Super news for February 2020

Maurice Blackburn Lawyers filed the case in the Victorian Supreme Court last month against two companies within the NAB group – MLC Nominees Australia Pty Ltd and NULIS Nominees Australia Ltd – claiming they ripped off more than 330,000 clients by failing to move them into lower cost default products.

The case alleges superannuation fund members invested in MasterKey Business Super and MasterKey Personal Super products were left paying higher fees for lower returns after MySuper reforms were introduced in 2013.

Talking to the ABC, Maurice Blackburn’s national head of class actions Andrew Watson described it as another regrettable case of mismanagement in the superannuation sector.

“The whole point of the MySuper reforms was to make sure that millions of everyday Australians who hadn’t made an active decision about their super were not losing money on higher fees and unnecessary or unused services,” Mr Watson said.

Following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Service Industry, class actions against banks, financial advisory and superannuation industry are increasing.

Class actions on behalf of AMP and Colonial First State superannuation fund account holders are currently ongoing. There is no cost to register. To find out if you are eligible to register, visit mauriceblackburn.com.au/class-actions.

No increase in transfer balance cap

The Australian Tax Office (ATO) has announced the general transfer balance cap will not increase to $1.7 million in July this year as was previously expected.

The All Groups Consumer Price Index (CPI) figure for the December 2019 quarter is at 116.2. Indexation of the transfer balance cap would only have occurred on 1 July if the figure had reached 116.9 or higher.

While estimated to impact only 1% of Australian superannuation account holders, the transfer balance cap was introduced at $1.6 million in July 2017 to ensure a fair superannuation system.

Today, retirees can access their superannuation as a lump sum, an income stream, or a combination of both. If you access any of your superannuation as an income stream, the income earned on the capital supporting that income is concessionally taxed at 0%.

The cap means that those fortunate enough to have retirement pensions above $1.6 million cannot live tax-free forever. To keep up with inflation, the $1.6 million is periodically indexed in $100,000 increments and the indexed amount is calculated proportionally based on the remainder of your cap.

The ATO anticipates the cap is now likely to increase to $1.7 million on 1 July 2021.

Older Australians resist home modifications

Almost two-thirds of Australians aged 75 and older say they want to remain living independently in their homes as they grow older but, for many, a failure to modify their properties threatens to shatter that dream.

A recent research report by the Global Centre for Modern Ageing (GCMA) called Ageing in the Right Place: An Australian Perspective, found that despite preferring to stay at home, only 17% of older Australians surveyed thought their home would require repairs or modifications to enable them to do so.

Even among those who are experiencing difficulties at home, only 40% acknowledge the need for home modifications.

GCMA CEO Julianne Parkinson says the research identifies an opportunity for industry to provide greater public education around home modifications to help people understand their needs and options.

Ms Parkinson says key barriers to home modifications include affordability and lack of trust in tradespeople. “The right industry partners could encourage earlier and more prudent conversations about home modification before an emergency arises,” she says.

Drawing on the new research, GCMA has created a House-Home-Haven framework to encourage fresh thinking around how physical houses can be transformed into haven-like environments.

GCMA research director Dr Stuart Smith says the research identifies seven distinct needs that determine the ‘right’ place for people as their circumstances change. These include choice, safety, comfort, access, independence, connection and happiness.

“Helping people to remain independent in their homes is increasingly important,” he says. “However, we know that this may not always be possible, so it’s also critical to understand how ‘home’ can be created in any place of residence.”

Dr Smith says the House-Home-Haven framework could serve as a guide for seniors and their families and could also assist industry to take a more client-centric approach when developing commercially viable homes, retirement villages and aged-care facilities that enable quality living and improve world standards.

More Australian seniors would downsize if they could

More than half of the Australians aged 55 and older would move to a smaller home if they could find one that matched their needs and preferences, according to a new report based on a survey of 2,400 households.

The research shows that downsizing – or ‘rightsizing’ – is seen as an essential component of future housing preferences. It not only enables older Australians to age well and age at home, but also frees up housing for younger growing families.

As our population ages, household needs are changing and the Australian housing landscape must also change to meet new and diverse needs. Government faces the challenges of delivering greater dwelling diversity, more at-home services and providing residential care.

The report, delivered this month by the Australian Housing and Urban Research Institute (AHURI), found that 26% of households had already sold the family home and another third are thinking about it.

Older Australians see downsizing as more than just a move to a cheaper house, but as a way to manage their internal and external spaces more easily and reduce their number of belongings for financial return.

Health, relationship status and adult children leaving home are the main factors in the findings that suggest more older Australians are willing to downsize. Household costs and difficulty maintaining large homes and gardens are also key, with 60% of respondents preferring a smaller garden and 67% wanting fewer bedrooms.

Three-bedroom homes, however, is the preferred size among older Australians, with 58% considering guest rooms a necessity, 50% wanting a study and 31% wanting a bedroom for children or grandchildren.

Barriers to downsizing include lack of suitable housing options and financial incentives. Across local government areas studied, there is a large variation in the availability of established dwellings that suit the size and tenure aspirations of older Australians. Emotional and physical issues are also contributing factors to staying put.

Forty percent said they would be more likely to move if there was suitable housing in their preferred locations. The ideal neighbourhood has shopping, medical, recreational and public transport services all within walking distance.

Yet, downsizers are mobile. While less than 25% remained within their original neighbourhood, 42% moved to a completely new postcode.

As a growing number of retirees are renters, the need for secure, stable, affordable and appropriate housing options in social and private rental sectors increases.

With nearly 6.5 million Australians aged 55 or older living in about 4.3 million households, the findings point to downsizing being relevant to 2.5 million households.