Hockey palms super reform to second term

By Leith van Onselen Being a Budget commentator is never dull. After expending significant effort this morning slamming the Government for failing to include Australia’s egregious superannuation concessions in its “war on entitlements”, Treasurer Joe Hockey has now flagged changes to superannuation and an increase in the preservation age, which will be taken to the


Kohler slams FoFA tweaks

Alan Kohler is in good form today demanding the Coalition dump its entire FoFa reform platform. He argues: The eight changes proposed by the Coalition, presumably written by the banks, are: 1. Allowing commissions to be paid for the provision of “general advice”, as opposed to personal advice. 2. Making the annual fee disclosure statement apply


Super rent-seekers demand more pork

By Leith van Onselen The Australian superannuation industry appears to be lobbying for the indexation of superannuation contribution limits, which would enable contributions to rise in relation to wages growth. From the AFR: …after taking over the Howard super model, in 2009, [Labor] halved the standard tax concessional contribution entitlement to the current $25,000 a


Superannuation balances hit $1.8 trillion

Cross-posted from DFA Blog APRA today released its quarterly superannuation statistics. They report that total estimated assets, which include the assets of self-managed superannuation funds and the balance of life office statutory funds, rose to $1.8 trillion at 31 December 2013.  Read about superannuation in our series of posts, The Superannuation Story. Self managed superannuation


Is there demand for Australian annuities?

By Martin North, cross-posted from the Digital Finance Analytics Blog Today we start to look at annuities in Australia. This follows on from our look at the UK’s Annuity Mess recently. In Australia the annuity market appears undeveloped, but in the light of regulatory change, rising superannuation balances and self-managed superannuation, we review the likely


The superannuation story, part 5

By Martin North. Cross Posted from Digital Finance Analytics Blog In previous posts we looked at aspects of superannuation in Australia, from the perspective of investment fund performance, fees, consumer attitudes to super and self-managed super. Today we look at the role of investment platforms, an element in the superannuation value chain which is often


Gutted FOFA frees conflicted planners

From Crikey comes a better effort today: The government’s winding back of the Future of Financial Advice reforms will legalise conduct by financial planners that has long been banned and hand a major win to the big banks and AMP — one that even the Howard government rejected, Crikey can reveal. …In 2006, ASIC launched an investigation


Superannuation exposes entitlements hypocrisy

By Leith van Onselen Deloitte-Access Economics’ Chris Richardson is the latest to jump on the “reform superannuation” bandwagon, arguing today that super concessions will cost the Government $32 billion in forgone revenue this year, with the majority of benefits going to the wealthy. From the AFR: Deloitte Access Economics partner Chris Richardson said while superannuation


SMSFs ramp up residential property exposures

Westpac’s Elliot Clarke has produced an interesting note today on the increased purchasing by Self-Managed Superannuation Funds (SMSFs) of Australian residential property: Superannuation is the principal form of savings for Australian households outside of the family home. As at September 2013, household superannuation assets stood at just over of $2trn – $1.7trn in super funds


The superannuation story, part 4

By Martin North. Cross Posted from Digital Finance Analytics Blog Continuing our series on superannuation, today we look at Self Managed Super Funds (SMSFs). Growth in SMSFs is probably the most significant event in the superannuation industry, leading not unsurprisingly for calls for greater regulation or a clamp-down from many industry players. We will be


The superannuation story, part 3

By Martin North. Cross Posted from Digital Finance Analytics Blog Continuing our series on Superannuation, after looking at performance and fees, today we look at consumer attitudes to Superannuation, based on the DFA household surveys. We collect data on an ongoing basis, and maintain a statistically robust sample. We include a number of specific questions


The superannuation story, part 2

By Martin North. Cross Posted from Digital Finance Analytics Blog Last week, we started our series on Superannuation, and showed that performance varied by type of fund, and across funds in an unpredictable way. Today we look at the industry from a consumer perspective. This is important because the overall returns as reported by APRA


The Superannuation Story, part 1

By Martin North. Cross Posted from Digital Finance Analytics Blog In our first post for the new year, we begin a multi-part examination of superannuation, using the recently released data from APRA on industry and fund level performance to June 2013, together with DFA’s own research. Superannuation has become big business, with total assets now


SMSF borrowing triples

From the AFR: The number of self-managed superannuation funds with borrowings has tripled over the past four years and average loan size has doubled to $357,000. Funds with borrowings also invested a larger proportion of their assets in non-residential and residential real property than funds without debt, a new analysis by the Tax Office shows.


Super lump sums must go

By Leith van Onselen Australia’s retirements system is riddled with problems that make it both unsustainable and inequitable in the face of Australia’s rapidly ageing population (see next chart). One of the many flaws in is that the superannuation system allows an individual to retire at 60, withdraw their super tax free as a lump


Nick Sherry on why super reform is inevitable

By Leith van Onselen ABC’s The Business aired an interesting interview last night with Nick Sherry, the former Labor government minister for superannuation, who now works for accounting firm Ernst and Young. In the interview, Sherry explains pointedly why Australia’s superannuation system is unsustainable and how reform is inevitable, due to people living longer, which


FoFA falls to the rentiers

From the AFR: Federal cabinet is expected to consider, as early as Monday, measures to wind back Labor reforms to the financial planning industry, despite apparent concerns by Treasury and Finance about some of the measures. …The FoFA reforms sought to stamp out prevalent arrangements where financial advice was compromised by commission payments to advisers from


Reverse mortgages do not fix super

By Leith van Onselen Business Spectator’s Rob Burgess has written another interesting article today calling for the Government to back the reverse mortgage market so that asset (house) rich, cash poor retirees can extract equity from their homes to use in their retirement: To understand, in tangible terms, what needs ‘fixing’, let’s assume a couple,


How to fix Australia’s busted retirement system

By Leith van Onselen Business Spectator’s Rob Burgess has an interesting article today in Business Spectator, arguing for reforms to Australia’s retirement system in a bid to make it more sustainable: The question for the 44th parliament is: do either Tony Abbott or Bill Shorten have the intelligence, the grit, the bloody-mindedness to start selling


More generational war from boomer interests

By Leith van Onselen Daryl Dixon, executive chairman of Dixon Advisory and author of Securing Your Superannuation Future, published a curious article in The Australian over the weekend lamenting the “unfairness” of Australia’s superannuation system under the former Labor Government, which purportedly unfairly penalised higher income earners: THE previous government’s superannuation policy unfortunately was driven


Boomers stampede super, housing rort

By Leith van Onselen Yesterday’s reported increase in Australian life expectancy, while good news overall, is likely to pose some acute challenges for retirement policy. According to the latest Australian Bureau of Statistics (ABS) life expectancy estimates, a 65 year old male can expect to live a further 19 years and females a further 22


Super changes to cost low income earners $27k

By Leith van Onselen While Robert Gottliebsen celebrates yesterday’s win for wealthy retirees, details have emerged about the cost of the Government’s super changes on lower income Australians. As explained yesterday, the new Coalition Government jettisoned the former Labor Government’s planned changes to superannuation, which would have seen tax concessions reduced on super funds earning


Making superannuation sustainable

By Leith van Onselen ABC’s The Business aired an interesting segment last night on the widespread push by the wealth management industry for Australians to turn their retirement nest eggs into income streams so that they don’t run out of superannuation too early – either by burning through their retirement savings or living longer than


The future’s millionaire pauper

From the SMH: Today’s young workers can expect to have an average $1.1 million in superannuation when they retire but it won’t be enough to maintain a comfortable post-work lifestyle. New research by Deloitte has found a 30-year-old worker on an average salary of $60,000 a year will have an estimated $1.1 million in super


Boomers stressing Australia’s superannuation system

By Leith van Onselen Last month, I asked whether the Baby Boomer generation had blown their retirement following a stinging critique by CPA Australia, which argued that many Baby Boomers had been spending and running-up big debts in anticipation of receiving a superannuation lump sum once they reach retirement, leaving them likely to be reliant


Have the boomers blown their retirement?

By Leith van Onselen The weekend edition of the Australian Financial Review published a stinging critique of the Baby Boomer generation, which it claims has blown its retirement savings by running-up debts on property and consumption: “They have already spent all of their super before their first day of retirement,” says Simon Kelly, a professor


Superannuation is inequitable and unsustainable

By Leith van Onselen Fairfax’s Michael West has published a ripper article questioning the merits of Australia’s superannuation system, which he argues is overly generous to higher income earners. From The Age: Super tax concessions cost the taxpayer about $32 billion a year, according to Treasury. The bulk of this, says [actuary Geoff] Dunsford, goes