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- Downsizer eligibility age lowered from 1 January
- TWUSUPER and Mine Super enter merger talks
- Bank-owned super funds required to disclose dividends
- ASIC issues updated guidance on SMSFs
- Retirement costs rise with inflation
- Total superannuation assets fall
- HNW investor numbers ease as assets grow
- 57% pass rate for November financial adviser exam
Downsizer eligibility age lowered from 1 January
The reduced eligibility age to make a downsizer contribution from age 55 is now law, with the Treasury Laws Amendment (2022 Measures No. 2) Bill 2022 receiving Royal Assent on 12 December 2022, and will apply from 1 January 2023.
This further reduces the downsizer eligibility age, which changed from 65 to 60 from 1 July 2022.
Eligible individuals aged 55 years or older can choose to make a downsizer contribution into their super fund of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home. There are no changes to the remaining eligibility criteria.
TWUSUPER and Mine Super enter merger talks
Mine Super and TWUSUPER have entered into a preliminary non-binding Memorandum of Understanding (MOU) to explore a merger of the two funds. If undertaken, a merged entity would create a combined fund managing nearly $20 billion for over 150,000 members.
In a joint statement, Mine Super Chair Christina Langby and TWUSUPER Chair Nick Sherry stated the two funds share a strong heritage of member first values as historically important profit to member industry superannuation funds.
“Mine Super and TWUSUPER share the vision of creating a sustainable fund which protects and promotes the interests of workers in the mining and transport industries.”
Bank-owned super funds required to disclose dividends
The Albanese government will launch a new annual super transparency report for superannuation funds that will be a “a single source of granular, consistent information for members to compare funds’ performance and expenditure”, according to Assistant Treasurer and Minister for Financial Services, Stephen Jones.
Jones said the report was part of his government’s efforts to improve transparency requirements so members could access “clearer, more meaningful and more consistent information about their fund.”
The report is expected to include details of donations, director and executive remuneration, investment management costs and marketing expenditure. And in a deal brokered with The Greens, it will also include dividends paid by bank-owned superannuation funds to related parties.
“We’ve also just secured the inclusion of dividends paid by bank-owned super funds in a new super transparency report,” Greens Economic Justice spokesperson Senator Nick McKim said.
ASIC issues updated guidance on SMSFs
The Australian Securities and Investment Commission (ASIC) has issued updated guidance on the provision of SMSF advice. The new information sheet has removed the reference to $500,000 as the balance at which an SMSF becomes cost effective compared to large super funds regulated by the Australian Prudential Regulation Authority (APRA).
Information Sheet 274 Tips for giving self-managed superannuation fund advice also outlines the importance of specialist knowledge for those working in the space.
“Providing personal advice to clients about SMSFs requires specialist knowledge, so before providing SMSF advice it’s important that you have and maintain SMSF knowledge and expertise,” the information sheet says.
The updated guidance was widely welcomed by the industry and especially the SMSF Association, which has commissioned two studies on costs and fees for SMSFs finding that $200,000 is the point at which they generally become cost effective.
Retirement costs rise with inflation
The Association of Superannuation Funds of Australia (ASFA) Retirement Standard figures for the September Quarter 2022 rose by 1.9% over the quarter with couples aged around 65 wanting to live a comfortable retirement now requiring $68,014 per year and singles $48,266.
Annually, the amount needed for a single person to fund a comfortable retirement has risen by 6.7% and for a couple by 6.6%. That is slightly lower than the annual rate of inflation (as measured by the Consumer Price Index) of 7.3%.
ASFA deputy chief executive officer Glen McCrea said that despite the pressure on household budgets, Australian retirees are in a stronger retirement position than their global peers because of our superannuation system and Age Pension.
“We can take some solace from the fact that the investment we’ve made in superannuation over the last three decades is acting as a buffer in the face of these strong headwinds,” he said.
Contributing to increases across the board for retirees were a 16.2% increase over the year in prices for fruit and vegetables and a 12.1% increase in prices for dairy products.
Domestic travel and accommodation rose by 10.8% over the year to September on the back of higher fuel prices, increased demand and capacity constraints, while the price of international travel rose by 25.3%.
Total superannuation assets fall
The value of Australia’s superannuation assets fell 3.2% over the year to $3.3 trillion at the end of September, APRA reported in its quarterly data report on the industry for September.
APRA says the fall in assets was driven by rising global interest rates, pressures from disrupted supply chains and downward revision of the global growth outlook.
Contributions to super rose by 12% to $150.2 billion over the same period. That increase is attributable to SG payments being boosted by strong employment numbers, along with an increase in personal member contributions of 17.2% to $36.6 billion. The superannuation guarantee rose to 10.5% in July and employer contributions were up 10.4% over the year to $111.0 billion.
Total benefit payments of $88.2 billion were split relatively evenly between lump sums ($47.7 billion, an increase of 12.4% over the year) and pension payments ($40.5 billion, an increase of 2.9%).
HNW investor numbers ease as assets grow
The number of Australian high net worth (HNW) investors, or those controlling over a million dollars in investable assets, eased slightly in 2022, after a surge in 2021, according to the Investment Trends 2022 High Net Worth Investor Report.
HNW investors numbered 625,000 in 2022, down from 635,000 in 2021, but still much larger than the 485,000 in 2020. While investor numbers are down, the total amount these combined HNW investors control has risen to $2.82 trillion from $2.72 trillion in 2021.
“Investors continue to have substantial exposure to property and direct shares, key pillars of their investment portfolio…Over recent years, they’ve also significantly increased their allocation to ETFs,” Investment Trends head of research Dr Irene Guiamatsia said.
Overall, HNW investors appear to be holding their ground with just 37% changing at least 10% of their portfolio, compared to 41% in 2021 and a record high of 50% in 2020.
“Looking ahead, HNW investors have recalibrated their investment goals in line with a more subdued outlook for the next twelve months, and increasingly more are looking to protect their wealth against a market downturn,” Guiamatsia said.
“Correspondingly, demand for asset classes is evolving, with fixed income emerging as an area of particular interest.”
57% pass rate for November financial adviser exam
Just over half (57%) of the 282 financial advisers who sat the Financial Advisers exam in November have passed.
Of those candidates that sat the test, 43% were sitting the exam for at least the second time, while the remainder sat it for the first time.
The Australian Securities and Investments Commission (ASIC) says that 20,309 individual candidates have sat the exam so far with 92% of those candidates eventually passing.
But not all passing candidates are practising as advisers, with just over 15,850 recorded as current financial advisers on ASIC’s Financial Adviser Register (FAR), representing 99% of current advisers on the FAR.
Over 2,700 are ceased advisers on the FAR and may be reauthorised in the future.
Unsuccessful candidates in the exam receive general feedback from the Australian Council for Educational Research (which conducts the exam), highlighting the curriculum areas where they have underperformed.
The next exam sitting will be on 16 February 2023.
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