Super news for November 2024

What a Trump Presidency means for investors

Trump’s victory in the US may have been a surprise for many but some markets had been predicting the outcome with bond yields, the US dollar and Bitcoin all up over the last month.

But a Trump victory could also mean a ramping up of trade wars and increased economic uncertainty.

AMP head of investment strategy and chief economist Shane Oliver says the likely investment market implications of Trump’s proposed policies are:

• Upwards pressure on US bond yields from a bigger budget deficit, higher inflation and higher interest rates.

• Upwards pressure on the value of the US dollar (putting downward pressure on the Aussie dollar) because of higher tariffs, higher than otherwise Fed interest rates and increased global uncertainty.

• Upwards pressure on Bitcoin and other cryptos as Trump is seen as supportive of crypto.

• Ambiguity for the US share market. While tax cuts and deregulation will be positive in the short-term, trade wars and higher bond yields will be negative over the longer term.

• US shares are likely to outperform global shares reflecting the tariffs and increased global uncertainty.

• Upwards pressure on US financial and energy shares relative to clean energy shares.

• Upwards pressure on US small caps relative to large caps as small caps will benefit most from the lower corporate tax rate on domestic profits and large caps are vulnerable to a trade war.

Call to extend super to under-18s

The Super Members Council of Australia (SMC) is calling for compulsory super to be extended to more under-18s, arguing it could make a $10,000 difference at retirement.

Under-18s are currently denied compulsory employer super contributions unless they work more than 30 hours a week but a new report from the Super Members Council finds about 9 in 10 teenagers do not reach the 30-hour work threshold each week. This denies approximately 505,000 teenage workers around $368 million in total super contributions per year.

The report’s analysis found that a typical teenager who works for at least two years per week would benefit from almost $2,200 in super by the time they are 18 years old.

This would mean they have $10,000 more (in today’s dollars) when they reach retirement age.  

“Every Australian worker, at every age, deserves the right to set themselves on the path to a dignified retirement,” Super Members Council CEO Misha Schubert said.

“Australians strongly support universal super – and know it’s a workplace right. Super should be for everyone, paid from the first hour of your first job, and fixing this outdated exclusion is overdue.” 

ASIC files civil penalty proceedings against Cbus

The Australian Securities and Investments Commission (ASIC) has filed civil penalty proceedings against the trustee of Cbus (United Super Pty Ltd), alleging that from September 2022 to November 2024 it failed to act efficiently, honestly and fairly in the handling of claims for death benefits and total and permanent disability (TPD) insurance.

According to the allegations, more than 10,000 members and claimants of Cbus were impacted by death benefits and TPD insurance claims taking more than 90 days to be processed. The financial loss has been estimated by Cbus to be $20 million to members and claimants.

“Delays in claims processing like those alleged by ASIC cause real harm to families who may be relying on the payments to meet critical expenses. This adds to difficult personal circumstances, whether grieving for a loved one or dealing with severe injury or illness,” ASIC deputy chair Sarah Court said.

“By late 2022, more than 6,000 Cbus members and claimants had their payments delayed by more than 12 months. Extraordinarily, that equates to more than 50% of Cbus’ total claims at that time. We allege they are yet to completely rectify these issues.”

FAAA welcomes ASIC relief on Financial Services Guide requirements

ASIC has amended ASIC Corporations (Financial Services Guides) Instrument 2015/541 allowing financial advisers to disclose information on a website instead of giving a Financial Services Guide (FSG) to a client if the financial service is dealing in a financial product for the purposes of implementing product advice.

Phil Anderson, general manager policy, advocacy and standards at the Financial Advice Association Australia (FAAA) said the announcement and relief was welcomed by financial advisers.

“This relief resolves a problem that was identified in the law following the passing of the Delivering Better Financial Outcomes (DBFO) Bill, where the service of dealing was unintentionally not captured by this reform. Dealing, which includes implementing a product that has been recommended as part of the provision of financial advice, is a critical service provided to clients. This relief now provides certainty to enable financial advice businesses to rely upon the FSG reform in the DBFO Bill,” Anderson said.

Attitudes towards retirement are changing

Many Australians no longer see retirement age as a line in the sand, according to new research from the Association of Superannuation Funds of Australia (ASFA). A significant proportion of people plan on working past 65 for either social or financial reasons.  

“This research shows us the days of working to customary retirement age and then putting your feet up are long gone,” ASFA CEO Mary Delahunty said.

“The rules around superannuation need to change to reflect this. Currently, Australians who’ve hit preservation age can’t draw down on their super and top up the same account. Being forced to have two or more accounts – one account to take money from and one to put money into – doesn’t make sense with our modern, fluid approaches to retirement.”

The representative survey of 1,500 Australians commissioned by ASFA found that of those aged 65 or more and still working, around 25% plan to keep working to stay socially engaged.

And a significant proportion of over 65s – around 14% – who are still working believe they will never be able to retire, largely due to financial reasons. This is equivalent to around 3% of the total population of people aged 65 plus.

“Our research shows beyond question that advice reform is vital to ensuring Australia’s super system remains a global leader. We’re committed to continuing to work closely with Government and the sector to see these changes come to life without delay,” Delahunty said.

ASIC calls for more focus on AI governance

ASIC’s first state of the market review of the use and adoption of AI by 23 financial services and credit licensees found there was potential for governance to lag AI adoption, despite current AI use being relatively cautious.

As a result, ASIC is urging licensees to ensure their governance practices keep pace with their accelerating adoption of AI.

“Our review shows AI use by the licensees has to date focussed predominantly on supporting human decisions and improving efficiencies. However, the volume of AI use is accelerating rapidly, with around 60% of licensees intending to ramp up AI usage, which could change the way AI impacts consumers,” ASIC chair Joe Longo said.

ASIC’s findings revealed nearly half of licensees did not have policies in place that considered consumer fairness or bias, and even fewer had policies governing the disclosure of AI use to consumers.

“It is clear that work needs to be done – and quickly – to ensure governance is adequate for the potential surge in consumer-facing AI,” Longo said.