Contributions rise too late for boomers
THE rise in Australia's compulsory superannuation has come too late for many baby boomers nearing retirement, experts have warned, prompting calls for super funds to improve how they manage investments for those nearing the end of their working lives.
THE rise in Australia's compulsory superannuation has come too late for many baby boomers nearing retirement, experts have warned, prompting calls for super funds to improve how they manage investments for those nearing the end of their working lives.The super industry yesterday welcomed passage of legislation lifting compulsory super contributions from 9 to 12 per cent by 2020, saying it would produce significant benefits for the economy, the federal budget, and the retirement of millions of Australians.But funds have been told to do more to help baby boomers approaching retirement, who would not receive substantial benefits from the measure.The increase in the super guarantee, part of the mining tax package passed on Monday night, will produce a 0.33 per cent rise in real GDP a year by 2025, according to a report by Allen Consulting for the Association of Superannuation Funds of Australia, and reduce the retirement savings gap by $184 billion, the Financial Services Council says.Legislation was also passed introducing a low income super contribution which will effectively make low earners' super contributions tax-free. The chief executive of the Association of Super Funds of Australia, Pauline Vamos, said this would benefit 3.5 million Australians.But the Australian Institute of Superannuation Trustees chief executive, Fiona Reynolds, said the lift had come too late for many people nearing retirement.Speaking at the Conference of Major Superannuation Funds in Brisbane, she said the average super balance for men aged 65 was still about $198,000 and for women $112,000, but these numbers were distorted by a small proportion of people with more, and most retirees had only $70,000 to $80,000.Ms Reynolds said the most important super benefit for many older people was the co-contribution - where the government matches some personal super contributions - and many were disappointed to learn the government was winding it back.She said the industry needed to campaign more strongly to have the full benefit reinstated as the federal budget improved, adding this was more important to the majority of older members than the planned caps on concessional contributions.It came as ratings agencies SuperRatings and Chant West reported funds had produced their second month of positive returns. The average balanced fund was up by 1.8 per cent last month, according to Super Ratings, and on track for a 4.5 per cent return for the March quarter. However, Chant West said conservative funds still had produced better returns over the past five, seven and 10 years.