Change in super helping out seniors

Prospective downsizers may end up with more money for their retirement following tighter restrictions on superannuation funds aiming to increase their performance.

Under the Commonwealth’s new rules, an online comparison tool called Your Super will enable superannuation fund members to check the costs of their fund, compare their investment performance with others and switch to a better service if they want.

From July 1 of this year, the superannuation guarantee, which is the amount of money an employer pays to staff on top of wages, increased to 10 per cent.

The before-tax contribution cap to superannuation accounts also increased from $25,000 to $27,500, while the after-tax cap shifted from $100,000 to $110,000.

The Federal Government has also sought to impose a yearly performance test on superannuation funds to ensure they are up to scratch and their fees are reasonable.

If a fund fails the test, the Australian Prudential Regulation Authority will mandate that all members of the fund are notified and the authority will also have the power to prevent consistently underperforming funds from recruiting new members.

In a big win against lost superannuation, the Federal Government has also legislated to ensure a new account is not automatically created every time a worker leaves their job to work for someone else.

Super accounts will now follow each Australian and prevent duplicate fees and insurance premiums, helping to uncomplicate a network of about six million super accounts, with around 850,000 created every year.

Seniors Own Real Estate Managing Director Mike Graebner said he wholly supported government changes that topped up superannuation for retirees, gave them a better quality of life and helped smooth out any costs around adequate seniors housing.

“A significant additional impediment to moving house is the relocation costs, including stamp duty, which is currently around $18,500 for a Perth median-priced home of $515,000,” he said.

“Of course, people 55 and over can already access retirement villages at a more affordable entry price under a lease-for-life arrangement and will not pay stamp duty.

“Conditions do apply when you leave; so do the research and decide on your personal priorities.”

The Association of Independent Retirees National President Wayne Strandquist also welcomed the superannuation reforms and said the retirement community was pleased to see a focus on cashing up the country’s older citizens.

“The passing of legislation that encourages superannuation funds to improve investment performance, lower their fees, increase member engagement and prevent duplicate superannuation accounts is welcomed by retirees,” he said.

“With superannuation accumulating for at least 40 years of working life and continuing for up to 30 years in retirement, even small gains in investment performance and lower fees can significantly increase retirement incomes.”