Super news for March 2024

Super to be paid on parental leave

The Federal Government announced in early March that it would pay superannuation on Paid Parental Leave (PPL) from 1 July 2025.

“The data is clear – that when women take time out of the workforce to raise children it impacts their retirement incomes with women retiring, on average, with about 25% less super than men,” minister for women Senator Katy Gallagher said.

“Paying super on Government parental leave is an important investment to help close the super gap and make decisions about balancing care and work easier for women,” minister Gallagher said.

“In the long term, this important change means a more dignified and secure retirement for more Australian women,” treasurer Jim Chalmers added.

Labor is also looking to extend the current PPL to 22 weeks from 1 July his year and if its expansion to PPL is passed, families will also be able to access 24 weeks leave from July 2025 and 26 weeks from July 2026.

No new taxes to fund aged care but the wealthy should pay more

The final report of the government-appointed Aged Care Taskforce has not recommended a new tax or levy to pay for aged care but has suggested that wealthier Australians could contribute more to the cost of aged care.

“Increasingly people still have accumulated wealth and income streams when they need to access aged care services,” the report said.

“As a result, there is more scope for older people to contribute to their aged care costs by using their accumulated wealth than in previous generations.”

The report’s third recommendation outlined that it was appropriate older people make a fair co-contribution to the cost of their aged care based on their means.

The Association of Superannuation Funds of Australia (ASFA) chief executive officer Mary Delahunty was pleased the taskforce had ruled out “ringfencing” part of super for aged care.

“The Taskforce also has proposed that refundable accommodation deposits (RADs) be phased out. This will lead to retirees having greater confidence to draw down their superannuation in retirement,” Delahunty said.

“However, even with a maturing superannuation system, many individuals will have only modest superannuation balances when they are in their 80s and 90s. The Superannuation Guarantee going to 12% and there being no further widespread early release of superannuation, such as for housing deposits, will be crucial for future retirees to meet their living expenses, including for aged care when appropriate,” Delahunty added.

Retirees cost of living continues to rise

The cost of living for retirees continued to rise in the fourth quarter of 2023, according to the latest ASFA Retirement Standard. The annual budget needed to maintain a comfortable lifestyle rose to a new record high of $72,148 per year for couples, and $51,278 for singles, taking the annual increase to approximately 3.5%.

“Retiree budgets have been under substantial pressure for the past two years due to the high cost of essential goods and services,” ASFA chief executive officer Mary Delahunty said.

“Fortunately, we are seeing price increases in the key categories that make up retiree budgets – home and content insurance, fruit and vegetables, fuel and electricity – begin to ease.” 

The ASFA Comfortable Retirement Standard includes the cost of everyday expenses such as health, communication, clothing and household goods and reflects community expectations as well as changing lifestyle expectations and spending habits. 

The categories showing the biggest increases were insurance – up by 16.2% over the year, food, which was up by 4.5 %, and the cost of domestic holiday travel and accommodation rose by 3.9%.

More than $250 million illegally accessed annually from SMSFs

The Australian Taxation Office (ATO) has just released findings of a new program that estimates the size, scale and trajectory of super illegally accessed from self-managed super funds (SMSFs) before a condition of release has been met.

“In the 2021 year, we estimated $256 million of super has been illegally accessed. Our analysis also found SMSFs entered into over $200 million in prohibited loans in each of these years,” the ATO said.

In the previous year, 2020, the ATO estimated that $381 million of super had been illegally withdrawn by trustees.

The ATO said that the estimates highlighted why they continued to be concerned with illegal early access and why it is important for regulators and industry to ensure SMSFs aren’t used as a vehicle to access super illegally or to provide short-term finance.

Thumbs up for the proposed purpose of super

Most Australians agree with the Government’s proposed purpose of super which is ‘to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’, according to a poll conducted by the Financial Services Council (FSC).

On behalf of the FSC, C|T Group found that 53% of more than 2,500 respondents surveyed agreed with the Government’s proposed wording for the objective of super, with only 10% disagreeing.

“Clearly defining the purpose of superannuation will help provide certainty for the 16 million Australians who are doing the right thing by saving for their own retirement,” FSC chief executive officer Blake Briggs said.

“An enshrined objective for superannuation would lead to more stability in policy settings and end the cycle of constant tinkering, which undermines confidence in the system,” Mr Briggs said.

Scam losses down over the December quarter

The National AntiScam Centre’s second quarterly report shows scam losses in October to December 2023 reduced by 43% from the same quarter in 2022 and fell 26% from the July to September 2023 quarter.

Comparing data with the same quarter in 2022, there was a 38% decrease in losses to investment scams; a 74 % decrease in losses by cryptocurrency; and a 31% decrease in losses by bank transfer.

“While this report is a promising sign that our plan is working, we urge people to remain vigilant to scammers and keep up to date with advice from the Australian Competition and Consumer Commission (ACCC) to protect themselves,” assistant treasurer and minister for financial services Stephen Jones said.