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- Pandemic has long-lasting impact on older Australians
- Intergenerational report forecasts doubling in older Australians
- Hostplus to grow through more mergers
- LUCRF Super teams up with AustralianSuper
- Super funds make bid for Sydney airport
- Six member SMSFS good to go
- Dixon Advisory to pay $8.2 million in penalties
Pandemic has long-lasting impact on older Australians
The COVID-19 pandemic has hit older Australians hard, according to the latest Council of The Ageing’s State of the (Older) Nation 2021 report, with the percentage of those surveyed who ranked their physical health highly (7 or more out of 10) dropping from 67% in 2018 to 57% in 2021.
Quality of life ratings dropped from 78% to 73%, mental health fell from 80% to 72%, and the quality of social relationships was down from 72% to 66%.
The report surveyed over 2800 Australians aged 50 and over, with quotas set for state and territories, metropolitan and regional areas, gender and age.
When it comes to retirement and financial security, Australians are working longer hours and feeling less secure about their financial future, with those ranking their financial situation highly, falling from 63% to 58%.
Over half (55%) felt secure about their finances being able to meet their needs for the rest of their lives but that left 45% who didn’t feel secure about their financial future into retirement.
And when it comes to working in 2021, less than half of those aged 65 had retired (at 49%) compared to 60% in 2018.
Intergenerational report forecasts doubling in older Australians
The government’s latest Intergenerational Report (IGR) has forecast the proportion of the population aged 65 and over will increase from 16% in 2019–20, to 23% by 2060–61.
Effectively, this will translate to a doubling in the number of Australians aged 65 and over by 2060–61.
The Association of Superannuation Funds of Australia (ASFA) says that with the report also projecting government expenditure on health and aged care to increase from a combined 5.3% of GDP in 2019–20 to 8.3% in 2060–61, older Australians will need to rely on their superannuation more than ever.
Treasury projections in the report also suggest that the median superannuation balance will grow substantially over the next 40 years, increasing from around $125,000 in 2020–21 to around $460,000 in 2060–61, as measured in 2020–21 dollars.
They attribute this growth to a maturing superannuation system. The superannuation guarantee will also have been at 12% for 35 years by 2060–61.
“This report highlights the importance of superannuation for Australian retirees who face higher medical and aged care costs in the coming decades,” ASFA chief executive officer Dr Martin Fahy said.
The report predicts the ratio of working-age people to those over 65 to fall from 4.0 to 2.7 over the next 40 years, as the baby boomer generation reach retirement.
Hostplus to grow through more mergers
Hostplus and Intrust Super announced they well progressed in merger talks and have signed a Successor Fund Transfer Deed with a target data of 26 November 2021.
The merger will add approximately $3 billion to Hostplus’ current $66 billion in funds under management and an additional 90,000 members to Hostplus’ 1.25 million.
“We are delighted … to have formally entered into an agreement with Intrust Super to merge our two funds to create a truly national fund of greater size and scale. As such, we wholeheartedly look forward to welcoming Intrust Super’s members, employers and staff into the Hostplus family,” Hostplus chief executive officer David Elia said.
Hostplus has also confirmed that it is in talks with Statewide Super about a potential merger, with the two funds intending to sign a Heads of Agreement that supports the funds commencing a reciprocal due diligence process.
That merger would add an extra 142,000 members and over $10.8 billion in funds to the combined entity.
“The engagement and discussions between the funds to date have been most encouraging and I’m very optimistic that the common ground, strengths and synergies we’ve already identified suggest that pursuing a merger of our funds will realise and deliver significant benefits for both funds’ members,” Statewide Super’s chief executive officer Tony D’Alessandro said.
LUCRF Super teams up with AustralianSuper
In more merger news, LUCRF Super has announced it will merge with AustralianSuper, with the merger expected to be complete by the first half of 2022.
The two funds have signed a memorandum of understanding, subject to a period of due diligence.
Established in 1978, LUCRF is the nation’s oldest industry superannuation fund and currently has $7.4 billion in funds under management and 123,000 members.
AustralianSuper is the nation’s biggest superannuation fund, with $225 billion in funds under management and more than 2.4 million members.
“LUCRF Super has specialised in taking care of the retirement savings of a large proportion of the lowest paid workers in Australia for more than four decades and we are certain that a merger with AustralianSuper will continue to provide the best value and benefits to members,” LUCRF Super chief executive officer Charlie Donnelly said.
“LUCRF Super will ensure that this merger will provide a model for how best to put members interests first during mergers of this kind.”
Long-serving head of AustralianSuper Ian Silk has also announced he will step down later this year after 15 years in the role of chief executive officer. He will be replaced by current chief risk officer Paul Schroder.
Super funds make bid for Sydney airport
A consortium consisting of the IFM Australian Infrastructure Fund, the IFM Global Infrastructure Fund, QSuper and Global Infrastructure Partners has made a $22.3 billion bid to acquire Sydney Airport.
Industry Funds Management is owned by 27 industry superannuation funds and the consortium is calling itself the Sydney Aviation Alliance. It has approached the board of Sydney Airport Limited with a non-binding indicative proposal to acquire all of the stapled securities in Sydney Airport Limited and Sydney Airport Trust 1, by way of a Scheme of Arrangement and a Trust Scheme.
The proposal is for a cash consideration of $8.25 per Sydney Airport stapled security, which was a 43% premium to Sydney Airport’s closing price on 1 July 2021.
Six member SMSFS good to go
Self-managed superannuation funds (SMSFs) are now able to have six members following the royal assent of the Treasury Laws Amendment (Self-Managed Superannuation Funds) Bill 2020 on 22 June 2021.
Funds may still be restricted by state and territory laws that dictate the number of trustees a trust can have but the Australian Taxation Office (ATO) says this can be avoided if individuals set up their SMSF as a corporate trustee with each member as a director of the corporate trustee.
“We are currently implementing the necessary system changes to enable SMSFs to add members five and six to their fund through the Australian Business Register (ABR). We recommend you wait until the ABR is updated before you register or update your fund with more than four members,” the ATO said.
Dixon Advisory to pay $8.2 million in penalties
Dixon Advisory & Superannuation Services (DASS), a wholly-owned subsidiary of E&P Financial Group (EP1), has entered into a Heads of Agreement to resolve civil penalty proceedings by the Australian Securities and Investment Commission (ASIC) that included allegations Dixon Advisory representatives failed to act in their clients’ best interests.
The Heads of Agreement proposes that Dixon Advisory pay a $7.2 million penalty for breaches of the Corporations Act and an additional $1 million to cover ASIC’s investigation and legal costs.
The allegations relate to advice given to clients to invest in the US Masters Residential Property Fund (URF) and URF-related products between 2 September 2015 and 31 May 2019. URF was established by Dixon Advisory in 2011.
“The Board of EP1 views this as an important step towards resolving the legal proceeding between ASIC and DASS. The Board wishes to make it clear that extensive management and governance changes have occurred across the Group over the last two years to ensure that DASS acts in its clients’ best interests at all times,” E&P Financial Group said in a statement to the ASX.