being anxious about the risk of outliving their savings. At an overall system level, the Government contends that super assets are not being efficiently converted into retirement incomes due to a lack of risk pooling and over-reliance on individual ABPs.


So the government has recently expanded the definition of products that can qualify for tax-concessions in the retirement drawdown phase, and is planning to introduce Comprehensive Income Products for Retirement (CIPRs), as laid out in the long-awaited discussion paper released at the end of last year.


Like to know more?


I often wonder how the experience of Australian retirees (and those about to retire) compares with their counterparts in similar countries. A recent Vanguard research paper examines this in detail—take a look here. It makes for interesting reading.


 


Paul Murphy
08 March 2017
www.vanguardinvestments.com.au


 


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