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This month we look at rising mortgage stress for retirees, Fat Cat Funds results, the suburbs with the most unclaimed super and the Better Retirement Outcomes report on super balances.
Researchers warn of rising mortgage stress for retirees
A growing number of older Australians are carrying unsustainable mortgage debt into retirement, leading to worsening mental health outcomes.
A recent study at WA’s Curtin University found that the burden of mortgage debt among retirees has overtaken growth in asset prices and incomes, with many relying on the age pension to pay off their homes.
The study shows average mortgage debt among older Australians has blown out by 600% since the late 1980s after accounting for inflation. Today, nearly half of all homeowners aged 55 to 64 are still paying off home loans, up from just 14% 30 years ago.
“These statistics are quite shocking,” says Rachel Ong Viforj, professor of economics at Curtin University and lead author of the study for the Australian Housing and Urban Research Institute (AHURI).
“Our research shows that if you are carrying a mortgage debt and having difficulty repaying it in later life, then your mental health is likely to be poorer than someone who does not have this issue.”
AHURI’s study also points to a sharp rise in the number of older Australians becoming stuck in the rental market when they can no longer work. By 2031, it forecasts a 60% rise in the number of people eligible for Commonwealth rent assistance, to more than 400,000.
Aussies have $17.5 billion in unclaimed super
The Australian Tax Office says $420 million worth of super funds has been reunited with owners in the last financial year, but there is still $17.5 billion unclaimed.
A list of the top 10 postcodes with the highest amounts of missing super was released by the ATO and includes one NSW account holder with more than $2 million waiting to be claimed.
Super providers are now legally required to pay inactive, low-balance accounts to the ATO to help reunite unclaimed super money into active accounts.
Top 10 unclaimed super postcodes
NSW 2170 – $59.2 million; 2560 – $50.2 million; 2010 – $45.7 million; 2000 – $44.0 million.
QLD 4740 – $60.1 million; 4870 – $57.5 million; 4350 – $53.3 million.
VIC 3030 – $56.7 million; 3029 – $43.8 million.
WA 6210 – $44 million.
ASFA’s Better Retirement Outcomes report
The latest ASFA report on superannuation account balances shows that Australian superannuation account balances are growing sustainably, although still lagging behind the Comfortable Retirement Standard.
The Better Retirement Outcomes report showed the gender gap is closing, as female account balances have grown by 15.4% in the past two years, compared with 11% for males.
ASFA’s Comfortable Retirement Standard calculates that a single person aged between 65 and 85, who owns their own home, would likely need an income of $43,695 a year to live comfortably in retirement, and a couple would need $60,063.
Stockspot’s 2019 Fat Cat Funds Report is out
Stockspot’s newly released 2019 Fat Cat Funds Report finds once again that fees make all the difference when it comes to your retirement savings.
The online investment advisor’s seventh annual Fat Cat Funds Report names ANZ/OnePath as this year’s worst performer, scoring 11 Fat Cat Funds, or 27% of the worst funds of the year, up from 25% in 2018.
ANZ/OnePath shares the Gold award honours with AMP who also scored 11 Fat Cat Funds. The Silver award goes to Perpetual Fund Management with four Fat Cat Funds, and in a two-way tie for the Bronze award, MLC and Zurich came in third for worst performing funds, scoring 3 Fat Cat Funds each.
The best performer for 2019 is QSuper who manages more than $100 billion worth of Australian superannuation investments and takes the Gold award with nine Fit Cat Funds. UniSuper win the Silver Award for the second year in a row with six Fit Cat Funds, and the Bronze award goes to Australia’s biggest superannuation fund, Australian Super, with Four Fit Cat Funds.
First published in 2013, Stockspot’s Fat Cat Reports rate 600 Australian superannuation funds on how they performed after fees over five years compared to others in the same risk category.
By shining a light on both the best and the worst, the report encourages Australian workers to compare their super fund’s performance, consider options, prompt funds to lower their fees and lobby the Federal Government to improve fairness and transparency in the system overall.
A 21-year-old Melbourne woman appeared in Court earlier this week as part of investigations into a major fraud and identity theft syndicate, which resulted in alleged thefts from the superannuation and share trading accounts of innocent victims worth of millions of dollars.
ASIC and the AFP allege the woman worked as part of a syndicate which used fraudulently-obtained identities to commit large-scale online fraud.
It is alleged the woman used stolen identity information purchased from dark net marketplaces, together with single use telephone SIM cards and fake email accounts, to undertake an ‘identity takeover’.
These identities were then used to open bank accounts at various Australian banks, and to subsequently illegally steal money from the superannuation and share-trading accounts of these victims.
ASIC and the AFP further allege the syndicate laundered the stolen funds through an overseas contact to purchase untraceable assets such as jewellery. It is believed the money was then transferred back to Australia through cryptocurrencies.
Investigations have uncovered at least 70 bank accounts created using fraudulently-obtained identities to date.
ASIC Deputy Chair Daniel Crennan, QC, said this matter highlights the challenging era of the digitalisation of the criminal economy.
“Cybersecurity threats such as data breaches and financial system attacks are a major concern for ASIC and we will continue to pursue not only cyber-related market and superannuation offending but also the need for institutions to maintain their obligations to ensure they have adequate cyber resilience,” he said.
Investigations into the syndicate are continuing, and further arrests and charges have not been ruled out.