Super news for August 2022

The Australian Securities and Investments Commission (ASIC) is concerned that super fund trustees have been mishandling internal dispute resolution processes, following a surveillance review.

The first stage of the review examined trustees’ compliance with the Regulatory Guide 271 Internal Dispute Resolution that came into effect late last year. ASIC looked at the timeliness of complaints handling and identified some problem areas that need fixing.

“We want trustees that have fallen behind to strengthen their internal dispute resolution arrangements to make sure that member complaints are handled in an effective, fair and timely way,” ASIC commissioner Danielle Press said.

RG271 requires trustees to record all member complaints and the surveillance found funds recorded complaints at a rate of 30 for every 10,000 members. However, ASIC was concerned that 10% of the funds it looked at recorded less than 10 complaints for every 10,000 members.

ASIC also identified issues around response time frames and informing complainants of delays.

“We expect all trustees to have in place effective arrangements that support expressions of dissatisfaction from their members and deliver fair, transparent and timely member outcomes,” Press said.

ATO warns of SMS scams

The Australian Taxation Office (ATO) has issued a warning about a high volume of
SMS scams pretending to be from them.

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These scam texts tell recipients that they’re owed an income tax refund and ask them to click a link and complete a form that takes them to a fake website asking for personal details.

The ATO reports similar email phishing scams have been asking recipients to click on links to complete tax lodgement processes, which then take them to fake websites.

The ATO keeps a record of scams that come to its attention here and reminds people not to click on any links in a suspected fake SMS or email and instead report it to the ATO.

First RBA review in three decades announced

Federal Treasurer Jim Chalmers has announced a review of the Reserve Bank of Australia (RBA) – the first in 30 years – and has appointed a panel of three independent experts from Australia and overseas to the comprehensive review.

The review’s terms of reference include an assessment of the RBA’s performance in meeting its objectives “including its choice of policy tools, policy implementation, policy communication and how trade-offs between different objectives have been managed.”

The review follows mounting criticism of the Australian central bank’s announcements last year that rates would be on hold until 2024 followed by its more recent decisions to rapidly raise rates to tamper rampant inflation. “This is an important opportunity to ensure that our monetary policy framework is the best it can be, to make the right calls in the interests of the Australian people and their economy,” the Treasurer said in a statement.

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Early release scheme came at a real cost for millions of Australians

New analysis by the Association of Superannuation Funds of Australia (ASFA) found while the COVID-19 early release of superannuation (ERS) scheme was successful in assisting a large proportion of Australians at the time, it also came at a high cost.

Not only will the early release scheme impact the eventual retirement savings of participants, but there was also a cost in taking a benefit when investment markets were temporarily down.

ASFA estimates that nearly one million Australians closed or largely cleaned out their super account through the scheme with women, single parents and the unemployed more likely to draw down balances.

The analysis also found that a 30-year-old taking out $20,000 in 2020 would have $43,000 less in retirement savings at age 67 (measured in today’s dollars and assuming no catch-up contributions are made).

“While superannuation was able to do much of the heavy lifting by distributing payments to people quickly in the early days of the COVID-19 pandemic, it’s important that we recognise the detrimental impact that this has had for the retirement savings of millions of Australians,” ASFA deputy chief executive officer Glen McCrea said.

“It’s more important than ever that we legislate the objective of super to ensure that Australians’ savings are preserved to support a dignified lifestyle in retirement.”

New research identifies lower super balances may be needed for retirement

Super Consumers Australia (SCA) has developed new superannuation balance targets to help Australians save for their retirement. The new amounts are substantially less than some other suggested retirement targets and assume that people will be eligible for a part pension.

The targets start at $88,000 for a single person retiring at 65, who owns their own home and is happy with an annual income of $34,000 a year, rising to $745,000 for a single person under the same financial circumstances who wants an annual income of $55,000. If a single person wants an income of $44,000 a year, then they need to have saved $301,000 by the time they retire at 65.

“Among the most important financial questions retirement-planning Australians face is how much they need to save and what income those savings will deliver in retirement. These new retirement targets are designed to help people answer these questions. They provide a solid rule of thumb for what is needed to maintain your living standards when you’re retired,” SCA director Xavier O’Halloran said.

The organisation consulted with consumers, academics, regulators, industry experts and super funds to come up with targets and received feedback from over 30 organisations.

SCA is an independent, non-profit consumer organisation that has partnered with CHOICE to advance and protect the interests of Australians with regards to their super. The research into the targets was also supported by a philanthropic grant from the Ecstra Foundation.