Kirby Rappell
With the recovery in superannuation looking increasingly secure, the focus in May was on the federal budget and some of the new measures to strengthen the system, including additional support to boost women’s retirement savings.
This budget is the second pandemic budget, with the focus now shifting from temporary spending measures to building a more sustainable post-COVID economy.
Importantly for super members, it also reaffirms the increase in the Superannuation Guarantee (SG) to 12 per cent by July 2025 and introduces more flexibility to help Australians save more and enjoy better retirement outcomes.
“The federal budget has one eye on fighting the virus and the other looking to the future to determine what needs to be done to support households, improve our aged care system, and of course ensure superannuation is delivering for everyone,” said SuperRatings Executive Director Kirby Rappell.
“We’re pleased to see the government reaffirm its commitment to the legislated increase in the Superannuation Guarantee to 12 per cent, and take important steps towards ensuring everyone can retire with adequate savings, especially women and those who have been severely impacted by the pandemic.”
Supporting women and parents with more flexibility
Some additional measures announced in the budget to boost women’s retirement savings and increase flexibility include:
- Abolishing the $450 per month earnings threshold for the payment of the SG.
- The removal of the work test (for those aged 67-74) for superannuation contributions.
- The expansion of the ‘downsizer scheme’ to those aged 60 and over.
- Increasing the flexibility of the Pension Loans Scheme (PLS).
While the budget has taken some important steps to help close the savings gap, it is important to recognise those super funds that have already implemented their own initiatives to provide more flexibility for women and parents.
The table below provides a snapshot of some the key offers available through individual funds to provide targeted value for members.
Super fund recovery looks secure
April further solidified the recovery in superannuation with another month of strong performance figures, supported by an improving economic situation and confidence in state and federal vaccination plans.
According to SuperRatings’ data, the median balanced option rose an estimated 2.1% in April, while the median growth option rose an estimated 2.6% and the median capital stable option rose an estimated 1.0%. Over the 2020-21 financial year to date, the median balanced option has returned 14.5%, which captures the rebound in financial markets in the second half of 2020 and the continued momentum through the start of 2021 as the vaccine narrative takes hold.
Pension returns were also positive in April. The median balanced pension option returned an estimated 2.3% over the month and 15.7% over the financial year to date. The median pension growth option returned an estimated 2.7% and the median capital stable option gained an estimated 1.1% through the month.
“Confidence is back, and consumers have so far shrugged off the unwinding of the JobKeeper program, but the pandemic is still with us, which means super members should expect markets to remain volatile,” said Mr Rappell.
“The federal government has doubled down on its expansionary fiscal strategy, which will continue supporting the economy as some of the temporary spending measures come to an end. Our relative success in managing the pandemic has meant we can stay open and prevent longer-term scarring to businesses and the labour market.”
